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India's national cyber fraud helpline. Call 1930 as soon as you lose money to an online or UPI fraud.
Example: Someone takes Rs 20,000 from you through a fake UPI request. You call 1930 within the hour, so the money can be flagged with the banks faster.
A 12 digit national identity number.
Example: Your Aadhaar is often used to finish KYC in minutes.
Aadhaar is a 12 digit identity number issued by UIDAI. It is widely used to verify who you are, including for a quick KYC when you start investing.
Aadhaar links your name, date of birth, address and biometrics to one number, so a bank or app can confirm your identity in seconds, often with a one-time password to your registered mobile. This is why opening an account or finishing KYC that once took days of paperwork can now be done on a phone in minutes. It is usually paired with your PAN, which is your tax identity.
Beyond investing, Aadhaar is used across banking, government benefits, SIM cards and more. For money specifically, it most often shows up in KYC, in linking your bank account for direct benefit transfers, and in the PAN-Aadhaar link the government requires most people to maintain.
Because Aadhaar unlocks identity checks, treat it with care. Share it only where genuinely required, and prefer a masked Aadhaar, which hides the first eight digits, when a full number is not needed. You can lock your Aadhaar biometrics on the UIDAI site or app so they cannot be used without your say-so. Be wary of anyone asking for your Aadhaar number or the OTP sent to your phone out of the blue, because that OTP is what approves a verification; a genuine agency never needs you to read it out. The same rule that protects your UPI PIN applies here: never share a one-time code.
Open full page →A fund where a manager picks holdings to try to beat the market.
Example: An active fund charges more than an index fund because a manager and team run it.
An active fund pays a manager and a research team to pick stocks and try to beat a benchmark. That effort costs more, so the expense ratio is higher than an index fund.
In an active fund, a human decides what to buy, hold and sell, aiming to do better than the market by choosing winners and avoiding losers. You are paying for that judgment, research and trading. The opposite is a passive index fund, which makes no choices and simply copies an index at low cost. The whole promise of an active fund is the chance of market-beating returns; the cost is a higher fee and the risk that the manager gets it wrong.
The catch is that beating the market consistently is hard, and the fee makes it harder. Over long periods, most active funds have trailed their benchmark after costs, the pattern tracked by the SPIVA scorecard. A manager can shine for a few years and then lag; past winners are not reliable future ones. So the higher fee buys a possibility, not a promise.
Active funds are not “bad”; some genuinely add value, particularly in less-efficient corners of the market. But for a core, long-term holding, a cheap index fund is a sensible default that avoids the risk of picking an underperforming active fund. Weigh the choice in active vs passive investing.
Open full page →Income tax paid during the year in four instalments, instead of all at once when you file.
Example: A freelancer expecting 80,000 rupees of tax pays it in parts by 15 June, 15 September, 15 December and 15 March.
Advance tax is pay-as-you-earn income tax. If tax isn’t cut at source from all your income, you pay the rest in four instalments during the year. Read more in advance tax: paying your tax in four parts.
Open full page →Annual Information Statement: the tax portal's record of income and transactions reported about you.
Example: Your bank reports the interest on your FD, so it shows up in your AIS even if you forget it.
AIS stands for Annual Information Statement. It’s the tax department’s view of what was reported about you: interest, dividends, sales of shares and funds, tax cut at source and taxes you paid. Check it before you file. Read more in AIS and Form 26AS explained.
Open full page →The process that decides who gets shares in an IPO, and how many.
Example: In an IPO oversubscribed 50 times, most applicants get no allotment and their blocked money is freed.
Allotment is the step that decides who gets shares in an IPO. When an issue is oversubscribed, there aren’t enough shares for everyone, so many applicants get none. If you’re not allotted, the money blocked through ASBA is freed. Read our IPO explainer for the full process.
Open full page →Asset Management Company, the company that runs a mutual fund's schemes day to day.
Example: When you invest in a fund, the AMC is the team that actually manages the money.
An AMC (Asset Management Company) is the company that manages a mutual fund’s schemes. It makes the investment decisions and runs the schemes day to day, but it works under the trustees and is approved by SEBI. It does not own your money; it only manages it.
The AMC employs the fund managers and analysts who decide what each scheme buys and sells, within the scheme’s stated objective. It also handles the operations: launching schemes, publishing the daily NAV, and charging the expense ratio that pays for all this. The well-known fund houses are AMCs; the funds you invest in are their products.
This is the structural safeguard worth understanding. The AMC runs the money but does not hold it. A mutual fund in India is set up as a trust: independent trustees oversee it, and a custodian actually holds the securities, all under SEBI’s rules. So even if an AMC ran into trouble, your units represent holdings kept apart from the company, not money sitting on the AMC’s own books.
You do not pick an AMC directly; you pick a scheme, and the AMC behind it comes with it. But its track record, how it handles costs, and how consistently its schemes follow their mandate are reasonable things to look at. Learn where it fits in how to pick a mutual fund.
Open full page →Association of Mutual Funds in India, the industry body for mutual funds. It is not a regulator.
Example: A distributor gets an ARN from AMFI after clearing the NISM exam.
AMFI (Association of Mutual Funds in India) is the industry body that mutual fund companies belong to. It sets industry standards and issues the ARN that distributors need. It is not a regulator, that role belongs to SEBI. Do not mix the two up, the exam likes to test it.
Open full page →Paying off a loan in instalments, where each EMI's split shifts from mostly interest to mostly repayment over time.
Example: In month one of a 20 lakh rupee, 20-year loan at 8.5%, about 14,167 of the 17,356 rupee EMI is interest (illustration).
Amortisation is how a loan gets paid down, one EMI at a time. Each payment covers that month’s interest first and repays a bit of the loan with the rest. Because interest is charged on what you still owe, the early EMIs are mostly interest. See the split in how an EMI works.
Open full page →A product bought from an insurer with a lump sum that pays you a regular income, often for life.
Example: At NPS exit, at least 20% of most non-government subscribers' pot must buy an annuity that pays a monthly pension.
An annuity is how a lump sum becomes a pension. You hand an insurer a sum of money, and it pays you a fixed income, often for life. It’s one of the few ways to make sure the income doesn’t run out however long you live. The trade-off: you usually give up the lump sum for good. In NPS, most non-government subscribers must put at least 20% of the pot into one at exit, per PFRDA’s rules.
Open full page →Annual percentage rate: a loan's full yearly cost, counting interest and all other charges.
Example: A loan at 11% interest with a processing fee can have an APR above 11%.
APR, or annual percentage rate, is the single best number for comparing loans. It wraps interest and charges like the processing fee into one yearly figure, so a loan with a lower headline rate but bigger fees can’t hide its cost. Find it in the Key Fact Statement.
Open full page →A hybrid fund that buys shares and sells them at the same time in futures, earning the small price gap.
Example: If a share costs 1,000 rupees today and its one-month future 1,006, the fund locks in the 6-rupee gap (illustration).
An arbitrage fund earns the small gap between a share’s price today and its price in the futures market. Because it buys and sells at once, it carries little stock market risk. It keeps at least 65% in shares, so it usually meets the tax law’s equity-oriented test. See hybrid funds explained and derivatives.
Open full page →AMFI Registration Number, the licence a mutual fund distributor needs to sell funds.
Example: You earn your ARN after clearing the NISM Series V-A exam.
An ARN (AMFI Registration Number) is the number a person or firm needs to sell mutual funds in India. You get it from AMFI after you clear the NISM Series V-A exam and complete the steps. Without an ARN, you cannot legally distribute mutual funds.
The ARN is a licence, not a qualification to give investment advice. It confirms that the holder has passed the basic mutual fund distributor exam and is registered to sell schemes and earn a commission for doing so. Every genuine distributor, bank relationship manager or app that sells regular-plan funds has an ARN, and it should appear on the paperwork.
Requiring an ARN keeps unqualified or unregistered people from selling funds, and makes distributors traceable and accountable. It is tied to the commission system: the trail commission a distributor earns on a regular plan is paid against their ARN. That is also why a direct plan, bought without a distributor, carries no ARN and a lower cost.
An ARN holder is a distributor, not necessarily a registered investment adviser, which is a separate SEBI category with stricter rules and a fee-for-advice model. It is worth knowing the difference: a distributor earns from the products you buy, an adviser from a fee you pay. If you want to clear the exam yourself, see what the NISM Series V-A certificate is; GreenFunds is not affiliated with NISM or AMFI.
Open full page →Application supported by blocked amount: your IPO money is blocked in your bank, not debited, until allotment.
Example: You bid 14,000 rupees in an IPO through ASBA. The amount is blocked, and freed if you get no shares.
ASBA means your IPO money is blocked, not taken. When you bid in an IPO, your bank holds the amount in your account. If you’re allotted shares, only that amount is debited. If you’re not, the block is lifted. For bids up to 5 lakh rupees, you approve the block with a UPI mandate. See our IPO explainer.
Open full page →Assets under management, the total money a scheme or fund house runs.
Example: If a scheme holds ₹500 crore across all investors, its AUM is ₹500 crore.
AUM (assets under management) is the total value of money a scheme, or a whole fund house, is managing across all its investors. A larger AUM means more money trusts that manager, but size is not quality.
AUM is a measure of scale, not of skill. A scheme with ₹500 crore under management is simply pooling that much from all its unit holders. A large and growing AUM can signal that investors trust a fund and that it is established, which brings some operating stability and sometimes a slightly lower expense ratio, since SEBI’s fee caps tighten as a fund grows.
A high AUM says nothing about returns, cost or whether a fund fits your goal. In fact, for some strategies a very large AUM can be a mild drag: a small-cap fund that grows too big may struggle to buy and sell nimbly without moving prices, so size can work against performance. For most funds, though, AUM is a background detail, not a reason to choose or avoid one.
Treat AUM as context, not a verdict. Judge a fund on its mandate, its cost, its consistency against its benchmark, and how it fits your plan, and let AUM be one small factor among those, not the headline.
Open full page →Moving a card balance to another card or lender at a lower rate for a set window.
