Publisher: WM STUDIOS. Last updated: 26 August 2026. These definitions are descriptive. They are neither investment advice nor tax advice, and the tax rules referred to change over time.
Wealth and liabilities
Gross wealth
The total of what you hold, before any loan is deducted: financial assets, property, any business assets, and the rest. See calculating net worth.
Net worth
Gross wealth less the principal you still owe on your borrowings. It is the only one of the two figures that answers the question « what is actually mine today ».
Outstanding principal
What it would cost to settle a loan today. That amount, and not the sum of the payments still to come, is your debt: the gap between the two is future interest that you do not owe yet. See amortisation schedules.
Amortisation schedule
A loan's repayment plan, instalment by instalment, splitting each one into an interest share and a principal share. The interest share falls, because it is computed on a balance that is shrinking.
Nominal rate
The rate used to build the amortisation schedule and compute the instalments. It includes neither insurance nor fees.
Annual percentage rate
The APR measures the total cost of the credit, including interest and all mandatory fees. It is not used to compute the instalments.
Interest only loan
A loan on which you pay interest alone for the whole term, repaying the principal in one go at maturity. The outstanding principal therefore stays equal to the amount borrowed until the very last day.
Deferred amortisation
An initial period during which no principal is repaid. If the deferral is total, the interest itself is capitalised and the debt grows before it starts to fall.
Early repayment indemnity
The amount a lender may charge if you settle a loan ahead of schedule. For a French residential mortgage it is capped by law: six months of interest on the capital repaid, or 3 % of the outstanding principal, whichever is lower.
Surrender value
For a life insurance contract, the amount you would receive by exiting today. That is what counts towards wealth, not the total of your contributions.
Share of ownership
The fraction of a jointly held asset that is yours. Held jointly or as a couple, your personal net worth covers only your share, assets and liabilities alike.
Securities and valuation
Weighted average acquisition price
The average of your purchase prices weighted by quantity, fees included. It is the method French law requires for computing a gain on securities of the same nature. A sale does not change it; only new acquisitions do. Also called weighted average cost or cost basis. See the dedicated page.
FIFO
First in, first out. The convention under which you are deemed to sell the oldest shares first, at their actual purchase price. It applies in other countries, but not to the French computation of gains on securities.
Unrealised gain
The difference between a holding's current value and its cost basis, as long as nothing is sold. It is not taxable, since it is not realised.
Realised gain
The difference recorded on an actual disposal, between the sale price and the cost basis of the securities sold. That is the one that goes into a tax return.
Net asset value
The price of a fund unit, computed periodically, often once a day, from the value of the assets the fund holds. A fund therefore has no continuous market price.
Accumulating fund
A fund that distributes nothing: the dividends of the securities it holds are reinvested inside the fund. There is no flow to track, and the counterpart appears in the net asset value.
Distributing fund
A fund that periodically pays out the income of the securities it holds. Those payments are tracked like dividends.
ISIN
A twelve character international code identifying a security uniquely. More stable than a ticker symbol, which varies by listing venue, or a name, which changes through corporate actions.
Corporate action
An event decided by the issuer that changes your position without being a purchase or a sale: split, consolidation, spin-off, rights distribution, scrip dividend. This is what defeats most history migrations. See importing statements.
Split and consolidation
The number of shares changes, the total value does not. Without the ratio applied, the cost of earlier lots cannot be reconstructed from the file alone.
Spin-off
A company transfers a business to a new entity whose shares you receive, without paying anything. A part of your original investment is economically transferred to them, which an import has to reflect or both holdings end up wrong.
Sub-unit currency
Some venues quote in hundredths of a unit, for example pence rather than pounds. Treating a pence price as a pound multiplies the line by a hundred.
Bid-ask spread
The difference, at a given moment, between the best price someone will sell at and the best price someone will buy at. It is paid on every transaction, in both directions, and widens on thinly traded securities and at quiet hours. It appears on no fee statement.
