EuroCalc

200+ financial terms, explained simply

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160 financial terms defined

Most popular terms

Compound Interest

Compound interest is interest earned on both the original principal and on the interest that has previously been added to the account, producing exponential growth over time.

ETF

An ETF (exchange-traded fund) is a basket of securities — usually stocks or bonds — that trades on a stock exchange like a single share, providing diversification at low cost.

Mortgage

A mortgage is a long-term loan secured by real estate, used to finance the purchase of a home or commercial property, repaid in monthly instalments over 10 to 30 years.

Pillar 3a

Pillar 3a is Switzerland's tax-advantaged private retirement account, where annual contributions are fully deductible from taxable income and the capital is locked until retirement (with limited early-withdrawal exceptions).

Inflation

Inflation is the rate at which the general price level of goods and services rises over time, reducing the purchasing power of money.

Net Income

Net income is the amount of money you actually receive after all taxes, social contributions and mandatory deductions have been subtracted from your gross earnings.

APR

APR (Annual Percentage Rate) is the total yearly cost of a loan expressed as a percentage, including the nominal interest rate plus mandatory fees, allowing fair comparison between offers.

SARON (Swiss Average Rate Overnight)

SARON is Switzerland's risk-free overnight reference rate, calculated from secured repo transactions in Swiss francs; since 2022 it has fully replaced CHF Libor as the benchmark for floating-rate loans and mortgages.

Dividend

A dividend is a cash payment a company makes to its shareholders out of profits, typically distributed quarterly, semi-annually or annually in proportion to shares held.

WEF — Using Pension to Buy a Home

Wohneigentumsförderung (WEF) is the Swiss legal mechanism that lets you withdraw or pledge your Pillar 2 and Pillar 3a capital to buy, build or amortise a primary residence.

Term of the day

Amortization

Amortization is the gradual repayment of a loan's principal through scheduled instalments, where each payment covers both interest and a shrinking share of the original balance.

What is Amortization?
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Accounts Payable
Business

Accounts payable (AP) is the money a business owes its suppliers for goods or services received but not yet paid for, recorded as a current liability on the balance sheet.

Accounts Receivable
Business

Accounts receivable (AR) is the money owed to a business by its customers for goods or services delivered on credit but not yet paid for, recorded as a current asset on the balance sheet.

Adjustable-Rate Mortgage (ARM)
Real Estate

An adjustable-rate mortgage has an interest rate that periodically adjusts based on a reference index plus a margin, often after an initial fixed-rate period — exposing the borrower to rate risk in exchange for a lower starting rate.

Amortization
Real Estate

Amortization is the gradual repayment of a loan's principal through scheduled instalments, where each payment covers both interest and a shrinking share of the original balance.

Annuity
Personal Finance

An annuity is an insurance contract in which the buyer pays a premium (lump sum or instalments) and the insurer pays a series of guaranteed periodic payments — for a fixed period or for life — typically used for retirement income.

Appraisal
Real Estate

An appraisal is a professional, independent estimate of a property's market value, conducted by a licensed appraiser, used by lenders to size mortgages and by buyers and sellers to set prices.

APR
Banking

APR (Annual Percentage Rate) is the total yearly cost of a loan expressed as a percentage, including the nominal interest rate plus mandatory fees, allowing fair comparison between offers.

Asset Allocation
Investment

Asset allocation is the strategic decision about what percentage of a portfolio to hold in each major asset class — stocks, bonds, real estate, cash, alternatives — chosen to match the investor's return objective, risk tolerance and time horizon.

ATM (Automated Teller Machine)
Banking

An ATM is a self-service machine that lets bank customers withdraw cash, deposit notes or cheques, transfer between own accounts and check balances using a debit or credit card and a PIN, available 24/7 in most locations.

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Balance Sheet
Business

The balance sheet is a financial statement that shows a company's assets, liabilities and shareholders' equity at a single point in time, governed by the accounting equation Assets = Liabilities + Equity.

