Financial Glossary
Quick Reference
Essential financial terms and concepts for Switzerland and the UK. Search or browse alphabetically to understand key terminology used in both financial systems.
AHV (Alters- und Hinterlassenenversicherung)
SwitzerlandSwitzerland's state pension system (1st pillar). Provides basic retirement, survivor, and disability benefits. Funded through payroll taxes and provides earnings-related pensions with minimum and maximum amounts.
Annual Management Charge (AMC)
GeneralThe yearly fee charged by investment funds for managing your money, expressed as a percentage of your investment. Typically ranges from 0.1% to 2% per year.
Auto-enrollment
UKUK system requiring employers to automatically enroll eligible workers into a workplace pension scheme. Applies to employees aged 22 to state pension age earning over £10,000 annually.
Base Rate
GeneralThe key interest rate set by a central bank (Bank of England in UK, SNB in Switzerland) that influences all other interest rates in the economy.
BVG (Berufliche Vorsorge)
SwitzerlandSwitzerland's occupational pension system (2nd pillar). Mandatory for employees earning over CHF 22,050. Provides additional retirement benefits on top of the state pension.
Capital Gains Tax
GeneralTax on profits from selling investments or assets. Switzerland generally doesn't tax capital gains for private investors. UK charges capital gains tax with annual exemption (£6,000 in 2024/25).
Cash ISA
UKTax-free savings account in the UK where interest earned is not subject to income tax. Part of the annual ISA allowance (£20,000 in 2024/25).
Compound Interest
GeneralInterest earned on both the original investment and previously earned interest. Einstein allegedly called it "the eighth wonder of the world" due to its powerful long-term growth effects.
Current Account
UKUK term for a checking account used for everyday banking. Usually includes a debit card, online banking, and direct debit facilities. Often free if you meet minimum deposit requirements.
Defined Contribution (DC)
GeneralPension scheme where retirement benefits depend on contributions made and investment performance. The final pension pot size is not guaranteed. Common in modern workplace pensions.
Defined Benefit (DB)
GeneralPension scheme that promises a specific pension amount based on salary and years of service. The employer bears the investment risk. Less common in private sector but still used in public sector.
Diversification
GeneralInvestment strategy of spreading money across different asset classes, countries, and sectors to reduce risk. "Don't put all your eggs in one basket."
ETF (Exchange-Traded Fund)
GeneralInvestment fund that tracks an index (like FTSE 100 or S&P 500) and trades on stock exchanges like individual shares. Usually low cost and provides instant diversification.
FCA (Financial Conduct Authority)
UKUK's conduct regulator for financial services, focusing on consumer protection, market integrity, and competition. Regulates over 50,000 firms including banks, insurers, and investment companies.
FINMA
SwitzerlandSwiss Financial Market Supervisory Authority - Switzerland's integrated financial regulator overseeing banks, insurance companies, and securities markets.
FSCS (Financial Services Compensation Scheme)
UKUK's deposit protection scheme covering up to £85,000 per person per institution if a bank fails. Also covers investments (£85,000) and insurance claims.
Inflation
GeneralThe rate at which prices for goods and services increase over time, reducing purchasing power. Central banks typically target around 2% annual inflation.
ISA (Individual Savings Account)
UKTax-free savings and investment wrapper available to UK residents. Annual allowance of £20,000 (2024/25) can be split between cash savings and investments.
Liquidity
GeneralHow quickly and easily an asset can be converted to cash without affecting its price. Cash is perfectly liquid; property is illiquid; shares are moderately liquid.
Lifetime ISA (LISA)
UKUK savings account for 18-39 year olds with 25% government bonus (up to £1,000 annually). Can be used for first home purchase or retirement, with penalties for other withdrawals.
Mortgage
GeneralLoan secured against property for purchasing real estate. Common types include fixed-rate (rate guaranteed for set period) and variable-rate (rate can change).
Pillar 3a
SwitzerlandSwitzerland's restricted private pension provision with tax benefits. Annual contribution limit of CHF 7,056 (2024) for employees. Funds generally locked until retirement with some exceptions.
Pillar 3b
SwitzerlandSwitzerland's unrestricted private savings without specific tax advantages but with flexible access. Used for additional retirement savings beyond Pillar 3a limits.
PRA (Prudential Regulation Authority)
UKUK regulator responsible for prudential supervision of banks, building societies, credit unions, insurers, and major investment firms. Part of the Bank of England.
Risk Tolerance
GeneralYour ability and willingness to accept investment losses in exchange for potential higher returns. Influenced by age, income, investment timeline, and personality.
SNB (Swiss National Bank)
SwitzerlandSwitzerland's central bank responsible for monetary policy, currency stability, and financial system oversight. Known for maintaining price stability and managing the Swiss franc.
State Pension
UKUK government pension providing foundation retirement income. Full new State Pension is £203.85 per week (2024/25). Requires 35 years of National Insurance contributions for full amount.
Stocks & Shares ISA
UKTax-free investment wrapper allowing investments in shares, funds, ETFs, and bonds within the annual ISA allowance. All growth and income is tax-free.
Tax Efficiency
GeneralStructuring finances to legally minimize tax liability. Examples include using ISAs in UK, Pillar 3a in Switzerland, and timing of asset sales for capital gains.
Volatility
GeneralThe degree of price fluctuation in investments. High volatility means prices change rapidly and unpredictably; low volatility means steady, predictable price movements.
Workplace Pension
UKUK employer-sponsored retirement scheme with automatic enrollment for eligible workers. Minimum contributions: 8% total (3% employer, 5% employee including tax relief).
Asset Allocation
GeneralStrategy of dividing investments among different asset classes (stocks, bonds, cash, real estate) to balance risk and return based on goals and risk tolerance.
Bond
GeneralDebt security where investor loans money to entity (government or corporation) for defined period at fixed interest rate. Generally considered lower risk than stocks.
Bull/Bear Market
GeneralBull market: sustained period of rising stock prices (optimism). Bear market: sustained period of falling stock prices (pessimism), typically 20%+ decline from recent highs.
Emergency Fund
GeneralMoney set aside for unexpected expenses or income loss. Financial experts typically recommend 3-6 months of living expenses in easily accessible savings.
Mutual Fund
GeneralInvestment vehicle pooling money from many investors to purchase diversified portfolio of stocks, bonds, or other securities, professionally managed.
P2P Lending
GeneralPeer-to-peer lending connecting borrowers directly with lenders through online platforms, bypassing traditional banks. Offers potentially higher returns but with increased risk.