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Dealing representative

Dealing representatives (commonly known as stockbrokers) are registered to buy and sell a variety of investments on your behalf, such as stocks, bonds, mutual funds, ETFs and closed-end funds. The investment firms they work for (commonly known as brokerage firms) are registered as investment dealers.

Death benefit

Money that your life insurance or savings and pension plan(s) pays to your estate or beneficiary after your death. Example: If you contributed to the Canada Pension Plan, money may go to your estate, spouse or common-law partner and children.

Debenture

An investment like a bond where you are lending money to a government or company based only on their reputation. The borrower does not back the loan with any collateral. Example: A Treasury bill (T-bill).

Debt

Money that you have borrowed. You must repay the loan, with interest, by a set date.

Deduction limit

The most you can deduct for your RRSP contribution on your income tax return. Any money that you put into a pension plan at work counts as part of your RRSP contribution.

Deferred profit sharing plan (DPSP)

A plan that employers use to build a retirement fund for employees. The company pays a share of its profits into the fund. The money grows inside the plan tax-free. Note: employees cannot put their own money into a DPSP.

Defined benefit (DB) pension plan

A registered savings plan that promises to pay you a set income when you retire. A formula sets how much you will get. It is often based on your income when you were working and the number of years you have worked.

Defined contribution (DC) pension plan

A registered plan that tells you how much your company will save for you in a personal account. The amount is based on how much you make every year. The best deal is where you can contribute to and your employer matches your contribution. Also known as a money purchase plan. Note: DC plans don’t guarantee what you will get when you retire. That depends on how well you invest the money over the years.

Deflation

A drop in the cost of goods and services over time. Often happens when the supply of money or credit shrinks, or when consumers or government cut spending. This means the same number of dollars will buy more.

Depreciation

The amount that something drops in value over time. Example: A home may go down in value if you don’t maintain it well. A car or a piece of business equipment will go down in value as it wears out.

Derivative

An investment that is based on a contract that gives you the right to buy and sell at set prices. Value is based on performance of an underlying financial asset, commodity or other investments. Examples: Futures, options and swaps.

Designation

A title that tells you that a person has qualified to work as a financial planner. For example, an advisor may get the Certified Financial Planner (CFP) credential based on their education, experience, exams and ethics.

Developed market

Generally defined as a country with well-developed capital markets and economy. Developed market countries may be less risky than countries in emerging or frontier markets.

Direct deposit

A way to have money from your pay, investments or the government put into your account without a cheque. Example: You can ask the Canada Revenue Agency to deposit your tax refund directly into your bank account rather than mailing you a cheque.

Disability insurance

Insurance that gives you income in case you get sick or hurt and can’t work.

Discount

When something sells for less than its normal price.

Discount broker

A stockbroker who charges lower fees to buy and sell investments, as opposed to a full-service broker. Does not provide investment advice.

Discount brokerage

A brokerage firm that charges lower fees to buy and sell investments, as opposed to a full-service brokerage. Does not provide investment advice.

Discount series (Series D)

A series or class of mutual funds that are tailored to do-it-yourself investors who purchase mutual funds through a discount brokerage.

Distribution

A payment you get from a mutual fund or company stock. Funds must distribute any capital gains to shareholders at least once a year. This payment can take the form of cash or additional units. Some companies offer Dividend Reinvestment Plans (DRIPs).

Diversification

A way of spreading investment risk by by choosing a mix of investments. The idea is that some investments will do well at times when others are not.

Dividend

Part of a company's profits that it pays to shareholders in proportion to the total number of shares held. The Board of Directors sets the amount. For common shares, the amount varies. It may skip dividends if business is poor or the directors invest money in things like new equipment or buildings.

Dividend payout ratio (DPR)

Measures what a company pays out to investors in dividends compared to what the stock is earning. It's calculated by dividing the annual dividends per share by the EPS.

Dividend reinvestment plan (DRIP)

The automatic reinvestment of shareholder dividends in more shares of the company's stock.

Dividend stocks

Provide regular income in the form of a dividend, which is a part of the company’s profits paid to its investors.

Dividend yield

A ratio that shows annual dividend rate expressed as a percentage of the current market price of a stock. To calculate, you divide the total dividends you get in a year by the price of each share that you own.

Dollar-cost averaging

A strategy where you try to reduce the cost of buying securities by spreading your purchases out over time. You buy a set amount of a security, such as a mutual fund, at regular intervals. In the end, you average out your cost per unit.

Down payment

The money you put into buying a large item like a car or home.

Duration

Duration is a way to compare bonds with different interest rates and terms. It measures how sensitive a bond’s price is to interest rate changes. It is stated in years.

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