Glossary

Money words, in plain language.

107 investing, tax, insurance and NRI terms, explained the way we'd explain them across the table.

107 terms

Advance taxTax: Income tax paid in instalments during the year, rather than all at the end. It often applies to professionals and business owners with income not fully covered by TDS.
AIF (Alternative Investment Fund)Accounts & regulation: A privately pooled fund regulated by SEBI, investing in areas such as private equity, private credit or specialised strategies, with high minimum investments.
AMC (Asset Management Company)Mutual funds: The company that manages a mutual fund's schemes, also called the fund house.
AMFIAccounts & regulation: The Association of Mutual Funds in India, the industry body that registers mutual fund distributors and promotes investor awareness.
APMIAccounts & regulation: The Association of Portfolio Managers in India, the industry body for portfolio management services, which registers PMS distributors.
ARNAccounts & regulation: The AMFI Registration Number given to a registered mutual fund distributor. You can verify it on the AMFI website.
Asset allocationBasics: How your money is divided between asset classes such as equity, debt, gold and cash. It drives most of a portfolio's risk and return, so it is decided before choosing individual products.
Asset classBasics: A group of investments that behave in similar ways, such as equity (shares), debt (bonds and deposits), gold or real estate.
AUM (Assets Under Management)Mutual funds: The total market value of money a fund or fund house manages.

Balanced advantage fundMutual funds: A hybrid fund that changes how much it holds in equity and debt depending on market conditions, within the limits set in its scheme documents.
Bear marketMarkets: A prolonged period of falling share prices and pessimism.
BenchmarkMutual funds: The index a fund's performance is compared against, such as the Nifty 50 for a large-cap fund.
BondMarkets: A loan you make to a government or company in return for interest and the return of your money at maturity.
Bull marketMarkets: A prolonged period of rising share prices and optimism.

CAGR (Compound Annual Growth Rate)Markets: The steady yearly growth rate that would take an investment from its starting value to its ending value over a period.
Capital gainsTax: The profit when you sell an investment for more than you paid. It is taxed differently depending on the asset and how long you held it.
CAS (Consolidated Account Statement)Accounts & regulation: A single statement showing all your mutual fund holdings across fund houses, linked to your PAN.
CIBIL scoreLoans: A three-digit credit score that lenders use to judge how reliably you repay. Paying on time keeps it healthy.
CompoundingBasics: Earning returns on your earlier returns, not just on what you put in. The longer money stays invested, the more compounding does the work, which is why starting early matters so much.
CorpusGoals & retirement: The total amount you need to have built up for a goal, such as retirement or a child's education.
Credit riskMarkets: The risk that a borrower, such as a company whose bond a fund holds, fails to pay interest or repay on time.
Critical illness coverInsurance: Insurance that pays a lump sum if you are diagnosed with a serious illness listed in the policy, whatever your hospital bills.

Debt fundMutual funds: A mutual fund that invests mainly in bonds, government securities and money-market instruments. Usually steadier than equity, though not risk-free.
Demat accountAccounts & regulation: An account that holds shares and other securities electronically.
Disability coverInsurance: Insurance that pays if an accident or illness leaves you unable to work, temporarily or permanently. Important for anyone whose income depends on their skills.
DiversificationBasics: Spreading money across different investments so that one poor performer doesn't sink the whole portfolio.
DividendMarkets: A share of a company's profit paid out to its shareholders.
DTAANRI: A Double Taxation Avoidance Agreement between India and another country, so the same income isn't fully taxed twice.

ELSS (Equity Linked Savings Scheme)Mutual funds: An equity mutual fund that can qualify for a tax deduction under the old tax regime, with a lock-in of three years from each investment.
Emergency fundBasics: Money kept safe and easy to access to cover several months of expenses if income stops or a large bill arrives. It comes before investing for long-term goals.
EMILoans: Equated Monthly Instalment: the fixed monthly payment that repays a loan with interest over its term.
Endowment planInsurance: A traditional policy that combines life cover with savings and pays a maturity amount. It often provides less cover and lower returns than keeping insurance and investing separate.
EPF (Employees' Provident Fund)Goals & retirement: A retirement savings scheme for salaried employees, with contributions from both employee and employer.
Equity fundMutual funds: A mutual fund that invests mainly in shares of companies. It aims for long-term growth and its value moves with the stock market.
Exit loadMutual funds: A fee some funds charge if you redeem within a set period after investing. Details are in the scheme documents.
Expense ratio (TER)Mutual funds: The yearly cost of running a fund, expressed as a percentage of its assets and deducted from the fund before its NAV is published.

