On October 7, Financial Education Day 2024 will be celebrated under the motto “Digital Finance: learn, innovate, progress”. According to the Bank of Spain, financial culture refers to the knowledge, behaviors and attitudes that allow us to make financial decisions throughout life. However, a study prepared by the same entity indicates that 8 out of 10 Spaniards do not know or understand concepts such as inflation or the difference between the nominal interest rate (TIN) and the APR.
In this context, Oney, a financial entity specializing in payment solutions and financial services, is strengthening its commitment to training and awareness of the importance of knowing terms related to economics and finance. It is for this reason that the company’s experts have prepared a glossary of essential financial terms that Spaniards must master to have the ability to understand and manage their personal finances, make informed decisions or achieve stability long-term economic:
1. Compound interest: This is interest which is added to the initial capital, generating new interest on this amount. This concept is essential understand long-term investment growth and the accumulation of debt.
2. Inflation: It is the general increase in the prices of goods and services in an economy that reduces the purchasing power of money. Understanding this concept is essential to good financial planning. and always protect your savings.
3. Diversification: This investment strategy involves spreading capital across different assets to reduce risk. This is a common practice in investment portfolio management to minimize losses during volatility.
4. Liquidity: Liquidity is a financial concept that refers to the capacity of an asset be converted into cash without loss of value. Cash savings are an example of liquid assets.
5. Interest rate: This is the percentage charged for using borrowed money or paid to keep the money in a savings or investment account. In this sense, it is a fundamental indicator for evaluating credits and loans.
6. Profitability: profit from an investment. This can be expressed as a percentage of the invested capital, it is also one of the key indicators to measure the success of an investment.
7. Fixed duration: file this is carried out in a financial institution for a certain period in exchange for a fixed interest rate. It is a low-risk investment option that guarantees predictable returns.
8. BNPL (Buy now, pay later): A type of financing that allows consumers to purchase products or services immediately and pay for them in deferred installments, usually interest-free if certain conditions are met, such as paying within a certain time frame.
9. Nominal interest (TIN): is the interest rate that a lender or bank sets for a loan or investment, without taking into account inflation or other factors such as additional costs or real returns.
10. APR (Annual Equivalent Rate): is a standardized measure that reflects the true cost or performance of a financial product (such as a loan or investment) in annual terms, taking into account not only the nominal interest rate, but also commissions, additional expenses and duration of operations.
“At Oney, we are committed to continuing to promote financial education to our customers and society in general, providing them with tools and knowledge that enable them to make more responsible decisions. We believe that an informed customer is an empowered customer. Financial education is the basis for consumers to better manage their resources, take advantage of market opportunities and avoid unnecessary risks,” says Salvador Loscertales, Managing Director of Oney Spain.
Through initiatives such as this glossary, Oney wishes to contribute to reducing the financial knowledge gap which affects a large part of the population. Access to quality financial information is a powerful tool for building a more secure and prosperous future for all.
