Glossary
Finance terms, plainly explained
Every acronym and jargon word you'll bump into across the site — SIP, XIRR, LTCG, CIBIL and more — defined in one line.
45 terms
#
- 50/30/20 RuleBudgeting
- A budgeting guideline: spend 50% on needs, 30% on wants, and save/invest 20% of your take-home pay.
A
- APRBorrowing
- Annual Percentage Rate — the true yearly cost of a loan including interest and fees. Use this to compare loans, not the headline rate.
- Asset AllocationInvesting
- How you split your portfolio across equity, debt, gold and cash. The biggest single driver of long-term returns and risk.
B
- Bond YieldMarkets
- The effective annual return on a bond at its current market price, factoring in coupon payments and price movements.
- Bull / Bear MarketMarkets
- A bull market is a sustained rise in prices; a bear market is a sustained fall of 20% or more from recent highs.
C
- CAGRInvesting
- Compound Annual Growth Rate — the yearly return an investment would have earned if it grew smoothly over the period.
- Claim Settlement RatioInsurance
- The % of claims an insurer paid out in a year. Prefer insurers with a consistently high ratio (>95%).
- Credit RatingMarkets
- A score (AAA down to D) assigned by agencies like CRISIL that estimates how likely a borrower is to repay a bond.
- Credit Score / CIBILBorrowing
- A 300–900 score that reflects your repayment history. 750+ gets you the best loan and card offers.
D
- Debt TrapBorrowing
- When you borrow new debt just to service old debt — interest snowballs, minimums spiral, and you can't dig out without a plan.
- DiversificationInvesting
- Owning different types of assets so a fall in one doesn't wipe out your portfolio.
- DrawdownMarkets
- The peak-to-trough fall in an investment's value. A useful measure of worst-case pain during a downturn.
E
- Emergency FundBudgeting
- 3–6 months of essential expenses kept in a savings account or liquid fund for job loss, medical events, or emergencies.
- EMIBorrowing
- Equated Monthly Instalment — the fixed monthly payment on a loan that covers both principal and interest.
- EPFInvesting
- Employee Provident Fund — a retirement scheme where both you and your employer contribute 12% of basic salary each month.
- ETFInvesting
- Exchange-Traded Fund — a basket of securities (usually an index like Nifty 50) that trades on the stock exchange like a share.
F
- Fixed Deposit (FD)Banking
- Money locked with a bank for a fixed period at a pre-agreed interest rate. Safe, predictable, taxable interest.
- Form 16 / 26AS / AISTaxes
- Form 16 is your salary TDS certificate. 26AS and AIS are consolidated statements showing all income and taxes reported against your PAN.
H
- Health Insurance / MediclaimInsurance
- A policy that pays your hospital bills up to the sum insured. Essential before you build wealth — one big illness can wipe out savings.
I
- IFSCBanking
- An 11-character code identifying a specific bank branch for NEFT, RTGS and IMPS transfers.
- Index FundInvesting
- A mutual fund that simply mirrors an index (e.g. Nifty 50) instead of picking stocks. Low cost, no fund-manager risk.
- InvITInvesting
- Infrastructure Investment Trust — like a REIT but for infrastructure assets like highways and power lines.
L
- Large / Mid / Small CapMarkets
- Categorisation of listed companies by market capitalisation. Top 100 = large-cap, 101–250 = mid-cap, 251+ = small-cap.
- LTCG / STCGTaxes
- Long-term and short-term capital gains — profit from selling an asset, taxed differently based on how long you held it.
M
- Mutual FundInvesting
- A pool of money from many investors that a fund manager invests across stocks, bonds or other assets on their behalf.
N
- NEFT / RTGS / IMPSBanking
- Three ways to transfer money between bank accounts. NEFT settles in batches, RTGS is real-time for large amounts, IMPS is 24×7 instant.
- Net WorthBudgeting
- Everything you own (assets) minus everything you owe (liabilities). The single best number to track your financial progress.
- Nifty 50 / SensexMarkets
- India's two flagship stock indices, tracking the 50 largest NSE-listed companies and the 30 largest BSE-listed companies respectively.
- NPSInvesting
- National Pension System — a long-term retirement product with equity+debt mix, low fees, and an extra ₹50,000 tax deduction under 80CCD(1B).
O
- Old vs New Tax RegimeTaxes
- Two ways to compute income tax in India. Old regime allows deductions (80C, HRA, etc.). New regime has lower slabs but almost no deductions.
P
- PPFInvesting
- Public Provident Fund — a 15-year government-backed savings scheme with tax-free returns (currently ~7.1%) and an 80C deduction.
R
- Recurring Deposit (RD)Banking
- A deposit where you contribute a fixed amount every month for a fixed tenure and earn interest like an FD.
- REITInvesting
- Real Estate Investment Trust — a listed vehicle that owns rent-generating commercial properties and pays out most of the rent as dividends.
S
- Savings AccountBanking
- A bank account that pays a small amount of interest (typically 2.5–4%) on your balance and lets you withdraw anytime.
- Section 80CTaxes
- Section of the Income Tax Act that lets you deduct up to ₹1.5 lakh/year for PPF, ELSS, EPF, life insurance premium, home loan principal, etc.
- Secured vs Unsecured LoanBorrowing
- Secured loans (home, gold, car) are backed by an asset and cheaper. Unsecured (personal, credit card) have no collateral and cost much more.
- SIPInvesting
- Systematic Investment Plan — auto-investing a fixed amount into a mutual fund every month to average out your buy price over time.
- Sovereign Gold Bond (SGB)Investing
- RBI-issued bonds that track the price of gold and pay 2.5% annual interest on top. Tax-free on maturity after 8 years.
- Sum Assured / Sum InsuredInsurance
- The maximum amount the insurer will pay out. Life = sum assured; health = sum insured.
T
- TDSTaxes
- Tax Deducted at Source — tax withheld by the payer (employer, bank) and deposited with the government on your behalf.
- Term InsuranceInsurance
- Pure life cover that pays a lump sum to your family if you die during the policy term. No maturity payout — that's a feature, not a bug.
U
- UPIBanking
- Unified Payments Interface — India's instant bank-to-bank transfer system that works via a mobile app using a VPA like name@bank.
V
- VolatilityMarkets
- How much an asset's price swings up and down. Higher volatility = higher potential return and higher potential loss.
X
- XIRRInvesting
- The equivalent annual return on investments with irregular cash flows (like SIPs and top-ups). The right metric for SIP returns.