Bear Market
Investment

A bear market is a period during which broad stock prices fall at least 20% from a prior peak, typically lasting several months to a few years and accompanied by economic recession, weak corporate earnings and broad pessimism.

Bond
Investment

A bond is a debt security in which an investor lends money to a government or corporation for a defined term, in exchange for periodic interest payments (coupons) and repayment of the face value at maturity.

Break-Even Point
Business

The break-even point is the sales volume at which total revenue exactly covers total costs, producing neither profit nor loss; every unit sold beyond it generates profit.

Budget
Personal Finance

A budget is a written plan that allocates expected income to spending, saving and debt repayment categories over a defined period, used to control finances and reach goals.

Bull Market
Investment

A bull market is a prolonged period — typically months to years — during which stock prices rise persistently, conventionally defined as a gain of at least 20% from the prior trough, accompanied by investor optimism and rising economic activity.

Burn Rate
Business

Burn rate is the speed at which a company — typically an unprofitable startup — spends its cash reserves each month, measuring the pace of cash consumption.

BVG Pension (Occupational Pension Payment)
Swiss-Specific

The BVG pension is the periodic income paid out by a Swiss Pillar 2 pension fund at retirement, calculated by multiplying the saver's accumulated capital by the fund's conversion rate (Umwandlungssatz).

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Capital Expenditure (CapEx)
Business

Capital expenditure is money a business spends to acquire, upgrade or maintain long-lived physical assets such as buildings, machinery, vehicles or technology infrastructure, capitalised on the balance sheet and depreciated over their useful life.

Capital Gain
Investment

A capital gain is the profit realised when an asset (stock, fund unit, property) is sold for more than its purchase price; the loss in the opposite case is called a capital loss.

Capital Gains Tax
Tax

Capital gains tax is the tax due on the profit realised when you sell an asset — shares, bonds, real estate, crypto or a business — for more than you paid for it, with rules that differ sharply across European jurisdictions.

Capitalisation Rate (Cap Rate)
Real Estate

The capitalisation rate is the ratio of a property's net operating income to its current market value, used to compare the unlevered yield of investment properties and to convert income into value.

Cash Flow
Business

Cash flow is the net amount of cash moving into and out of a business during a period, measuring the actual liquidity created or consumed rather than accounting profit.

Cash Flow Statement
Business

The cash flow statement reports the actual cash entering and leaving a business over a period, split into operating, investing and financing activities.

Central Bank
Banking

A central bank is the public institution that issues a country's currency, sets monetary policy by adjusting the policy interest rate, supervises commercial banks and acts as lender of last resort during financial crises.

Certificate of Deposit (CD / Festgeld)
Banking

A certificate of deposit is a time-deposit bank product in which you lock a fixed amount of cash for a defined term (1 month to 10 years) in exchange for a guaranteed interest rate that is higher than a savings account.

Checking Account
Banking

A checking account is a demand-deposit bank account designed for everyday transactions — receiving salary, paying bills, using a debit card and withdrawing cash at ATMs — with funds available on demand and usually paying little or no interest.

Church Tax
Tax

Church tax (Kirchensteuer / impôt ecclésiastique) is an additional income or wealth tax collected by the state on behalf of recognised religious communities, levied on registered members of those communities.

Closing Costs
Real Estate

Closing costs are the various fees and expenses — beyond the property price — paid by buyer and seller at the completion of a real-estate transaction, typically 2–5% of the purchase price.

Compound Interest
Personal Finance

Compound interest is interest earned on both the original principal and on the interest that has previously been added to the account, producing exponential growth over time.

Corporate Tax
Tax

Corporate tax is the tax a company pays on its profits — revenues minus deductible business expenses, depreciation, interest and (often) loss carry-forwards — with European rates ranging from 9% in Hungary to 30% in some German municipalities.

Cost of Living
Personal Finance

The cost of living is the amount of money needed to maintain a certain standard of living in a particular place, covering housing, food, transport, healthcare, utilities, taxes and other essentials.

Credit Card
Banking

A credit card is a revolving credit instrument that lets you borrow from the card issuer at point of sale, repay the balance interest-free if cleared within the grace period, or carry the balance forward at an annual interest rate that is usually higher than 15%.

