Every term, in plain English

Interest a bond has earned since its last coupon date but not yet paid; a buyer usually pays it to the seller on top of the quoted price.

Fixed income

A privately pooled, SEBI-registered investment vehicle — such as a private equity, venture or hedge-style fund — typically for high-net-worth investors.

General

The return a fund earned above or below what its benchmark or level of market risk would explain — a rough gauge of a manager’s value-add.

Returns & risk

A contract, usually bought from a life insurer with a lump sum, that pays you a regular income for life or for a set period.

Retirement

How you divide money across asset classes such as equity, debt, gold and cash — the biggest single driver of a portfolio’s risk and behaviour.

Planning

The total market value of investments a scheme or fund house manages on behalf of investors at a point in time.

Mutual funds

The index a fund’s performance is measured against, chosen to represent the market or segment the fund invests in.

Returns & risk

How much a fund or stock has tended to move relative to its benchmark; a beta of 1.2 suggests swings about 20% larger in either direction.

Returns & risk

The steady yearly growth rate that would take an investment from its starting value to its ending value over a given period.

Returns & risk

The profit made when you sell or redeem an investment for more than it cost; taxed as short- or long-term depending on how long you held it.

Tax

The share of claims an insurer settled out of the claims it dealt with in a year — one indicator of how it handles claims.

Insurance

The share of each health insurance claim you agree to pay yourself, such as 10% or 20%, with the insurer paying the rest.

Insurance

Earning returns on past returns as well as on the original amount, so growth accelerates the longer money stays invested.

General

The interest a bond pays its holder, stated as an annual percentage of the bond’s face value and paid on fixed dates.

Fixed income

A rating agency’s opinion of how likely a borrower is to pay interest and principal on time, on a scale running from AAA down to D.

Fixed income

The risk that a bond issuer or borrower fails to pay interest or repay principal in full and on time.

Fixed income

A fixed deposit that reinvests interest within the deposit and pays principal plus all accumulated interest together at maturity.

Fixed income

A bond’s annual coupon divided by its current market price — a quick measure of income relative to what you pay today.

Fixed income

Lending money in return for interest — through bonds, deposits or debt mutual funds — with returns driven mainly by interest rates and credit quality.

General

The share of your monthly income that goes to loan repayments — a measure lenders use, and a useful check on financial strain.

Planning

Cover from DICGC, an RBI subsidiary, that protects bank deposits up to ₹5 lakh per depositor per bank if an insured bank fails.

Fixed income

The version of a mutual fund scheme bought directly from the fund house, with no distributor commission and so a lower expense ratio.

Mutual funds

Spreading money across different investments so that a loss in any one of them has a limited effect on the whole portfolio.

Planning

The weighted average time, in years, to receive a bond’s cash flows — and a guide to how sensitive its price is to interest rates.

Fixed income

An equity mutual fund with a three-year lock-in whose investments can qualify for a tax deduction under the old tax regime, within limits.

Mutual funds

Money kept safe and easy to reach to cover several months of essential expenses if income stops or an unexpected cost arrives.

Planning

Ownership in a company through its shares; equity investors share in the company’s growth and profits, and bear the risk of losses.

General

A fund, usually tracking an index or holding gold or bonds, whose units are listed and traded on a stock exchange like shares.

Mutual funds

A fee some mutual fund schemes charge if you redeem units within a specified period, deducted from the redemption amount.

Mutual funds

The yearly cost of running a mutual fund scheme, shown as a percentage of its assets and deducted from the scheme before NAV is published.

Mutual funds

The nominal amount of a bond — what the issuer repays at maturity and the base on which coupon payments are calculated.

Fixed income

A deposit with a bank or finance company that earns a fixed interest rate for a chosen term, with principal and interest due at maturity.

Fixed income

A tradeable debt instrument issued by the central or a state government to borrow money, carrying very low credit risk in the domestic market.

Fixed income

A mutual fund option that keeps all gains invested in the scheme instead of paying them out, so returns show up entirely in the NAV.

Mutual funds

Insurance that pays for hospitalisation and related medical costs, up to a sum insured, under your policy’s terms and exclusions.

Insurance

An estimate of the economic value of your future income to your family — a common way to size life insurance cover.

