- EMI
- Equated monthly instalment. The same fixed amount you repay every month on a loan, covering interest first and principal second. It is the standard way personal, car and home loans are repaid.
- SIP
- Systematic investment plan. Investing a fixed amount at regular intervals, usually monthly, rather than a single lump sum. A step-up SIP raises that amount each year.
- APR
- Annual percentage rate. The yearly cost of borrowing including compulsory fees, which makes it fairer than a headline rate for comparing loan offers.
- Amortisation
- Paying off a loan gradually through regular instalments, where each payment covers the interest due first and reduces the debt with whatever is left.
- Compound interest
- Earning returns on your returns. Growth is applied to the new larger balance each period, which is why long time horizons matter far more than large contributions.
- Monte Carlo simulation
- Running a calculation thousands of times with randomly varying inputs to produce a range of possible outcomes instead of a single figure. Used here to show how uncertain an investment outcome really is.
- Volatility
- How much an investment's value swings up and down. Higher volatility means a wider range of possible outcomes, both better and worse.
- Principal
- The amount actually borrowed, separate from the interest charged on it.
- Deposit
- The cash you pay up front. The rest is what you borrow. A bigger deposit means a smaller loan, less interest, and usually a better rate.
- Interest rate
- The yearly cost of borrowing, as a percentage. On a £200,000 loan, 5% means roughly £10,000 of interest in the first year.
- Term
- How many years you take to pay the loan off. A longer term lowers the monthly payment but you pay more interest overall.
- Loan-to-value (LTV)
- Loan-to-value. The share of the property's price that is borrowed. Borrow £85,000 on a £100,000 home and your LTV is 85%. Lower LTV usually unlocks cheaper rates.
- Number of payments
- How many monthly payments you will make in total — simply the term in years multiplied by 12.
- Total interest paid
- Everything the loan costs you on top of the amount borrowed, added up over the whole term. It is often a surprisingly large number.
- Current balance
- How much you still owe on the mortgage right now — not the property's value, and not what you originally borrowed.
- Extra paid each month
- Money paid on top of your normal payment. It comes straight off the debt, so you stop paying interest on it from that month onward.
- Time knocked off
- How much sooner the loan is cleared because of the overpayments. The monthly payment stays the same — the loan just ends earlier.
- Buying fees
- One-off costs of purchasing: stamp duty, solicitor, survey, mortgage arrangement fee. Easy to forget, but they are real cash you must find.
- Monthly costs
- Ongoing running costs — letting agent fees, landlord insurance, service charge, and a sensible allowance for repairs.
- Cash needed upfront
- The total cash you must hand over on day one: your deposit plus all the buying fees.
- Gross yield
- A year's rent as a percentage of the purchase price, before any costs. A quick way to compare properties, but it flatters a deal because it ignores the mortgage and bills.
- Net yield
- The same idea as gross yield, but after running costs are taken off. It deliberately excludes the mortgage, because that is a financing choice rather than a cost of the property itself.
- Cash-on-cash return / yr
- What your own money earns each year. It is your annual profit divided by the cash you actually put in (deposit plus fees) — useful for comparing against savings or investments.
- Investment type
- Picks a typical yearly return and a typical level of ups and downs for that kind of investment. Safer types grow slowly but steadily; riskier ones can grow faster but swing much more.
- Expected return / yr
- The average yearly growth you are assuming. It is an average over many years, not a promise — real years will be above or below it, sometimes negative.
- Target
- A savings goal to aim for. The tool then tells you what share of the simulations reached it.
- Median growth on top
- The profit in the middle outcome — everything above what you paid in yourself. Half the simulations did better, half did worse.
- Likely range (5th–95th)
- Out of all the simulated futures, 90% ended somewhere in this range. It shows how uncertain the outcome is — a wider range means a riskier investment.
- Chance of reaching target
- The share of the 1,500 simulated futures that finished at or above your target. A rough guide to how realistic your goal is, not a guarantee.
- Asset / brand tier
- Different things lose value at very different speeds. A prestige car or a laptop drops fast; a supercar or classic holds on far better. This sets a typical curve for the type you pick.
