Mechanism through which earned interest generates additional interest when it remains invested.
Practical Example:
Reinvested annual interest gradually increases the amount that earns a return.
Bank account used for everyday transactions such as deposits, withdrawals, transfers and payments.
Practical Example:
A salary is paid into a current account used for monthly expenses.
Readily available reserve created to cover unexpected expenses without selling a long-term investment.
Practical Example:
Keeping several months of expenses in a liquid savings product.
Additional amount paid by an employer into an employee savings plan according to the employee's payment and the plan rules.
Practical Example:
The employer adds EUR 300 when the employee contributes EUR 500.
Financial Flows (Wealth Cash Flow)
Savings & Banking
All cash inflows and outflows affecting wealth over a given period: savings contributions, security purchases and sales, rent received, loan repayments. Tracking them helps understand how wealth evolves beyond its valuation alone.
Practical Example:
A monthly contribution to an employee savings plan and a rent payment are two opposite financial flows in a wealth tracker.
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Financial Projections (Wealth Forecasts)
Analysis & Risk
Numerical estimates of how wealth or its income streams may evolve, built from current data (value, yield, maturities) and growth assumptions. These are indicative estimates, not guarantees of actual results.
Practical Example:
A financial projection may estimate a portfolio's value in 10 years assuming a constant average annual return.
A general rise in prices that reduces purchasing power and may lower the real return on savings.
Practical Example:
Savings earning 3% lose purchasing power when inflation reaches 5%.
Percentage used to calculate the return on savings or the cost of borrowing over a given period.
Practical Example:
A FCFA 1,000,000 deposit earning 3% produces FCFA 30,000 in annual interest before tax.
IRVM (Income Tax on Securities)
Accounts & Taxation
Tax deducted at source on dividends, interest and capital gains generated by investments in transferable securities.
Practical Example:
In the UEMOA zone, the IRVM rate on dividends from listed companies is often reduced to 7% to encourage investment.
The ability to convert an asset quickly into available cash without a significant loss of value.
Practical Example:
A bank balance is generally more liquid than real estate.
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Income generated by wealth without regular active involvement from its owner: stock dividends, bond coupons, rental income or savings interest. It contrasts with earned income from work.
Practical Example:
Dividends received each year on a stock portfolio are a form of passive income.
French employee savings arrangement used to build an investment portfolio, potentially with an employer contribution. Funds are generally locked for five years, subject to statutory early-release cases.
Practical Example:
An employee invests profit-sharing income in a PEE and receives an employer contribution.
French long-term retirement savings wrapper funded individually or through an employer, with capital, annuity or combined retirement benefits depending on applicable rules and the origin of funds.
Practical Example:
A saver makes regular contributions to an individual PER until retirement.
Legacy French employer retirement savings plan closed to new establishment since October 2020 and progressively replaced by collective PER plans. Existing PERCO plans may continue or be transferred.
Practical Example:
An existing PERCO may be transferred into a collective company PER.
Collective French company retirement savings plan succeeding PERCO. It may receive employee payments, profit sharing, employer contributions and eligible leave balances.
Practical Example:
The employer matches an employee contribution to a PERECO.
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Account intended to hold money that may earn interest according to the financial institution's terms.
Practical Example:
Money is deposited every month into a savings account for a future project.
Account opened with an SGI allowing the storage and registration of transferable securities (shares, bonds, mutual fund shares).
Practical Example:
Consult your securities account statement to monitor the valuation of your portfolio.
Bank investment locked for an agreed period in exchange for a fixed or determinable interest rate.
Practical Example:
A sum is locked for twelve months with a return known at subscription.
Wealth Availability (Liquidity Horizon)
Savings & Banking
The time before an asset in a portfolio can be converted into usable cash: immediate for a current account, several years for a PER retirement plan or a property. It helps check whether wealth matches upcoming cash needs.
Practical Example:
An employee savings plan (PEE) locked for 5 years has lower availability than a savings account accessible at any time.
A unified view grouping all of an investor's assets (bank accounts, securities accounts, real estate, employee savings) into a single dashboard, to know the total value and actual composition of their wealth.
Practical Example:
Wealth consolidation makes it possible to see at a glance the share of stocks, real estate and savings within total wealth.
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