Navigating the world of finance can be complex and intimidating at times. There are a huge array of choices, from different financial products to conflicting advice on the safest place to put your money.

It’s tricky to know what to do sometimes, and the opaque language that financial advisors use doesn’t help. So, with that in mind, we’re bringing you our quick guide to just some of the most common – and important – financial terms that you might be too embarrassed to ask about.

APR

This is a term you’ll see everywhere. It’s plastered all over the pre-agreed credit card offers you get through the post. Or it might be the headline figure on the financing deal you’re signing up for to buy that new car.

But what exactly does APR mean? Well, it stands for Annual Percentage Rate. In simple terms it is the rate of interest that you will pay (if it’s a loan), or that you will earn if its an investment.

As you’d expect, it’s measured over a year. So, if it’s an investment with an APR of 3 per cent, at the end of one year you’ll have your investment, plus 3 per cent of that amount (including fees).

Premium or excess?

Most of us will have insurance of one kind or another (if you haven’t, you really should!). But there are a couple of terms – premiums and deductibles (or ‘excess’ in the UK) – which can cause a bit of confusion.

Basically, the premium is the amount that you will pay to protect whatever it is you’re insuring. It might be monthly amount or in some cases it is an annual payment.

The deductible (or excess) however is the amount that you will pay up to before the insurer covers the rest. So in the event of a claim, if your insured item has a £3,000 excess but a total insured value of £10,000, you’ll pay the £3,000 and then the insurance company will pay the remaining £7,000.

Cash

We all know what cash is, surely? Well in financial terms it’s slightly more complicated than simply referring to the paper and metal in your wallet. When financial advisors talk about investing cash, they’re often also referring to money that can easily be converted into cash too. This could include anything from government bonds to money in a savings account.

Bonds

When we’re thinking of investing on the stock market, bonds are an interesting alternative to stocks and shares.

But what exactly is a bond? Well, one of the best ways to think of it is as an IOU, between you and a financial institution (or even the government). Bonds are a great way for these institutions to raise money, and at the same time give the people who are investing in them a steady income.

Bonds generally have a fixed interest rate too, so their performance is relatively easy to predict.