Example: A balance transfer can cut your interest, but it usually has a fee and the low rate ends after a few months.
A balance transfer moves what you owe on one credit card to another card or lender that charges a lower, often promotional, rate for a fixed period. It can save interest while you repay, but there is usually a fee, and the rate jumps once the window ends.
You apply to move an existing balance to a new card or a bank’s balance-transfer offer. For a set window, often a few months, that transferred amount is charged a low or even zero interest rate instead of the usual ~3.5% a month. The idea is to buy yourself breathing room: with little or no interest piling up, more of each payment goes to clearing the actual debt rather than feeding interest.
A balance transfer helps only if you use the low-rate window to repay aggressively. Two things catch people out: a one-time processing fee, often 1 to 3% of the amount moved, and the rate snapping back to normal once the promotional period ends. If a chunk of the balance is still there when the window closes, you are back to paying high interest, now with the fee on top. New spending on the card usually gets no low rate either.
Only if you have a realistic plan to clear most of the balance before the window ends, and you stop adding new spending. Otherwise it just shifts the problem. It is one tool alongside the debt avalanche; the real fix is to pay the total amount due in full. See how to get out of credit card debt.
Open full page →A small safe you rent inside a bank's strong room to store valuables, for a yearly rent.
Example: You rent a locker for 4,000 rupees a year. Under RBI rules, if its contents are stolen, the bank owes up to 100 times that, or 4 lakh rupees (illustration).
A bank locker keeps your valuables in the bank’s strong room, but the bank’s liability has a cap. The full rules, from the agreement to access alerts, are in bank locker rules: what the bank owes you.
Open full page →The index a fund is measured against, to judge whether the manager actually added anything.
Example: A large-cap fund benchmarked to the Nifty 50 should be compared with that index.
A benchmark is the index a fund is measured against, to judge whether the manager actually added anything. It has to match the scheme’s objective, its asset allocation and its strategy, and it is named in the scheme document.
A return on its own tells you very little, because it is shaped mostly by how the whole market did, not by the manager’s skill. The benchmark separates the two. A large-cap fund is measured against a large-cap index like the Nifty 50; if the index rose 13% and the fund rose 11%, the fund actually lagged the market, even though 11% looks good. Beat the benchmark consistently and the manager added value; trail it and you paid active fees for less than the market gave.
Funds are compared against the total return version of an index, the TRI, which counts dividends as well as price movement. This matters, because the fund itself earns those dividends, so comparing against a price-only index would flatter it. SEBI requires the TRI comparison so the yardstick is honest.
The hard truth the benchmark exposes is that many active funds fail to beat it after costs. That is the case for a cheap index fund, which simply buys the benchmark and charges very little. See active vs passive investing and the SPIVA scorecard.
Open full page →A measure of how much a fund moves compared with its benchmark market.
Example: A beta of 1.2 means the fund tends to rise and fall about 20% more than the market.
Beta tells you how sensitive a fund is to its market. A beta of 1 moves in line with the market, above 1 means bigger swings in both directions, and below 1 means smaller swings.
Beta compares a fund’s movement with its benchmark market. A beta of 1 means the fund tends to rise and fall roughly in step with the market. A beta of 1.2 means it swings about 20% more: when the market rises 10%, the fund tends to rise about 12%, and it falls harder too. A beta of 0.8 means the reverse, smaller moves than the market in both directions. It is a measure of sensitivity, not of good or bad.
Beta measures only the part of a fund’s movement that tracks the market. It says nothing about returns, and unlike standard deviation, which captures all the volatility, beta ignores the swings specific to the fund’s own holdings. So the two are complementary: standard deviation tells you total bumpiness, beta tells you how much of the ride comes from the market itself.
A higher-beta fund will likely amplify both market rises and falls, so it suits someone with a long horizon and the nerves for sharper drops, and is less suitable for money needed soon. Pair it with the Sharpe ratio and the fund’s mandate rather than reading it alone. All these figures look backward, so treat beta as a clue to character, not a forecast.
Open full page →Bureau of Indian Standards: India's national standards body, which runs gold hallmarking.
Example: The BIS logo is one of the three marks on hallmarked gold jewellery.
BIS stands for Bureau of Indian Standards, India’s national standards body. It sets quality standards for many products. For gold buyers, it matters because it runs hallmarking: the BIS logo is one of the marks on hallmarked jewellery, alongside the purity grade and the HUID code.
Open full page →Buy now, pay later: a short-term loan that splits a purchase into later payments.
Example: Splitting a 6,000 rupee purchase into three monthly payments at checkout is BNPL (illustration).
BNPL, or buy now, pay later, is a loan dressed up as a checkout button. A lender pays the shop and you repay in parts. Paid on time, it can cost nothing extra; missed, it brings late fees and a lower credit score. Read more in our buy now, pay later guide.
Open full page →Free extra shares a company gives existing shareholders from its reserves.
Example: In a 1:1 bonus, you get one new share for each share you hold, and the price adjusts down.
A bonus issue gives you free extra shares from the company’s reserves. In a 1:1 bonus, you get one new share for each you hold, and the price halves to match, so your holding’s value doesn’t change. Unlike a stock split, face value stays the same. See our corporate actions explainer.
Open full page →The fee your stock broker charges for carrying out a trade.
Example: A broker may charge a flat fee per order, or nothing on delivery trades.
Brokerage is what your broker charges for each trade. Some brokers charge a flat fee per order, some a percentage, and some charge nothing on delivery trades. GST is added on top. Even at zero brokerage, you still pay STT, stamp duty and DP charges. See the real cost of buying shares.
Open full page →Basic Savings Bank Deposit Account: a savings account with no minimum balance and free basic services.
Example: Tired of minimum balance charges, Riya asked her bank to convert her account into a BSBDA.
A BSBDA is the true zero balance account. It exists so that anyone can bank without being charged for holding too little money. RBI rules, updated in December 2025 and in force from 1 April 2026, widened what it must include for free. The main limit is that you can hold only one across all banks, so it works best as your main everyday account. Check the current RBI directions before relying on these details.
Open full page →When a company buys back its own shares from shareholders, usually at a set price.
Example: A company announces a buyback at 1,200 rupees a share, and shareholders choose whether to tender.
A buyback is when a company buys back some of its own shares, usually at a set price. You choose whether to tender your shares. Since 1 April 2026, what you get is taxed as capital gains, after a stretch when it was taxed like a dividend. See our corporate actions explainer.
Open full page →The smoothed average yearly growth rate of an investment over a multi-year period.
Example: ₹1 lakh growing to ₹2 lakh in six years is a CAGR of about 12%.
CAGR stands for Compound Annual Growth Rate. It answers one question: what steady yearly rate would have taken my money from the start value to the end value? It smooths out the bumps, so it is useful for comparing funds over the same multi-year period.
Real returns are lumpy: a fund might rise 30% one year, fall 10% the next, and crawl 5% after that. CAGR replaces that jagged path with the single, constant yearly rate that would have produced the same final amount. So if ₹1 lakh became ₹2 lakh in six years, the CAGR is about 12%, the steady rate that doubles it in that time. It lets you compare two investments held over the same stretch on a like-for-like basis, instead of being misled by one good or bad year.
Because it looks only at the start and end points, CAGR says nothing about the ride in between. Two funds with the same CAGR could have had wildly different journeys, one smooth, one terrifying. That is why CAGR is best read alongside a risk measure like standard deviation, which captures the swings CAGR irons out.
Use CAGR for a single lump sum held over a period. It cannot handle money invested on many dates, like a monthly SIP, where each instalment stays invested for a different length of time. For that, use XIRR, which accounts for every date. In short: lump sum, CAGR; SIP, XIRR. Both are a kind of compounding rate.
Open full page →The profit you make when you sell an investment for more than you paid for it.
Example: Buy for ₹1,00,000 and sell for ₹1,30,000, and the capital gain is ₹30,000.
A capital gain arises only when you actually sell. Until then a rise in value is on paper and is not taxed; you book the gain, and the tax on it, at the moment you sell for more than you paid.
Gains are split into short-term and long-term by how long you held the asset, and the two are taxed differently, usually with long-term treated more kindly to reward holding. The dividing line depends on the asset: for listed shares and equity mutual funds it is twelve months, while for many other assets it is longer. Knowing which bucket a sale falls into is the first step in working out the tax. See long-term capital gain and short-term capital gain.
The holding periods, the rates, and reliefs like indexation differ across shares, mutual funds, property and gold, and they are revised from time to time, often at Budget. That is why a figure you remember from a few years ago may no longer apply. The current rates for each asset are in the questions above and on incometax.gov.in; always check the position for the specific asset and date before planning around it.
A capital loss is the same thing in reverse, and it is useful: a loss can usually be set off against gains, and carried forward for a few years if it cannot be used now, which lowers the tax on future gains. Capital gains are also why the tax on a mutual fund depends on how long you held it, explained in how mutual funds are taxed.
Open full page →Withdrawing cash against your credit card. It has no interest-free period, so interest runs from day one, plus a cash-advance fee.
Example: Withdrawing Rs 10,000 on a credit card may add a fee of around Rs 250 to Rs 500 plus interest from the day of withdrawal.
A cash advance is withdrawing cash against your credit card, usually at an ATM. It breaks the card’s one good rule: there is no interest-free period, so interest runs from the day you withdraw, and the bank charges a cash-advance fee on top, often around 2.5% to 3% of the amount with a minimum. That combination makes it one of the costliest ways to get cash, so it is best kept for a genuine emergency. Check your card’s schedule of charges for the exact fee and rate.
Open full page →When the insurer settles the hospital bill directly, so you do not pay upfront.
Example: With cashless, a network hospital bills the insurer instead of you.
Cashless hospitalisation means the insurer pays the hospital directly, so you avoid paying the full bill yourself and claiming it back later. It works only at hospitals in the insurer’s network, so before you buy, check that good hospitals near you are on that list.
Open full page →When a bank refuses to pay a cheque, most often because the account lacks enough money.
