Glossary

A section of the Income Tax Act allowing deductions up to ₹1.5L/year for specified investments and expenses — only available under the old tax regime.

An additional ₹50,000 tax deduction available exclusively for NPS contributions, over and above the ₹1.5L 80C limit.

A section of the Income Tax Act allowing deductions for health insurance premiums — up to ₹25,000/year (₹50,000 for senior citizens).

An investing style where a fund manager actively picks stocks aiming to outperform a benchmark index.

The extra return a fund generates above its benchmark index, after adjusting for risk.

Asset Management Company — the company that creates, manages, and markets mutual funds (e.g. HDFC AMC, SBI Mutual Fund).

A financial product that converts a lump sum into a regular (usually monthly) income stream, often for life.

How your total investments are split across asset classes like equity, debt, gold, and real estate.

Assets Under Management — the total market value of all investments a fund or fund house manages.

A measure of how much a fund or stock moves relative to the overall market — a beta of 1 means it moves in line with the market.

Compound Annual Growth Rate — the smoothed-out annual growth rate of an investment over a period, assuming steady compounding.

The percentage of insurance claims an insurer actually pays out in a year, out of all claims received.

The total accumulated value of an investment or savings pool at a given point in time.

A version of a mutual fund bought directly from the fund house, without a distributor — carrying a lower expense ratio.

Exempt-Exempt-Exempt — a tax status where the investment, the interest/growth, and the withdrawal are all tax-free.

Exempt-Exempt-Taxed — a tax status where the investment and growth are tax-free, but withdrawal/maturity is taxed.

Employees' Provident Fund — a mandatory retirement savings scheme for salaried employees, with employer matching contributions.

Exchange Traded Fund — a fund that trades on the stock exchange like a share, usually tracking an index or asset like gold.

A fee charged if you redeem your mutual fund units before a specified holding period.

The annual fee a mutual fund charges, expressed as a percentage of your investment, to cover fund management and operating costs.

A mutual fund category with no fixed minimum allocation across large, mid, and small caps — the manager has full discretion.

A window (typically 15-30 days) after buying an insurance policy during which you can cancel it and get a refund if you're unhappy with the terms.

The professional responsible for making the buy/sell decisions within a mutual fund's portfolio.

An exchange-traded fund that tracks gold prices and trades on the stock exchange like a share, backed by physical gold in vaults.

House Rent Allowance — a salary component that can be partly tax-exempt if you live in rented accommodation and claim it correctly.

Hindu Undivided Family — a separate legal tax entity recognised under Indian law, allowing a family to pool assets and get its own tax exemptions.

An adjustment that increases an asset's purchase cost for inflation before calculating capital gains tax — no longer available for most debt funds after April 2023.

Infrastructure Investment Trusts — listed vehicles that own operational infrastructure assets (toll roads, power lines) and distribute the income.

Insurance Regulatory and Development Authority of India — the regulator overseeing all insurance companies and products.

Companies ranked among the top 100 in India by market value — the biggest, most established businesses.

A period during which you cannot withdraw or redeem an investment without a penalty (or at all).

Long-Term Capital Gains — profit from an investment held beyond the specified long-term threshold (12 months for equity, 24 months for most other assets).

Investing your entire amount in one go, rather than spreading it out over time via SIP.

Companies ranked 101st to 250th in India by market value — bigger than small caps, smaller than large caps.

Net Asset Value — the price of one unit of a mutual fund, calculated at the end of each business day.

New Fund Offer — the initial launch period when a mutual fund first opens for subscription, typically priced at ₹10 per unit.

National Pension System — a government-regulated, market-linked retirement account with an additional ₹50,000 tax deduction.

An investing style that simply tracks a market index rather than trying to beat it through stock selection.

Pension Fund Regulatory and Development Authority — the regulator overseeing the National Pension System (NPS).

Public Provident Fund — a government savings scheme with a 15-year lock-in and EEE tax status.

The amount you pay — usually annually or monthly — to keep an insurance policy active.

Reserve Bank of India — the central bank regulating banks, interest rates, and instruments like government bonds and RBI Floating Rate Bonds.

Periodically adjusting your portfolio back to your target asset allocation as market movements shift the actual mix.

A version of a mutual fund bought through a distributor or advisor, who earns a trail commission built into a higher expense ratio.

Real Estate Investment Trusts — listed vehicles that own income-generating commercial property and distribute the rental income to unit holders.

Senior Citizen Savings Scheme — a government savings scheme exclusively for those aged 60+, offering one of the highest safe fixed rates.

Securities and Exchange Board of India — the regulator overseeing mutual funds, stock markets, PMS, AIFs, REITs, and InvITs.

Sovereign Gold Bonds — government bonds whose value tracks gold prices, paying an additional 2.5% fixed annual interest.

A measure of return earned per unit of risk taken — higher is better.

Systematic Investment Plan — investing a fixed amount into a mutual fund automatically every month.

Companies ranked below the top 250 in India by market value — the smallest listed businesses.

A statistical measure of how much a fund's returns swing above and below its average return.

Short-Term Capital Gains — profit from an investment sold before the long-term holding threshold is reached.

The guaranteed amount an insurance policy pays out on a claim (death, disability, or the covered event).

Systematic Withdrawal Plan — withdrawing a fixed amount from a mutual fund every month while the rest stays invested.

How much an index fund or ETF's returns deviate from the index it's supposed to copy.

Extended Internal Rate of Return — the annualised return of an investment where money went in or out at irregular times, like a SIP.