Dollar cost averaging
Investing a fixed amount at regular intervals, without regard to the price of the day. Because the amount is fixed and the price varies, the quantity bought varies: more units when the price is low, fewer when it is high. See the guide on dollar cost averaging.
Harmonic mean
The reciprocal of the mean of the reciprocals. It is the average that describes the price paid by fixed-amount contributions, and it is always less than or equal to the ordinary average of the prices. On six prices of €100, €80, €125, €100, €90 and €110 it comes to €98.84, where the ordinary average comes to €100.83.
Index funds and ETFs
ETF
Exchange traded fund, also called a tracker. Its units are bought and sold continuously during the session, like a share, and its management consists of reproducing an index rather than selecting securities. See the guide on ETFs.
Index
A list of securities with weights, published and maintained by an index provider under a publicly stated rule. An index is not investable as such: it bears no charges, no tax and no liquidity constraint. It is the reference the fund tries to reproduce, not what the fund achieves.
UCITS
The European directive that imposes rules on a fund's diversification, liquidity and custody of assets. Its most important consequence in practice: the fund's securities are held by a custodian separate from the asset manager and do not appear on the manager's balance sheet.
Physical replication
The fund genuinely holds the index constituents, either in full or as a sample chosen to behave like the index. What it tracks and what it owns are then the same thing.
Synthetic replication
The fund holds a basket of securities with no necessary link to the index, and exchanges that basket's return for the index return with a counterparty, through a contract known as a swap. Tracking is often tighter, including on markets that are hard to access, and counterparty risk enters the equation.
Ongoing charges
The annual percentage a fund takes from its assets, sometimes shown as TER (total expense ratio). It appears on no statement and is never debited: it is removed continuously from the net asset value, and so shows up only as a performance gap against the index.
Tracking difference
The performance gap observed between a fund and its index over a given period. Usually negative, by the amount of the charges and frictions, it can be positive, for instance when the fund earns income from lending its securities.
Tracking error
How regular that gap is, measured by its standard deviation. A fund consistently 0.20% behind is highly predictable; a fund sometimes 0.4% ahead and sometimes 0.5% behind is much less so, even if its average is better. The two measures answer different questions and are often confused.
Premium and discount
The gap between a unit's market price and its net asset value. It is called a premium when the price is above and a discount when it is below. In calm conditions the gap is a few hundredths of a percent on heavily traded indices; it widens when the underlying market is closed or very unsettled.
Currency hedging
A mechanism built into certain share classes, flagged as hedged, which largely neutralises the effect of exchange rate moves between the currency of the securities held and that of the investor. Its cost is borne by the fund and varies with the interest rate differential between the two currencies. Hedging gives up the favourable move as much as it protects from the adverse one.
Securities lending
The practice by which a fund temporarily lends the securities it holds for a fee, against collateral. It is regulated and collateralised, it improves the tracking difference, and it is disclosed in the fund's documents.
KID
Key information document (DIC in French), a regulatory document of three pages at most that the issuer must publish and keep current for each share class. Its structure is prescribed, which makes two funds comparable line by line: nature of the product, risk indicator, performance scenarios, costs, recommended holding period, how to exit.
Summary risk indicator
A score from 1 to 7 shown on the KID, derived from past volatility and credit risk. It measures the size of the swings observed, not the probability of losing capital, and it is computed on past data.
Dividends and flows
Ex-date
The day from which the share trades without the right to the announced dividend. It is the key moment that determines eligibility for the dividend: you must hold before it. See tracking dividends.
Record date
The issuer's internal checkpoint, which fixes the list of entitled shareholders. It follows the ex-date.
Payment date
The day the money reaches your account, often several days or weeks after the ex-date.
Withholding tax
A deduction made by the issuer's country before any payment, for a foreign security. It explains the gap between the announced gross figure and the net received.
Current yield
The annual dividend divided by the current price. It is what compares securities with each other, since it does not depend on your history.
