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Labour-sponsored investment fund (LSIF)

An investment fund sponsored by labour organizations. Must follow government rules and meet specific investment criteria. Often provides tax breaks for investors.

Laddering

A way to invest where you spread your money across the same investment with different maturity dates. Example: With $5,000, you could put $1,000 into a 1-year GIC, $1,000 into a 2-year GIC and so on. That way you would have $1,000 of principal maturing every year for 5 years.

Large-cap stock

The stock of a company that has issued shares worth between $10 billion and $200 billion.

Lender

Any person or organization that lends money.

Leverage

A way to make a larger investment by using borrowed money to invest. The more you invest, the more money you can make. But if things don’t work out, you will have bigger losses.

Liabilities

What a company owes, including money, goods or services.

Licensed

An advisor or firm that has met the standards set by the insurance industry. Regulated by the Financial Services Commission of Ontario (FSCO).

Life annuity

A life annuity gives you a guaranteed regular income for life. Payments usually stop when you die, and no money will go to your estate. You may choose to add an option that allows your spouse, beneficiary or estate to continue to receive your payments after your death.

Life income fund (LIF)

A fund that you open with the money from your pension plan when you leave your company or retire. They give you a regular flow of income, but they have rules about how much you withdraw each year.

Life Insurance

Insurance that pays cash to your family or other beneficiary after your death. This can give them income and help pay your funeral and other final costs.

Lifelong learning plan (LLP)

You and your spouse each can borrow up to $20,000 from your RRSPs to pay for full-time or part-time education or training expenses under the government's Lifelong Learning Plan (LLP). The maximum you can take out in any year is $10,000. You won’t pay any tax on the money as long as you pay it back over a period of 10 years.

Limited partnership

A special type of business partnership. Two or more partners own and manage a business together, along with one or more limited partners who only invest money. The limited partners have limited liability for the company’s debts.

Line of credit

An account that you set up with a financial institution (often a bank) to borrow money. It lets you borrow what you need, when you need it, up to a certain limit.

Liquidity

Refers to how easy it is to change an investment or asset into cash, without affecting the price. Liquid assets include most stocks, money market instruments and government bonds. Your home or other property is not very liquid.

Liquidity risk

The risk of being unable to sell your investment at fair price and get your money out when you want to. To sell the investment, you may need to accept a lower price. In some cases it may not be possible to sell the investment at all.

Living trust

A formal account set up to hold assets for a beneficiary. You cannot take back the assets of the trust. A trustee manages them until the beneficiary reaches legal age. The person who sets up the trust can be the trustee or can appoint someone else.

Living will

A legal document that sets out the medical care that you do or do not want in case you are ever not able to state your wishes.

Loan

An agreement to borrow money for a set period of time. You agree to pay back the full amount, plus interest, by a set date.

Loan insurance

Insurance that pays your loan payments if you lose your job or become sick or hurt and can’t work.

Locked-in

An account that you cannot take money out of until you retire. In most cases, you can't get a cash payout. Your plan may make exceptions if you have a terminal illness, or a small pension benefit.

Locked-in retirement account (LIRA)

An account that holds money moved out of a pension plan. You may use one if you are changing companies and can take your pension savings with you. It works like an RRSP, but your money is locked in. You cannot withdraw the funds until you retire.

Locked-in retirement income fund (LRIF)

A fund that you open with the money from your pension plan when you leave your company or retire. They give you a regular flow of income, but they have rules about how much you withdraw each year.

Locked-in RRSP

An account that holds money moved out of a pension plan. You may use one if you are changing companies and can take your pension savings with you. It works like an RRSP, but your money is locked in. You cannot withdraw the funds until you retire.

Long position

An investment strategy where you buy a security you believe will rise in value.

Longevity risk

The risk of outliving your savings. This risk is particularly relevant for people who are retired, or are nearing retirement.

Lost profit potential

A way to measure the possible gains that you give up when you buy mutual funds, because you pay fees to an expert fund manager instead of investing that money yourself. Also called foregone earnings.

Lump-sum payment

A large one-time payment of money.

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