Credit Score
Personal Finance

A credit score is a numerical rating — typically 300 to 850 in the US — that summarises a borrower's creditworthiness based on credit history, used by lenders to decide loan approval and pricing.

Credit Utilisation
Personal Finance

Credit utilisation is the percentage of available credit on revolving accounts (credit cards, lines of credit) that is currently being used — a major component of credit scores, with lower being better.

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Debit Card
Banking

A debit card is a payment card linked directly to your checking account that authorises merchants and ATMs to withdraw funds from your available balance in real time, without extending any credit.

Debt Avalanche Method
Personal Finance

The debt avalanche method is a debt-repayment strategy in which the borrower pays minimums on every debt and channels all extra funds to the highest-interest-rate balance first, regardless of size.

Debt Snowball Method
Personal Finance

The debt snowball method is a debt-repayment strategy in which the borrower pays minimums on every debt and channels all extra funds to the smallest balance first, then rolls each freed payment into the next-smallest balance.

Debt-to-Income (DTI)
Real Estate

Debt-to-income is the percentage of a borrower's gross monthly income that goes toward debt payments, used by lenders to assess affordability and creditworthiness.

Deposit Insurance
Banking

Deposit insurance is a government or industry-backed guarantee that reimburses bank customers up to a defined limit (CHF 100,000 in Switzerland, EUR 100,000 in the EU) if their bank fails, designed to prevent bank runs and stabilise the financial system.

Depreciation
Business

Depreciation is the systematic allocation of the cost of a tangible long-lived asset over its useful life, reflecting wear and tear as an expense on the income statement.

Derivatives
Investment

Derivatives are financial contracts whose value derives from an underlying asset (stock, bond, currency, commodity, index, rate), used for hedging, speculation and access to exposures that would be inefficient or impossible to obtain directly.

Direct Debit
Banking

A direct debit is a recurring payment arrangement in which you authorise a company to pull a variable or fixed amount from your bank account on agreed dates, used for utility bills, insurance premiums, gym memberships and subscriptions.

Disability Insurance
Personal Finance

Disability insurance replaces a portion of the insured's income — typically 50–70% — if illness or injury prevents them from working, providing financial security during inability to earn.

Diversification
Investment

Diversification is the practice of spreading investments across many uncorrelated holdings — different companies, sectors, countries and asset classes — so that the failure of any one cannot destroy the portfolio.

Dividend
Investment

A dividend is a cash payment a company makes to its shareholders out of profits, typically distributed quarterly, semi-annually or annually in proportion to shares held.

Double Taxation
Tax

Double taxation occurs when the same income or capital is taxed twice — most commonly by two different countries claiming taxing rights — and is mitigated through bilateral tax treaties and domestic relief mechanisms.

Down Payment
Real Estate

A down payment is the upfront cash portion of a property purchase that the buyer contributes from their own savings, typically 10–25% of the price, with the remainder financed by a mortgage.

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FIRE Movement
Personal Finance

FIRE — Financial Independence, Retire Early — is a movement and lifestyle that uses aggressive saving (typically 50–70% of income) and low-cost index investing to build enough wealth to retire decades before the traditional age.

Fixed Costs
Business

Fixed costs are business expenses that do not change with the level of output or sales in the short term — they must be paid whether you sell zero units or thousands.

Fixed-Rate Mortgage
Real Estate

A fixed-rate mortgage is a home loan with an interest rate that remains constant for the full term — typically 5, 10, 15, 25 or 30 years — providing predictable monthly payments and protection against rate rises.

Foreclosure
Real Estate

Foreclosure is the legal process by which a lender repossesses a mortgaged property after the borrower fails to keep up payments, sells it, and uses the proceeds to recover the outstanding loan balance.

Fractional Reserve Banking
Banking

Fractional reserve banking is the system in which commercial banks keep only a small fraction of customer deposits as cash reserves and lend the remainder out, thereby creating new money each time a loan is granted.