Example: A ₹20,000 rent cheque written from an account holding ₹12,000 bounces, and both banks may charge a fee.
A daily price band beyond which a share can't trade, or a market-wide pause after a sharp fall or rise.
Example: A share hitting its upper circuit can't trade higher that day, however many buyers want in.
A circuit limit is a brake on wild price moves. Exchanges set a daily band on many shares, and a share can’t trade beyond it that day: hitting the top is an upper circuit, the bottom a lower circuit. For the whole market, SEBI’s circuit breakers pause trading when the Sensex or Nifty 50 moves 10%, 15% or 20% in a day.
Open full page →The share of claims an insurer paid out of all the claims it received in a year.
Example: An insurer that paid 9,800 of 10,000 death claims in a year has a claim settlement ratio of 98%.
The claim settlement ratio is the share of claims an insurer paid out of all those it received in a year. It’s one way to compare insurers before you buy, but it counts claims rather than rupees and doesn’t show speed, so read it with the policy terms.
If an insurer received 10,000 claims and paid 9,800, its claim settlement ratio is 98%. A high ratio suggests the insurer honours most of the claims brought to it, which is reassuring, especially for life insurance, where the claim is made by your family at the worst time and you are not there to argue your case. For that reason, a consistently high ratio over several years is a sensible thing to look for in a term insurance provider.
The ratio has real blind spots. It counts the number of claims, not the money, so a company could pay many tiny claims and reject a few large ones and still look good. It says nothing about how quickly claims were paid, or how fairly borderline cases were handled, and it mixes different policy types. A single year can also swing on unusual events.
Treat a strong, steady claim settlement ratio as one positive signal, then look at the rest: the policy’s exclusions and terms, the insurer’s complaint record, and the insurance ombudsman data. Buying well matters as much as the ratio. See how a family claims life insurance.
Open full page →A tax rule that adds income from money or assets you give your spouse, without adequate payment in return, to your own income.
Example: You gift your spouse 5 lakh rupees, which goes into a fixed deposit in their name. The gift is not taxed, but the deposit's interest is added to your income and taxed at your rate.
Clubbing of income stops couples and families from splitting income just to lower tax. Under section 99 of the Income-tax Act, 2025, income from assets you transfer to your spouse without adequate consideration is taxed in your hands. The gift itself stays tax-free.
Without it, a person in a high tax bracket could simply gift money to a lower-earning spouse or minor child, have the income arise in their name, and pay less tax on it as a family. Clubbing closes that loophole: the law looks past whose name the asset is in and taxes the income with the person who really provided the money. It is about income, not the gift.
Say you gift your spouse ₹5 lakh and they put it in a fixed deposit. The gift is not taxed, because a spouse is a relative under the Act and gifts between relatives are exempt. But the interest that deposit earns is added to your income and taxed at your slab, not theirs. The same logic covers assets transferred to a minor child and some other relatives.
Clubbing does not apply to your spouse’s own salary or to income from their own skills and qualifications, and income on income (what the clubbed interest itself later earns) generally escapes. It is a specific anti-avoidance rule, not a blanket one. See couples financial planning and tax on gifts.
Open full page →A second person who applies for a loan with you and shares the duty to repay it.
Example: A parent who signs an education loan with their child is the co-applicant.
A co-applicant is your partner on a loan. They apply with you, and they owe the money just as you do. On an education loan it’s usually a parent. Because the loan sits on both credit reports, one missed EMI hurts two credit scores.
Open full page →A share of every health claim you pay yourself, with the insurer paying the rest.
Example: A 10% co-pay means you pay 10% of each hospital bill.
Co-pay is the portion of each claim you agree to pay out of your own pocket. A policy with a 10% co-pay pays 90% of an approved bill and leaves 10% to you.
The co-pay applies to every approved claim, as a fixed percentage. On a ₹4 lakh hospital bill with a 10% co-pay, the insurer pays ₹3.6 lakh and you pay ₹40,000, even though your sum insured may be much higher. It is a way of sharing cost: you carry a slice of each claim, which is why a co-pay reduces your premium.
A co-pay is a classic premium-versus-protection choice. A higher co-pay means a lower premium now, but a bigger bill exactly when you are already dealing with a hospital stay. A lower or zero co-pay costs more upfront but leaves you less exposed at claim time. For a young, healthy buyer a small voluntary co-pay can be a reasonable way to cut cost; on older policies it is often compulsory.
Co-pay often appears quietly in two places: on senior-citizen plans, where it is frequently mandatory, and on policies covering treatment in a higher-cost city or a non-network hospital. It stacks with other limits like a room rent limit, so two features together can shrink a payout more than you expect. Always read how the co-pay is applied before buying, and see how much health cover you need.
Open full page →An asset you pledge to a lender as security, which it can take if you don't repay.
Example: In a loan against FD, your fixed deposit is the collateral.
Collateral is what you put up as security when you borrow. Your FD backs a loan against FD, the car backs a car loan, gold backs a gold loan. Because the lender can fall back on it, a secured loan usually costs less, but if you don’t repay, you can lose the asset.
Open full page →A UPI request asking you to pay someone; approving it sends money from your account.
Example: Scammers send a collect request pretending you will receive money, but approving it pays them.
A collect request is a UPI feature that lets someone request money from you. When you approve it and enter your PIN, money leaves your account. It never brings money in, which is exactly why scammers send one while claiming they are paying you.
The legitimate use is simple: a shop, a friend or a biller sends you a request for a specific amount, and you approve it to pay them. It saves them from sharing account details and saves you from typing an amount. Approving a collect request is the same as making a payment, and like any UPI payment, it needs your UPI PIN to go through.
Here is the trap. A collect request can only pull money out of your account; it can never push money in. So a fraudster posing as a buyer, a refund desk or a lottery sends you a collect request while telling you it will credit money to you. If you approve it and enter your PIN, you pay them. The confusion between “receiving” and “approving a request” is the entire scam.
You never need to approve a request or enter your PIN to receive money. Receiving is automatic and silent. So treat any collect request you did not expect with suspicion, read what the app actually says (it will say you are paying, not receiving), and decline anything from a stranger. See common UPI scams and UPI safe habits.
Open full page →When your earnings start earning too. A snowball effect.
Example: Interest on ₹100 becomes ₹110, then next year you earn on ₹110.
Compounding is your money making money, and then that new money making more. It starts slow and gets powerful over long periods, which is why starting early matters more than starting big.
In the first year, you earn a return on what you put in. In the second year, you earn on your original amount plus the first year’s return, so you are earning on a slightly larger base. Repeat that for many years and the base keeps growing, so each year’s gain is bigger than the last. The growth is not a straight line; it curves upward, gently at first and then steeply, which is why the later years do most of the heavy lifting.
Because compounding needs time, a modest amount invested early can outgrow a larger amount invested later. The years are the ingredient you cannot buy back. Someone who starts a small SIP in their twenties can end up ahead of someone who invests far more but starts in their forties. See it in one picture in what a monthly SIP can grow to.
Compounding works for you in investments and against you in debt, where unpaid credit card interest compounds the same way. And inflation quietly compounds too, eating into what your money will buy, which is why your returns need to beat it. Learn the idea fully in how compounding works.
Open full page →Your broker's official record of a trade: the share, quantity, price, time and every charge.
Example: After buying 5 shares, your contract note shows the price paid plus brokerage and taxes.
A contract note is your receipt for a share trade. Your broker sends it within 24 hours, under SEBI rules, listing the share, how many, the price, the time and each charge. Check it every time against your order, whether it was a market order or a limit order. It’s also handy proof when you work out tax later.
Open full page →The total amount you've built up for a goal, such as your retirement savings pot.
Example: A retirement corpus of 1 crore rupees is the pool you'll draw your income from after you stop working.
Corpus just means the total pot of money you’ve built for a goal. In retirement planning, it’s the amount saved by the day you stop working, built through things like a SIP or NPS. After that, the job flips: the corpus has to pay your bills, through a scheme, an annuity or regular withdrawals, and your withdrawal rate decides how long it lasts.
Open full page →A company that tracks everyone's loans and cards to build a credit score.
Example: A credit bureau like CIBIL records whether you repay on time.
A credit bureau collects your loan and card repayment history and turns it into a credit score. Lenders check that score before giving you a loan. CIBIL is the best known in India.
Every bank and lender reports your accounts to the bureaus: the cards and loans you hold, your limits and balances, and crucially whether you pay on time. The bureau gathers all of this into a credit report, a full history of how you handle borrowed money, and boils it down into a three-digit score lenders can read at a glance.
Four credit information companies are licensed by the RBI: TransUnion CIBIL, Experian, Equifax and CRIF High Mark. Each builds its own report and score from roughly the same underlying data, so your numbers can differ a little between them. CIBIL is the most widely used by Indian lenders, which is why “CIBIL score” is often used loosely to mean any credit score.
You are entitled to see your own report, and each bureau must give you one free full report a year. Checking your own report is a soft enquiry and does not lower your score, unlike a lender’s hard enquiry when you apply. It is worth checking now and then for errors, because a wrong entry can drag your score down. See how to check your credit report.
Open full page →A card that lets you spend the bank's money now and pay it back later; unpaid dues carry high interest.
Example: A credit card bill not paid in full can run interest of about 3.5% a month.
A credit card lets you spend up to a limit on the bank’s money and pay it back by a due date. Clear the full bill in time and it is interest-free; leave any part unpaid and it carries high interest, around 3.5% a month on many Indian cards.
A credit card runs on a billing cycle, usually about a month. You spend during the cycle, then the bank sends a statement listing the total amount due and a due date a few weeks later. Pay the full total by that date and the bank charges no interest: you have effectively used its money free for up to about 45 days. That interest-free stretch is the grace period.
The statement also shows a minimum due, often about 5% of the bill. Paying only that keeps the card regular and avoids a late fee, but it does not clear the bill. The unpaid rest starts carrying interest at around 3.5% a month, roughly 42% a year, and you lose the grace period on new purchases too. This is how a small balance snowballs. See what it costs in the cost of a slow card payoff.
