The words, in plain English.

A

Actively managed fund

A fund whose managers choose investments to try to beat a market index, usually for a higher fee than an index fund.

Explained in What an ETF actually is (Start Here).

Adjusted cost base (ACB)

What you paid for an investment, plus costs to buy it such as commissions. In a non-registered account, your capital gain is the sale price minus the ACB. When you buy the same investment at different prices, the ACB is the average cost.

Explained in Outside the shelters (Accounts and Tax).

All-in-one ETF

Also called an asset allocation ETF. A single fund that holds a global mix of stock and bond funds and rebalances itself. Usually labelled by its share of stocks, such as 80% or 60%.

Explained in What an ETF actually is (Start Here).

B

Bond

A loan to a government or company that pays interest and returns the principal at the end of its term.

Explained in What an ETF actually is (Start Here).

C

Capital gain

The profit when you sell an investment for more than its adjusted cost base. In a non-registered account, half of a capital gain is taxable (CRA guide for 2025).

Explained in Outside the shelters (Accounts and Tax).

Carry-forward

Unused contribution room that moves to the next year. TFSA and RRSP room carry forward indefinitely. FHSA room carries forward up to $8,000.

Explained in The FHSA clock (Accounts and Tax).

Contribution room

The amount you are allowed to put into a registered account. Each account calculates it differently.

Explained in Know your three containers (Start Here).

Covered-call fund

A fund that owns stocks and sells call options on them. It collects cash now and gives up gains above a set level.

Explained in Yield is not return (Know What You Own).

CRA account (My Account)

The Canada Revenue Agency's online portal. It shows your notice of assessment, RRSP deduction limit and TFSA information. CRA says the TFSA figure is updated once a year, in the spring, with the previous year's transactions.

Explained in TFSA room, exactly (Accounts and Tax).

Currency hedging

Contracts a fund uses to cancel out most of the effect of exchange-rate moves. Hedged funds usually say "CAD-hedged" in the name.

Explained in The currency inside your fund (Know What You Own).

D

Distribution

A payout from a fund to its holders. It can be made up of dividends, interest, capital gains and return of capital.

Explained in Yield is not return (Know What You Own).

Diversification

Spreading money across many investments so that no single one decides your result. It reduces the risk from one company. It does not remove the risk of the whole market falling.

Explained in What an ETF actually is (Start Here).

Dividend

A share of a company's profit paid to its shareholders.

Explained in Outside the shelters (Accounts and Tax).

Dividend tax credit

A credit that lowers the tax on dividends from taxable Canadian corporations held in a non-registered account. Foreign dividends don't qualify.

Explained in Outside the shelters (Accounts and Tax).

Dollar-cost averaging

Investing the same amount on a regular schedule, whatever the market is doing. The deposit buys more units when prices are low and fewer when they are high.

Explained in Build the habit (Start Here).

E

Earned income

Mostly employment and self-employment income. Your new RRSP room each year is 18% of the previous year's earned income, up to an annual maximum.

Explained in The RRSP is a deferral (Accounts and Tax).

ETF (exchange-traded fund)

A fund that holds a basket of stocks, bonds or both, and trades on a stock exchange like a single share.

Explained in What an ETF actually is (Start Here).

ETF Facts

A short, standardized document every ETF sold in Canada must publish. It shows what the fund invests in, its top 10 holdings, its fees, its risk rating and its past returns. Mutual funds have Fund Facts.

Explained in What an ETF actually is (Start Here).

Excess amount (over-contribution)

Money contributed beyond your room. CRA charges 1% a month on the highest excess in a TFSA or FHSA. For an RRSP the charge applies above a $2,000 buffer.

Explained in TFSA room, exactly (Accounts and Tax).

F

FHSA (First Home Savings Account)

A registered account for a first home. Contributions are deductible, growth is tax-free and a qualifying withdrawal is tax-free. $8,000 a year, $40,000 lifetime.

Explained in The FHSA clock (Accounts and Tax).

First-time home buyer

For the FHSA and the Home Buyers' Plan: someone who has not lived, this year or in the previous four calendar years, in a home that they or their current spouse or partner owned as a main residence.

Explained in The FHSA clock (Accounts and Tax).

G

GIC (Guaranteed Investment Certificate)

A deposit that pays a set interest rate for a set term. The money is usually locked in until the term ends.

Explained in Look inside the container (Start Here).

