Glossary

Each word in two or three sentences that stand on their own. The article that explains it in depth is shown when there is one.

22 entries, in alphabetical order.Search the library

adjusted cost base(ACB)

Also called: tax cost · PBR (in French)

The adjusted cost base is the tax notion of a security's cost, the one that as a general rule serves to calculate the capital gain in a non-registered account. It starts from the same calculation as the average cost, but is normally computed per security, across all accounts at all of your brokers, and certain situations adjust it — acquisition fees, superficial losses, certain distributions. That is why a broker's average price, or Everyfolio's average cost, is not necessarily your ACB.

The article that explains itSee also: average cost, capital gain, superficial loss

average cost

Also called: average price (on some statements) · weighted average cost · coût moyen (in French)

The average cost is the total cost of your purchases of a security, purchase fees included, divided by the number of units you still hold. A sale does not change it: it removes units at the average cost and realizes a gain or loss on the difference. It is the figure Everyfolio shows; the adjusted cost base, for tax, starts from the same calculation with more rules.

The article that explains itSee also: adjusted cost base, realized gain, unrealized gain

bid-ask spread

Also called: spread · bid-offer spread · écart acheteur-vendeur (in French)

At every moment, a security's order book shows a best buyer and a best seller; the gap between their two prices is the bid-ask spread. It is an implicit transaction cost: buying at the seller's price and immediately selling at the buyer's price loses the spread, without the quote having moved. It is narrow for a heavily traded security, wide for a thinly traded one, and does not exist for a mutual fund, whose price is calculated rather than negotiated.

The article that explains itSee also: market order, limit order, net asset value

broker

Also called: brokerage · investment dealer · courtier (in French)

A broker is the intermediary through which securities are bought and sold on an exchange, and which then holds them for your account, normally segregated from its own assets. It keeps the account, produces the statement and tax slips and executes orders; it does not set the price, which comes from the market. In Canada, investment dealers are overseen by CIRO.

The article that explains itSee also: security, market order

capital gain

Also called: capital loss · gain en capital (in French)

A capital gain is the difference between the sale price of a security and its tax cost, the adjusted cost base. It exists for tax purposes only at the moment of disposition — in practice, the sale — and, in a non-registered account, only a fraction of it is included in taxable income, at an inclusion rate set by law. A capital loss is, as a general rule, deductible only against capital gains, and it carries across time.

The article that explains itSee also: adjusted cost base, realized gain, unrealized gain, superficial loss

contribution room

Also called: contribution limit · unused room · droits de cotisation (in French)

Contribution room is the amount a person can put into a registered account without exceeding its limit. It accumulates: each year adds some, and what is not used carries forward — in a TFSA whether or not the account is open, in an RRSP according to earned income. The figure that governs is the CRA's, which covers all of your accounts across every institution; an excess is, as a general rule, penalized.

The article that explains itSee also: Tax-Free Savings Account, Registered Retirement Savings Plan

distribution

Also called: fund distribution · payout · distribution (in French)

A distribution is what a fund — ETF or mutual fund — pays its unitholders: the basket's dividends and interest, sometimes capital gains, according to the fund's rules. For tax purposes, a distribution can be made of several kinds of income, which the tax slip tells apart. In Everyfolio, a distribution is recorded as a dividend: one entry gesture, the tax nature remaining that of the slip.

The article that explains itSee also: dividend, exchange-traded fund, mutual fund

dividend

Also called: dividende (in French)

A dividend is the share of profits a company decides to pay its shareholders periodically, in proportion to the shares held. Not all companies pay one, and its absence is neither a missed duty nor a sign of quality. In Everyfolio, a dividend is entered as received — the net amount on the statement — and it counts in total return without being folded into the security's price.

The article that explains itSee also: distribution, return

exchange-traded fund(ETF)

Also called: FNB (in French)

An ETF is a basket of securities that is bought and sold on an exchange like an ordinary stock. Holding a unit means holding a fraction of everything in the basket, whose contents follow a rule announced in advance — track an index, cover a sector, follow a type of bond. Its units are created and destroyed continuously, which as a general rule brings their price back toward the value of the basket.

The article that explains itSee also: mutual fund, net asset value, management expense ratio

limit order

Also called: limit-price order · ordre limite (in French)

A limit order asks to buy at a given price or lower, or to sell at a given price or higher. It guarantees the price — never worse than the limit set, sometimes better — but not execution: if nobody accepts the limit, the order waits, and can expire having done nothing while the quote moves away. Neither type of order does better than the other: they keep different promises.

The article that explains itSee also: market order, bid-ask spread

management expense ratio(MER)

Also called: management fee · RFG (in French)

The management expense ratio is the annual cost of a fund or an ETF, expressed as a percentage of assets, taken inside the fund and never billed separately. It is invisible: the return shown is already net of it. An annual percentage compounds over time, exactly like a return — but in the opposite direction.

