Financial glossary

Plain-English explanations of the most common finance terms that appear in our calculators and articles. Definitions are informational and intentionally simplified.

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Annuity payment: A fixed monthly loan instalment (principal + interest) that usually does not change over time. At the beginning, a larger share of the instalment is interest; later, a larger share is principal.
Letter of credit: A payment method used in international trade where the bank guarantees payment to the seller once the agreed conditions are met (for example, when delivery documents are presented).
Advance payment: A partial payment made upfront (for example, when buying a vehicle or a service). It is often used as a down payment or first instalment.
Amortization: The gradual reduction in the value of an asset over time (accounting) or the gradual repayment of a loan (amortization schedule).
Gross: An amount before deductions (for example, taxes and social contributions). For salary, gross pay is higher than net pay.
Balance sheet: A statement showing a company’s assets, liabilities and equity on a specific date. It is a basic tool for reviewing financial position.
Credit rating: An assessment of the creditworthiness of a person or company. A higher credit rating usually means easier access to financing and better terms.
Bank guarantee: A commitment by a bank to pay the beneficiary an agreed amount if the client does not fulfil their obligation (for example, in public tenders or contracts).
Policy rate: The interest rate a central bank uses as a signal for monetary policy. It indirectly affects interest rates on loans and deposits.
Central bank: An institution responsible for price stability and the stability of the financial system. In the eurozone, monetary policy is led by the ECB.
Net present value (NPV): An investment valuation method that discounts future cash flows back to today’s value. A positive NPV usually means the investment makes sense at the chosen discount rate.
Deposit: Money placed with a bank for a fixed period (term / maturity) at an agreed interest rate. Early withdrawal is usually restricted or less favourable.
Dividend: A distribution of part of a company’s profit to shareholders. It can be paid in cash or in shares, depending on company policy.
Debt: An obligation owed to a creditor (for example, a loan, borrowing or bond). Debt must be repaid under the agreed terms.
Discount rate: The interest rate used to convert future amounts into present value. A higher discount rate means a lower present value of future receipts.
DSTI (also DSR): The ratio between monthly debt obligations and monthly income (articles often call it "DSR"). Since July 2023, Banka Slovenije has capped it at a flat 50% for new consumer and mortgage loans, regardless of income.
Drawdown (loan disbursement): The moment the bank actually pays out an approved loan - to your account or directly to the seller (for example, when buying a flat). Interest runs from drawdown onwards. A housing loan can also be drawn in several parts (for example, as construction progresses), and the deadline for drawing it is set in the contract.
APR (Annual Percentage Rate): The total annual cost of a loan (interest + fees), expressed as a percentage. It makes offers easier to compare because it includes more than just the nominal interest rate.
ECB: The European Central Bank. It sets key interest rates and steers monetary policy in the eurozone.
ETF: An exchange-traded fund that often tracks an index (for example, a stock index). It provides diversification, and costs are often measured with TER.
EURIBOR: A reference interest rate on the euro interbank market. For variable-rate loans, the total interest rate is often calculated as EURIBOR + the bank’s margin.
€STR: A short-term euro reference interest rate (euro short-term rate). It is used as one of the benchmarks for financial products.
Fixed interest rate: An interest rate that stays the same throughout the agreed period. Instalments are more predictable, but the starting rate may be higher than with a variable interest rate.
Financial leverage: The use of debt to increase potential return. It also increases risk, because losses and financing costs can grow.
FURS: The Financial Administration of the Republic of Slovenia, the state tax authority. Among other things, it must be notified annually of interest earned on some foreign accounts.
Principal: The base amount of a debt or investment, excluding interest. For a loan, the principal is the amount you actually receive.
Mortgage: Loan security backed by real estate. If the borrower does not pay, the bank has the right to recover from the property’s value through the legal process.
Indexation: Adjusting amounts (for example, rent or contract values) according to an index, often inflation. The aim is to preserve real value.
Inflation: A general rise in prices over time. Higher inflation usually means money will have less purchasing power in the future.
Intercalary interest: Interest charged for the period from loan drawdown to the first instalment due date. It is common with housing loans when the loan is drawn in the middle of the month.