Yield on cost
The annual dividend divided by your cost basis. It describes your position and compares only with itself over time. On the same holding at the same instant, the two yields differ, sometimes by several points.
Reinvestment
A dividend received and immediately used to buy shares. That is two transactions: income, then a purchase that changes your cost basis.
Return of capital
A distribution that is not income but a return of part of your investment. Treated as a dividend, it inflates the apparent yield when it ought to reduce the cost basis.
Total return
The measure that adds price movement and payments received together. It is the only coherent one, since a dividend is not added on top of a security's performance: it is part of it.
Taxation
IFU
Imprimé fiscal unique. The annual statement your French broker sends you, covering disposals, dividends and deductions. It is the reference document for a tax return: amounts computed by a tracking tool are indicative and meant to be cross-checked against it.
Flat tax
Prélèvement forfaitaire unique. A fixed rate taxation of investment income and gains, made up of an income tax component and social levies. At the date this page was updated the total stands at 31.4 % (12.8 % income tax and 18.6 % social levies since 2026). Some products, such as life insurance, home-savings plans and property income, keep social levies at 17.2 %. An option for the progressive scale exists.
Social levies
The social component of the taxation of investment income, distinct from income tax. It remains due in certain cases where income tax is not.
Allowance
A reduction applied to a taxable base before tax is computed. Whether one exists, at what rate and on what conditions depends on the regime concerned.
Loss carry forward
The mechanism allowing a loss to be set against gains of the same nature, with any unused balance carried forward to later years, within the limit the law provides.
Form 2074
The French return detailing the computation of gains on disposals of securities, whose results are carried across to the income tax return.
PEA
Plan d'épargne en actions. A French wrapper in which disposals are not taxed transaction by transaction: withdrawal from the plan triggers taxation, under its own rules on duration. One plan per person.
Ordinary securities account
An account with no particular tax wrapper, where each disposal generates a gain or a loss taxable in the year it is realised.
Financial transaction tax
A tax applied to the purchase of certain securities, which forms part of the acquisition price and therefore reduces the taxable gain.
Life insurance
A French savings contract in which the sums paid in are invested in options selected by the insurer, a closed list. Gains are not taxed as long as nothing is withdrawn, and the tax treatment on exit is specific to the contract. One point worth knowing: two layers of charges sit on top of one another, those of the underlying options and those of the wrapper, and their total is never shown added up anywhere.
Projection
Monte Carlo simulation
A method that, instead of applying a constant return, draws thousands of paths by picking a return at random each year from a chosen distribution. It gives a spread of outcomes, not a forecast. See the dedicated page.
Percentile
A threshold in the results of a simulation. « In 10 % of simulations » describes a property of the model under the assumptions chosen, not a probability about your life.
Sequence risk
The fact that the order of returns changes the outcome as soon as there are withdrawals, at an identical average return. With no withdrawals the order has no effect, since multiplication is commutative.
Volatility
A measure of how widely returns scatter around their mean. In a simulation it is an assumption you choose, not an observation.
Model risk
The risk that the chosen distribution describes reality poorly. Choosing a distribution already decides part of the outcome, and no number of additional draws reduces that risk.
Compound interest
The fact that gains from one period themselves produce gains in the periods that follow, which makes the progression non-linear. The symmetrical and often overlooked consequence: an amount taken out in one year, in charges for instance, produces nothing in the years that follow. See the guide on compound interest.
Sources
The wealth definitions follow the Insee nomenclature, the tax definitions refer to the texts cited in the corresponding pages, and the projection notions are described in the methodology page. Tax rules change: check the state of the law at the date that concerns you.
- Insee, definition of net worth, in French.
- French Code général des impôts, article 150-0 D: weighted average price and acquisition costs, in French.
- French Consumer Code, article R313-25: cap on the early repayment indemnity, in French.
Further reading
The guides hub develops each of these subjects, and the frequently asked questions cover how the application works.