Financial Encyclopedia

Taxation

Advance Tax

Income tax paid in installments during the financial year as income is earned, mandatory if total annual tax liability after TDS exceeds ₹10,000 in India.

Fund Types

AIF (Alternative Investment Fund)

A privately pooled investment vehicle in India regulated by SEBI under Category I (Venture/Social), Category II (Private Equity/Debt), or Category III (Hedge Funds).

Advanced Metrics

Alpha

A risk-adjusted performance metric indicating the excess return generated by a mutual fund manager relative to its benchmark index.

Regulatory & Bodies

AMC (Asset Management Company)

A registered financial entity in India that manages money pooled from investors into various mutual fund schemes under SEBI regulations.

Regulatory & Bodies

AMFI (Association of Mutual Funds in India)

The primary industry body of SEBI-registered Asset Management Companies in India that promotes investor protection and ethical standards.

Behavioral Finance

Anchoring Bias

A behavioral finance tendency where an investor relies too heavily on an initial price point (e.g., 52-week high or purchase price) when making investment decisions.

Retirement & Withdrawal

Annuity Plan

A contract from an insurance company that guarantees periodic income payouts (monthly, quarterly, or annual) during retirement in exchange for a lump-sum deposit.

Fund Types

Arbitrage Fund

A hybrid mutual fund scheme that captures simultaneous price differences between cash and derivative markets, enjoying equity tax treatment.

Investment Basics

Assets Under Management (AUM)

The total market value of financial assets managed by a mutual fund scheme or Asset Management Company on behalf of investors.

Fund Types

Balanced Advantage Fund (BAF)

A dynamic asset allocation mutual fund that dynamically adjusts equity and debt weightings based on market valuation indicators like P/E and P/B.

Fund Types

Banking & PSU Debt Fund

A debt fund scheme mandated to invest at least 80% of its assets in debt instruments issued by Banks, Public Sector Undertakings (PSUs), and Public Financial Institutions.

Market Mechanics

Bear Market

A prolonged market phase characterized by falling asset prices, typically defined as a drop of 20% or more from recent peaks accompanied by pessimistic sentiment.

Advanced Metrics

Beta

A measurement of a fund's price sensitivity and volatility relative to the overall market benchmark. A beta above 1 indicates higher volatility than the market.

Market Mechanics

Bonus Issue (Bonus Shares)

Free additional shares issued by a company to its existing shareholders in a fixed ratio (e.g., 1:1) out of accumulated reserves without extra cash outlay.

Retirement & Withdrawal

Bucket Strategy

A retirement cash flow planning framework that segregates portfolio capital into Immediate (Cash/Liquid), Medium-Term (Debt/BAF), and Growth (Equity) buckets.

Market Mechanics

Bull Market

A sustained financial market period marked by rising stock prices, strong investor confidence, and economic expansion.

Advanced Metrics

CAGR (Compound Annual Growth Rate)

The annualized geometric growth rate of an investment over a multi-year horizon, assuming profits are continuously reinvested.

Taxation

Capital Gains Bonds (Section 54EC)

Specified bonds issued by REC, PFC, or NHAI offering capital gains tax exemption on long-term capital gains from property sales if invested within 6 months.

Taxation

Capital Loss Set-Off & Carry Forward

Provision under the Income Tax Act allowing short-term and long-term capital losses from mutual funds to be set off against capital gains and carried forward for up to 8 assessment years.

Operations & KYC

CAS (Consolidated Account Statement)

A single monthly statement aggregated across CAMS, KFintech, NSDL, and CDSL showing all mutual fund folios and demat holdings linked to your PAN.

Operations & KYC

Central KYC (CKYC)

A centralized digital repository storing investor Know Your Customer verification records in India, preventing repeated verification across financial entities.

Fund Types

Certificate of Deposit (CD)

A negotiable money market debt instrument issued by scheduled commercial banks for short-term liquidity funding.

Market Mechanics

Circuit Breaker (Upper/Lower Circuit)

SEBI-mandated price band limits that automatically halt stock trading or index operations when prices surge or crash beyond set percentage limits.