The bank sets a credit limit from your income and record. How much of it you use, your credit utilisation, feeds your credit score: keeping usage low helps, maxing the card out hurts. Paying on time is the single biggest factor in a healthy score.
Treated like a debit card, spending only what you can repay in full, a credit card is convenient, safer for online payments, and builds your credit history. The only real danger is the interest, and that is entirely avoidable by paying the full bill every month.
Open full page →A check of your credit report; a soft one is harmless, a hard one can dent your score.
Example: Checking your own score is a soft enquiry; a lender checking after you apply is a hard one.
A credit enquiry is a look at your credit report. A soft enquiry, like checking your own score, changes nothing. A hard enquiry, when a lender checks because you applied for credit, can nudge your score down, especially if you make many in a short time.
Open full page →Your record of borrowing and repaying, held by credit bureaus and read by lenders.
Example: Two years of credit card bills paid in full and on time build a clean credit history.
Your credit history is your record of borrowing and repaying: every loan and card, how much you borrowed, and whether you paid on time. A credit bureau keeps it and turns it into your credit score. See building credit from zero to start one.
Open full page →The most you can spend on a credit card, set by the bank from your income and credit score.
Example: On a card with a Rs 1,00,000 limit, your spending plus unpaid dues cannot cross Rs 1,00,000.
A credit limit is the most you can spend on a credit card, set by the bank mainly from your income and credit score. Your spending plus any unpaid dues cannot cross it. The limit is a ceiling the bank is willing to lend, not an amount you are meant to spend: using a large share of it, called high credit utilisation, can weigh on your score.
Open full page →The chance that a borrower fails to pay interest or repay a bond on time.
Example: A company bond rated AA pays more interest than a government bond because it carries more credit risk.
Credit risk is the chance a borrower doesn’t pay you back in full or on time. Government bonds carry almost none. Company bonds are rated by credit rating agencies, and lower ratings pay higher interest to make up for higher risk. In a debt fund, one default can pull the NAV down. See debt funds explained and when a bond defaults in your debt fund.
Open full page →A three digit number, 300 to 900, that shows how reliably you repay.
Example: A score around 750 or above is often seen as strong, though cutoffs vary by lender.
A credit score sums up your borrowing record in one number, from 300 to 900. Lenders check it before a loan or card. The higher it is, the easier the approval and the lower the interest rate you are likely to get. Credit bureaus like CIBIL build it, and the exact formula is not public.
The rough bands. Lenders and apps commonly read the scale as four bands. These are a widely used convention, not an official standard, and each lender sets its own cutoff.
| Score range | Common label |
|---|---|
| 300 to 549 | Poor |
| 550 to 649 | Fair |
| 650 to 749 | Good |
| 750 to 900 | Excellent |
A brand new borrower has no score yet, shown as NA or NH (not applicable, or no history), not a low 300. No history is not the same as a poor record.
Open full page →How much of your credit card limit you are using, as a share of the total.
Example: Spending 20,000 on a 1,00,000 limit is 20% utilisation.
Credit utilisation is the part of your card limit you have used, as a share of the total. Lower is generally better for your credit score, because heavy use suggests you lean on credit.
Divide what you owe on your cards by your total limit. Spending ₹20,000 on a ₹1,00,000 limit is 20% utilisation. Bureaus look at it both per card and across all your cards together, and they read a high figure as a sign you may be stretched, which can weigh on your score. There is no official cutoff, but keeping usage comfortably below your limit is the usual guidance.
Along with paying on time, utilisation is one of the biggest things a credit bureau watches. Maxing a card out, even if you clear it later, can show up as high utilisation on the day the bank reports to the bureau, and temporarily dent your score.
Two simple levers help. First, pay the balance down before the statement date, not just by the due date, so a lower figure gets reported. Second, a higher limit lowers your utilisation for the same spending, which is one reason a credit limit increase can help your score, as long as you do not spend more because of it. Paying the total amount due in full each month keeps both your interest and your utilisation in check.
Open full page →Insurance that pays a fixed lump sum when you are diagnosed with a serious illness on its list.
Example: A 15 lakh critical illness policy pays 15 lakh on a valid claim, whether the hospital bill is 3 lakh or 12 lakh.
Critical illness cover is a benefit based policy: it pays a set amount on diagnosis of a listed illness, after the waiting and survival periods, whatever the bills come to. Read how a claim works in critical illness insurance.
Open full page →Cost to company: everything an employer spends on you in a year, including parts you never get in your monthly pay.
Example: A 15 lakh rupee CTC that includes the employer's PF and gratuity means a gross salary below 15 lakh.
CTC stands for cost to company. It’s the full yearly cost of employing you, not what lands in your account. Take out the employer’s PF contribution, gratuity and similar items to get gross salary; take out tax and your own PF to get take-home. See every step in how your salary is taxed.
For a worked example from offer letter to monthly pay, see CTC vs in-hand salary.
Open full page →Cheque Truncation System: cheques clear as scanned images instead of paper moving between banks.
Example: You deposit a ₹10,000 cheque at your branch; under CTS only its image travels to the payer's bank.
A bank account built for businesses that make many payments a day, usually with no interest.
Example: A shop owner uses a current account to receive customer payments and pay suppliers.
A current account is a working account for business. It is built to handle a high volume of payments in and out, not to grow your money, so it usually earns no interest and needs a larger balance. If you are salaried, a savings account does the job, and a current account mostly adds cost.
Open full page →The firm that safely holds a scheme's securities, appointed by the trustees.
Example: The shares a scheme buys sit with its custodian, not with the AMC.
A custodian keeps safe custody of the securities a scheme owns. It is appointed by the trustees and registered with SEBI, which keeps the assets separate from the company that manages them.
When a mutual fund buys shares or bonds, those securities do not sit with the AMC that picks them; they are held by an independent custodian. The custodian records what the scheme owns, settles trades, and collects dividends and interest on the scheme’s behalf. In effect it is the vault, while the AMC is the decision-maker.
This split is one of the structural safeguards that make mutual funds safe to use even though a private company runs them. Because the custodian, not the AMC, actually holds the assets, the fund house can never simply take your money. Even if an AMC failed, the securities bought with investors’ money are held apart, overseen by independent trustees and the custodian under SEBI’s rules. You do not choose or deal with the custodian directly; it works quietly in the background, but its existence is part of why your units represent real, separately held assets rather than an IOU from the fund company.
Open full page →cybercrime.gov.in, the government website where you file a written complaint about an online fraud or cyber crime.
Example: After calling 1930 about a 15,000 rupee UPI fraud, you file the details and screenshots on cybercrime.gov.in and save the acknowledgement number.
The cybercrime portal, cybercrime.gov.in, is where you put an online fraud complaint in writing, after calling 1930. The full order of steps is in cyber crime complaint: what to do, step by step.
Open full page →A card that pays straight from your bank account, using money you already have.
Example: You pay 2,000 rupees with a debit card, and 2,000 rupees leaves your account right away.
A debit card is the simplest way to spend money you already have. It keeps you within your balance, which is its strength. The weak spot is fraud: money taken with a debit card leaves your own account, so blocking the card and reporting fast matters more than with a credit card.
Open full page →Paying off your highest-interest debt first to save the most money.
Example: With the avalanche method you clear a 3.5% a month card before a 2.5% one.
The debt avalanche means paying the minimum on everything, then putting every spare rupee on your highest-interest debt first. Because the costliest debt grows fastest, clearing it first saves you the most money overall.
List every debt with its interest rate. Keep paying at least the minimum due on all of them so none goes overdue, then throw every extra rupee at the one with the highest rate. When that is cleared, roll the whole amount you were paying on it onto the next-highest, and so on. The high-rate debts, usually credit card balances at around 3.5% a month, are attacked first because they are the ones quietly costing you the most.
Interest is the enemy, and interest is highest on the costliest debt. By killing the highest rate first, you cut the biggest source of interest soonest, so you pay less in total and get out of debt faster in money terms than with any other order. On paper, the avalanche is the mathematically cheapest way to clear multiple debts.
The trade-off is motivation. The avalanche saves the most money, but the first debt can take a while to clear, which some people find discouraging. The debt snowball, which clears the smallest balance first, costs a little more interest but delivers quick wins. The best method is the one you will actually stick to. See how to get out of credit card debt.
Open full page →Paying off your smallest balance first for quick wins and momentum.
Example: The snowball method clears a small 5,000 balance first, then rolls that payment into the next debt.
The debt snowball means clearing your smallest balance first, then rolling that freed-up payment into the next smallest, and so on. It costs a little more in interest than the avalanche, but the early wins keep you motivated to finish.
List your debts by balance, smallest to largest, ignoring the interest rate. Pay the minimum due on all of them, and put every spare rupee on the smallest balance until it is gone. Then take the full payment you were making on it and add it to the next-smallest debt, which now clears faster, and repeat. The payment “snowballs”: it grows larger as each debt falls, speeding up the ones that remain.
On pure maths, the debt avalanche, highest rate first, is cheaper. The snowball’s strength is psychological: knocking out a whole debt early, even a small one, gives a visible win and a burst of motivation, and crossing debts off the list keeps people going. For anyone who has stalled on repayment before, that momentum can matter more than the small extra interest.
Pick the avalanche if you are driven by the numbers and want to pay the least. Pick the snowball if you need quick wins to stay the course. Either beats paying only the minimum and drifting. See the way out in how to get out of credit card debt.
Open full page →A set rupee amount of covered bills that the health insurer will not pay, before the policy starts paying.
Example: On a top-up with a 5 lakh deductible, the insurer pays only the part of covered bills above 5 lakh.
A deductible is the first slice of covered bills a health policy leaves to you or to another policy, before this one starts paying. It is the engine behind top-up and super top-up cover.