Free Cash Flow
Business

Free cash flow (FCF) is the cash a business generates from operations after deducting the capital expenditures needed to maintain or expand its asset base — the cash truly available to shareholders, lenders and reinvestment.

Freehold
Real Estate

Freehold is the most absolute form of property ownership, granting the holder unlimited time of possession of the land and any buildings on it, subject only to statutory obligations such as zoning, taxes and easements.

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IBAN (International Bank Account Number)
Banking

An IBAN is a standardised international account identifier of up to 34 alphanumeric characters that uniquely identifies a bank account across borders, combining the country code, two check digits and the domestic account number.

Income Statement
Business

The income statement (or profit and loss statement, P&L) reports a company's revenues, expenses and profits over a specific period, showing whether the business made money and how.

Income Tax
Tax

Income tax is a tax levied by governments on the wages, salaries, business profits and other earnings of individuals and corporations, usually charged at progressive rates that rise with the amount of income.

Index Fund
Investment

An index fund is a mutual fund or ETF designed to track the performance of a specific market index (S&P 500, SPI, MSCI World) by holding the same constituents in the same weightings, at a fraction of the cost of an actively managed fund.

Inflation
Personal Finance

Inflation is the rate at which the general price level of goods and services rises over time, reducing the purchasing power of money.

Inheritance Tax
Tax

Inheritance tax (or estate tax) is a tax on assets transferred from a deceased person to their heirs, calculated either on the deceased's estate as a whole or on each beneficiary's share, with rates depending on the relationship to the deceased.

Interest Rate
Banking

An interest rate is the cost of borrowing money or the return for saving it, expressed as an annual percentage of the principal amount.

Inventory Turnover
Business

Inventory turnover is the number of times a company sells and replaces its stock over a period, measuring how efficiently inventory is converted into sales.

IPO (Initial Public Offering)
Investment

An IPO is the first time a private company sells shares to the public on a stock exchange, raising capital, providing liquidity to early investors and subjecting itself to listing-disclosure rules going forward.

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P/E Ratio (Price-to-Earnings)
Investment

The price-to-earnings ratio divides a stock's market price by its earnings per share, expressing how many years of current profits an investor is paying for one share — the most-cited valuation metric in equity analysis.

Payroll Tax
Tax

Payroll tax is the broad term for taxes and social contributions calculated on wages — including pension, health, unemployment and family-allowance contributions — typically split between employer and employee and remitted by the employer.

Pillar 1 (AHV/AVS)
Swiss-Specific

Pillar 1 (AHV/AVS) is Switzerland's mandatory state pension, financed by payroll contributions to provide a basic retirement, survivor and disability income for everyone living or working in the country.

Pillar 2 (BVG/LPP)
Swiss-Specific

Pillar 2 (BVG/LPP) is Switzerland's mandatory occupational pension scheme, funded jointly by employee and employer, designed to top up AHV so total retirement income reaches about 60% of pre-retirement salary.

Pillar 3a
Swiss-Specific

Pillar 3a is Switzerland's tax-advantaged private retirement account, where annual contributions are fully deductible from taxable income and the capital is locked until retirement (with limited early-withdrawal exceptions).

Pillar 3b
Swiss-Specific

Pillar 3b is the 'free' private savings layer in Switzerland — any savings, securities or life insurance held privately that does not enjoy Pillar 3a's tax deduction but also has no withdrawal restrictions.

Portfolio
Investment

A portfolio is the complete collection of investments held by an investor, designed as a whole to balance return and risk in line with the investor's goals, time horizon and tolerance for loss.

Prime Rate
Banking

The prime rate is the interest rate that commercial banks charge their most creditworthy corporate customers, used worldwide as the benchmark from which retail loan and credit-card rates are derived by adding a risk premium.

Private Mortgage Insurance (PMI)
Real Estate

Private mortgage insurance is an insurance policy required by US lenders when a borrower puts down less than 20% on a conventional mortgage, protecting the lender (not the borrower) against default.

Profit Margin
Business

Profit margin is a profitability ratio that expresses a company's profit as a percentage of its revenue, showing how many cents of profit are produced by each franc, euro or dollar of sales.

