- SIP Systematic Investment Plan
- A standing instruction to invest a fixed amount into a fund every month, automatically. Not a product — just a method of buying. Its superpower is removing your emotions from the schedule.
- Mutual fund
- A pool of money from many investors, managed by a professional, that buys a basket of stocks or bonds. You own units of the pool. One fund = instant diversification across dozens or hundreds of companies.
- NAV Net Asset Value
- The price of one unit of a mutual fund. The catch: a ₹10 NAV is not "cheaper" than a ₹500 NAV — it's just a different unit size. What matters is what the fund holds and what it charges, never the NAV number itself.
- Expense ratio TER
- The fund's annual fee, taken silently from the NAV every day. Index funds: 0.1–0.3%. Active funds: 1.5–2.25%. The catch: you never receive a bill, so most investors never notice they're paying it.
- Direct plan vs. Regular plan
- The same fund sold through two doors. Direct = you buy from the fund house, no middleman. Regular = a distributor is in the chain and earns 0.5–1.5% of your balance every year, forever, out of your returns. Always check for the word "Direct" in the fund name.
- Index fund
- A fund that simply buys every stock in an index (like the Nifty 50) in proportion, with no manager making picks. Boring by design, very cheap, and over 10+ years it beats most professional managers after fees.
- ETF Exchange-Traded Fund
- An index fund that trades on the stock exchange like a share. Needs a demat account. Slightly cheaper than index funds, but you must buy at market price — beginners usually find plain index funds simpler.
- Equity
- Ownership. A share of a company, or a fund that holds shares. Highest long-run growth of the major assets, and the largest short-term swings. The price of the growth is enduring the swings.
- Debt fund / fixed income
- Funds that lend money (to governments and companies) and collect interest. Steadier than equity, lower returns — think 6–8%. The catch: gains are taxed at your income slab rate, and "debt" is not "risk-free" (the borrower can default).
- ELSS Equity-Linked Savings Scheme
- An equity mutual fund with a 3-year lock-in that qualifies for a tax deduction under Section 80C (old tax regime). The catch: under the new regime the deduction doesn't apply — check which regime you're in before buying for tax reasons.
- NPS National Pension System
- A government-regulated, very low-cost retirement account with equity/debt mixes. Extra tax deduction available. The catch: locked until 60, and 40% of the corpus must buy an annuity at exit.
- PPF Public Provident Fund
- A 15-year government savings scheme, currently ~7.1% tax-free, sovereign-guaranteed. Excellent as the safe portion of a portfolio. The catch: long lock-in and the rate resets quarterly.
- EPF Employees' Provident Fund
- The retirement deduction from your salary, matched by your employer, earning ~8%+ tax-free. Free money via the match — never opt out of it to "invest better."
- FD Fixed Deposit
- A locked bank deposit at a fixed rate. Safe (insured up to ₹5 lakh per bank via DICGC) and predictable. The catch: interest is fully taxable at your slab, so after tax and inflation the real return is often near zero.
- Demat account
- An electronic locker for shares and ETFs, opened with a broker. Needed for stocks/ETFs; not needed for regular mutual funds. Watch the annual maintenance charge.
- XIRR
- Your true annualised return when money went in at different times (like a SIP). The only honest way to compare your SIP's performance to a fund's advertised return. Every platform can show it — look for it.
- CAGR Compound Annual Growth Rate
- The smoothed yearly rate that turns the starting amount into the ending amount. A fund that "doubled in 6 years" has a CAGR of ~12%. The catch: the smooth number hides violent year-to-year swings.
- LTCG / STCG Capital gains tax
- Tax on your profits when you sell. Equity held over a year: 12.5% on gains above ₹1.25 lakh/year (long-term). Under a year: 20% (short-term). The catch: every unnecessary switch or "rebalance" is a tax event.
- Exit load
- A penalty (typically 1%) for selling fund units within a set period, usually 12 months for equity funds. Fine if you're a long-term investor; a tax on the fidgety.