Family floaterInsurance: A health insurance policy where one sum insured is shared by the whole family.
FEMANRI: The Foreign Exchange Management Act, which governs how NRIs can invest in India and move money in and out.
FIREGoals & retirement: Financial Independence, Retire Early: building enough wealth to stop depending on a salary well before the usual retirement age.
Flexi-cap fundMutual funds: An equity fund free to invest across large, mid and small companies in whatever proportion the fund manager chooses.
Fund managerMutual funds: The professional who decides what a mutual fund buys and sells, within the scheme's stated objective.

GIFT CityNRI: India's international financial services centre in Gujarat, where certain funds are offered in foreign currency.
Goal-based investingGoals & retirement: Investing for each life goal separately, with its own amount, date and risk level, instead of one undifferentiated pot.
GratuityGoals & retirement: A lump sum an employer pays an employee who leaves after completing the qualifying years of service.
Growth and IDCW optionsMutual funds: In the growth option, gains stay invested and build up in the NAV. In the IDCW (Income Distribution cum Capital Withdrawal) option, the fund may pay out part of your money from time to time.

Holding periodTax: How long you held an investment before selling. It decides whether a gain counts as short-term or long-term for tax.
Hybrid fundMutual funds: A mutual fund that invests in a mix of equity and debt, and sometimes gold, to balance growth and stability.

Index fundMutual funds: A fund that copies a market index, such as the Nifty 50, instead of picking stocks. Costs are usually lower.
IndexationTax: Adjusting the purchase price of an asset for inflation when calculating capital gains, where the law allows it.
InflationBasics: The rise in prices over time, which means the same rupee buys less each year. Long-term goals must be planned in future rupees, not today's.
Interest rate riskMarkets: The risk that bond prices fall when interest rates rise. Longer-term bonds are more sensitive.

KYC (Know Your Customer)Accounts & regulation: The identity and address verification required before you can invest. Done once, it is recognised across fund houses.

Large, mid and small capMutual funds: Groups of companies by market size. Large caps are the biggest and generally steadier; small caps can grow faster but swing more.
Liquid fundMutual funds: A debt fund investing in very short-term instruments, often used to park money for short periods or an emergency fund.
LiquidityBasics: How quickly and easily an investment can be turned into cash without a big loss in value.
LTCG and STCGTax: Long-term and short-term capital gains. The dividing line and the tax rates depend on the type of investment and current tax law.
Lump sumMutual funds: Investing a single, larger amount at one time instead of spreading it out through a SIP.

Market capitalisationMarkets: The total value of a company's shares on the stock market.
Mutual fundMutual funds: A pooled investment where many investors' money is managed together by professionals, according to a stated objective.

NAV (Net Asset Value)Mutual funds: The price of one unit of a mutual fund on a given day, calculated from the value of everything the fund holds minus its costs.
Net worthBasics: Everything you own minus everything you owe.
NFO (New Fund Offer)Mutual funds: The launch period when a new mutual fund scheme first raises money from investors.
Nifty 50 and SensexMarkets: India's best-known stock market indices, tracking 50 large companies on the NSE and 30 on the BSE respectively.
NominationGoals & retirement: Naming the person who receives an account or investment if the holder dies. Keeping nominations updated saves your family time and stress.
Nominee (insurance)Insurance: The person who receives the claim amount if the policyholder dies.
NPS (National Pension System)Goals & retirement: A government-regulated retirement scheme where you invest during your working life and use the corpus for retirement income.
NRE accountNRI: A rupee account for NRIs funded from overseas income. Balances are freely repatriable and interest is tax-free in India.
NRO accountNRI: A rupee account for NRIs to manage income earned in India, such as rent or dividends. Repatriation is limited and interest is taxable in India.

Old and new tax regimeTax: Two ways to calculate income tax in India. The old regime allows more deductions; the new regime has lower rates with fewer deductions. The better choice depends on your income and deductions.