- Depreciation / yr
- How much value is lost each year, as a percentage of what it is worth at the time. Higher means it loses value faster.
- Residual floor
- The value it will not drop below, however long you keep it. Almost nothing becomes worthless — there is usually scrap, parts or trade value left. Set as a percentage of what you paid.
- Running costs / yr
- What it costs each year just to keep and use it — insurance, servicing, road tax, MOT. Fuel is not included here.
- Value retained
- What it is still worth at the end, as a percentage of what you paid. Higher is better — it means the asset held its value.
- Depreciation per year
- The total value lost divided by the years owned. Note this is an average — the early years lose much more than the later ones.
- Worst year (first year)
- The value lost in year one. On most things this is the single biggest drop, which is why buying something two or three years old avoids the steepest fall.
- True cost of ownership / mo
- The honest monthly cost: value lost plus running costs, spread over the time you own it. Usually far more than people expect, because lost value never arrives as a bill.
- Loan amount
- How much you are borrowing, before interest. For a car or personal loan this is the cash the lender hands over.
- Interest rate (APR)
- APR is the annual percentage rate — the yearly cost of borrowing including compulsory fees. It is the fairest way to compare loan offers, because it captures more than the headline rate.
- Tenure
- How many months you take to repay. A longer tenure lowers the monthly payment but you pay considerably more interest in total.
- Arrangement fee
- A one-off charge some lenders add for setting up the loan. If it is already included in the APR, leave this at zero so you do not count it twice.
- Interest as % of loan
- Total interest divided by the amount borrowed. The quickest way to judge a loan: roughly under 10% is cheap, over 30% is expensive.
- Total you repay
- Everything you hand back over the whole term — the amount borrowed plus all the interest.
- Monthly investment
- The fixed amount you invest each month. Investing steadily like this is often called a SIP, or systematic investment plan.
- Yearly step-up
- How much you increase your monthly investment each year, usually in line with a pay rise. A 10% step-up on £300 makes it £330 next year, £363 the year after, and so on.
- Expected return
- The average yearly growth you are assuming. It is an average across many years, not a promise — real years will be higher or lower, and some will be negative.
- Starting lump sum
- Money you already have to invest at the start, on top of your monthly contributions. Leave at zero if starting from nothing.
- Final monthly amount
- What your monthly investment will have grown to by the last year, after all the yearly step-ups.
- Gained by stepping up
- The extra you end up with compared with keeping your contribution flat for the whole period. Early increases matter most, because they compound for longer.
- Target amount
- The total you are trying to save. Be realistic — a goal you can actually hit beats an ambitious one you abandon.
- Target date
- When you want the money by. This sets the pace you need to keep.
- Growth rate
- The yearly return on money already saved. Use 0 if it is sitting in a current account, or your savings rate if it is earning interest.
- Still to find
- The gap between what you have saved and your target.
- Needed per month
- What you must put aside each month from now to hit the target on time. It already accounts for growth on what you have saved, so it falls as your balance builds.
- Your recent pace
- What you have actually contributed over the last 90 days, expressed monthly. Compared against the amount needed to tell you whether you are on track.
- Inflation
- The rate at which prices rise over time, which means each unit of money buys a little less than it did before. Measured as a yearly percentage. At 2.5% inflation, something costing 100 now costs about 128 in ten years.
- Purchasing power
- What a sum of money can actually buy, rather than its face value. Inflation erodes purchasing power: the number in your account may be unchanged while the goods it buys quietly shrink.
- Consumer Price Index (CPI)
- An index tracking the average price of a fixed basket of goods and services over time. Comparing the index in two years shows how much prices have risen between them. Published by national statistics offices such as the UK's ONS and the US Bureau of Labor Statistics.
- HICP
- Harmonised Index of Consumer Prices. The standardised inflation measure used across the euro area so that member countries' figures can be compared on the same basis. Compiled by Eurostat.
- Real vs nominal value
- Nominal is the face amount of money; real is that amount adjusted for inflation, expressed in the buying power of a chosen year. A salary that rises 3% in a year when prices rise 4% has grown in nominal terms but fallen in real terms.