H

Home bias

The tendency of investors to hold far more of their own country's stocks than that country's share of the world market.

Explained in Canada is a small slice (Know What You Own).

Home Buyers' Plan (HBP)

A program that lets a first-time buyer withdraw up to $60,000 from an RRSP without tax, then repay it to the RRSP over up to 15 years.

Explained in The first-home stack (Accounts and Tax).

I

Index

A published list of investments that represents a market, such as the largest companies in Canada. An index fund holds what is on the list.

Explained in What an ETF actually is (Start Here).

Index fund

A fund that aims to match a market index by holding what is in it, instead of trying to beat it.

Explained in What an ETF actually is (Start Here).

L

Look-through

Opening up a fund to see the companies, countries and industries it actually holds, including what is inside any funds it owns.

Explained in One ticket, thousands of companies (Know What You Own).

M

Marginal tax rate

The rate of tax on your next dollar of income, combining federal and provincial tax. It is the rate that decides what an RRSP deduction is worth to you.

Explained in The RRSP is a deferral (Accounts and Tax).

Market-cap weighting

Sizing each holding in a fund by the company's total market value, so larger companies take a larger share of the fund.

Explained in The top 10 (Know What You Own).

MER (management expense ratio)

A fund's yearly cost, shown as a percentage of your balance. It is taken inside the fund, so you see it as slightly lower returns, not as a bill.

Explained in Fees: the slow leak (Start Here).

N

Non-registered account

A regular investment account with no tax shelter. Interest, dividends and capital gains are taxable, and you track your own cost base.

Explained in Outside the shelters (Accounts and Tax).

Notice of assessment

The summary CRA sends after it processes your tax return. It shows your RRSP deduction limit for the next year.

Explained in The RRSP is a deferral (Accounts and Tax).

Q

Qualifying withdrawal

A tax-free FHSA withdrawal. It requires, among other conditions, a written agreement to buy or build a home in Canada that you will live in.

Explained in The FHSA clock (Accounts and Tax).

R

Rebalancing

Bringing a portfolio back to its intended mix after markets move it away. All-in-one ETFs do this for you.

Explained in What an ETF actually is (Start Here).

Registered account

An account registered with the government that shelters investments from tax. The TFSA, FHSA and RRSP are the main ones.

Explained in Know your three containers (Start Here).

Resident of Canada (for tax)

Someone with enough residential ties to Canada, such as a home or family here. For most newcomers it begins the first day they live in Canada. Account eligibility follows this status, not citizenship.

Explained in New to Canada (Accounts and Tax).

Return of capital

Part of a fund's payout that is your own investment handed back, not income the fund earned. In a non-registered account it lowers your adjusted cost base.

Explained in Yield is not return (Know What You Own).

RRSP (Registered Retirement Savings Plan)

A registered account for retirement. Contributions are deductible, growth is tax-deferred and withdrawals are taxed as income.

Explained in The RRSP is a deferral (Accounts and Tax).

RRSP deduction limit

The most you can deduct for RRSP contributions in a year: unused room, plus 18% of last year's earned income up to the annual maximum, minus any pension adjustment.

Explained in The RRSP is a deferral (Accounts and Tax).

S

Stock

A share of ownership in one company.

Explained in What an ETF actually is (Start Here).

Superficial loss

A capital loss you can't claim because you, or someone affiliated with you, bought the same investment within 30 days before or after the sale and still hold it. The loss is added to the cost of the replacement.

Explained in Outside the shelters (Accounts and Tax).

T

Tax deduction

An amount subtracted from your income before tax is calculated. RRSP and FHSA contributions are deductible. TFSA contributions are not.

Explained in The RRSP is a deferral (Accounts and Tax).

TFSA (Tax-Free Savings Account)

A registered account for any goal. Contributions are made with after-tax money, growth is tax-free and withdrawals are tax-free at any time.

Explained in Know your three containers (Start Here).

Total return

What an investment earned in full: the change in its price plus any distributions paid.

Explained in Yield is not return (Know What You Own).

W

Withholding tax

Tax held back at the source. Two common cases: the United States usually withholds 15% of dividends paid to Canadian investors, and Canadian banks hold back tax on RRSP withdrawals.

Explained in The currency inside your fund (Know What You Own).

Y

Yield

A fund's yearly payout as a percentage of its price. It measures cash paid out, not what you earned.

Explained in Yield is not return (Know What You Own).