Financial glossary
Plain-English explanations of the terms you'll come across while investing, borrowing, or protecting your finances.
SIP (Systematic Investment Plan)
A fixed amount invested at regular intervals, usually monthly, into a mutual fund. SIPs average your purchase cost over time and build investing discipline.
NAV (Net Asset Value)
The per-unit market value of a mutual fund on a given day — calculated as the fund's total assets minus liabilities, divided by the number of outstanding units.
Mutual Fund
A pool of money from many investors, professionally managed and invested in a mix of stocks, bonds, or other securities based on the fund's stated objective.
AMC (Asset Management Company)
The company that manages a mutual fund's investments on behalf of its investors, in line with the fund's stated objective and regulations.
Expense Ratio
The annual fee a mutual fund charges investors for managing the fund, expressed as a percentage of the fund's average assets.
CAGR (Compound Annual Growth Rate)
The average annual growth rate of an investment over a period longer than one year, assuming profits are reinvested each year.
XIRR (Extended Internal Rate of Return)
A method used to calculate returns on investments made at different points in time, such as SIPs, accounting for the timing of each cash flow.
Term Insurance
A pure life insurance product that pays a death benefit to nominees if the policyholder passes away during the policy term. It has no maturity or investment value.
ULIP (Unit Linked Insurance Plan)
An insurance product that combines life cover with investment in market-linked funds, with a portion of the premium going toward insurance and the rest toward investment.
EMI (Equated Monthly Instalment)
The fixed monthly payment made to repay a loan, covering both a portion of the principal and the interest, over an agreed tenure.
Credit Score
A three-digit number, typically ranging from 300 to 900 in India, that reflects your creditworthiness based on your borrowing and repayment history.
Bond
A debt instrument where an investor lends money to a company or government in exchange for periodic interest payments and return of principal at maturity.
Yield to Maturity (YTM)
The total return anticipated on a bond if it is held until it matures, accounting for its current price, coupon payments, and time remaining to maturity.
Unlisted Shares
Equity shares of a company that are not listed on a public stock exchange. They offer growth potential but come with lower liquidity and higher risk.
IPO (Initial Public Offering)
The process by which a private company offers its shares to the public for the first time, becoming listed on a stock exchange.
Portfolio Diversification
Spreading investments across different asset classes, sectors, or instruments to reduce the impact of any single investment underperforming.
Asset Allocation
The strategy of dividing an investment portfolio among different asset categories, such as equity, debt, and cash, based on goals and risk tolerance.
Risk Appetite
The level of risk an investor is willing and able to accept in pursuit of their financial goals, influenced by factors like age, income, and goals.
Compounding
The process where the returns an investment earns start generating their own returns over time, accelerating growth the longer money stays invested.
Inflation
The rate at which the general price level of goods and services rises over time, eroding the purchasing power of money.
Actuarial Valuation
A financial assessment that uses statistical and mathematical methods to evaluate risk, liabilities and long-term financial commitments, commonly used in insurance and pension planning.
Cash Flow Projection
A forward-looking estimate of the money expected to move in and out of a business over a period, used for planning and risk management.
SEBI (Securities and Exchange Board of India)
India's primary regulator for the securities and capital markets, responsible for protecting investor interests and regulating market participants.
AMFI (Association of Mutual Funds in India)
An industry body of SEBI-registered mutual fund houses in India that works to promote investor awareness and maintain professional standards.
IRDAI (Insurance Regulatory and Development Authority of India)
The regulatory body overseeing the insurance industry in India, responsible for protecting policyholder interests and regulating insurers.
ARN (AMFI Registration Number)
A unique identification number issued by AMFI to individuals or entities authorised to distribute mutual funds in India.
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