Financial Glossary

Financial Glossary – Investment & Banking Terms

Explore 100+ essential financial terms explained in simple language. From SIP and CAGR to mutual funds and tax planning.

A

Amortization

Gradual loan repayment through regular installments covering principal and interest.

Annual Percentage Rate (APR)

Yearly cost of borrowing including interest and fees.

Asset Allocation

Distribution of investments across stocks, bonds, cash, and other asset classes.

AUM (Assets Under Management)

Total market value of assets managed by a fund manager or investment firm.

B

Bear Market

Market condition where stock prices are falling and investor confidence is low.

Blue Chip

Established company with strong reputation and reliable dividends.

Bond

Fixed income security representing a loan with fixed interest payments.

Bull Market

Market condition where stock prices are rising and investor confidence is high.

BSE (Bombay Stock Exchange)

Primary stock exchange in India for trading stocks and securities.

C

CAGR

Compound Annual Growth Rate - average annual return over multiple years.

Capital Gains

Profit from selling an asset for more than the purchase price.

Compound Interest

Interest earned on both principal and accumulated interest over time.

CTC

Cost To Company - total employee compensation including salary and benefits.

Credit Score

Numerical rating of creditworthiness based on borrowing history.

D

Debt Fund

Mutual fund investing in bonds and fixed income securities.

Demat Account

Digital account for holding and trading securities in electronic form.

Depreciation

Reduction in asset value over time due to wear or obsolescence.

Diversification

Strategy of spreading investments across different assets to reduce risk.

Dividend

Cash payment distributed to shareholders from company profits.

E

ELSS

Equity Linked Savings Scheme - tax-advantaged mutual fund for Indian investors.

EMI

Equated Monthly Installment - fixed monthly loan repayment amount.

Equity

Ownership stake in a company represented by shares or stock.

ETF

Exchange Traded Fund - investment fund traded like stocks on exchanges.

Exchange Rate

Price at which one currency can be exchanged for another.

F

FD (Fixed Deposit)

Fixed income investment earning guaranteed interest over specific period.

FIRE

Financial Independence, Retire Early - strategy to accumulate wealth and retire young.

Floating Rate

Interest rate that adjusts based on market conditions and benchmarks.

Forex

Foreign exchange market for trading currencies globally.

Fund Manager

Professional who invests and manages mutual fund or portfolio assets.

G

GDP

Gross Domestic Product - total economic output of a country.

Gratuity

Lump sum payment given to employees at end of service.

Gross Salary

Total employee compensation before deductions and taxes.

GST

Goods and Services Tax - consumption tax on goods and services.

Growth Fund

Mutual fund focused on capital appreciation with higher risk.

H

HRA

House Rent Allowance - tax-free housing component of salary.

Hedge Fund

Investment fund using advanced strategies to maximize returns with managed risk.

I

Index Fund

Mutual fund tracking a market index like Sensex or Nifty.

Inflation

Rate at which general price levels of goods and services increase.

Interest Rate

Percentage charged by lender or paid by borrower on principal amount.

IPO

Initial Public Offering - first time a company's shares are offered to public.

IRDA

Insurance Regulatory and Development Authority - regulates insurance in India.

L

Liquidity

Ease of converting an asset to cash without significant price loss.

Lumpsum

Single large investment made at one time rather than in installments.

LTCG (Long Term Capital Gains)

Tax on profits from selling assets held for more than one year.

M

Maturity

Date when investment principal is repaid to investor.

Mutual Fund

Investment fund pooling money from investors to purchase diversified securities.

Market Cap

Market Capitalization - total value of a company's outstanding shares.

MCLR

Marginal Cost of Funds Based Lending Rate - RBI benchmark for loan rates.

N

NAV

Net Asset Value - price per unit of a mutual fund or ETF.

Net Worth

Total assets minus total liabilities; measure of financial position.

NPS

National Pension System - voluntary retirement savings scheme in India.

NSE

National Stock Exchange - largest stock exchange in India by volume.

NRI

Non-Resident Indian - Indian citizen living outside India.

P

PF (Provident Fund)

Employee savings scheme with employer and employee contributions.

Portfolio

Collection of investments held by an individual or fund.

PPF

Public Provident Fund - long-term tax-free savings scheme in India.

Premium

Amount paid above par value or price above current market value.

R

RD (Recurring Deposit)

Savings deposit with regular monthly fixed amount investments.

Repo Rate

Rate at which central bank lends to commercial banks overnight.

Returns

Profit or loss earned on an investment expressed as percentage.

Risk

Possibility of losing some or all investment capital.

ROI

Return on Investment - profit percentage on capital invested.

S

Sensex

Benchmark index of 30 largest companies listed on BSE.

SEBI

Securities and Exchange Board of India - regulates Indian securities market.

SIP

Systematic Investment Plan - regular monthly mutual fund investments.

STCG

Short Term Capital Gains - tax on profits from selling assets held under one year.

STP

Systematic Transfer Plan - automatic regular fund transfers between schemes.

SWP

Systematic Withdrawal Plan - regular periodic withdrawals from mutual fund.

T

Tax Deduction

Expense that reduces taxable income and tax liability.

TDS

Tax Deducted at Source - tax collected by payer and remitted to government.

Term Insurance

Life insurance providing coverage for specific period at low cost.

ULIP

Unit Linked Insurance Plan - combination of insurance and investment.

X

XIRR

Extended Internal Rate of Return - measures actual returns on irregular investments.

Why Learn Financial Terms?

Understanding financial terminology is essential for making informed investment decisions. Whether you are planning your retirement with a 401k, investing in mutual funds via SIP, or taking a home loan EMI, these terms will help you navigate financial products with confidence.

Use Our Calculators

Every glossary term links to our comprehensive definitions page which includes examples and related calculator tools. Understand the concept, then put it into practice with our free calculators.

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