Property Management
Real Estate

Property management is the operation, control and oversight of real estate on behalf of the owner — covering tenant relations, rent collection, maintenance, repairs and regulatory compliance, usually performed by a professional firm for a fee.

Property Tax
Tax

Property tax is an annual tax levied by a local or regional government on the assessed value of real estate — land and buildings — paid by the owner and used to fund municipal services.

Property Value
Real Estate

Property value is the estimated worth of a piece of real estate, determined by appraisal, comparable sales or income approach, and used for sale pricing, mortgage underwriting, taxation and insurance.

Purchasing Power
Personal Finance

Purchasing power is the amount of goods and services that a unit of currency can buy, used to compare wealth across time (inflation) and across places (currency exchange plus local prices).

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Refinance
Real Estate

Refinancing is the process of replacing an existing mortgage with a new one — typically to obtain a lower interest rate, change the loan term, switch between fixed and adjustable, or cash out equity.

REIT (Real Estate Investment Trust)
Investment

A REIT is a listed company that owns, operates or finances income-producing real estate, required by law to distribute at least 90% of taxable income to shareholders as dividends, offering retail investors stock-like access to commercial property returns.

Rental Yield
Real Estate

Rental yield is the annual rental income from an investment property expressed as a percentage of the property's value, used to compare the income performance of different real-estate investments.

Retirement Planning
Personal Finance

Retirement planning is the process of determining retirement income goals and the actions and decisions necessary to achieve them — covering savings, investments, insurance, taxes and withdrawal strategy.

Return on Equity (ROE)
Business

Return on equity is a profitability ratio that measures the net profit a company generates relative to its shareholders' equity, showing how efficiently management uses equity capital.

Return on Investment (ROI)
Business

Return on investment is a profitability ratio that measures the gain or loss generated by an investment relative to its cost, usually expressed as a percentage of the amount invested.

Revenue
Business

Revenue is the total income a business generates from selling goods or services before any costs or expenses are deducted, also called the top line.

Risk Tolerance
Investment

Risk tolerance is the level of investment loss an investor is psychologically and financially able to bear without abandoning the plan, used to determine the right mix of stocks, bonds and cash in a portfolio.

Robo-Advisor
Investment

A robo-advisor is an automated investment service that builds and manages a diversified ETF portfolio based on a client questionnaire, rebalances and tax-optimises automatically, and charges a fraction of the fee of a traditional human adviser.

Roth IRA
Personal Finance

A Roth IRA is a US individual retirement account funded with after-tax dollars, in which contributions and earnings grow tax-free and qualified withdrawals in retirement are entirely tax-free.

Runway
Business

Runway is the number of months a business — usually a startup — can continue operating at its current burn rate before it runs out of cash.

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SARON (Swiss Average Rate Overnight)
Swiss-Specific

SARON is Switzerland's risk-free overnight reference rate, calculated from secured repo transactions in Swiss francs; since 2022 it has fully replaced CHF Libor as the benchmark for floating-rate loans and mortgages.

Savings Account
Banking

A savings account is an interest-bearing bank deposit designed to hold cash you do not need immediately, paying a higher rate than a checking account in exchange for limits on the number of free withdrawals per month or year.

Savings Rate
Personal Finance

The savings rate is the percentage of after-tax income that a household saves rather than spends, a key driver of long-term wealth and the timeline to financial independence.

Short Selling
Investment

Short selling is a strategy that profits from a fall in a security's price by borrowing shares from a broker, selling them at the current price, and buying them back later at a lower price to return to the lender — the inverse of conventional 'going long'.

SNB Policy Rate
Swiss-Specific

The SNB policy rate is the interest rate set by the Swiss National Bank as its main monetary-policy instrument; it steers short-term Swiss-franc money-market rates, especially the Saron benchmark.

Social Security
Personal Finance

Social Security in the US (AHV/AVS in Switzerland, NI in the UK) is a government-run social-insurance programme that provides retirement, disability and survivor benefits to qualifying workers and their families, funded through payroll taxes.