IBAN: The International Bank Account Number. It is used for payments and account identification within the SEPA area.
Index: A basket of selected securities or an indicator (for example, a stock index). ETFs often track an index.
INR (individual investment account): An investment account (under the ZINR act, in use since March 2026) that you can also use to invest in ETF funds and shares. Tax is charged only on withdrawal, at a flat 15%, dropping to 0% after 15 years without a withdrawal. Annual contributions are capped.
Guarantee: A commitment that someone will meet an obligation if the debtor does not. In practice, this can be a guarantor or a legal undertaking (for example, a guarantee).
Equity: An ownership source of financing (in a company or household). On the balance sheet, it represents the difference between assets and liabilities.
Capitalization (compound interest): A calculation in which interest is added to principal, and then interest is also earned on that interest. It is common in saving and long-term investing.
Creditworthiness: An assessment of how much borrowing you can realistically afford based on income, obligations and the bank’s rules. Term / maturity, interest rate and collateral also matter.
Credit card: A payment card with deferred payment. If you do not repay the full amount, interest and fees may apply, depending on the product.
Capital gain: Profit resulting from an increase in the value of an investment (for example, selling shares above the purchase price). It may be taxable.
LTV (loan-to-value): The ratio between the loan amount and the value of the collateral (for example, real estate). A higher LTV usually means more risk and may lead to worse terms.
Liquidity: How quickly an asset can be converted into cash without a major loss in value. Higher liquidity usually means more flexibility.
Margin / spread: The additional part of an interest rate set by the bank (for example, for a loan priced as EURIBOR + spread). The total interest rate is the sum of the reference rate and the spread.
Bill of exchange: A negotiable instrument in which the issuer promises payment of a specific amount on a specific date. It is also used as collateral.
Moratorium: A temporary suspension or deferral of payments (for example, postponing loan instalments) under certain conditions.
Net: An amount after deductions (for example, taxes and social contributions). For salary, net pay is the amount you receive in your account.
Nominal interest rate: The basic interest rate without including all fees and costs. For comparing loans, APR is often more useful.
Investment risk: The possibility that the return on an investment will differ from expectations, including negatively. Higher potential return often means higher risk.
Interest rate: The price of money, expressed as a percentage. For a loan, it is the cost of borrowing; for a deposit, it is the return for tying up funds.
Bond: A debt security. The buyer of a bond lends money to the issuer (state/company) and receives interest plus repayment of principal at maturity.
Compound interest: The effect where interest is added to principal, and in the next period interest is also charged or earned on that interest.
Balloon payment: An amount you pay at the end of some leases if you want to take ownership (balloon / buyout).
Opportunity cost: The value of the best alternative you give up when choosing a particular decision. Example: if you use €5,000 for early loan repayment, the opportunity cost may be the return that money could have earned in another investment, or vice versa: if you invest the money, you give up the interest savings.
Premium: An additional payment, often in insurance (insurance premium) or as an amount above price (for example, for bonds trading above nominal value).
Down payment: Your initial own contribution (for example, in a loan or lease). A higher down payment usually lowers the financed amount and the interest cost.
Guarantor: A person who guarantees the borrower’s obligations. If the borrower does not pay, the bank can demand payment from the guarantor, in line with the contract and the law.
Portfolio: A collection of investments (for example, shares, bonds, ETF). The aim of a portfolio is diversification and risk management in line with the investor’s goals.
Early repayment: Repaying a loan before the end of its term / maturity. This can reduce interest costs. Slovenian law (ZPotK-2) caps any compensation fee at 0.5-1% of the prepaid principal and does not allow it at all on variable-rate loans.
Risk premium: The additional expected return an investor demands for taking on higher risk (for example, shares vs. government bonds).
Real interest rate: An interest rate adjusted for inflation. Roughly: nominal interest rate minus inflation.
Term / maturity: The period for which you take out a deposit or a loan. For a deposit, it is the lock-in period; for a loan, it is the repayment period.
Refinancing: Replacing an existing loan with a new one, often on better terms. The goal may be a lower instalment, a lower interest rate or a different term / maturity.