Suppose a policy has a deductible of ₹5 lakh. It pays nothing on the part of your covered bills up to ₹5 lakh; only costs above that line are its responsibility. The gap can be met out of your pocket, by your emergency fund, or, more usefully, by a base health policy. In the standard policy definition, a deductible does not shrink your sum insured; it simply sets where this policy’s cover begins.
This is the clever part. A plain ₹25 lakh policy is expensive, but a ₹25 lakh top-up sitting above a ₹5 lakh deductible is far cheaper, because big claims are rare and the top-up only pays the portion above ₹5 lakh. Pair a modest base policy, which handles the common smaller bills, with a high-deductible top-up, which handles the rare huge one, and you get a large total cover for a low combined premium.
They are different. A deductible is a fixed amount paid first, before the policy pays anything; a co-pay is a percentage of every claim you keep paying even after cover starts. See it in rupees in super top-up vs top-up.
Open full page →A digital locker that holds your shares and funds safely.
Example: Buy 1 share and it sits in your demat, like money in a bank app.
Demat is short for dematerialised. A demat account holds your investments in digital form, so you never deal with paper certificates. You open one through a broker or an investing app, and it is where your shares and funds live.
Think of it as a bank account, but for securities instead of cash. It can hold shares you buy on the stock exchange, exchange-traded funds, bonds and government securities, and it can hold mutual funds too if you choose to keep them there. When you buy, the units land in your demat; when you sell, they leave it. Your bank account handles the money, and the demat handles the securities.
A demat account on its own cannot buy or sell anything. To place an order you need a trading account, which connects to the stock exchange. Most brokers open the two together, along with a linked bank account, so money, orders and holdings move between the three. A buy order takes money from your bank, the trade goes through the trading account, and the shares settle into your demat, usually the next working day.
You open a demat account online in a few minutes by finishing KYC with your PAN and Aadhaar. There is usually no charge to open it, but most brokers levy a small yearly maintenance fee, and some waive it on basic accounts. You can hold more than one demat account across different brokers, though keeping everything in one place is simpler to track, and easier for your nominee later.
This trips up a lot of beginners. You can invest in mutual funds without a demat account at all, by holding them in a folio directly with the fund house or through an app. A demat account is mainly for shares and ETFs that trade on the exchange. For the full walkthrough, read what a demat account is.
Open full page →Contracts, like futures and options, whose value comes from a share, index or other asset.
Example: An index option is a derivative: its price moves with the index, not with any one share you own.
Derivatives are contracts whose value comes from something else, like a share or a market index. The common ones are futures and options, or F&O. They use leverage, which magnifies both gains and losses, and SEBI’s August 2026 study found most individual traders lose money in them. Our F&O explainer has the numbers.
Open full page →Deposit Insurance and Credit Guarantee Corporation: the RBI arm that insures bank deposits up to ₹5 lakh per bank.
Example: If your bank fails while you hold ₹3 lakh there, DICGC pays you back the full ₹3 lakh plus the interest due.
A fake "arrest" over a video call used by scammers; no real agency does this.
Example: A caller claiming to put you under digital arrest is always a scammer.
Digital arrest is not a real legal process. It is a scam where fraudsters pose as police, CBI or customs on a video call, claim you are part of a crime, and keep you “under arrest” online while they pressure you to pay. Indian authorities have said no agency arrests anyone over a video call, so any such claim is fraud. Report it on 1930.
Open full page →Gold bought online in small amounts, stored by the seller; it sits outside SEBI's rules.
Example: Buying 100 rupees of gold in a payments app each month is buying digital gold.
Digital gold is gold you buy on your phone, in amounts as small as a few rupees, with the seller keeping matching physical gold in a vault for you. It’s convenient, but SEBI has cautioned that it sits outside its rules. Read the risks of digital gold before you put serious money in.
Open full page →An app or website that gives loans online; a genuine one names an RBI-regulated bank or NBFC as the lender.
Example: A loan app shows the name of the NBFC that lends the money and appears in RBI's directory of lending apps. That is a regulated digital lending app.
A version of a mutual fund scheme bought without a distributor, so it costs less each year.
Example: The direct plan of a scheme has a lower expense ratio than its regular plan.
Every mutual fund offers two versions of each scheme. A direct plan is the one you buy straight from the fund house, with no distributor in between, so no commission is paid. A regular plan includes that commission in its fee. Same scheme, same portfolio, same manager, lower yearly cost in the direct plan.
The difference is the commission built into the regular plan’s expense ratio, often a fraction of a percent up to around 1% a year. That sounds trivial, but it is charged every year on your whole balance and compounds against you, so over a decade or two the direct plan can leave meaningfully more in your hands for an identical investment. Because the fee comes out before the NAV is set, the direct plan simply shows a slightly higher NAV over time.
The direct plan is not “better” in every case; it is cheaper because it comes with no advice. The regular plan’s extra cost is what pays a distributor or adviser. So the sensible rule is this: if you choose and manage your funds yourself, the direct plan leaves more money with you. If you genuinely rely on an adviser who earns that commission, a regular plan can be worth it. What to avoid is holding a regular plan while getting no advice at all.
You can buy direct plans through the fund house’s own site or app, or neutral platforms. Moving from regular to direct is a redemption and a fresh purchase, so mind any exit load and capital gains. See the same fund for a lower cost.
Open full page →Not putting all your money in one place, to lower risk.
Example: Spreading ₹10,000 across several things, not one single share.
Diversification means spreading your money across many investments so that one bad one does not sink you. A mutual fund does this for you automatically by holding many companies at once.
Different investments do not all move together. When one company, sector or asset struggles, another may hold up or rise, so spreading your money smooths the ride and lowers the chance of a single event wiping out a big chunk of it. You lower risk without having to predict which investment will win, which is the appeal: it is one of the few things in investing that improves your odds without needing a forecast.
You can spread across companies, across sectors, across asset types like equity and debt, and even across geographies. The simplest way to get wide spread in one step is a mutual fund or an index fund, which holds dozens or hundreds of companies, so even a small SIP is diversified from day one. Deciding how much goes to each asset type is called asset allocation.
Diversification lowers the risk that any one holding hurts you, but it does not remove market risk: in a broad fall, most things drop together. And over-diversifying, holding many overlapping funds, adds clutter without extra benefit. The goal is sensible spread, not endless variety. Learn where it fits in risk and return.
Open full page →A share of profits paid out to owners. Companies pay it, and some funds pass it on.
Example: Hold shares paying a ₹5 dividend per share and 100 shares earn you ₹500.
A dividend is money a company chooses to hand its shareholders rather than reinvest. It is never guaranteed, even where a company has paid one for years.
When a company makes a profit, it can either plough the money back into the business or pay some of it to shareholders as a dividend. If you own shares in a company that declares a ₹5 dividend, you receive ₹5 for each share you hold. Dividends are a real cash return from owning equity, on top of any rise in the share price, but a company’s board decides each time, and it can cut or skip a dividend in a tough year. A steady dividend history is a sign of a settled business, not a promise.
A mutual fund has an equivalent payout option, now called IDCW, and this is where people get confused. A fund payout is not extra money: the scheme’s NAV falls by exactly the amount paid out, so it came out of your own holding, not from thin air. The growth option, which keeps the money compounding inside the fund, usually serves a long-term goal better.
Dividends matter for returns in aggregate: the total return index a fund is judged against counts reinvested dividends, which are a big part of long-run equity returns. See why a fund payout is not free money.
Open full page →A unique computer-generated number on every genuine communication from the Income Tax Department, used to check that a notice is real.
Example: Before replying to a tax notice, you enter its Document Identification Number in the e-filing portal's 'Authenticate notice' service and see it listed as a genuine notice.
A Document Identification Number (DIN) is the unique number the Income Tax Department puts on every genuine notice, order or letter issued since 1 October 2019. You can check it on the e-filing portal without logging in, which helps you spot fake notices sent as phishing. Read more in what to do when you get an income tax notice.
Open full page →The part of a home's price you pay yourself, because the bank won't lend all of it.
Example: On a 60 lakh rupee flat with an 80% loan, the down payment is 12 lakh rupees.
A down payment is the part of a home’s price you pay from your own money. RBI limits how much of a home’s value a bank can lend, through the loan-to-value cap, so you fund the rest. Stamp duty and registration come on top.
RBI caps a home loan at a share of the property’s value: 90% for loans up to ₹30 lakh, 80% for ₹30 lakh to ₹75 lakh, and 75% above ₹75 lakh. Your down payment is at least the rest, so 10%, 20% or 25% of the price. On a ₹60 lakh flat with an 80% loan, that is ₹12 lakh from your pocket. Putting in more than the minimum lowers the loan, the EMI and the total interest.
The down payment is not the only upfront cash you need. Stamp duty and registration, often several percent of the price, are extra and come on top, because RBI’s rules say a bank should not include them in the value it lends against (except for homes up to ₹10 lakh). So on that ₹60 lakh flat you need the ₹12 lakh down payment plus a few lakh more for duty and charges.
Because it is a large, fixed sum needed on a known date, a home down payment is a goal to save for in safe, accessible places, not in volatile equity. See rent vs buy a home.
Open full page →A fee your depository participant charges when shares are sold out of your demat account.
Example: Sell shares of one company in a day and your DP charges one flat fee, whatever the amount.
DP charges are what your depository participant, usually your broker, charges when you sell shares from your demat account. It’s a flat fee per company sold, not a percentage, and each DP sets and publishes its own rate. It sits alongside brokerage and STT. See the real cost of buying shares.
Open full page →A measure, in years, of how much a bond or debt fund's price moves when interest rates change.
Example: A debt fund with a duration of 5 years may fall about 5% if rates rise by 1 percentage point.
Duration measures how much a bond’s price, or a debt fund’s NAV, reacts to a change in interest rates. It’s stated in years. A fund with a duration under a year barely moves when rates change; one with a duration of seven years can move a lot. SEBI uses Macaulay duration to define debt fund categories. See debt funds explained.
Open full page →At a foreign shop or website, the option to be billed in rupees instead of the local currency. The overseas merchant sets the rate and adds a markup, usually costing more.