Fund Types

Commercial Paper (CP)

An unsecured short-term debt money market instrument issued by highly-rated corporations to finance working capital needs, maturing up to 1 year.

Fund Types

Corporate Bond Fund

A debt mutual fund mandated to invest at least 80% of its total assets in highest-rated AA+ and AAA corporate bonds.

Retirement & Withdrawal

Corpus Exhaustion Risk

The risk of depleting one's retirement capital before life expectancy due to high withdrawal rates, longevity, inflation, or poor market returns.

Regulatory & Bodies

Credit Rating Agencies (CRISIL, ICRA, CARE)

SEBI-regulated independent agencies in India that evaluate and assign creditworthiness scores (AAA, AA, A, D) to corporate debt instruments.

Fund Types

Credit Risk Fund

A debt mutual fund mandated to invest at least 65% of its assets in corporate bonds rated below AA, offering higher yields in exchange for credit default risk.

Advanced Metrics

Credit Spread

The yield difference between a corporate bond and a risk-free Government Security of equivalent maturity, reflecting default risk compensation.

Operations & KYC

Cut-Off Time

The daily SEBI-mandated deadline (e.g., 3:00 PM) for submission of purchase or redemption requests to determine the applicable day's NAV.

Fund Types

Debt Fund

A mutual fund scheme investing primarily in fixed-income securities like Government Bonds, Corporate Debentures, Treasury Bills, and Commercial Paper.

Taxation

Debt Mutual Fund Taxation

Tax rules under Indian tax laws where capital gains from debt mutual funds acquired on or after April 1, 2023 are added to the investor's total income and taxed at marginal slab rates.

Operations & KYC

Demat Account

An electronic account maintained with depositories (NSDL/CDSL) to hold financial securities like stocks, mutual fund units, and bonds in dematerialized form.

Fund Types

Direct Plan

A mutual fund plan bought directly from the AMC without distributor intervention. It carries a lower Total Expense Ratio (TER) and higher NAV than a Regular Plan.

Market Mechanics

Dividend Yield

A financial ratio showing how much a company pays out in dividends each year relative to its stock price, expressed as a percentage.

Advanced Metrics

Downside Deviation

A volatility measure focusing exclusively on negative return fluctuations below a target minimum threshold, ignoring positive upside volatility.

Fund Types

Dynamic Bond Fund

An open-ended debt fund that actively shifts portfolio duration between short and long maturities based on the fund manager's interest rate outlook.

Fund Types

ELSS (Equity Linked Savings Scheme)

An equity mutual fund offering tax deductions under Section 80C up to ₹1.5 Lakh per financial year, carrying a mandatory 3-year lock-in period.

Personal Finance & Savings

Emergency Fund (Contingency Fund)

A liquid reserve equivalent to 6–12 months of essential living expenses kept in liquid funds or savings accounts for unforeseen crises like job loss or health emergencies.

Retirement & Withdrawal

EPF (Employees' Provident Fund)

A statutory retirement savings scheme for salaried Indian employees governed by EPFO, receiving mandatory joint contributions from employee and employer.

Market Mechanics

Equity Risk Premium

The excess return that investing in the stock market provides over a risk-free rate (such as Government G-Sec yields) to compensate for market risk.

Fund Types

Equity Savings Fund

A hybrid scheme that invests in equity, debt, and arbitrage opportunities to maintain equity taxation while mitigating portfolio downside.

Retirement & Withdrawal

Estate Planning

The legal and financial process of arranging the management and transfer of an individual's assets and wealth to beneficiaries after death via Wills, Trusts, and Nominations.

Fund Types

ETF (Exchange Traded Fund)

An index-tracking investment security traded on stock exchanges (NSE/BSE) throughout trading hours at real-time market prices.

Market Mechanics

Ex-Dividend Date

The cutoff date on or after which a stock trade does not carry the right to receive the declared upcoming dividend payment.

Fees & Charges

Exit Load

A penalty fee deducted by an AMC upon redeeming or switching mutual fund units prior to a specified minimum holding duration.