P/E ratioMarkets: A company's share price divided by its earnings per share. A rough measure of how expensive a share is.
PMS (Portfolio Management Services)Accounts & regulation: A professionally managed portfolio of securities held in your own demat account, with a regulatory minimum investment.
Portfolio overlapMutual funds: When several funds you hold own many of the same stocks, so you are less diversified than it looks.
PPF (Public Provident Fund)Goals & retirement: A government-backed long-term savings scheme with a fixed tenure and tax benefits.
PrepaymentLoans: Paying off part of a loan early to cut interest or the term. Whether to prepay or invest depends on the loan rate and your goals.
Professional indemnityInsurance: Insurance that covers professionals, such as doctors, against claims of negligence or error in their work.

Real returnBasics: The return on an investment after allowing for inflation. It shows whether your money is actually growing in buying power.
RebalancingBasics: Bringing a portfolio back to its intended asset allocation after markets have moved it, for example by trimming equity after a strong run.
RedemptionMutual funds: Selling your mutual fund units back to the fund to get your money.
RepatriationNRI: Moving money from India back to your country of residence, within the rules for the account and investment.
Residential statusNRI: Whether you count as a resident or non-resident for Indian tax, based mainly on the days you spend in India. It decides what income is taxed in India.
Retirement corpusGoals & retirement: The amount needed at retirement to fund your expenses for the rest of your life, allowing for inflation.
Risk profileBasics: An assessment of how much investment risk you can take, based on your goals, time horizon, finances and comfort with ups and downs. Recommendations should follow it.
RTA (Registrar and Transfer Agent)Accounts & regulation: The company that keeps records and processes transactions for fund houses, such as CAMS or KFintech.
Rupee cost averagingMarkets: Through a SIP, the same amount buys more units when prices are low and fewer when high, which can lower the average cost over time.

Scheme Information Document (SID)Mutual funds: The official document describing a mutual fund scheme's objective, strategy, risks and costs. Read it before investing.
SCORESAccounts & regulation: SEBI's online system for investors to lodge and track complaints against market intermediaries.
SEBIAccounts & regulation: The Securities and Exchange Board of India, the regulator for securities markets, mutual funds and portfolio managers.
Section 80CTax: A section of the Income Tax Act allowing deductions for certain investments and payments, such as ELSS, PPF and life insurance premiums, under the old tax regime.
Section 80DTax: A section allowing deductions for health insurance premiums paid for yourself, your family and your parents, under the old tax regime.
SIF (Specialised Investment Fund)Accounts & regulation: A newer SEBI-regulated category that sits between mutual funds and PMS, allowing more flexible strategies with a higher minimum investment.
SIP (Systematic Investment Plan)Mutual funds: Investing a fixed amount in a mutual fund at regular intervals, usually monthly. It builds discipline and spreads purchases over time.
Sovereign Gold BondMarkets: A government security whose value is linked to the price of gold, issued in place of physical gold.
Step-up SIPMutual funds: A SIP whose amount increases by a set amount or percentage each year, usually in line with rising income.
STP (Systematic Transfer Plan)Mutual funds: Moving a fixed amount regularly from one fund to another, for example from a liquid fund into an equity fund to invest a lump sum gradually.
Sum assuredInsurance: The amount a life insurance policy pays on a claim.
Super top-upInsurance: Health cover that pays once your bills cross a set amount in a year, a cost-effective way to raise total cover.
SWP (Systematic Withdrawal Plan)Mutual funds: Withdrawing a fixed amount from a mutual fund at regular intervals, often used to create a monthly income in retirement.

Tax harvestingTax: Selling and reinvesting to use available tax exemptions on gains, or to offset gains with losses, within the rules. Best done with your CA.
TDS (Tax Deducted at Source)Tax: Tax deducted by the payer, such as an employer or bank, before money reaches you, and credited against your tax liability.
Term insuranceInsurance: Pure life cover for a fixed period. It pays your family if you die during the term, and offers the most cover for the premium.
Time horizonBasics: How long you can stay invested before you need the money for a goal. Longer horizons can usually take more equity risk.

ULIPInsurance: A Unit Linked Insurance Plan that combines life cover with market-linked investment. Costs and lock-ins should be understood fully before buying.
UnitsMutual funds: What you hold when you invest in a mutual fund. Your investment buys units at that day's NAV.

VolatilityBasics: How much and how quickly an investment's value moves up and down. Equity is more volatile than debt in the short term.

WillGoals & retirement: A legal document stating who receives your assets after your death. It works alongside nominations, which don't by themselves decide final ownership.

XIRRMarkets: A way to calculate the annual return on investments made at different times, like a SIP, where a simple average would be misleading.

YieldMarkets: The income an investment produces, such as interest from a bond, expressed as a percentage of its price.

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