WealthCanadian Investing Glossary
ACB
Adjusted Cost Base: weighted-average cost used to calculate capital gains/losses.
TFSA
Tax-Free Savings Account — tax-sheltered growth, tax-free withdrawals.
FHSA
First Home Savings Account — combines RRSP deduction with TFSA-style withdrawals.
RRSP
Registered Retirement Savings Plan: tax deduction, tax-deferred growth.
ETF
Exchange-Traded Fund: diversified basket of assets at low cost.
Dividend
Portion of a company's earnings distributed to shareholders.
DRIP
Automatic reinvestment of dividends into new shares, commission-free.
Capital gains
Profit realized on sale of an investment. Taxed at 50% inclusion in Canada.
MER
Management Expense Ratio: annual fees of an ETF or mutual fund, as % of assets.
RRIF
Registered Retirement Income Fund — the RRSP's continuation after 71.
RESP
Registered Education Savings Plan — 20% CESG grant.
HBP
Home Buyers' Plan — withdraw up to $60,000 from your RRSP.
Rebalancing
Bringing a portfolio back to its target mix by trimming what has run up.
Asset allocation
How a portfolio is split across stocks, bonds and cash.
FIRE
Financial Independence, Retire Early: aim for 25× your annual spending.
REIT
Real Estate Investment Trust: own publicly traded real estate.
Bonds
A loan to a government or company that pays you interest.
Index fund
A fund that tracks an index (S&P 500, TSX) at very low cost.
Inflation
The general rise in prices that erodes your money's purchasing power.
Compound interest
Interest that itself earns interest — the snowball effect.
Volatility
How much an investment's price swings — not a permanent loss.
CPP / QPP
The public retirement pension: Canada Pension Plan / Quebec Pension Plan.
Net worth
Everything you own minus everything you owe — the measure of your wealth.
Diversification
Not betting on a single holding: spread out to reduce risk.
Risk tolerance
Your capacity and willingness to endure portfolio declines.