Fees & Charges

Expense Ratio (TER)

The annual operational and management fee expressed as a percentage of total scheme assets, capped by SEBI regulations.

Market Mechanics

Face Value

The nominal nominal value of a share or security stated by the issuing corporate entity, distinct from its market trading price.

Operations & KYC

FATCA (Foreign Account Tax Compliance Act)

A US tax compliance law mandated for Indian mutual funds to collect self-declarations from NRI investors with US tax residency status.

Operations & KYC

FCNR Account (Foreign Currency Non-Resident)

A term deposit account maintained in India by NRIs in foreign currencies (USD, GBP, EUR) with tax-free principal and interest.

Retirement & Withdrawal

FIRE (Financial Independence, Retire Early)

A financial movement advocating high savings rates and systematic compounding to build 25x–30x annual expenses in liquid investments for early retirement.

Personal Finance & Savings

Fixed Deposit (FD)

A banking investment product offering guaranteed interest rates over a fixed tenure, with interest taxed at the investor's marginal income tax slab.

Fund Types

Flexi Cap Fund

An equity fund scheme free to invest across large-cap, mid-cap, and small-cap companies without market cap threshold restrictions.

Fund Types

Focused Fund

An equity mutual fund restricted by SEBI guidelines to holding a concentrated portfolio of a maximum of 30 stocks.

Operations & KYC

Folio Number

A unique account identification number assigned by an AMC to track an investor's transactions and scheme holdings.

Taxation

Form 15G / Form 15H

Self-declaration forms submitted by resident individuals (15H for senior citizens) to prevent Tax Deducted at Source (TDS) when total income is below the taxable threshold.

Fund Types

Fund of Funds (FoF)

A mutual fund scheme that invests its capital in units of other domestic or international mutual funds rather than direct stocks or bonds.

Market Mechanics

Futures and Options (F&O)

Derivatives contracts traded on stock exchanges allowing market participants to leverage or hedge underlying stock and index movements.

Taxation

Gift Tax Rules (Section 56(2)(x))

Income tax rules stating that monetary or asset gifts exceeding ₹50,000 per financial year received from non-relatives are taxable under Income from Other Sources.

Fund Types

Gilt Fund

A debt mutual fund required to invest at least 80% of its capital in Government Securities (G-Secs), carrying zero default risk.

Fund Types

Government Securities (G-Secs / SDLs)

Sovereign debt bonds issued by the Government of India (G-Secs) or State Governments (State Development Loans - SDLs) carrying zero default risk.

Taxation

Grandfathering Clause

A tax provision introduced in Union Budget 2018 exempting equity capital gains accrued prior to January 31, 2018 from LTCG taxation.

Personal Finance & Savings

Gratuity

A statutory lump-sum benefit paid by an employer to employees completing 5 or more years of continuous service, tax-exempt up to ₹20 Lakh.

Investment Basics

Growth Option

A scheme plan option where realized profits and capital gains remain within the fund to compound, increasing NAV instead of paying dividends.

Behavioral Finance

Herd Mentality (FOMO Investing)

The behavioral tendency of retail investors to follow crowd trends or market hype, buying at market peaks and selling during panic troughs.

Taxation

HUF (Hindu Undivided Family)

A separate tax entity recognized under Indian tax laws consisting of all persons lineally descended from a common ancestor, eligible for a separate PAN and Section 80C deductions.

Fund Types

Hybrid Fund

A mutual fund category investing in a blend of equity and fixed-income assets to balance growth and capital preservation.

Investment Basics

IDCW (Income Distribution cum Capital Withdrawal)

The official SEBI name replacing the former Dividend option, representing distribution of accumulated equalization reserves.

Taxation

Income Tax Surcharge & Marginal Relief

An additional tax levied on high-net-worth individuals earning above ₹50 Lakh, subject to marginal relief calculations.

Fund Types

Index Fund

A passively managed mutual fund that replicates the portfolio composition and performance of a specific benchmark index like Nifty 50.

Taxation

Indexation Benefit

The process of adjusting investment purchase costs against the Cost Inflation Index (CII) to reduce taxable capital gains.

