Finance Lexicon.

The process of spreading out a loan into a series of fixed payments over time. While the payments are equal, the portion going to interest starts high and decreases over the life of the loan.

An investment strategy that aims to balance risk and reward by apportioning a portfolio's assets according to an individual's goals, risk tolerance, and investment horizon.

A condition in which securities prices fall 20% or more from recent highs amid widespread pessimism and negative investor sentiment.

A financial market of a group of securities in which prices are rising or are expected to rise.

Interest calculated on the principal balance plus the accumulated interest from previous periods. It is essentially 'interest on interest'.

A measure that examines the weighted average of prices of a basket of consumer goods and services. It is one of the most frequently used statistics for identifying periods of inflation or deflation.

A personal finance measure that compares an individual's monthly debt payment to their monthly gross income.

A financial ratio that tells you the percentage of a company's share price that it pays out in dividends each year.

An amount of money set aside to cover large, unexpected expenses or a loss of income. It acts as a financial safety net.

A fixed payment amount made by a borrower to a lender at a specified date each calendar month.

The annual fee that all funds or ETFs charge their shareholders. It expresses the percentage of assets used to pay for administrative and other operating expenses.

A lifestyle movement whose goal is financial independence and retiring much earlier than traditional budgets or retirement plans allow.

A fixed deposit account for NRIs to park their foreign currency in India without currency conversion risk.

A sequence of numbers where each term after the first is found by multiplying the previous one by a fixed, non-zero number called the common ratio. Used for calculating future values.

A legal entity in Indian tax law that can be used for tax planning and holding ancestral property.

A type of mutual fund or ETF with a portfolio constructed to match or track the components of a financial market index, such as the Nifty 50.

The rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling.

Profits from the sale of an asset held for a specific period (usually more than 1 or 2 years in India). Taxed at a preferential rate.

A voluntary, defined contribution retirement savings scheme in India designed to enable the subscribers to make optimum decisions regarding their future.

A long-term savings-cum-tax-saving instrument in India with a 15-year lock-in period and tax-free interest.

The process of realigning the weightings of a portfolio of assets to maintain the original or desired level of asset allocation or risk.

A monetary policy used by central banks to decrease the amount of liquidity or money supply in the economy.

The annual percentage return realized on an investment, which is adjusted for changes in prices due to inflation or other external effects.

Government securities denominated in grams of gold. They are substitutes for holding physical gold.

A facility offered by mutual funds to investors to invest in a disciplined manner at regular intervals.

Profit made on an asset held for a short duration (less than 12-36 months depending on asset type). Usually taxed at higher rates.

A facility that allows an investor to withdraw a fixed amount of money from their mutual fund at regular intervals.

Bonds issued by government-backed entities where the interest earned is exempt from income tax.

The actual rate of return of an investment or a pool of investments over a given evaluation period, including interest, capital gains, dividends, and distributions.

A product that provides the benefits of both insurance and investment in a single plan.

A statistical measure of the dispersion of returns for a given security or market index. Often used as a proxy for risk.

The total return anticipated on a bond if the bond is held until it matures.

A debt security that doesn't pay interest but is instead traded at a deep discount, rendering profit at maturity when the bond is redeemed for its full face value.

Accounts that use Aadhaar for e-KYC (Know Your Customer) to enable paperless and instant investment processing in India.

The return that an asset achieves over a certain period, expressed as a percentage of the initial investment, without comparison to a benchmark.

Growth that happens at a constant rate over time, as opposed to exponential growth where the rate of growth itself increases.

The simultaneous purchase and sale of an asset to profit from a difference in the price. It is a trade that profits by exploiting the price differences of identical or similar financial instruments.

A 3-digit numeric summary of your credit history, rating, and report, ranging from 300 to 900. A score above 750 is generally considered excellent.

A measurement of a bank's available capital expressed as a percentage of a bank's risk-weighted credit exposures.

The number of times interest is calculated and added to the principal each year (e.g., annually, semi-annually, quarterly, or monthly).

The amount of revolving credit you're currently using divided by the total amount of revolving credit you have available.

Insurance provided by the Deposit Insurance and Credit Guarantee Corporation, which covers up to ₹5 Lakh per bank for deposits in India.

A mutual fund scheme where the AMC does not pay any commission to distributors, resulting in a lower expense ratio for the investor.

A type of diversified equity mutual fund that qualifies for tax tax deduction under Section 80C, featuring a 3-year lock-in period.

A type of pooled investment security that operates much like a mutual fund, but is traded on stock exchanges.

A fee charged by a mutual fund company to an investor for exiting or redeeming units from a scheme within a specified period.

The legal and ethical obligation of a financial advisor to act in the best interest of their client at all times.

The average of a set of products, the calculation of which is commonly used to determine the performance results of an investment or portfolio.

A technique used to adjust the purchase price of an investment for inflation, which helps in reducing the long-term capital gains tax.

A category of mutual funds that invest in short-term debt instruments like treasury bills and commercial papers with maturities up to 91 days.

The market value of a single unit of a mutual fund scheme, calculated by dividing the total value of all assets by the number of units.

The rate of return on an investment without adjusting for inflation or taxes.

The proportion of earnings paid out as dividends to shareholders, typically expressed as a percentage.

The specific percentage deviation from a target asset allocation that triggers a portfolio rebalancing event.

The section of the Indian Income Tax Act that allows deductions for premiums paid toward health insurance.

A measure used to help investors understand the return of an investment compared to its risk.

A medical insurance policy that provides additional coverage over and above a base health policy, covering multiple claims after a threshold.

The practice of selling securities at a loss to offset a capital gains tax liability.

A transaction where an investor sells a security at a loss and then buys it back shortly after, primarily to claim a tax benefit.