Example: A shop abroad offers to bill you Rs 5,200 instead of the local price; paying in the local currency is usually cheaper.
Dynamic currency conversion is the option, at a foreign shop, terminal or website, to be charged in rupees instead of the local currency. It sounds helpful, but it is usually the costlier choice. With it, the overseas merchant does the conversion and sets the exchange rate, typically adding its own markup on top of what your card already charges. Decline it and pay in the local currency, and your own bank does the conversion instead, usually at a better rate, with only your card’s forex markup to pay. The safe habit abroad is simple: always choose the local currency.
Open full page →Your one-time approval for a company to auto-debit a recurring payment from your card, UPI or wallet.
Example: A 999 rupee monthly subscription paid by e-mandate is debited automatically, after a notice a day ahead.
An e-mandate is your one-time approval for a merchant to debit a recurring payment from your card, prepaid wallet or UPI. RBI’s 2026 framework requires a notice at least 24 hours before each debit, lets you skip or cancel any time, and bars any charge for the facility. See pay yourself first.
Open full page →An equity mutual fund that qualifies for a tax deduction and locks your money for three years.
Example: Investing ₹1,50,000 in ELSS can reduce taxable income under the old regime.
ELSS stands for Equity Linked Savings Scheme. It invests mainly in shares and qualifies under section 80C, with a three-year lock-in that is the shortest among the 80C options.
Under the old tax regime, money you put into ELSS, up to the ₹1.5 lakh 80C cap, is deducted from your taxable income, so it does two jobs at once: saves tax now and invests for growth. That dual benefit, plus the short lock-in, is why ELSS is a popular 80C choice. The catch is simple and important: the deduction only exists in the old regime. Under the new regime there is no 80C, so an ELSS is just an equity fund that happens to have a lock-in.
Each instalment is locked for three years from the day it is invested, so in a SIP every monthly amount has its own three-year clock. Because ELSS holds equity, its value rises and falls with the market, and three years is not always long enough to ride out a dip. So treat it as a long-term equity investment that also saves tax, not as a three-year deposit, and do not count on a specific figure exactly when the lock-in ends.
Against other 80C options, ELSS offers the highest growth potential and the shortest lock-in, but also the most ups and downs. See it next to the alternatives in ELSS vs PPF vs FD, and how the SIP lock-in and tax work in ELSS explained.
Open full page →Money set aside for emergencies, usually 3 to 6 months of expenses, kept easy to reach.
Example: Build an emergency fund before you start investing for long-term goals.
An emergency fund is money you keep aside for a sudden need, like a job loss, a medical bill, or an urgent repair. A common target is 3 to 6 months of expenses, kept somewhere safe and easy to reach, such as a savings account or a liquid fund, not locked away or invested in risky assets.
An emergency fund is the foundation the rest of your money plan sits on. Without one, a single surprise forces you either to break a long-term investment at the worst time, or to borrow at high interest on a credit card or loan. With one, a shock becomes an inconvenience rather than a crisis, and your investments are left to compound undisturbed. That is why the usual advice is to build the fund first, then invest.
Three to six months of your essential expenses is the common range: nearer three if your income is stable and secure, nearer six or more if it is irregular or you are the sole earner. Size it on what you actually spend, not your salary. Keep it where it is safe and reachable within a day or two, such as a bank savings account, a sweep fixed deposit, or a liquid fund. It should not be in equity or anything that can be down exactly when you need it.
Build it gradually, treating the monthly contribution like a bill, until you hit your target. Use it only for genuine emergencies, and top it back up afterwards. Learn the full approach in the emergency fund lesson.
Open full page →A fixed monthly repayment on a loan.
Example: A ₹60,000 phone on a 12 month EMI is about ₹5,000 a month, plus interest.
EMI stands for Equated Monthly Instalment. It is the fixed amount you pay every month to slowly clear a loan, covering both the borrowed money and the interest. Easy EMIs feel small, but always check the total you will pay over the full term.
Each EMI has two parts: interest on what you still owe, and a bit of the loan itself, the principal. Early on, when the balance is largest, most of the EMI goes to interest and little to principal. As the balance falls, the interest share shrinks and more of the same EMI repays the loan. This is the reducing-balance method that most Indian lenders use.
A lower EMI almost always means a longer tenure, and a longer tenure means paying interest for more years. The monthly figure looks easier, but the total you hand over is larger. This is the single most useful thing to grasp about any loan: compare the total payable, not just the monthly amount. See it in one picture in what a loan’s tenure costs.
Turning a credit card bill or a purchase into EMIs is not always cheap. A card EMI adds a processing fee and GST, and a so-called no-cost EMI often builds the interest into the price or removes a discount you would otherwise get. Work out your own numbers in the EMI calculator, and read is no-cost EMI really free.
Open full page →The EPFO pension scheme funded by part of your employer's EPF share, paying a monthly pension after 10 years' membership.
Example: Part of your employer's monthly PF contribution goes to the Employees' Pension Scheme, not to your EPF balance.
The Employees’ Pension Scheme is the pension part of your provident fund. Your employer’s share is split, and a slice goes here instead of your EPF balance. After 10 years of membership, it pays a monthly pension from 58. The EPFO runs it. See how it sits next to gratuity in gratuity explained.
Open full page →A life insurance policy that also pays a lump sum if you survive the term.
Example: An endowment plan mixes modest life cover with a low, savings-style return.
An endowment plan is a traditional life policy that combines insurance with a savings element, paying out at the end of the term if you survive. It is sold as protection plus savings, but the cover is usually small and the return is low once you work out the yearly rate.
You pay a regular premium for a set term. If you die during the term, your family gets the sum assured; if you survive to the end, you get a maturity amount, often with bonuses the insurer adds along the way. So unlike term insurance, you always get something back, which is why endowment premiums are far higher for the same cover.
The comfort of “money back” has a cost. Because part of every premium goes to savings and the insurer’s guarantees are cautious, the effective return usually works out to a modest few percent a year, often below what simple long-term investing delivers, and below inflation in some cases. The life cover is also typically small relative to the premium, so it protects your family less than a cheap term plan would.
An endowment can suit someone who wants a disciplined, very low-risk savings habit bundled with some cover, and who values certainty over returns. For most people, though, buying term insurance for protection and investing the difference separately does both jobs better. See the numbers in term vs endowment, the real cost.
Open full page →Employees' Provident Fund, a retirement scheme where you and your employer both pay in each month.
Example: A slice of your salary goes into EPF every month for retirement.
EPF, the Employees’ Provident Fund, is a retirement savings scheme for salaried workers. Each month a part of your salary goes in, your employer adds a matching share, and it earns interest set by the government. You reach it online using your UAN.
Both you and your employer put in 12% of your basic pay plus dearness allowance each month. Your full share goes to the provident fund. Of the employer’s share, a slice is diverted to the Employees’ Pension Scheme, which pays a pension later, and the rest joins the provident fund. So your EPF balance is built from your contribution, part of the employer’s, and the interest on both.
The government fixes the EPF rate each year; it was 8.25% for 2024-25. The interest compounds, and within the rules the contributions, the interest and the final amount are tax-favoured, which makes EPF one of the most effective long-term savings most salaried people have. Confirm the current rate on epfindia.gov.in, since it is reviewed yearly. See how it sits against other safe routes in the small savings rates chart.
Your UAN is a permanent number that ties your EPF across jobs, so when you change employers you transfer the balance rather than start over. You can check the balance and passbook online, and withdraw fully or in part under set conditions, for example after a period without covered employment or for specific needs. The exact withdrawal rules are detailed and change, so read PF withdrawal rules and how to activate your UAN. EPF sits alongside the PPF, which anyone can open, salaried or not.
Open full page →Taking money out of your EPF account, either partly for set needs or fully on retirement or a long break from work.
Example: After 12 months of membership, someone can make a partial EPF withdrawal for illness, but 25% of what has gone in stays.
EPF withdrawal means taking money out of your EPF account. Under the 2026 scheme, partial withdrawals open up after 12 months of membership, while 25% of everything credited stays put as a Minimum Balance. Full withdrawal is for retirement or a year without covered work. Claims are filed online with your UAN. Our explainer on the EPF withdrawal rules has the details.
Open full page →Employees' Provident Fund Organisation, the government body that runs your EPF, pension and insurance schemes.
Example: When you check your PF balance or file a PF withdrawal claim, you're dealing with the EPFO.
The EPFO, or Employees’ Provident Fund Organisation, runs your provident fund, your pension under the Employees’ Pension Scheme, and the EDLI insurance cover. You reach it online with your UAN, on epfo.gov.in or the UMANG app. Read more in gratuity explained, which sets out how gratuity differs from your EPF.
Open full page →Earnings per share: a company's yearly profit divided by the number of its shares.
Example: A company earning 100 crore rupees with 4 crore shares has an EPS of 25 rupees (illustration).
EPS, or earnings per share, is a company’s profit for the year split across all its shares. If a business earns more while its share count stays the same, its EPS rises. It’s the bottom half of the P/E ratio, and one of the first numbers in any company’s results.
Open full page →Ownership in a company. Shares are equity, and equity funds invest mainly in shares.
Example: An equity fund holding 40 companies spreads your ₹5,000 across all of them.
Equity means a stake in a business rather than a loan to one. Returns come from the business growing and, sometimes, from dividends. There is no promised return and no maturity date, which is why equity swings far more than debt in the short run and has historically rewarded patience over long periods.
This is the core idea. When you buy equity, a share, you own a slice of the company and share in its fortunes: the value rises if the business does well and falls if it does badly. That is different from lending, say through a bond or a fixed deposit, where you are promised your money back with interest regardless of how the business performs. Ownership carries more risk and, historically, more reward.
Over days and months, share prices move on news, mood and expectations, so equity can rise or fall sharply. Over many years, prices tend to follow how the underlying businesses actually grow, which is why a long horizon has historically smoothed out the bumps. The flip side is simple: money you need within a few years does not belong in equity, because you cannot be sure where prices will be when you need it.