Market Mechanics

India VIX (Volatility Index)

A benchmark index computing expected equity market volatility over the next 30 calendar days based on Nifty options order books.

Advanced Metrics

Information Ratio

A performance metric assessing a fund manager's ability to consistently generate excess returns over a benchmark relative to tracking error.

Fund Types

International / Overseas Fund

A mutual fund scheme investing in foreign stocks or international ETFs, providing geographical diversification to Indian portfolios.

Investment Basics

Investment Corpus

The cumulative monetary value of your total wealth pool, comprising all initial principal investments, periodic contributions, and accrued compound gains.

Fund Types

InvIT (Infrastructure Investment Trust)

A SEBI-regulated investment trust pooling investor capital to own and operate revenue-generating infrastructure assets (highways, power grids, pipelines).

Market Mechanics

IPO (Initial Public Offering)

The first public issue of shares by an unlisted company to raise capital from retail and institutional investors to list on stock exchanges.

Advanced Metrics

Jensen's Alpha

A risk-adjusted performance measure representing the average return on a portfolio above that predicted by the Capital Asset Pricing Model (CAPM).

Personal Finance & Savings

Kisan Vikas Patra (KVP)

A small-savings instrument backed by the Government of India that doubles the principal investment over a fixed mandated tenure.

Fund Types

Large Cap Fund

An equity mutual fund mandated to invest at least 80% of total assets in top 100 Indian companies ranked by market capitalization.

Personal Finance & Savings

Lifestyle Inflation (Lifestyle Creep)

The phenomenon where spending and living expenses increase proportionally with increases in income, delaying financial independence.

Fund Types

Liquid Fund

A debt mutual fund scheme investing in short-term money market instruments maturing in up to 91 days, offering high liquidity.

Investment Basics

Lock-in Period

A mandatory period during which mutual fund units cannot be redeemed or switched (e.g., 3 years for ELSS tax-saving funds).

Behavioral Finance

Loss Aversion Bias

A psychological bias where investors feel the pain of a monetary loss far more acutely than an equivalent financial gain, leading to irrational panic selling.

Fund Types

Low Duration Fund

A debt mutual fund scheme investing in debt and money market securities such that the Macaulay duration of the portfolio is between 6 months and 12 months.

Taxation

LTCG (Long Term Capital Gains)

Capital gains on equity shares and equity mutual funds held for more than 12 months. Gains above ₹1.25 Lakh per year are taxed at 12.5%.

Taxation

LTCG Exemption Limit (₹1.25 Lakh)

The annual tax-free threshold under Section 112A for long-term equity capital gains earned by resident individuals.

Advanced Metrics

Macaulay Duration

The weighted average time until a bond's cash flows are received, measuring price sensitivity to interest rate shifts.

Market Mechanics

Market Capitalization (Market Cap)

The total rupee value of a company's outstanding shares, computed by multiplying total shares by the current market price per share.

Advanced Metrics

Maximum Drawdown

The maximum peak-to-trough drop of a fund or portfolio during a specified period, measuring maximum downside risk exposure.

Behavioral Finance

Mental Accounting

The cognitive bias where investors treat money differently based on its source or intended use rather than treating all money as fungible.

Fund Types

Mid Cap Fund

An equity fund mandated to invest at least 65% of assets in companies ranked 101st to 250th in full market capitalization.

Advanced Metrics

Modified Duration

A bond sensitivity metric quantifying the expected percentage change in a bond fund's price for a 1% shift in interest rates.

Fund Types

Money Market Fund

A debt mutual fund investing in short-term money market instruments (like Commercial Paper and Certificates of Deposit) maturing in up to 1 year.

Market Mechanics

MSCI India Index

A global equity index tracking large and mid-cap segments of the Indian market, widely used by foreign institutional investors (FIIs) as a benchmark.

Fund Types

Multi Asset Allocation Fund

A hybrid fund required to invest at least 10% of total capital across at least three distinct asset classes (e.g., Equity, Debt, and Gold).

Fund Types

Multi Cap Fund

An equity mutual fund mandated by SEBI to invest a minimum of 25% each in Large Cap, Mid Cap, and Small Cap stocks.

