Glossary
Plain-language explanations of the terms used across ClearGauge’s advice pages, Financial Library, calculators and research. Browse a topic below; terms are alphabetical within each section.
Each definition includes a link to relevant reading on this site. Calculator results illustrate assumptions, and research records describe dated evidence. Neither is a personal recommendation.
On this page: Retirement Planning · Investing · Financial Planning · Tax & Estate Planning · Behaviour & Decision-Making · Choosing a Financial Adviser · Fees & Investment Costs · Company & Fund Research
Retirement Planning
CPI (Consumer Price Index) — A published measure of price changes for a broad basket of goods and services, produced monthly by Statistics South Africa. It is a useful guide to general inflation but may not match any one household's actual cost of living. Estimating retirement capital.
Fund mandate — The written scope within which a fund or portfolio must operate — the assets, ranges and limits it may hold. A mandate sits inside any wider regulatory limit, such as Regulation 28, and needs to be read on its own terms, not assumed from the limit alone. Understanding fund research.
Funding gap — The difference between a retirement capital target and the amount projected to be available. The result depends on assumptions about saving, returns, inflation and withdrawals; it is not a prediction of the eventual shortfall. Explore the retirement funding illustration.
Gross income / Net income — Gross income is the amount before tax and any other deductions being considered. Net income is what remains after those deductions. ClearGauge’s retirement calculators show gross withdrawals before personal tax, so their results should not be read as take-home income. Read the retirement calculator assumptions.
Guaranteed annuity — Also called a life or conventional annuity. An income is set by the insurer according to the policy terms at the outset, in exchange for the retirement capital used to purchase it. Terms such as level pay, fixed increases, an inflation link and spouse cover vary by policy and should be read in the quote. Living versus guaranteed annuities.
Income gap — The amount your investments must provide each month once other reliable income is subtracted from your after-tax spending needs. It is the starting point for estimating retirement capital, not a finished plan. Estimating retirement capital.
Living annuity — A retirement-income product that keeps the underlying money invested while paying you an income drawn from it. The income selected must fall within the permitted drawdown range set by the regulator, but staying within that range does not guarantee the money will last for life. Living versus guaranteed annuities.
Longevity risk — The possibility that a person lives longer than their money or income arrangements can support. A retirement plan needs to consider both lifespan and the changing costs of supporting one or two people. Explore retirement income questions.
Nominal income / Real income — A nominal income is the rand amount actually paid. A real income is what that amount can buy after inflation. An income that stays flat in rand terms is losing purchasing power in real terms as prices rise. Retirement calculator methods and limits.
Real return — Investment return after allowing for inflation. The exact calculation is (1 + nominal return) divided by (1 + inflation), minus 1, using the same period for both. Whether fees and tax are included must also be clear. A planning assumption is not a promise of performance. Retirement calculator methods and limits.
Regulation 28 — A regulation that sets investment limits for South African retirement funds, restricting how much may be held in categories such as equities, offshore assets and property. It reduces concentration risk within a fund but does not by itself guarantee diversification, a suitable mandate, or that a fund fits an investor's personal time frame. Retirement planning guides.
Retirement Annuity (RA) — A retirement savings vehicle governed by its own rules on contributions, tax treatment and access. Often considered alongside a Tax-Free Savings Account when deciding where to save first. Retirement planning guides.
Retirement capital — Money set aside specifically to produce income after work ends. Estimating it starts with the income gap and is then tested against inflation, fees, tax, market risk and time in retirement. Estimating retirement capital.
Sequence risk — The risk that weak market returns arrive early in retirement, while income is being withdrawn. Because withdrawals continue regardless of market conditions, an early downturn can leave less capital available to recover later — even if long-term average returns turn out to be reasonable. Retirement withdrawal risks.
Tax-Free Savings Account (TFSA) — A savings vehicle with its own annual and lifetime contribution limits, within which growth and withdrawals are not taxed under current rules. Often compared with a Retirement Annuity as part of a broader savings sequence. Retirement planning guides.
Withdrawal rate — The percentage (or rand amount expressed as a percentage) of retirement capital taken as income each year. It is a useful way to test whether a capital sum can support an income plan — not a promise, forecast or personal recommendation. Retirement calculator methods and limits.