Insurance

A mutual fund that invests across asset classes — usually equity and debt, sometimes gold — in proportions set by its category and mandate.

Mutual funds

A mutual fund option that pays out distributions from time to time; payouts can include part of your own capital, not just income.

Mutual funds

A mutual fund that aims to replicate a market index by holding the index’s constituents in the same proportions, at low cost.

Mutual funds

The rate at which prices rise over time, which steadily reduces what a fixed amount of money can buy.

Planning

The risk that a bond’s price falls when market interest rates rise — larger for bonds and debt funds with longer duration.

Fixed income

The identity and address verification you complete with a regulated intermediary before investing in mutual funds or securities.

General

A debt mutual fund that invests in very short-term money-market instruments, often used to park money needed soon.

Mutual funds

Gains on assets held longer than a set period; for listed shares and equity-oriented funds, that currently means more than 12 months.

Tax

Investing a single, larger amount at one time, rather than spreading it across instalments.

Mutual funds

The date on which a bond, deposit or other fixed-term investment ends and its principal is due to be repaid.

Fixed income

An estimate of how much a bond’s price changes, in percent, for a one percentage point change in interest rates.

Fixed income

The per-unit value of a mutual fund scheme, worked out from the market value of its holdings after expenses and published each business day.

Mutual funds

Everything you own minus everything you owe — a snapshot of your financial position at a point in time.

Planning

A fixed deposit that pays interest out at regular intervals — monthly, quarterly, half-yearly or yearly — and returns the principal at maturity.

Fixed income

A voluntary, market-linked, defined-contribution retirement scheme regulated by PFRDA, in which contributions build a corpus for retirement.

Retirement

The two NPS account types: Tier 1 is the core pension account with withdrawal limits; Tier 2 is an optional, flexible savings account.

Retirement

A SEBI-regulated service in which a portfolio manager manages securities held in your own name, with a high minimum investment.

General

Your return after accounting for inflation — the growth in what your money can actually buy.

Returns & risk

Bringing a portfolio back to its intended asset mix after market movements have pushed it away from target.

Planning

The version of a mutual fund scheme bought through a distributor; its expense ratio includes the distributor’s commission.

Mutual funds

A SEBI-mandated dial on every mutual fund scheme that shows its risk level on a six-step scale from Low to Very High.

Mutual funds

Investing a fixed amount at regular intervals, so you buy more units when prices are low and fewer when they are high.

Mutual funds

The share of your income you save or invest each month — one of the strongest levers on how quickly you can reach your goals.

Planning

The return earned above a baseline, such as a Treasury bill yield, for each unit of volatility taken; higher means more return per unit of risk.

Returns & risk

A way to invest a fixed amount in a mutual fund at regular intervals, usually monthly, instead of investing everything at once.

Mutual funds

A measure of how widely an investment’s returns have varied around their average; a higher figure means a bumpier ride.

Returns & risk

Gains on assets sold within a set holding period; for listed shares and equity-oriented funds, gains on holdings of 12 months or less.

Tax

An SIP whose instalment rises at set intervals — usually yearly, by a fixed amount or percentage — so investing keeps pace with income.

Mutual funds

An instruction to move a fixed amount at regular intervals from one mutual fund scheme to another within the same fund house.

Mutual funds

The cover amount in a life insurance policy — what the insurer agrees to pay your nominees on a valid claim.

Insurance

An instruction to redeem a fixed amount from a mutual fund at regular intervals, used to draw a steady cash flow from an existing investment.

Mutual funds

Tax withheld by the payer — an employer, bank or fund house — before paying you, and credited against your final tax for the year.

Tax

Pure life insurance that pays a fixed amount to your nominees if you die during the policy term, with no payout if you outlive it.

Insurance

How much an index fund’s or ETF’s returns have deviated from its index over time; lower means it has followed the index more closely.

Mutual funds

A period after a health policy starts during which some conditions are not covered, such as pre-existing diseases or specified illnesses.

Insurance

An annualised return for investments with several cash flows on irregular dates, such as SIPs, top-ups and partial withdrawals.

Returns & risk

The annualised return on a bond bought at today’s price and held to maturity, if every payment arrives as promised and coupons are reinvested at that rate.

Fixed income

A bond that pays no periodic interest; it is bought at a discount to face value and repays the full face value at maturity.

Fixed income