Operations & KYC

Mutual Fund Nomination

The legal registration of a designated nominee to claim mutual fund units and corpus in the event of an investor's death.

Personal Finance & Savings

National Savings Certificate (NSC)

A fixed-income post office savings scheme backed by the Government of India, eligible for Section 80C tax deductions.

Investment Basics

NAV (Net Asset Value)

The per-unit market value of a mutual fund scheme, computed daily after deducting scheme liabilities from total market assets.

Personal Finance & Savings

Net Worth

The quantitative measure of financial health, calculated as total assets (investments, property, cash) minus total liabilities (loans, debts).

Taxation

New Tax Regime (Section 115BAC)

The default concessional income tax slab structure in India featuring lower tax rates but removing traditional deductions like Section 80C and HRA.

Investment Basics

NFO (New Fund Offer)

The subscription period during which an AMC launches a new mutual fund scheme to raise initial capital before public trading.

Market Mechanics

Nifty 50 Index

The flagship benchmark stock index of the National Stock Exchange of India (NSE), tracking 50 large, liquid Indian companies across sectors.

Retirement & Withdrawal

NPS (National Pension System)

A voluntary, government-backed pension scheme regulated by PFRDA offering market-linked market returns and extra tax benefits under Section 80CCD(1B).

Operations & KYC

NRE Account (Non-Resident External)

A rupee bank account held by NRIs in India to deposit overseas earnings, featuring tax-free interest income and full repatriability.

Operations & KYC

NRO Account (Non-Resident Ordinary)

A bank account held by NRIs to manage income earned in India (rent, dividends, pension), subject to Indian income tax rules.

Taxation

Old Tax Regime

The traditional tax structure allowing deductions under Section 80C, 80D, 24(b), HRA, and LTA to reduce taxable income.

Fund Types

Overnight Fund

A debt mutual fund scheme that invests exclusively in debt securities with a maturity of 1 day, carrying near-zero interest rate and credit risk.

Investment Strategies

Perpetual SIP

A Systematic Investment Plan registered without a defined end date, continuing automatically until manually modified or stopped.

Fund Types

PMS (Portfolio Management Services)

A customized investment service regulated by SEBI for High Net Worth Individuals (HNIs) with a minimum investment requirement of ₹50 Lakh.

Advanced Metrics

Portfolio Overlap

The percentage of identical stock holdings shared between two mutual fund schemes, revealing portfolio concentration risk.

Advanced Metrics

Portfolio Turnover Ratio

The percentage of a fund's portfolio holdings that have been bought or sold over the past year, indicating trading aggressiveness.

Retirement & Withdrawal

PPF (Public Provident Fund)

A 15-year sovereign small-savings scheme offering complete tax-free interest and maturity benefits under EEE tax status.

Market Mechanics

Price-to-Book Ratio (P/B)

A valuation metric comparing a company's market stock price to its book value per share.

Market Mechanics

Price-to-Earnings Ratio (P/E)

A valuation ratio comparing a company's current share price to its per-share earnings.

Advanced Metrics

R-Squared (R²)

A statistical percentage metric representing the proportion of a fund's price movements that can be explained by movements in its benchmark index.

Regulatory & Bodies

RBI (Reserve Bank of India)

India's central banking institution responsible for regulating monetary policy, repo rates, inflation targets, and banking systems.

Retirement & Withdrawal

Real Rate of Return

The net annualized return on an investment after subtracting prevailing inflation rates and income taxes.

Personal Finance & Savings

Recurring Deposit (RD)

A banking savings product allowing individuals to deposit a fixed amount monthly over a set term at fixed interest rates.

Fund Types

Regular Plan

A mutual fund scheme bought through a distributor or broker, carrying a higher TER to fund ongoing distributor commissions.

Fund Types

REIT (Real Estate Investment Trust)

A SEBI-regulated entity that pools capital to purchase and manage income-generating real estate properties, listing on stock exchanges.

Market Mechanics

Rights Issue

An invitation to existing shareholders to purchase additional new shares of a company at a discounted price in proportion to existing holdings.

