R - Investments Glossary
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Glossary
Rally. A reversal of a downward trend of, say, share prices.
Ramp. The purchase of shares to force up share prices artificially.
Ratio. The value of one thing compared to something else.
Real Estate. Property comprising land and/or buildings. Also termed realty.
Reason Why Letter. A letter from financial adviser to client explaining the reasons behind a recommendation.
Rebasing. To ensure that capital gains tax is not paid on any inflation linked increase in the value of an asset, the purchase price is index linked from date of purchase to date of disposal. Where the asset was acquired before 31.02.1982, the purchase price is taken to be the market value as at that date; this is the rebasing - rebasing for indexation purposes.
Rebate. Either a reduction in price or a return of an overpayment. Rebate Only Personal Pension. A personal pension which is made up solely of the National Insurance rebates, payable by the DSS, where the member has elected to contract out of SERPS, by means of a personal pension. See 'Appropriate Personal Pension'.
Receiver. Someone appointed by the court, or under statute, to protect and preserve property, or to receive income from property and apply it as directed. Recession. Fall or reduction in trading volume.
Recognised Professional Body. In addition to the Self Regulatory Organisations, solicitors, insurance brokers, actuaries and accountants professional organisations are recognised by SIB as being competent to control their members' conduct when providing financial advice.
Red Book. Text of the Chancellor's speech published on budget day.
Redeem. Pay off a debt. Redeemable. An investment where one's initial investment is repayable at some future date or event. Redemption Date. The date on which a loan is to be repaid.
Redemption Penalties. When a loan under a mortgage is repaid before the agreed date, there may be penalties and fees due to cover the lenders lost investment and administration costs.
Reduced Allocation. A method of recouping initial expenses when setting up a unit linked policy, whereby only a proportion of the investment is allocated to the policy for the first few years.
Reduction in Yield. The amount by which an insurance company's charges can be expected to reduce the investment return on a policy with an investment content.
Redundant. Excess to requirements.
Reflation. Stimulation of the economy by increasing the money supply and/or by reducing taxes.
Register of Members. A company document listing details of members (shareholders) including how many and what type of shares.
Registered Individual. Out of date term for a person registered with an SRO or a RPB. PIA now uses the terms Independent Practitioner for IFAs, Product Provider for those selling packaged products, and Marketing Associate for company representatives.
Reinstate. In certain circumstances, it may be possible to 're-start', or reinstate a policy where premiums have been unpaid for some time. Conditions vary amongst companies and depending on the policies.
Reinsure. An insurer will try to spread the risk of certain large risks by seeking to reinsure, or share, the risk with other companies in exchange for part of the premium.
Reinvestment Relief. Allows CGT to be deferred when the gain is reinvested in certain qualifying investments, for instance a Venture Capital Trust or an unquoted investment including EISs and Shares listed on AIM.
Related Property. Related property means separate assets which, when valued together, have a higher value than when valued separately e.g. a pair of antique candlesticks together may be worth £1000, but separately only £300 each. For IHT purposes, when splitting related property, the value of the gift is deemed to be the relevant portion of the joint value, not the value of the item on its own e.g. in the case of the candlesticks, £500 each, rather than the £300.
Relevant Benefits. One of the proviso's for an occupational scheme to qualify for 'exempt approved' status, and meaning in broad terms any financial benefits provided on death or retirement, but not a PHI-type benefit.
Relevant Earnings. Defined in S623(2) of the Income and Corporation Taxes Act 1988. Refers generally to earned income only, schedule D and E.
Remainderman. Someone, male or female, who benefits from an estate after the death of a life tenant. Remortgage. Replacement of an existing mortgage loan with another, usually from a different lender.
Remuneration. In pension planning terms generally taken to mean the full and total earnings package i.e. salary and benefits in kind.
Remuneration Limited. A figure set out in legislation, which is used to determine whether a member of an occupational pension scheme may also contribute concurrently to a scheme governed by the new defined contribution regime.
Renewable. Generally used in connection with a type of term assurance, which runs for an initial period of years. At expiry the policyholder has the option to 'renew' the policy, at premium rates current at the time, but without need for further underwriting.
Rent. Payment by a tenant to a landlord for the use of property Repayment Mortgage. Loan repayment by means of instalments made up of capital and interest. See 'Annuity mortgage'.
Requisite Benefits. The minimum scale of benefits that were originally required in order that a defined benefit scheme could contract out. This requirement was removed in November 1986, but is intended to be re-introduced (Pensions Act 1995).
Residence. A place in which a person has a home. See 'Domicile' Resident. Someone living in a country whether domiciled or not, whether a citizen of that country or not.
Residual Value. The value of property or assets remaining after e.g. repayment of a loan, or at the end of a lease agreement.
Retail Price Index. A monthly indication of the average price changes to a particular 'basket' of consumer goods, and used as a general indicator of price inflation.
Retained Benefits. Pension benefits earned in previous employments and self employments. Retirement. The state of having given up full time work.
Retirement Annuity Contract. The forerunner of the Personal Pension Plan, although there are differences between the two e.g. in terms of contributions and availability of cash sums. New RAC contracts no longer available, but existing contracts may continue.
Return on Capital. Profit before tax and interest, expressed as a percentage of capital employed.
Revaluation. A means of increasing a figure from a base date in line with inflation e.g. pensionable salary, accrued pension deferred, pension in payment, or capital gains.
Revenue Maxima. Revenue imposed ceilings on benefits and contributions when calculating maximum approvable benefits.
Revenue Undertaking. A written undertaking, provided by the scheme administrator, promising to notify the Inland Revenue in the event of certain circumstances, or before taking certain specified actions. For example, the undertaking that benefits will not exceed Inland Revenue maximum approvable limits. Reversionary. Generally, refers to property which passes on death. Also : reversionary annuity - one paid on the death of someone; : reversionary bonus - see above.
Reversionary Bonus. The general term for the annual valuation and distribution of surplus to with-profits policyholders.
Revertor to Settlor Trust. A trust where the settlor is one of the trustees, and which contains the facility for some or all of the trust property to revert, or return, to the settlor if the settlor is alive at a particular date.
Revolving Credit. Credit offered on the basis that as the debt is reduced, more may be borrowed up to the agreed limit.
Rights Issue. Issue of shares to existing shareholders in order to raise extra finance.
Risk. In insurance terms, the likelihood of a claim being made on a policy during its term. In investment terms, the balance of potential loss and potential gain as perceived by the investor; a subjective view in general.
Risk Aversion. The degree to which a client is unwilling to take on a risk.
Roll-over Relief. A tax concession which allows investors and businesses to defer the payment of CGT. For example, if proceeds from the sale of a fixed asset are re-invested, CGT is not payable until the new asset is sold.
Roll-up Funds. An offshore investment fund which does not distribute its dividends. Romalpa Clause. Often seen on purchase invoices stating that ownership of the item does not pass to the purchaser until full payment has been made.
Rule of 115. To calculate how long it will take to treble money with interest reinvested, divide the interest rate into the number 115.
Rule of 72. To calculate how long it will take to double money with interest reinvested, divide the interest rate into the number 72. For example, at 8 per cent it would take nine years to double the principal - 72 divided by eight is nine.
UK Investments - Financial, Property & Other Investments - 1998-2008
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