- AMC Asset Management Company
- The fund house — HDFC MF, SBI MF, ICICI Prudential, etc. Your money is held by a separate custodian, so even if an AMC shuts down, your units remain yours.
- AUM Assets Under Management
- Total money a fund manages. Bigger isn't better performance — it mostly signals popularity. Very small funds (<₹500 Cr) carry a little extra operational risk.
- Benchmark
- The index a fund measures itself against (e.g. Nifty 50). The one question that matters for an active fund: did it beat its benchmark after fees, over 5–10 years? Most don't.
- Asset allocation
- How your money splits across equity, debt, and gold. Decades of research say this split determines most of your outcome — far more than which specific funds you pick.
- Rebalancing
- Restoring your target split once a year — selling a bit of what grew, buying what lagged. Forces you to buy low and sell high mechanically. Once a year is plenty; more is churning.
- Diversification
- Not betting everything on one company, sector, or country. The only "free lunch" in investing: it reduces risk without necessarily reducing return. One index fund already diversifies across 50+ companies.
- Volatility
- How much prices bounce around. Volatility is not loss — it only becomes loss when you sell during it. Equity's long-run returns are the payment you receive for enduring volatility without flinching.
- Term insurance
- Pure life cover: you pay a small premium; your family gets a large sum if you die during the term. No maturity value, no investment component — which is exactly why it's cheap and exactly what you want. Rule of thumb: cover 10–15× your annual income.
- ULIP Unit-Linked Insurance Plan
- Insurance and investment fused into one product, with charges stacked on charges and a 5-year lock-in. Almost always worse than buying term insurance + mutual funds separately. If an agent is enthusiastic about it, ask what their commission is.
- NFO New Fund Offer
- A brand-new fund being launched, marketed "at just ₹10". The ₹10 means nothing (see NAV). No track record, launched when a theme is hot and sellable. An existing fund with a 10-year history is almost always the better pick.
- SWP Systematic Withdrawal Plan
- The reverse of a SIP — automatically selling a fixed amount monthly, used to draw an income from a corpus in retirement. More tax-efficient than taking dividends.
- STP Systematic Transfer Plan
- Automatically moving money from one fund to another monthly — commonly parking a lump sum in a liquid fund and drip-feeding it into equity to avoid investing it all at a peak.
- Liquid fund
- A debt fund holding very short-term instruments; the mutual-fund equivalent of a savings account, earning ~6–7% with next-day withdrawal. A natural home for tier-2 of an emergency fund.
- F&O Futures & Options
- Derivative contracts for hedging and speculation. SEBI's own study: ~9 in 10 retail F&O traders lose money, averaging ₹1 lakh+ a year. Not an investing tool — a professional risk-transfer market where beginners are the liquidity.
- P/E ratio Price-to-Earnings
- Price divided by yearly profit — roughly "years of profit you're paying upfront." Useful for sensing whether a market is expensive or cheap; useless as a timing tool. High P/E ≈ high expectations built into the price.
- Blue chip / large cap / mid cap / small cap
- Company size buckets. Large caps (top 100) are steadier; small caps swing harder both ways. The catch: "blue chip" is a marketing word with no legal definition — a fund named "Blue-chip" is just a large-cap fund.
- SEBI Securities and Exchange Board of India
- The market regulator. Two letters matter to you: an advisor who is a SEBI RIA (Registered Investment Adviser) is legally bound to act in your interest and is paid by you, not by commissions.
- Rupee cost averaging
- What a SIP does automatically: your fixed ₹10,000 buys more units when prices are low, fewer when high. It doesn't beat lump-sum investing on average — its real value is making crashes work for you and keeping you invested.
- Sovereign Gold Bond / Gold ETF
- Ways to own gold without jewellery's making charges (8–25%) or purity doubt. For portfolio gold (5–10% max), these beat the locker. Jeweller "gold savings schemes" are neither — they're unregulated deposits.
- Nominee
- The person who can claim your investment if you die. Takes two minutes to set on every account, and its absence is why tens of thousands of crores sit unclaimed in India. Set it today, on everything.
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