Investment Strategies

Rupee Cost Averaging

The benefit of SIP investing where buying fixed rupee amounts regularly buys more units when prices are low and fewer when prices are high.

Market Mechanics

Rupee Depreciation

The decline in the exchange value of the Indian Rupee (INR) against foreign currencies like USD, impacting inflation and overseas fund returns.

Market Mechanics

S&P BSE Sensex

The benchmark index of the Bombay Stock Exchange (BSE) comprising 30 financially sound, well-established Indian companies.

Retirement & Withdrawal

Safe Withdrawal Rate (SWR)

The maximum annual withdrawal percentage from a retirement corpus that minimizes the risk of running out of money.

Regulatory & Bodies

SEBI (Securities and Exchange Board of India)

The statutory market regulator overseeing stock exchanges, securities transactions, and mutual fund operations in India.

Taxation

Section 80C

A tax deduction provision allowing individuals to deduct up to ₹1.5 Lakh per year from taxable income for investments in ELSS, PPF, EPF, and NSC under the Old Tax Regime.

Taxation

Section 80CCD(1B)

An exclusive tax deduction provision offering an additional tax benefit of up to ₹50,000 for voluntary contributions to the National Pension System (NPS).

Taxation

Section 80D

Tax deduction allowed for medical insurance premiums paid for self, family, and senior citizen parents.

Taxation

Section 80E

Income tax deduction allowed under the Old Tax Regime for interest paid on higher education loans without any upper monetary cap.

Taxation

Section 80GG

Deduction for house rent paid by salaried or self-employed individuals who do not receive House Rent Allowance (HRA) from employers.

Taxation

Section 80TTA / 80TTB

Tax deductions on savings bank interest income up to ₹10,000 for individuals (80TTA) and up to ₹50,000 on all interest income for senior citizens (80TTB).

Fund Types

Sectoral / Thematic Fund

An equity mutual fund mandated to invest at least 80% of its capital in stocks belonging to a single industry sector or economic theme.

Personal Finance & Savings

Senior Citizens Savings Scheme (SCSS)

A government-backed savings scheme for individuals aged 60 and above offering quarterly interest payouts and Section 80C tax deduction.

Retirement & Withdrawal

Sequence of Returns Risk (SRR)

The risk that market crashes occurring early in retirement severely diminish portfolio longevity during the withdrawal phase.

Market Mechanics

Share Buyback

A corporate action where a company repurchases its own shares from existing shareholders to reduce outstanding shares and enhance EPS.

Advanced Metrics

Sharpe Ratio

A risk-adjusted return ratio measuring excess returns over the risk-free rate per unit of total portfolio volatility (standard deviation).

Fund Types

Short Duration Fund

A debt mutual fund scheme that invests in debt and money market instruments with a portfolio Macaulay duration between 1 year and 3 years.

Investment Strategies

SIP Pause

A feature allowing investors to temporarily suspend monthly SIP deductions for 1 to 6 months without forfeiting fund units or terminating the folio.

Fund Types

Small Cap Fund

An equity scheme required to invest at least 65% of total capital in companies ranked 251st onwards in market capitalization.

Fund Types

Solution-Oriented Fund (Retirement / Children's)

A category of mutual fund schemes designed for specific goals like retirement or children's education, carrying a mandatory 5-year lock-in period.

Advanced Metrics

Sortino Ratio

A risk-adjusted return ratio evaluating excess returns strictly against downside deviation, ignoring harmless upside price spikes.

Regulatory & Bodies

Sovereign Credit Rating

An independent evaluation of a country's overall creditworthiness and default risk assigned by rating agencies like S&P, Moody's, and Fitch.

Personal Finance & Savings

Sovereign Gold Bond (SGB)

Government securities denominated in grams of gold issued by the RBI, earning annual interest plus capital gains tax exemption upon maturity.

Taxation

Stamp Duty on Mutual Funds

A flat statutory government tax of 0.005% levied on all mutual fund purchase transactions including SIPs, STPs, and lump sums.