Investing
Active investing — An approach where a fund manager selects individual holdings with the aim of outperforming a benchmark or market segment, generally at a higher cost than a passive approach. Neither active nor passive investing is inherently right for every investor or goal. Active and passive investing.
Asset allocation — The way a portfolio is divided between types of investment, such as shares, bonds, property and cash, and between local and offshore exposures. The mix influences the risks taken and the role the portfolio can serve. Choosing an asset mix.
Benchmark — A reference used to judge an investment’s results, such as a market index or an inflation-related target. A useful comparison considers the mandate, risk, currency, time period and whether costs are treated consistently. How funds are compared.
Bond — A debt investment through which an issuer borrows money on stated terms. Interest payments, repayment dates and protections depend on those terms. Bond prices can change before maturity, and repayment depends on the issuer’s ability to meet its obligations. Interest rates and bond risk.
Concentration risk — The risk created by holding too much wealth in a single asset, share, sector or property. A single holding — however well-performing — carries risks that a diversified portfolio is designed to reduce. Concentration risk explained.
Credit risk — The risk that a borrower or issuer fails to pay interest or repay capital as agreed. A higher quoted yield can reflect greater credit risk; it should not be treated as extra return without extra uncertainty. Understanding fixed-income risks.
Currency risk — The effect of exchange-rate movements on an investment’s value or income in the currency you spend. A foreign investment can rise in its home currency while falling in rand, or the reverse. Its trading currency alone does not describe all its economic exposure. Understanding offshore exposure.
Discretionary Fund Manager (DFM) — A firm that may make or implement day-to-day investment changes within an agreed mandate, typically alongside — not instead of — a financial adviser. Using a DFM adds a party and often a cost layer, so the roles of adviser, DFM, platform and asset holder should each be clearly understood before signing. Understanding fund research.
Diversification — Spreading investment risk across more than one asset, sector or geography rather than concentrating it in one holding. Diversification reduces concentration risk; it does not remove market risk, and a well-diversified fund can still fall in value when markets fall broadly. Concentration risk explained.
Duration — A measure of how sensitive a bond or bond fund is to changes in interest rates. A longer duration generally means a larger price movement for a given change in rates. Interest rates and investment portfolios.
Endowment — An investment policy with a particular legal, tax and access framework. The wrapper is separate from the investments held inside it. Costs, withdrawal restrictions, ownership and beneficiary arrangements need to be considered alongside any potential tax benefit. When a South African endowment may fit.
Exchange-traded fund (ETF) — A fund whose units trade on an exchange. Many ETFs track an index, but the name alone does not establish the strategy, diversification, costs or risk. Check the underlying holdings, mandate and trading arrangements. Assessing funds and their portfolio role.
Feeder fund (rand-denominated) — A local fund structure that gives exposure to offshore markets while allowing an investor to trade and receive reporting in rand, without opening a foreign bank or brokerage account directly. Its actual offshore exposure depends on its mandate and underlying holdings, which should be checked rather than assumed from the name. Direct offshore investment and rand feeder funds.
Interest rate risk — The risk that changes in interest rates affect an investment’s value or income. For bonds, duration helps estimate price sensitivity. Credit risk is a separate risk concerning the issuer’s ability to meet its payment obligations. Interest rates and investment portfolios.
Investment wrapper — The legal or product structure through which investments are held, such as a retirement arrangement or an endowment. A wrapper affects matters such as tax, access, administration and succession; it does not remove the risks of the underlying investments. Offshore wrappers and direct investment.
Liquidity — The ability to access cash or turn an asset into cash within the time needed, at an acceptable cost. An asset can have a substantial estimated value yet be difficult to sell promptly. Liquidity needs depend on when obligations must be met. Why liquidity matters.
Lump sum investing — Investing an available amount in full on a single date, rather than spreading it over time. It gives the money the maximum possible time in the market, at the cost of full exposure to whatever happens immediately afterward. Investing a lump sum or phasing it in.
Offshore exposure — The portion of an investment portfolio held in assets outside South Africa, whether through direct foreign accounts, rand-denominated feeder funds, or funds with underlying offshore holdings. The appropriate level depends on the investor's goals, time frame and existing exposure — there is no single correct amount for every South African. Understanding offshore exposure.
