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death benefit

A payment made from a super fund to a beneficiary when you die. For example, from a super fund or insurance policy.

debenture

A medium- to long-term investment issued by a company. You are lending money to the company. In return you will receive a regular and fixed interest amount for the term of the investment. The invested funds (principal) are repaid at the end of the term (maturity). Your money may or may not be secured by assets of the company.

debit card

A plastic card that gives you access to your bank accounts via ATM and EFTPOS facilities.

debt agreement

A legal agreement for the repayment of unpaid debts that is less formal and intrusive than bankruptcy. The agreement is between you and all of your unsecured creditors and allows you to pay back your debts over an extended period of time at an amount per week you can afford.

debt consolidation

See loan consolidation.

debt investment

Comprises cash and fixed interest investments. You lend money to an organisation in return for interest payments. The company you lent to now owes you or is indebted to you.

debt to equity ratio

Total debt divided by total equity. A company's equity represents the amount of shareholder's funds.

default fee

An amount of money that you may be charged if you fail to make a repayment when it is due on a loan or credit card.

defensive asset

Cash or fixed interest investments that are generally low risk and less volatile than growth investments.

deferred establishment fee

A fee charged by a lender when a loan is paid off before a set period has elapsed e.g. 3 years. Also known as an exit fee. It's to cover the costs the lender incurred in setting up the loan.

deferred payment

A debt that can be paid off at some time in the future.

defined benefit fund

A super fund where your retirement benefits are calculated by a predetermined formula. Retirement benefits are usually calculated using your average salary over the last few years before you retire and the number of years you worked in the company or public service. In general, market fluctuations have limited effect on the value of your benefit, although in periods of prolonged economic downturn, your defined benefits could be affected. If the fund performance is poor, the trustee will generally ask an employer to help pay member benefits as required.

dependant

A person who relies on you for financial support e.g. children under 18 or your non-working spouse.

deposit bond

Can be used in place of a deposit when a buyer exchanges contracts on a property. It guarantees that the buyer will pay the full deposit by an agreed date.

depreciation

A decrease in the value of an asset.

derivative

A financial instrument whose value is 'derived' from an underlying asset such as a share, commodity or index. Common types of derivatives include options and futures contracts.

direct debit

A payment collection method that allows loan or service providers to draw money from your bank account on a regular basis.

dispute resolution

A way to resolve issues instead of going to court. All Australian Financial Services (AFS) licensees, banks and other credit providers must belong to a dispute resolution scheme.

diversification

Spreading investments across a wide variety of different asset classes to reduce risk.

dividend

A payment made by a company to its shareholders. The payment is a share of the profits of the company and is based on the number of shares a person holds. A franked dividend consists of profits the company has already paid tax on.

dividend yield

A financial ratio that measures how much a company pays out in dividends each year relative to its share price.

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