Throughout the website you'll find lots of investment references. Here we've given a more detailed explanation of some of the terms that we often get asked about.

You can also find more investment information in the resources section.

• Equities: Investing in equities means buying a share in the profits of a business. Equities can make money for you in 2 ways: they pay an income, known as a dividend, usually twice a year, and they increase (or decrease) in value. So when you sell equity, you may get more or less than you paid for it. Hopefully more! This is known as capital growth.
  
  The price of equities tends to go up and down quite a lot over the short term - say, within a five year period. But over the longer term, equities have, historically, beaten inflation, which is what you need if you want your money to increase in value in real terms.
• Bonds: When you buy bonds you're effectively lending your money out, usually to the government but sometimes to large companies. Government bonds are often referred to as gilts or gilt-edged stock. Large companies issue bonds to raise money to develop their business. In return for your money, the borrower agrees to pay you a fixed rate of interest over a set period. So, you get an income in the form of interest on the loan and, at the end of that period, you get your money back. For example, buying a 5% Treasury stock 2012 would pay interest at 5% every six months until 2012, when the government would repay the loan.
  
  Bonds also have a capital value that moves up or down in relation to interest rates. When interest rates are high, the capital value goes down. When they're low, it goes up. So you can also make money from bonds by selling them for more than you paid for them.
• Cash: Cash is cash. If you invest in a cash-based fund, such as a unit trust, you're investing in a fund that makes money by gaining interest. The difference between the cash in your bank account and the cash in a unit trust is that the pool of cash in a unit trust is huge. That means you can get a better rate of interest than is generally available from, say, a savings account.
• Passively managed funds: Passive fund management (or 'tracking') means aiming to match the returns of stock markets by holding almost all of the investments included in a particular index, such as the FTSE 100 or the NASDAQ. This is also known as tracking the index. Passively managed funds normally have lower charges than actively managed funds as there's less work for the investment managers to do.
• Actively managed funds: Active investing means aiming to out-perform the stock market indices by making individual decisions on which shares to own. There's more risk with an active strategy than a passive strategy because your investment returns depend, to some extent, on the skill of the people who manage the fund. The charges on actively managed funds tend to be higher than the charges on passively managed funds as the investment managers have to do more research.
• Benchmarks: A benchmark is simply a standard used to compare investment performance. For example, we might use the FTSE All-share index as a benchmark, then set a target for the investment manager to out-perform it by 1% each year.