Passive investing — An approach where a fund tracks a market index or benchmark rather than selecting individual holdings, generally at a lower cost than active management. Cost comparisons should be based on actual products, not assumptions about the category. Active and passive investing.
Phasing — Investing an available lump sum into the market gradually, over a set schedule of dates and instalments, rather than all at once. Phasing reduces the chance of investing the full amount immediately before a market fall, but it does not protect against loss and leaves part of the money in cash — and therefore out of the market — until each instalment date. Investing a lump sum or phasing it in.
Portfolio overlap — Shared underlying holdings or exposures across different investments. Owning several funds does not necessarily create several independent sources of risk if they invest in many of the same companies, countries or sectors. See the portfolio-overlap explanation.
Rebalancing — The practice of adjusting a portfolio's holdings back toward its intended asset mix after market movements have shifted it away from that target. Reviewing a portfolio.
Volatility — The degree to which investment returns or prices fluctuate over a measured period. It describes variability, not every form of risk: an investment can appear stable while still carrying credit, liquidity or permanent-loss risk. Considering return and risk together.
Financial Planning
Balloon payment — A final lump-sum repayment due under a loan agreement. It can reduce earlier instalments while leaving a substantial amount to fund at maturity. ClearGauge’s debt calculator flags a shortfall rather than assuming that refinancing will be available. Check balloon-payment assumptions.
Cash flow — Money received and paid over a period. For a household, the timing and reliability of income matter alongside recurring expenses and debt payments. For a company, cash flow is distinct from accounting profit. Build a family financial map.
Debt avalanche / Debt snowball — Two ways to direct extra repayments after required minimums: avalanche prioritises the highest interest rate, while snowball prioritises the smallest balance. Fees, promotional rates and final payment deadlines can affect the comparison. Compare debt repayment methods.
Financial plan — A working view of money, protection and key dates, built around a person's or family's goals rather than a single product or account. Planning and investment management.
Financial planning vs investment management — Financial planning addresses the wider picture — goals, cash flow, protection, tax and estate matters — while investment management concerns the selection and oversight of the underlying investments themselves. The two are related but distinct pieces of work, and a plan built around investments alone may miss risks that sit outside the investment account. Planning and investment management.
Life File — ClearGauge’s term for an organised index of important records, their locations, relevant contacts and outstanding actions. It is not a password store, and locating a document does not establish its legal validity or authorise someone to act. What the Life File can cover.
Net worth — The value of assets less liabilities at a particular date. It provides a balance-sheet view of wealth, but does not show whether cash will be available when needed or whether assets can be sold at their estimated values. Map assets, liabilities and responsibilities.
Planning scenario — An illustration of what could happen if selected assumptions hold. Changing returns, inflation, contributions or costs helps explore sensitivity. A scenario is a way to examine a decision, not a forecast or a guarantee. Explore planning assumptions.
Wealth governance — ClearGauge’s term for organising and reviewing the ownership, decisions, responsibilities and structures through which wealth serves its purpose. It brings investments together with liquidity, succession, behaviour and the practical needs of a family. The ClearGauge approach to wealth governance.
Wealth Map — An organised picture of financial arrangements and how they connect to goals, risks and decisions. ClearGauge’s published example illustrates the format; it is not a personal plan or a recommendation for the reader. View the illustrative Wealth Map.
Tax & Estate Planning
Base cost — The cost used to calculate a capital gain or loss on an asset for Capital Gains Tax purposes — typically the original purchase price plus certain allowable costs, supported by records such as contracts and invoices. Capital gains tax explained.
Beneficiary nomination — A record naming intended recipients of a benefit under the relevant product or arrangement. Its effect depends on the applicable rules; it is not interchangeable with a will and does not necessarily mean the proceeds will be available to the estate. Beneficiaries and estate liquidity.
Capital Gains Tax (CGT) — A tax on the capital gain made on the disposal of an asset — broadly, the difference between the proceeds and the base cost, after applicable exclusions. It is a tax on the gain, not on the full sale price, and the applicable rate depends on the inclusion rate and the taxpayer's own tax position. Capital gains tax explained.
Dutiable value — The value of an estate on which estate duty is actually calculated, arrived at after deducting allowable amounts and the statutory abatement from the estate's net value. It is narrower than the estate's gross value. Estate liquidity in South Africa.
