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Identity theft

When a fraudster steals your identity, using it to make purchases or obtain credit in your name.

Illiquidity

The difficulty experienced when trying to change an investment back to cash.

Immediate vesting annuity

A quick way to get a pension. You buy the annuity with a lump sum and the income is paid straight away.

Income fund

A fund which focuses on achieving a high level of income.

Independent financial advisor (IFA)

An investment adviser who can make recommendations across the entire market, and who isn’t tied to advising on one company’s products (unlike a tied agent). Can be paid by commission or on a fee basis.

Index-linked investment

An investment with a return linked to the rate of inflation. The best known example is index-linked government gilts.

Individual savings account (ISA)

A way of protecting some of your savings and investments from the taxman - up to a limit set by the government. The current limit is £10,200. Up to half of this can be saved in a cash ISA, with the rest in a shares ISA. Alternatively, you can use up your whole allowance in a shares ISA. Cash ISAs are offered by banks and building societies and are essentially savings accounts with the bonus of tax-free interest. Shares ISAs are ‘wrappers’ within which you can hold shares, funds or certain other investments - and any gains are free from tax. They are sold by investment firms, advisers, stockbrokers and banks.

Individual voluntary arrangement (IVA)

A way of repaying your debts without having to resort to bankruptcy. Most of your creditors have to agree to accept the repayment plans. IVAs are usually only suitable for reasonably small levels of debt.

Inflation

The general increase in prices over time. Inflation has the effect of reducing the buying power of money. The most common measure of inflation is the Retail Prices Index (RPI). Negative inflation is called deflation.

Inheritance tax (IHT)

This is a tax that is levied on the value of your estate when you die. It is currently paid at 40% on anything above a threshold of £325,000.

Insider dealing

This refers to the illegal use of privileged information which, if made public, would significantly affect the share price.

Interest

The rate you’ll pay on debts - or the rate you’ll get on savings.

Interest-only mortgage

A mortgage in which you only repay the interest over the term of the loan, and pay the capital when the mortgage finishes. Cheaper than a repayment mortgage, but also riskier, as you need to find the money to repay the original loan at the end of the term.

Intestacy

What can happen if you die without making a will. In this situation, the law states how your assets will be distributed.

Investment club

A group of individual investors who club together to buy shares on a collective basis, then share any profits made.

Investment management firm

A firm which runs open ended investment companies (Oeics), unit or investment trusts. Actively managed funds are overseen by expert investment fund managers.

Investment trust

A fund which invests in a range of companies’ shares, just like unit trusts or open ended investment companies (Oeics). However, the structure is different: Investment trusts are closed ended funds, which means there are a set number of shares. The shares are traded just like ordinary companies on the stock market, and you buy them through a stockbroker or adviser.

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