30 terms — plain-English definitions with formulas, examples, and links to free calculators.
Loan Amortisation
The process of paying off a loan in regular instalments over time, where each payment covers interest first and then reduces the outstanding principal.
Annual Percentage Rate
The true annual cost of borrowing money, including the interest rate and all mandatory fees, expressed as a yearly percentage to enable accurate loan comparison.
Assets Under Management
The total market value of all investments managed by a fund house or portfolio manager on behalf of clients. AUM is a key indicator of a mutual fund's size and investor confidence.
Compound Annual Growth Rate
The mean annual growth rate of an investment over a specified time period longer than one year, smoothing out volatility to show a steady rate of return.
CIBIL Credit Score
A three-digit number (300–900) that represents your creditworthiness based on your repayment history, credit utilisation, loan mix, and credit enquiries. A score above 750 is considered good in India.
Earnings Before Interest, Taxes, Depreciation and Amortisation
A measure of a company's core operating profitability before accounting for financing costs, tax obligations, and non-cash charges like depreciation and amortisation.
Equity Linked Savings Scheme
A type of mutual fund that invests primarily in equities and qualifies for a tax deduction of up to ₹1.5 lakh per year under Section 80C, with the shortest lock-in period of 3 years.
Equated Monthly Instalment
A fixed monthly payment that repays a loan over a set period, covering both the principal amount and the interest accrued.
Annual Fund Expense Ratio
The annual fee charged by a mutual fund to cover management, operational, and distribution costs, expressed as a percentage of the fund's average AUM. Directly reduces your investment returns.
Cost Inflation Index Adjustment
A method of adjusting the purchase price of an asset for inflation using the Cost Inflation Index (CII) before computing capital gains tax, reducing the taxable gain on long-term assets.
Consumer Price Inflation
The rate at which the general price level of goods and services rises over time, eroding purchasing power. Measured in India primarily through the Consumer Price Index (CPI).
Internal Rate of Return
The discount rate at which the net present value of all cash flows from an investment equals zero — effectively the annualised rate of return expected from the project.
Long Term Capital Gains
Profit earned on selling a capital asset held for more than a specified period. Taxed at concessional rates in India — 12.5% on equity (above ₹1.25 lakh) and 12.5% on debt/real estate with indexation.
Loan-to-Value Ratio
The ratio of a loan amount to the appraised value of the asset being purchased, expressed as a percentage. Lenders use LTV to assess lending risk.
Net Asset Value
The per-unit price of a mutual fund, calculated by dividing the total net assets of the fund by the number of units outstanding.
Personal Net Worth
The total value of everything you own (assets) minus everything you owe (liabilities). Net worth is the most comprehensive single-number measure of your financial health.
National Pension Scheme
A government-sponsored voluntary retirement savings scheme in India that invests contributions across equity, corporate bonds, and government securities.
Recurring Deposit
A bank deposit where you invest a fixed amount every month for a set tenure, earning compound interest and a lump sum at maturity.
Repurchase Agreement Rate
The rate at which the Reserve Bank of India lends money to commercial banks. When the RBI raises the repo rate, borrowing becomes costlier, which increases loan interest rates across the economy.
Return on Investment
A performance metric that measures the gain or loss from an investment relative to its cost, expressed as a percentage.
Section 80C — Income Tax Deduction
A provision in the Indian Income Tax Act that allows individuals and HUFs to claim a deduction of up to ₹1.5 lakh per financial year from taxable income by investing in specified instruments.
Section 80D — Health Insurance Tax Deduction
An income tax deduction for health insurance premiums paid for self, spouse, children, and parents. Maximum deduction ranges from ₹25,000 to ₹1 lakh depending on age of the insured.
Systematic Investment Plan
A method of investing a fixed amount regularly in a mutual fund, allowing you to accumulate wealth gradually through the power of compounding.
Short Term Capital Gains
Profit earned on selling a capital asset held for less than the specified holding period. Taxed at 20% for equity and at your income tax slab rate for debt and other assets.