Estate duty — A tax on the dutiable value of a deceased estate, applied after allowed deductions and the statutory abatement. For a person ordinarily resident in South Africa, it applies to worldwide assets and certain deemed assets, not only local ones. Estate liquidity in South Africa.
Estate duty abatement — A statutory amount deducted from the net value of an estate before estate duty is calculated, reducing the dutiable value on which the tax is charged. Estate liquidity in South Africa.
Estate liquidity — The estate’s ability to obtain cash to meet its obligations when they fall due. Gross asset value alone does not establish liquidity: ownership, access, sale timing and the destination of policy proceeds can all affect the cash available. Read the estate liquidity guide.
Executor — The person appointed to administer a deceased estate under the applicable legal process. Administration includes establishing assets and liabilities and dealing with obligations and distributions. Being named in a will does not by itself provide immediate authority to act. Understand deceased-estate administration.
Immediate cash gap — In ClearGauge’s estate-liquidity calculator, the shortfall when assumed immediately available funds are less than debts plus the entered estimate of other cash demands. It is an aggregate illustration; the tool does not calculate taxes or establish exact receipt and payment dates. Explore the estate-liquidity snapshot.
Inclusion rate — The portion of a net capital gain that is included in a taxpayer's taxable income for Capital Gains Tax purposes. It differs from the final tax rate applied, which depends on the taxpayer's own circumstances. Capital gains tax explained.
Intestate succession — The legal process that determines how an estate is distributed when a person dies without a valid will. It provides a statutory order of heirs, which does not necessarily reflect a family's actual wishes or arrangements. Dying without a valid will.
Offshore estate planning — Planning for how foreign-held assets will be identified, controlled, taxed and transferred on death or incapacity — a question broader than the currency or investment chosen, since the legal position can differ by asset type and country. Tax and estate planning guides.
Ownership structure — The legal and tax form in which an asset is held — for example, in an individual's own name, within a trust, or through a company. Each structure carries its own tax, control and administrative consequences, and the choice should follow a genuine purpose rather than a headline tax rate. Tax and estate planning guides.
Policy proceeds — Amounts payable under an insurance policy when its conditions are met. Proceeds payable directly to a beneficiary are different from proceeds payable to an estate. Their destination, timing, cessions and tax treatment need to be checked before treating them as estate cash. What the estate-liquidity inputs mean.
Primary residence exclusion — A Capital Gains Tax relief applying to a taxpayer's primary residence, subject to conditions such as ownership, actual use as the usual residence, and any business or rental use of the property. It is not an automatic or unlimited exemption. Capital gains tax explained.
Tax avoidance vs tax evasion — Legitimate tax planning uses the law, genuine transactions and accurate records to manage a tax outcome. Tax evasion involves dishonest or unlawful conduct, such as not declaring income or making false claims. The distinguishing test is not the label used to describe a strategy, but whether it has a genuine purpose, correct records and truthful disclosure. Tax and estate planning guides.
Trust — A separate legal arrangement governed by its trust deed, trustees, beneficiaries and statutory duties. It can serve a clear estate-planning purpose, such as a smooth handover of administration or support for a beneficiary who needs assistance, but it is not a generic tax-saving device and carries its own ongoing administrative obligations. Trusts and estate planning.
Will — The legal document stating who should receive a person's estate and who should administer it. Without a valid will, an estate is distributed according to the statutory order set out in intestate succession law. Dying without a valid will.
Behaviour & Decision-Making
Investor underperformance (behaviour gap) — The difference between a fund's published return and the actual return an individual investor experiences, often caused by the timing of an investor's own contributions, withdrawals and switches rather than the fund itself. Fees, tax and product choice can also contribute, so underperformance is not always the result of investor behaviour alone. Investor returns and fund returns.
Money-weighted return — A return that takes account of the amounts and timing of money paid into and withdrawn from an investment. It helps describe the investor’s own experience and can differ from a fund’s time-weighted return. Compare investor and fund returns.
Sunk cost — A cost already incurred that cannot be recovered. The original purchase price can become an emotional reference point, but a decision to hold or sell should also consider the investment’s current prospects, alternatives, costs and tax consequences. Thinking clearly about a losing investment.