The article that explains itSee also: exchange-traded fund, mutual fund, return

market order

Also called: at-market order · ordre au marché (in French)

A market order asks to buy or sell now, at the best available price. It guarantees execution — as long as there is a counterparty — but not the price: the order takes whatever the book offers at the moment it arrives, which can differ from the last quote shown, especially if the book is thin or the order is large. Its counterpart is the limit order, which makes the opposite promise.

The article that explains itSee also: limit order, bid-ask spread

mutual fund

Also called: fonds commun de placement (in French)

A mutual fund pools money from many people to hold a basket of securities managed according to a rule; each person owns a fraction of it in the form of units. Its units are bought and sold from the fund itself, once a day, at the net asset value — with no bid and no ask, hence no spread. It charges a management expense ratio like an ETF; the two forms differ in how units change hands, not in the idea.

The article that explains itSee also: exchange-traded fund, net asset value, management expense ratio

net asset value(NAV)

Also called: NAV per unit · valeur liquidative (in French)

The net asset value is the value of one unit of a fund, calculated by the fund itself: everything the basket holds, minus its debts, divided by the number of units. A mutual fund is bought and sold at that price, calculated once a day after markets close — the price is not negotiated, it is computed. The price of an ETF unit, by contrast, forms on the exchange and gravitates around that value without matching it at every instant.

The article that explains itSee also: mutual fund, exchange-traded fund, bid-ask spread

non-registered account

Also called: taxable account · cash account · open account · compte non enregistré (in French)

A non-registered account is an investment account with no tax shelter: capital gains, dividends and interest are taxable in the year they occur, each under its own rules. It is also the only container with no contribution limit. It is in this account that the adjusted cost base and the superficial loss take on their meaning.

The article that explains itSee also: capital gain, adjusted cost base, Tax-Free Savings Account

realized gain, unrealized gain

Also called: paper gain · crystallized gain · réalisé / non réalisé (in French)

A gain or loss is unrealized as long as the security is still held: it is the difference, on paper, between its current exchange value and its cost. It becomes realized at the moment of the sale, when a transaction crystallizes it. Everyfolio always keeps the two apart, and the tax boundary runs exactly there: as a general rule, only the realized part counts for tax.

The article that explains itSee also: return, capital gain

Registered Retirement Income Fund(RRIF)

Also called: FERR (in French)

The RRIF is the most common destination of an RRSP that has reached the deadline the law sets for it. It is its mirror image: no more contributions, and a minimum annual withdrawal, set by an official table that rises with age, is mandatory. The conversion is normally not a taxable event; it is the withdrawals that are taxed, as income, and the investments keep growing sheltered from tax as long as they stay in the account.

The article that explains itSee also: Registered Retirement Savings Plan

Registered Retirement Savings Plan(RRSP)

Also called: REER (in French)

The RRSP is an accumulation account: the contribution is, as a general rule, deductible from taxable income in the year it is made, investments grow inside it sheltered from tax, and it is the withdrawal that is taxed, as income. The idea of the plan is to shift taxation to a period when income — and therefore the tax rate — is usually lower. Its contribution room depends on earned income and carries forward; a withdrawal usually does not give it back.

The article that explains itSee also: Tax-Free Savings Account, Registered Retirement Income Fund, contribution room

return

Also called: total return · simple return · rendement (in French)

Return is what an investment has earned, relative to what it cost. Everyfolio shows a simple return: for a position, the unrealized gain divided by its cost; for a portfolio, the realized, the unrealized and the dividends, relative to the capital invested. Other calculations — annualized, time-weighted or money-weighted — answer other questions and give other figures, all correct within their own definition.

The article that explains itSee also: realized gain, unrealized gain, average cost

security

Also called: financial instrument · titre (in French)

A security is anything you buy and hold in an investment account: a stock, an ETF or mutual fund unit, a bond. It is the word Everyfolio uses for every line of a portfolio, whatever its nature. A security has a symbol, an exchange and a currency; what it pays and how it is taxed depend on its nature, not on the word.

superficial loss

Also called: perte apparente (in French)

A superficial loss is a loss the tax authority refuses to recognize because the same security was bought back too soon: as a general rule within a window running from 30 days before to 30 days after the loss sale — sixty-one days in all, the sale date included — and still held at the end of the window, by you or an affiliated person, your registered accounts included. Outside a registered account the loss is not lost but deferred: it is added to the adjusted cost base of the repurchased security. Bought back in a TFSA or RRSP, it can be gone for good.

The article that explains itSee also: adjusted cost base, capital gain, non-registered account

Tax-Free Savings Account(TFSA)

Also called: CELI (in French)

A TFSA is funded with money that has already been taxed; in exchange, gains earned inside the account — capital gains, dividends, interest — are normally not taxed, neither while held nor on withdrawal. Contribution room is capped and accumulates each year, whether or not the account is open. A withdrawal normally gives the equivalent room back, but only the following year.

The article that explains itSee also: Registered Retirement Savings Plan, contribution room, non-registered account

These definitions say what a thing is, never a parameter: limits, rates and ages live with the CRA, and the sources are in the articles. General, informational content — not personalized advice.