Advanced Metrics

Standard Deviation

A statistical volatility metric quantifying how much a mutual fund's actual returns fluctuate around its historical average return.

Taxation

STCG (Short Term Capital Gains)

Capital gains from equity shares or equity mutual funds held for 12 months or less, taxed at a flat rate of 20% in India.

Investment Strategies

Step-Up SIP (Top-Up SIP)

An investment strategy where monthly SIP contributions automatically increase periodically (e.g., 10% every year) to align with annual income growth.

Market Mechanics

Stock Split

A corporate action increasing the number of outstanding shares by dividing existing shares (e.g., 1:5 split), reducing the face value proportionally.

Personal Finance & Savings

Sukanya Samriddhi Yojana (SSY)

A small-savings tax-free scheme for the girl child under Beti Bachao Beti Padhao offering high government interest rates and Section 80C benefits.

Investment Basics

Systematic Investment Plan (SIP)

A disciplined investment facility allowing periodic automated contributions into a mutual fund scheme, harnessing compound growth.

Investment Strategies

Systematic Transfer Plan (STP)

An automated instruction that transfers a fixed sum periodically from one mutual fund scheme (usually debt) into another (usually equity).

Retirement & Withdrawal

Systematic Withdrawal Plan (SWP)

A tax-efficient cash flow mechanism allowing investors to redeem fixed sums regularly from a mutual fund scheme during retirement.

Market Mechanics

T+1 Settlement Cycle

The Indian stock market settlement mechanism where stock and cash transactions settle within 1 business day after trade execution.

Taxation

Tax Rebate under Section 87A

An income tax rebate in India providing full tax relief for resident individuals earning up to ₹7 Lakh in the New Tax Regime or ₹5 Lakh in the Old Tax Regime.

Retirement & Withdrawal

The 4% Rule

A retirement guideline stating that withdrawing 4% of an initial portfolio value, adjusted annually for inflation, sustains wealth for 30 years.

Fees & Charges

Total Expense Ratio (TER)

The total annualized cost of operating and managing a mutual fund scheme, capped by SEBI based on scheme asset slabs.

Advanced Metrics

Tracking Error

The standard deviation of return differences between an index fund or ETF and its underlying benchmark index.

Fund Types

Treasury Bills (T-Bills)

Short-term sovereign debt instruments issued by the Government of India in tenures of 91 days, 182 days, and 364 days at a discount to face value.

Advanced Metrics

Treynor Ratio

A risk-adjusted performance measure evaluating excess returns per unit of systematic market risk (Beta).

Fund Types

Tri-Party Repo (TREPS)

A short-term collateralized money market instrument regulated by the RBI and operated by CCIL for overnight borrowing and lending.

Fund Types

Ultra Short Duration Fund

A debt mutual fund scheme that invests in debt and money market instruments such that the Macaulay duration of the portfolio is between 3 months and 6 months.

Fund Types

Value / Contra Fund

An equity fund scheme following a value or contrarian strategy, investing in undervalued stocks or out-of-favor sectors.

Advanced Metrics

Value at Risk (VaR)

A statistical risk management metric estimating the maximum expected financial loss of a portfolio over a set timeframe at a given confidence level.

Personal Finance & Savings

Voluntary Provident Fund (VPF)

An optional extension of EPF allowing salaried employees to contribute beyond the mandatory 12% limit into their provident fund.

Retirement & Withdrawal

Will & Testament

A legal declaration expressing a person's wishes regarding the distribution and management of their property and wealth after death.

Advanced Metrics

XIRR (Extended Internal Rate of Return)

The accurate rate of return calculation for uneven cash flows occurring at different dates, standard for SIP and SWP returns.

Advanced Metrics

Yield Curve

A graph plotting interest rates of bonds having equal credit quality but differing maturity dates, reflecting economic growth and inflation expectations.

Advanced Metrics

Yield to Maturity (YTM)

The total anticipated annualized return on a bond fund if all underlying bonds are held until maturity and coupon payments are reinvested.

Fund Types

Zero-Coupon Bond

A debt security issued at a deep discount to face value that pays no periodic interest, maturing at full par value.