Time-weighted return — A standard measure of a fund's investment performance that removes the effect of the timing and size of an investor's own cash flows into and out of the fund. It can differ meaningfully from the actual return a particular investor experienced. Investor returns and fund returns.
Choosing a Financial Adviser
Best interest — In everyday use, a broad and sometimes vague phrase. In practice, whether an adviser is acting in a client's best interest is best assessed through observable conduct — clear scope of service, proper fact-finding, clearly explained reasons, disclosed costs and conflicts, and a documented record of what was agreed. Professional scope and client protection.
Conflict disclosure — A clear explanation of any commercial relationship between an adviser and a product, platform or provider, including who is paid what and by whom. A conflict disclosure is not, by itself, an accusation — it gives a client the facts needed to ask whether advice still fits their objective. Professional scope and client protection.
Financial Clarity Review — ClearGauge’s separately scoped, once-off assessment of how existing financial arrangements work together, concluding in a written report. It may identify priorities or confirm that arrangements remain appropriate. There is no obligation to appoint ClearGauge for ongoing advice afterwards. What the Financial Clarity Review includes.
FSCA authorisation — Confirmation, checked via the Financial Sector Conduct Authority's official search tools, that a financial services provider is authorised to operate. Authorisation is an important starting check, but it does not by itself confirm that a specific service or recommendation is suitable for a particular client. Professional scope and client protection.
FSP (Financial Services Provider) — A firm authorised by the FSCA under the FAIS Act to render financial advice and intermediary services, identified by its own FSP number. ClearGauge Wealth (Pty) Ltd is an Authorised Financial Services Provider, FSP No. 55826. Professional scope and client protection.
Ongoing advice — An agreed continuing service for financial planning and portfolio oversight. Its work, review arrangements, responsibilities and fees should be clear. At ClearGauge, it is an optional appointment agreed separately from a once-off Financial Clarity Review. Understand the ongoing advisory service.
Scope of engagement — The agreed questions, work, deliverables and professional boundaries of an appointment. Scope identifies what is included, what is excluded and where another specialist is needed, so a fee can be assessed against the service actually being provided. Agreeing the work before it begins.
Fees & Investment Costs
Advisory fee — A charge for the agreed advice or planning service. It is separate from investment-management, platform and product charges unless the disclosure explicitly includes them. Compare the full combination of costs and services, rather than one headline percentage. Read the advisory fee schedule.
Advisory-fee cap — A ceiling on the agreed advisory charge. ClearGauge’s monthly cap applies to its ongoing advice fee, not all investment costs. Caps are reviewed annually in March under the agreed terms; a capped current fee is not a promise that fees will never change. What the advisory cap covers.
Cap threshold — The portfolio value at which the applicable percentage-based advisory fee reaches its cap. Under ClearGauge’s published terms, the percentage fee applies again if the relevant value falls below that threshold. Scope, valuation basis and other charges still matter. See thresholds and fee examples.
Effective Annual Cost (EAC) — A standardised disclosure that expresses the effect of specified investment, advice, administration and other costs as an annual percentage over stated holding periods. It is a comparison measure, not another fee to add to the bill. Check its assumptions and any separately paid costs. Understanding total investment costs.
Fee credit — An agreed offset of one fee against another. ClearGauge may credit a once-off review fee against first-year ongoing advisory fees, subject to the agreed scope and terms. The credit is not automatic and does not require a client to take ongoing advice. Read the fee-credit terms.
Percentage point — The absolute difference between two percentages. A change from 1% to 2% is one percentage point, but a 100% relative increase. Keeping the distinction clear helps when comparing fees, returns and changes in rates. Understanding total investment costs.
Platform fee — A charge for administering investments through a platform or account service. It may sit alongside fund and advice charges. Check the fee schedule, actual statements, tiers, rebates and VAT treatment when reconciling the total cost. Understanding total investment costs.
Total Expense Ratio (TER) — A fund-cost measure expressing specified expenses borne inside a fund as a percentage of its assets over the stated measurement period. It excludes the separately disclosed transaction costs. Check the actual fund class and avoid adding fees already included in the TER. Understanding total investment costs.
Total Investment Charges (TIC) — The combined measure of a fund’s Total Expense Ratio and Transaction Costs. Adding TER to TIC would count TER twice. TIC does not necessarily include separate platform or advisory charges outside the fund. Understanding total investment costs.
