Resources

Glossary

ASX – Australian Stock Exchange.

Bad and doubtful debts – loans that are likely to remain uncollectible and will be written off.

Building Society – a not-for-profit organisation owned by its members.

Continuous disclosure – a requirement that a company keeps the market informed on matters that may affect the price of their shares. This is one of the rules of listing with the New Zealand or Australian stock exchange.

Credit rating - an independent opinion of a company’s ability to meet its financial commitments in full and on time.

Credit Union – a financial cooperative that encourages the financial well-being of its members.

Debenture – a fixed term investment in a finance company.

Enforceable undertaking – a written undertaking offered by an investment company to the Securities Commission, usually because of non-compliance with securities law or some other areas of concern. The undertaking specifies the steps the company agrees to take to remedy the breach. “Enforceable” means the undertaking is enforceable in the courts.

Finance company – a company that's main business is lending money, particularly for consumer finance, property and business lending which may fall outside the core business of traditional banks.

Gearing – net assets divided by total assets. A high gearing is generally considered very speculative.

Impaired and past due assets – overdue loans that may not be recoverable. These could be more than 90 days overdue (the number of days differs among companies).

Impaired asset expense – the money put aside by the finance company to cover bad and doubtful debts.

Investment grade - a credit rating of at least BBB-(S&P), Baa3-(Moody's), BBB-(Fitch). See credit ratings for more.

Investment statement – an investment “advertisement”. Its purpose is to provide key information to the prudent but non-expert investor. The investment statement is the primary disclosure document you receive as an investor.

NZX – New Zealand Stock Exchange.

Prospectus– contains more detailed information than the investment statement. It explains the investment (including its terms), who’s offering it, the planned use of the money, past financial statements, and other information that could help you decide if the investment suits you.

Receiver – person appointed to manage the affairs of a company that can’t pay its debts.

Related-party transactions – transactions between a company and others (companies or individuals) that have personal or business links with the company or its management.

Secured debenture – the most secure type of finance company investment. But if the company goes into receivership, a secured debenture holder is paid only after employee wages, tax and other bank or finance-company commitments have been paid.

Speculative grade – a credit rating below investment grade and therefor higher risk.

Term deposit – an investment where you commit your savings for a set time period in return for a fixed rate of return.

Unsecured debenture - in the event of receivership, an unsecured debenture holder is paid only after employee wages, tax, other bank or finance company, and secured debenture holder commitments have been paid.

 
 
 

 

Important

Like you, we can't predict the future - which means we can't guarantee the performance of any company or investment. Consumer NZ does not endorse any specific company, scheme or investment. ConsumerSaver is a good starting point - but, before you commit, we strongly suggest you seek independent financial advice. See our full disclaimer.