Stamp Duty
Real Estate

Stamp duty is a tax levied on legal documents — most notably on property transfers — calculated as a percentage of the transaction value and paid by the buyer to register the transaction.

Standing Order
Banking

A standing order is a customer-initiated instruction to your bank to transfer a fixed amount to the same beneficiary on the same day of each month (or week, quarter, year), used for rent, savings sweeps and regular allowances.

Stock (Share / Equity)
Investment

A stock is a unit of ownership in a publicly listed company that entitles the holder to a proportional claim on the firm's assets and future profits, traded on exchanges like SIX, Xetra, Euronext or NYSE.

SWIFT / BIC Code
Banking

A SWIFT code, also called a BIC (Bank Identifier Code), is an 8 or 11-character identifier that uniquely names a financial institution worldwide, used to route international payments to the correct bank, branch and country.

Swiss Franc (CHF)
Swiss-Specific

The Swiss franc (CHF) is the official currency of Switzerland and Liechtenstein, internationally regarded as a safe-haven currency thanks to Switzerland's political stability, low inflation and large current-account surplus.

Swiss Health Insurance Premia
Swiss-Specific

Swiss basic health-insurance premiums are mandatory monthly premiums that every resident must pay out of pocket to a private insurer of their choice; they are not deducted from salary and vary by canton, age and chosen model.

Swiss Tax Return (Steuererklärung)
Swiss-Specific

The Swiss tax return (Steuererklärung / déclaration d'impôt) is the annual filing every resident not taxed at source must submit to their canton, declaring worldwide income and wealth as of 31 December.

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Tax Allowance
Tax

A tax allowance (or personal exemption) is a fixed amount of income that is tax-free for everyone — or for specific categories of taxpayer such as the elderly, parents or low earners — applied before the tax brackets kick in.

Tax Avoidance vs Tax Evasion
Tax

Tax avoidance is the legal arrangement of one's affairs to minimise tax liability within the law, while tax evasion is the illegal concealment of income or assets to escape tax — the difference being legality, not morality.

Tax Bracket
Tax

A tax bracket is a range of income taxed at a specific rate; in a progressive tax system, higher income falls into higher brackets with higher marginal rates.

Tax Credit
Tax

A tax credit is an amount subtracted directly from the tax you owe — not from taxable income — so each franc or euro of credit reduces your tax bill by exactly one franc or euro, making credits far more valuable than equivalent deductions.

Tax Deduction
Tax

A tax deduction is an expense or contribution that you can subtract from your gross income before calculating taxable income, reducing your tax bill by the deduction multiplied by your marginal tax rate.

Tax Haven
Tax

A tax haven is a jurisdiction that offers very low or zero taxation, strict financial secrecy and minimal substance requirements, used legally for international structuring and illegally for tax evasion and money laundering.

Tax Residency
Tax

Tax residency determines which country has the primary right to tax your worldwide income, based on rules such as days physically present, location of permanent home, centre of vital interests and family location.

Tax Return
Tax

A tax return is the annual declaration filed with the tax authority that reports your income, deductions, credits and tax already paid, used to calculate your final tax liability and any refund or top-up due.

Tax Treaty
Tax

A tax treaty (double-taxation agreement) is a bilateral or multilateral agreement between countries that allocates taxing rights over cross-border income and provides procedures to relieve double taxation, exchange information and resolve disputes.

Term Life Insurance
Personal Finance

Term life insurance is the simplest form of life insurance: it pays a fixed death benefit if the insured dies within a defined term (typically 10, 20 or 30 years), with no cash-value or savings component.

Title Insurance
Real Estate

Title insurance is a one-time premium insurance policy that protects property buyers and lenders against financial loss from defects in the title to the property — such as undisclosed liens, fraud, or competing ownership claims.

Transfer Pricing
Tax

Transfer pricing is the set of rules that determines the prices at which related companies within a multinational group charge each other for goods, services, intangibles and financing, requiring those prices to reflect what independent parties would have agreed (the 'arm's length principle').

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