Glossary
Money words, explained.
Each one in a sentence or two, with an example in rupees.
- AIS
- Annual Information Statement: what the tax department already knows about your income.
- AMC
- Asset management company: the fund house that runs mutual funds.
- AMFI
- Association of Mutual Funds in India: the industry body.
- Arbitrage fund
- A fund that earns from small price gaps between markets, with very low ups and downs.
- ARN
- AMFI Registration Number: a mutual fund distributor's licence number.
- Asset allocation
- How your money is split between equity, debt and cash.
- AUM
- Assets under management: the total money in a fund.
- Basic pay
- The fixed core of your salary. PF, HRA and gratuity are worked out from it.
- Benchmark
- The index a fund is compared against.
- CAGR
- Compound annual growth rate: the steady yearly return that gets you from the start value to the end value.
- Capital gains
- The profit when you sell units for more than you paid.
- CAS
- Consolidated Account Statement: every fund you own, across fund houses, in one PDF.
- Cess
- An extra 4% on top of your income tax, for health and education.
- Compounding
- Earning returns on past returns, not just on what you put in.
- CTC
- Cost to company: everything your employer spends on you in a year, including parts you don't get as monthly pay.
- Cut-off time
- The time your money must reach the fund house to get that day's NAV.
- Debt fund
- A fund that lends to governments and companies for interest.
- DICGC
- The body that insures bank deposits up to ₹5 lakh per bank.
- Direct plan
- A fund plan bought straight from the fund house. Same fund, lower fee, no distributor commission.
- Drawdown
- How far a fund fell from a high point before it recovered. Shows the downside you might have to sit through.
- ELSS
- Equity linked savings scheme: an equity fund with a 3-year lock-in and an 80C deduction.
- Emergency fund
- Money kept aside for surprises: 3 to 6 months of expenses.
- eNACH
- An electronic bank mandate for automatic debits, approved through net banking or debit card.
- EPF
- Employees' Provident Fund: retirement savings your employer and you both pay into each month.
- EPS
- Employees' Pension Scheme: part of your employer's PF share, for a pension.
- Equity fund
- A fund that mainly buys company shares.
- Exit load
- A charge some funds take if you withdraw within a set time after investing.
- Fixed deposit
- Money left with a bank for a set time at a fixed interest rate.
- Flexi cap fund
- An equity fund free to invest in companies of any size.
- Folio
- Your account number with a fund house.
- Form 16
- Your employer's yearly certificate of salary paid and tax deducted.
- Form 26AS
- Your tax credit statement on the income tax portal.
- Gratuity
- A lump sum your employer pays when you leave after 5 or more years.
- Gross salary
- Your salary before tax and your own PF are taken out.
- Growth option
- Gains stay in the fund and show up as a rising NAV.
- HRA
- House rent allowance: part of salary meant for rent. Can lower tax in the old regime if you pay rent.
- Hybrid fund
- A fund that holds both shares and bonds.
- IDCW
- Income distribution cum capital withdrawal: the option that pays out part of the fund's value.
- In-hand salary
- What actually reaches your bank account each month.
- Index fund
- A fund that copies a market index like the Nifty 50.
- Inflation
- Prices rising over time, so the same money buys less.
- Instant redemption
- Getting money from a liquid fund within minutes.
- ITR
- Income tax return: the yearly form where you report income and settle tax.
- KYC
- Know your customer: a one-time identity check before you can invest.
- Large cap
- The 100 biggest listed companies by market value.
- Liquid fund
- A debt fund that lends for up to 91 days. Often used to park money you'll need soon.
- Lock-in
- A period during which you can't withdraw.
- LTCG
- Long-term capital gains: on equity funds held over 12 months.
- Lump sum
- Investing a large amount at once instead of monthly.
- Mandate
- Your permission for automatic debits from your bank account, for SIPs.
- Mid cap
- Companies ranked 101 to 250 by market value.
- Money market fund
- A debt fund that lends for up to one year.
- Mutual fund
- A pool of money from many investors, managed under fixed rules.
- NAV
- Net asset value: the price of one unit of a mutual fund, published every business day.
- New tax regime
- The default way to work out income tax: lower rates, few deductions.
- Nominee
- The person who receives your units if something happens to you.
- NPS
- National Pension System: a retirement account with its own tax benefits.
- Old tax regime
- The optional way to work out tax: higher rates, but with deductions like 80C, 80D and HRA.
- Overnight fund
- A debt fund that lends for just one day.
- PAN
- Permanent Account Number: your tax ID, needed for any mutual fund investment.
- Past performance
- How a fund did before. It doesn't promise future returns.
- PPF
- Public Provident Fund: a 15-year government savings scheme.
- Professional tax
- A small state tax on salaries, at most ₹2,500 a year.
- Redemption
- Selling your units to get money back.
- Registrar (RTA)
- The company that keeps the record of who owns which units, like CAMS or KFintech.
- Regular plan
- A fund plan bought through a distributor. Its fee includes the distributor's commission.
- Riskometer
- A six-level scale every fund must show, from Low to Very High risk.
- Rupee cost averaging
- Buying more units when prices are low and fewer when high, by investing a fixed amount.
- SEBI
- Securities and Exchange Board of India: the regulator for mutual funds and markets.
- Section 80C
- Deductions up to ₹1.5 lakh a year for things like EPF, PPF, ELSS and life insurance. Old regime only.
- Section 80D
- A deduction for health insurance premiums. Old regime only.
- Section 87A rebate
- A rebate that cancels tax below a certain income.
- Short duration fund
- A debt fund that lends for roughly 1 to 3 years on average.
- SIP
- Systematic investment plan: investing a fixed amount in a fund every month, automatically.
- Small cap
- Companies ranked 251 and below by market value.
- Special allowance
- The flexible part of your salary left after basic, HRA and PF. Fully taxable.
- Standard deduction
- A flat amount taken off salary before tax, with no proof needed.
- STCG
- Short-term capital gains: on equity funds sold within 12 months.
- Step-up SIP
- A SIP that rises by a fixed percent or amount each year.
- STP
- Systematic transfer plan: moving a fixed amount from one fund to another every month.
- Sweep-in FD
- A savings account that moves extra money into an FD automatically.
- Switch
- Moving money from one fund to another in the same fund house.
- SWP
- Systematic withdrawal plan: taking out a fixed amount every month.
- Tax harvesting
- Selling and buying back to use the yearly ₹1.25 lakh tax-free limit.
- TDS
- Tax deducted at source: income tax your employer takes from each month's salary.
- TER (expense ratio)
- The yearly fee a fund takes out of your money, as a percentage. Shown before you invest.
- UAN
- Universal Account Number: your PF account number for life.
- UCC
- Unique Client Code: your investor account with BSE StAR MF.
- Units
- Your share of a mutual fund.
- UPI AutoPay
- A mandate set up in your UPI app for automatic SIP debits.
- Volatility
- How much a fund's value swings up and down.
- VPF
- Voluntary PF: putting more than 12% of basic into your EPF.
- XIRR
- A yearly return that accounts for money going in at different times, like monthly SIPs.