SWIFT / BIC: A bank code used for international payments. It is used together with IBAN, especially for payments outside SEPA or for identifying the bank.
Spread: The difference between two interest rates or two prices (for example, bid and ask). In lending, it can also describe the margin above a reference rate.
SEPA: The Single Euro Payments Area. It enables standardised euro transfers and direct debits between member countries.
SISBON: A Slovenian credit information exchange register where banks record loans, overdrafts and payment discipline. Banks check it when assessing creditworthiness.
SURS: The Statistical Office of the Republic of Slovenia. Among other things, it publishes minimum living cost data, which banks use when calculating creditworthiness.
Fund: An investment product where multiple investors pool money and a manager invests it according to a set strategy. Costs matter here too (for example, TER).
Account maintenance fees: Regular charges for maintaining an account, loan or investment product. When comparing offers, these costs should also be taken into account.
Variable interest rate: An interest rate that can change (for example, when EURIBOR changes). The instalment may be lower at the start, but it is less predictable.
Origination fees: One-off fees charged by a bank or provider when arranging a loan or another service. They affect APR.
Ounce (troy ounce): The standard unit for pricing precious metals (gold, silver) - 1 troy ounce = 31.1035 g. Gold and silver are often labelled with the ticker codes XAU and XAG.
TER: The Total Expense Ratio of a fund, expressed as a percentage. A higher TER means higher costs, which can reduce investment returns over time.
TRR (current account): A transaction account used for receiving salary, paying bills and everyday banking. In Slovenia, you may still see the acronym TRR on bank documents.
Risk: The possibility that the outcome will differ from what was expected, including negatively. In finance, it means the possibility of loss or a lower return.
Management fee: The cost of managing an investment product (for example, a fund). It is often part of TER or listed separately.
Savings: Setting money aside for the future (for example, in a deposit or savings account). It is important to consider inflation and real value.
Currency risk: The risk that a change in the exchange rate will change the value of an investment or liability in your home currency.
Default interest: Interest you pay if you settle an obligation late. The rate and rules may be set by contract and law.
Insurance premium: The price of insurance. You pay it monthly or annually, depending on the insurance contract.
Loan collateral: The way a bank reduces the risk of non-payment (for example, a mortgage, guarantor or insurance policy). It affects the terms and the interest rate.
Life insurance: Insurance that pays out an agreed amount when a defined event occurs (for example, the death of the insured person). It is sometimes used as part of loan security.
Market price: The price at which a commodity or security is currently trading on an exchange. For gold it is the starting point to which a dealer adds a premium, so you cannot buy gold in a shop at the market price.
DCA (dollar-cost averaging): Investing the same amount regularly, for example every month, regardless of the price. When the price is low you buy more, when it is high you buy less, so you buy at the average price and do not have to guess the right moment.
Good Delivery (LBMA): The standard of the London Bullion Market Association (LBMA). Its list names the refiners whose bars meet strict requirements for fineness and markings. Dealers buy such bars back easily and at a better price.
Investment gold: Gold bars or wafers with a fineness of at least 995 thousandths and gold coins of at least 900 thousandths, minted after 1800, that were legal tender. In Slovenia and the EU it is exempt from VAT, and a private individual pays no income tax when selling at a profit. Jewellery is not investment gold.
Buyback price: The price at which a dealer buys gold, silver or other goods back from you. It is usually somewhat below the market price. The gap between the buy and the buyback price is your cost, which a price rise must cover first.
Drawdown (investment): How far an investment fell from its highest point to its lowest point before rising again. It shows how much you can lose if you buy at the wrong time. After its peak in October 2012, gold fell 37% in euros and took almost seven years to recover.
Premium (precious metals): The amount a dealer charges above the market price of gold or silver. On a one-ounce bar it is about 1 to 3%, on a 1 g wafer as much as 10 to 15%.
Tungsten (fake gold): A metal almost as dense as gold (about 19.3 g/cm³). Counterfeiters fill bars with it and plate them with gold, so a fake weighs the same as a real bar and cannot be spotted without equipment. That is why you should only buy gold from trusted dealers.