Few beginners buy individual shares well. Most get equity exposure through an equity mutual fund or an index fund, which spreads your money across many companies at once, so one firm doing badly does not sink you. That spreading is diversification. Learn the groundwork in risk and return.
Open full page →A fund that copies an index and trades on the stock exchange like a share, so it needs a demat account.
Example: A Nifty 50 ETF rises and falls with the Nifty 50 and is bought through a demat account during market hours.
ETF stands for Exchange Traded Fund. Like an index fund, it tracks an index at low cost, but you buy and sell it on the stock exchange during market hours, at a live price, through a demat account.
An ETF holds the same basket as the index it follows, but its units trade on the exchange just like a share. That means its price moves through the day with the market, and you buy or sell at that live price rather than at a once-a-day NAV. Because it is passive, with no manager picking stocks, its expense ratio is very low, usually among the cheapest ways to own a slice of the whole market.
Both track an index cheaply, and the difference is how you buy them. An ETF needs a demat account and trades on the exchange at a live price, which suits someone who already deals in shares. A regular index fund needs no demat account, is bought straight from the fund house at the day’s NAV, and accepts an automatic monthly SIP easily, which suits a hands-off investor. For most beginners doing a monthly SIP, an index fund is simpler; an ETF appeals if you want exchange trading.
Because an ETF trades live, its market price can drift slightly from the value of its underlying holdings, and you pay the usual brokerage and charges on each trade. Gold and other assets also come in ETF form. See index funds for where they fit.
Open full page →The first trading day a share is sold without the right to an announced dividend or other corporate action.
Example: If a share's ex-date for a 12 rupee dividend is Friday, someone who buys on Friday does not get the 12 rupees; the seller does.
The ex-date marks the point where a share stops carrying an announced dividend or other benefit. In India, shares settle one trading day after the trade, so a buyer must buy at least one trading day before the record date to be on the company’s list. That makes the ex-date and the record date usually the same day. Shares sit in your demat account, and the date that counts is when they arrive there. Read the full guide in record date vs ex-date.
Open full page →The person named in a will to carry out its instructions after the writer dies.
Example: She named her elder son as executor, so he gathers the documents and hands each asset to the right heir.
An executor is the person you name in your will to carry it out. After you die, they gather your papers, deal with banks and funds, and make sure each asset reaches the right person. An executor acts on the will’s instructions, not their own preferences.
The executor is the practical hands behind the will. They locate the will and the asset papers, inform banks, fund houses, insurers and employers, settle any outstanding dues or taxes from the estate, and then distribute each asset to the heir the will names. It is an administrative, fiduciary role: they manage and hand over, they do not get to change who gets what.
Pick someone you trust, who is organised, likely to outlive you, and who will know where your documents are. Many people name a spouse, an adult child or a close relative; you can name more than one, and it helps to name a backup. Crucially, tell the person you have chosen them and where the will is kept, because an executor who does not know they exist cannot act.
An executor can apply for probate, a court’s confirmation of the will, to get formal authority, though it is no longer compulsory in India. For money held with a nominee, the process is often simpler still. See writing a will.
Open full page →A small charge some funds apply if you sell units within a set period.
Example: A 1% exit load on selling within a year means ₹100 on a ₹10,000 exit.
An exit load is a charge some schemes apply when you redeem units before a set period, to discourage very short holding. It is deducted from the amount you get back.
The load is a small percentage, often around 1%, charged only if you sell within the scheme’s stated window, commonly up to a year. Sell ₹10,000 of units inside that period with a 1% load and you receive ₹9,900; the ₹100 stays with the scheme, for the benefit of the investors who remain. Hold past the window and the load no longer applies, so you get the full NAV for your units.
An exit load is not a profit for the fund house; it is a brake on rapid in-and-out trading, which raises costs for everyone in the scheme. By making a quick exit slightly expensive, it nudges investors to stay for the horizon the fund is built for. Equity funds and many others carry one; liquid and overnight funds usually have little or none, because they are designed for very short holding.
The simplest way to avoid an exit load is to hold your units past the stated period, which is easy if you invested with a plan rather than to trade. Remember it is separate from capital gains tax, which can also apply when you redeem. Always check a scheme’s exit-load rule in its factsheet before investing.
Open full page →The yearly fee a mutual fund charges, shown as a percentage of the money you hold.
Example: A 1% expense ratio on ₹1,00,000 costs about ₹1,000 over a year.
The expense ratio covers fund management, administration and distribution costs. You never pay it as a separate bill. It is deducted before the NAV is declared, so the return you see is already net of it.
An expense ratio sounds tiny, often around 1%, but it is charged every year on your whole balance, and it compounds against you exactly as returns compound for you. Over a few years the gap between a 0.3% fund and a 1.5% fund is minor; over thirty years, that one-point-plus difference can cost lakhs on a large portfolio. Because the fee comes out quietly before the NAV is set, most investors never feel it, which is exactly why it is worth checking.
Every fund sells two versions. A regular plan includes a commission paid to the distributor who sold it, so its expense ratio is higher. A direct plan of the very same fund, bought straight from the fund house, cuts out that commission and charges less, which means a higher return for an identical portfolio. Over time that difference alone adds up.
Every scheme publishes its expense ratio in its factsheet and on the fund house site. As a rough guide, index funds and ETFs are the cheapest, often a fraction of a percent, because they simply track an index; actively managed funds charge more for the manager’s work. Lower is not automatically better if a pricier fund genuinely delivers, but the fee is one of the few things about a fund you can know for certain in advance. See how costs fit into choosing in how to pick a mutual fund.
Open full page →Being able to answer basic money questions and make everyday money decisions.
Example: Knowing how interest, inflation, and a budget work is financial literacy.
Financial literacy means understanding the basics of money well enough to make good everyday decisions. It covers simple ideas like saving, budgeting, interest, inflation, and avoiding scams.
Financial literacy is not about complex investing or jargon. It is the handful of core ideas that shape ordinary money life: how a budget works, why an emergency fund matters, how interest helps you when you save and hurts you when you borrow, how compounding and inflation quietly add up over years, and how to spot a scam before it empties your account. Someone financially literate can read a loan’s real cost, a card’s terms, or a fund’s fee, and act sensibly.
The stakes are high because small misunderstandings cost real money: paying only the card minimum, buying bundled insurance-investment products, or keeping everything in cash while inflation erodes it. Surveys that test a few basic money questions find only about 27% of Indian adults pass, a figure worth treating as indicative rather than exact, but it points to a wide gap. That gap is exactly what GreenFunds exists to close, one plain-language explanation at a time.
You build financial literacy the same way you build any skill: one concept at a time, in plain words, applied to real decisions. Start with the money basics path and this glossary.
Open full page →India's money and tax year, from April to March.
Example: FY25 means April 2024 to March 2025.
A financial year, often shortened to FY, is the 12 month period a country uses for money and tax. In India it runs from 1 April to 31 March. So FY25 is the year from April 2024 to March 2025, FY26 is April 2025 to March 2026, and FY27 is April 2026 to March 2027. News reports and government data usually count money over a financial year, not a calendar year.
The shorthand can confuse, because FY25 is mostly made up of 2024. The convention is that the number names the calendar year the period ends in. FY25 ends on 31 March 2025, so it is “25”, even though it begins in April 2024. When in doubt, read FY25 as “the year ending March 2025”.
Two terms sit close together at tax time. The financial year is the year you earn the income. The assessment year, or AY, is the following year, when you file and are taxed on that income. So income earned in FY25 (April 2024 to March 2025) is filed in AY 2025-26. Deadlines, tax regime choices and section 80C limits all run on the financial year, so it is worth knowing which one you are in.
Most tax deadlines, investment limits and interest calculations reset on 1 April. A tax-saving investment counts for the financial year you make it in, and your capital gains are totted up over the same April-to-March window. Lining your planning up with the financial year, rather than the calendar year, keeps you on the right side of deadlines.
Open full page →Money placed with a bank for a set period at a rate agreed upfront.
Example: A ₹1,00,000 deposit at 7% for a year pays about ₹7,000 in interest.
A fixed deposit promises a known return over a known period, which is its whole appeal. You place a lump sum with a bank or the post office for a chosen term, from a few days to ten years, at a rate fixed on the day you book it. That rate does not change even if market rates fall later.
You can take a cumulative FD, where the interest is added back and compounds until maturity, or a payout FD, where it is paid out monthly, quarterly or yearly as income. A cumulative deposit grows the most, because the interest itself earns interest. Work out the maturity value in the FD calculator.
The interest is generally taxable at your income slab, and the bank cuts TDS once your interest from it crosses a yearly limit. After tax, and once inflation is counted, the real gain can be small or even negative, so your buying power quietly shrinks even while the balance grows. That is the trade-off for safety: an FD protects the amount, not always its purchasing power. See how its rate sits against other safe options in the small savings rates chart.
Bank deposits are insured by the DICGC up to ₹5 lakh per depositor per bank, counting principal and interest together, so spreading large sums across banks keeps each pot under the cover. Breaking an FD before maturity is allowed but usually costs a penalty and a slightly lower rate. A sweep or flexi deposit is a variant that moves money back to your savings account automatically when it runs short. Next to a liquid fund an FD is more certain but less flexible; read FD vs debt fund.
Open full page →A loan interest rate that stays the same for the period agreed, whatever happens to market rates.
Example: A 3-year car loan at a fixed 9% keeps the same EMI even if the RBI raises rates during those 3 years.
A fixed rate is a loan interest rate that stays the same for the period you agreed. Your EMI is predictable, which makes budgeting easy. The trade-off: if market rates fall, your rate doesn’t. Many fixed loans are fixed only for a few years, so check the terms. Compare it with a floating rate in fixed vs floating interest rates.
Open full page →Interest charged on the full original loan for the whole tenure, even as you repay, so it costs more than it sounds.
Example: A 12% flat rate on 1 lakh rupees for 3 years means 36,000 rupees of interest, about as costly as a 21% reducing rate (illustration).