Transaction Costs (TC) — The disclosed costs of buying and selling investments inside a fund. They are reported separately from TER and combined with it in TIC. They should not be confused with every other charge that an investor may pay outside the fund. Understanding total investment costs.
Company & Fund Research
Dividend / Dividend per share (DPS) — A distribution declared by a company for shareholders. DPS states the amount for each relevant share. Check the share class, currency, whether the amount is gross or net of tax, and the declaration terms; future dividends are not guaranteed. Read dividend events and issuer evidence.
Earnings per share (EPS) — Earnings attributable to ordinary shareholders divided by the relevant weighted average number of shares. Diluted EPS also reflects qualifying potential additional shares. EPS is an accounting measure, not cash received by a shareholder. See earnings measures in company research.
Ex-dividend date — The date from which a share normally trades without entitlement to a particular declared dividend. Entitlement follows the applicable exchange and corporate-action rules. Use the published timetable; do not infer the date from a payment date or another market’s settlement conventions. Check the dividend timetable.
Free cash flow — A measure of cash remaining after specified investment spending, commonly operating cash flow less capital expenditure. Companies may define it differently. Read the calculation and reconciliation before comparing businesses or treating the figure as cash available for dividends. Explore company financial records.
Fund class — A particular class of units in a fund. Classes can follow the same underlying strategy but have different fees or access terms. Research and cost comparisons should use the class actually available to, or held by, the investor. Fund classes and costs.
Headline earnings per share (HEPS) — A South African earnings measure that adjusts the earnings used for basic EPS for specified remeasurements under the applicable SAICA guidance, then expresses the result per share. It is not a cash-flow measure or a blanket removal of every unusual item. See reported HEPS in context.
Information cutoff — The date up to which information was included in a particular research record or assessment. It helps readers judge the age and scope of the evidence. It is distinct from a results period, a later source-check date or a live market price. Read the dates attached to company research.
Issuer evidence — An announcement, report or other published material from the company or issuer relevant to a claim. A link to issuer evidence helps readers inspect the source; it does not turn management’s expectations into verified future outcomes. Review sources and event status.
Management guidance — Management’s stated expectations, targets or outlook for future business performance. Guidance depends on assumptions and can change. It should be distinguished from results already reported and from ClearGauge’s own interpretation. Separate management statements from analysis.
Maximum drawdown — The largest observed fall from a previous peak to a subsequent trough over a specified period and data frequency. It describes a historical loss path, not the largest loss an investment could suffer in the future. Why the investment path matters.
Payment date — The date on which an issuer schedules payment of a declared dividend. A published payment date does not by itself prove that funds have reached an investor’s account; processing and account arrangements may affect receipt. Read scheduled dividend payments.
Record date — The date used to determine holders on the relevant register for a corporate action such as a dividend. Buying on that date does not automatically establish entitlement; the ex-dividend date, settlement arrangements and event rules also matter. Check declared dividend dates.
Reporting period — The span covered by financial results, such as a quarter, half-year or financial year. Financial years differ between companies. Compare the period end, currency and reporting basis rather than assuming that similarly labelled results cover the same months. Read reported periods and currencies.
Revenue — Income recognised from a company’s ordinary business activities under its accounting policies, often described as sales. It is before the expenses needed to arrive at profit and is not necessarily cash collected during the same period. See sales and earnings in context.
Risk-adjusted return — Return assessed relative to a specified measure of risk. Different measures capture different aspects of an investment’s behaviour. A favourable historical ratio does not establish suitability, remove risk or guarantee a repeatable future outcome. How fund outcomes are assessed.
Rolling returns — Returns measured over repeated periods of the same length with different starting dates, such as successive three-year periods. They show how the investor’s starting point can affect historical experience, instead of relying on one convenient start and end date. Understand rolling-period comparisons.
General educational information, not personal financial, investment, tax or legal advice. Definitions simplify concepts and do not replace product terms, legislation or the detailed explanations linked above. Rules and disclosures can change. Check the dates and applicable terms before making a decision.
Reference frameworks: ASISA cost-disclosure standards; SARS estate duty guidance; Investor.gov dividend-date explanation. Dividend timetables and rules must be checked for the relevant market.