Glossary of terms

Indexes are tracking devices that measure the ups and downs of various market prices. The term 'indexed by inflation' means the tracking of inflation as it falls and rises over time.

Inflation - is the rate at which the prices of goods and services increase over time. The effect of this is to reduce the purchasing power of money. For example, if you could buy something with $1000 now, in one years time, you would need $1020 to buy that same thing (assuming 2% inflation).

Increasing an amount of money each year by the same amount as inflation each year. For example, if you saved $1,000 last year, and the rate of inflation for the 12 months was $2%, you should increase this year's savings by 2%. So $1,000 inflation adjusted, is now $1,020. You make an inflation adjustment to maintain the value of your savings.

Money paid in return for the use of money. If the bank is using your money (in a savings account) they pay you interest. If you are using the bank's money (via a loan), you pay the bank money.

The amount of interest you pay on a loan or are paid for an investment, usually expressed in a percentage.

A way to use your money to make it grow.