A flat interest rate charges interest on the full original loan amount for the entire tenure, not on what you still owe. It looks cheaper than it is. Always ask whether a quoted rate is flat or reducing; see the comparison in how an EMI works.
Open full page →A loan interest rate linked to an outside benchmark, like the RBI repo rate, so it rises and falls over time.
Example: A home loan priced at the repo rate plus a margin moves up when the RBI raises the repo rate, and down when it cuts.
A floating rate is a loan interest rate that moves with an outside benchmark, usually the RBI’s repo rate, plus the lender’s margin. When rates fall, you pay less; when they rise, you pay more, or for longer. Most home loans are floating. See how it compares in fixed vs floating interest rates.
Open full page →Your account number with a mutual fund, where your units are recorded.
Example: Your folio shows every purchase and redemption you have made.
A folio is your account with a mutual fund, much like a bank account number. The RTA records your units and transactions against your folio.
Every purchase, SIP instalment, redemption and switch you make in a scheme is logged against your folio, along with your contact and bank details and your nominee. When you ask for a statement, it is drawn from the folio. It is the fund house’s record of you as an investor, maintained on its behalf by a registrar and transfer agent, the RTA.
You can end up with several folios: a new one often opens each time you invest in a different fund house, and sometimes even within the same house if your details do not match an existing record. Scattered folios make your holdings harder to track. You can ask the fund house or RTA to consolidate them under a single folio, and a consolidated account statement from the RTA shows every folio across fund houses in one place.
A folio is not a demat account. A folio is your record held directly with the fund house through its RTA, the normal way to hold mutual funds. A demat account holds securities electronically with a depository and is mainly for shares and ETFs, though funds can be held there too if you prefer. Keeping your details consistent across folios makes life easier for you and your nominee later.
Open full page →Paying off a loan in full before its tenure ends.
Example: Repaying the whole remaining car loan in year three of a five-year loan is foreclosure.
Foreclosure is closing a loan early by paying everything you owe. It saves the interest you would have paid on the remaining months. For many individual floating-rate loans, RBI rules now bar any charge for it; for fixed-rate loans, check your Key Fact Statement. See car loan basics for an example.
Open full page →A fee your card adds on every foreign-currency transaction, usually about 1% to 3.5% on Indian cards, with 18% GST charged on the fee.
Example: On a Rs 50,000 foreign spend, a 3.5% markup is Rs 1,750, plus about Rs 315 of GST on that fee.
A forex markup is a fee your card adds on every transaction made in a foreign currency, whether you are travelling or shopping on an overseas website. On Indian cards it is usually around 1% to 3.5% of the amount, and 18% GST is charged on the fee itself, not on the whole spend. Some travel-focused cards charge a lower markup or none, so the card you use changes the cost. The markup applies to foreign-currency online orders too, and a charge shown in rupees can still count as international if the merchant is abroad. Check your card’s schedule of charges for its exact rate.
Open full page →A declaration you give your bank so it does not deduct TDS on interest, when your tax for the year will be nil.
Example: A 68-year-old whose tax for the year works out to nil can file Form 121 with the bank, so no TDS is cut from FD interest.
Forms 15G and 15H were the declarations people used to stop TDS on interest. From 1 April 2026, one form, Form 121, does both jobs. It is a declaration about your own tax, so only file it when your tax for the year really will be nil.
Read the full walk-through in TDS on FD interest: Form 121 replaced 15G and 15H.
Open full page →A tax statement showing the tax cut or collected at source against your PAN.
Example: If your employer cut 30,000 rupees of tax from your salary, Form 26AS should show that 30,000 against your PAN.
Form 26AS is your tax credit statement: it lists the tax cut or collected at source against your PAN. Your claim for that tax depends on it showing up here. Read more in AIS and Form 26AS explained.
Open full page →The part of a company's shares that is actually available for the public to trade.
Example: If promoters hold 60% of a company's shares, roughly 40% is free float.
Free float is the part of a company’s shares that’s actually out there for the public to trade. Big locked-in holdings, such as a promoter’s stake, are left out. Multiply the free-float shares by the share price and you get free-float market capitalisation, which is how the Nifty 50 and Sensex decide how much each company counts.
Open full page →The 30 days after you receive a new insurance policy, when you can review it and cancel.
Example: You receive your policy document on 1 March and find a clause you dislike. You can cancel it within 30 days.
The free-look period is your cooling-off window on a new policy. Use it to read the wording, not just the brochure. It is one of five buyer rules in our health insurance guide, and it applies to term cover too, see how much term cover.
Open full page →The last payment an employer makes when you leave: pending salary, leave encashment and other dues, minus any recoveries.
Example: Someone leaving a job checks the full and final settlement for last month's salary, unused leave and any bonus owed.
Full and final settlement is the last payment when you leave a job. It usually covers unpaid salary, leave encashment, any bonus, and gratuity if you qualify, minus recoveries like a notice period shortfall. Under the Code on Wages, 2019, wages due must be paid within two working days of leaving. Our lesson on losing a job covers what to check.
Open full page →A mutual fund that invests in other mutual funds or ETFs instead of directly in shares or bonds.
Example: A gold fund that puts your money into a gold ETF is a fund of funds.
A fund of funds is a mutual fund that invests in other funds or ETFs instead of buying shares or bonds itself. It’s a convenient wrapper, for example a gold fund that buys a gold ETF for you, but it adds a second layer of expense ratio. See an example in gold ETF vs gold fund.
Open full page →Government security: a bond or bill issued by the central or a state government to borrow money.
Example: A 10-year G-sec pays interest every six months and returns its face value after 10 years.
A G-sec, or government security, is how the government borrows. Short-term ones are Treasury bills; longer dated securities, usually 5 to 40 years, pay a coupon every six months. State governments issue similar bonds called state development loans. Individuals can buy them directly through RBI Retail Direct. See bonds and government securities.
Open full page →A SEBI-regulated fund that holds physical gold and trades on the stock exchange like a share.
Example: Buying 10 units of a gold ETF through your broker gives you a share in the fund's gold, held in your demat account.
A gold ETF is a fund that holds physical gold and is listed on the stock exchange, so you buy and sell it like a share through a demat account. It’s regulated by SEBI, has no making charges or storage worries, and charges a small yearly fee. Compare it with a gold fund in gold ETF vs gold fund.
Open full page →A mutual fund that invests in a gold ETF for you, so you need no demat account.
Example: A 1,000 rupee monthly SIP into a gold fund buys gold ETF units for you, with no demat account.
A gold fund is a mutual fund that invests in a gold ETF on your behalf. You can start a SIP without a demat account, at the cost of a slightly higher yearly fee, since it’s a fund of funds. See how it compares in gold ETF vs gold fund.
Open full page →A loan against your gold jewellery or coins, which the lender holds until you repay.
Example: Pledge jewellery with ₹2 lakh of gold in it, and an RBI-regulated lender can lend you up to ₹1.7 lakh, the 85% limit for small loans.
A gold loan turns jewellery sitting in a locker into quick cash, without selling it. The lender keeps the gold as security, so it often leans less on your credit score. The catch is simple: if you don’t repay, the gold can be auctioned.
Read the rules and the real cost in Gold loans: the real cost, and RBI’s new rules.
Open full page →The interest-free days between a purchase and the bill's due date, if you pay in full.
Example: Pay your full bill within the grace period and you owe no interest.
The grace period is the gap between your purchase and your bill’s due date when no interest is charged, but only if you pay the full bill. Pay less than the full amount and you lose it, so new purchases start accruing interest right away.
Buy something early in your billing cycle and you do not pay for it until the due date on the statement that follows, which can be up to around 45 to 50 days later. During that window the bank charges no interest, so you are effectively using its money free. This is the single biggest perk of a credit card, and it costs you nothing as long as you pay the total amount due in full and on time.
The grace period is a reward for paying in full, not a permanent feature. The moment you carry any balance, by paying only the minimum due or anything less than the full bill, you forfeit it. From then on, even brand-new purchases start charging interest from the day you make them, with no interest-free window at all, until you clear the whole balance and begin a fresh clean cycle.
This is why “pay in full every month” is the one rule that makes a credit card genuinely free. Keep the grace period and a card is a convenience; lose it and the interest, around 3.5% a month, starts quietly running on everything. See the cost in the cost of a slow card payoff.
Open full page →A lump sum your employer pays when your job ends after enough years of service: 15/26 of your last monthly wage per year.
Example: With a last monthly wage of 52,000 rupees and 10 years of service, gratuity is 52,000 ÷ 26 × 15 × 10, or 3 lakh rupees.
Gratuity is part of your CTC that you only see when you leave. Read the full rules in gratuity explained, and work out your own figure with the gratuity calculator.
Open full page →All your taxable income for the year added together, from salary, property, business, capital gains and other sources.
Example: Taxable salary of 13.25 lakh plus 60,000 rupees of FD interest gives a gross total income of 13.85 lakh (illustration).
Gross total income is all your income for the tax year, added up across every source: salary, house property, business, capital gains and other sources like interest. It’s the number your deductions come off, and the starting point for your tax. See how it’s built in how your salary is taxed and income from other sources.
Open full page →Goods and Services Tax: the tax added to the price of most things you buy in India.
Example: When you buy gold, GST is charged on top of the price, so the gold has to rise just to cover it.
GST stands for Goods and Services Tax. It’s the tax added to the price of most goods and services in India, collected by the seller. You pay it without filing anything yourself, but it adds to your costs: on gold, on making charges, and on many fees like a loan processing fee. Rates differ by item, so look for the GST line on your bill.
Open full page →The official purity stamp on gold jewellery: the BIS logo, a purity grade and a unique HUID code.
Example: A ring stamped with the BIS logo, 22K916 and a six-character code is hallmarked 22 carat gold.
A hallmark is the official stamp that certifies how pure a piece of gold jewellery is. It has three marks: the BIS logo, a purity grade such as 22K916, and a unique HUID code you can check in the BIS CARE app. Learn to read it in gold hallmark and HUID.
Open full page →Insurance that pays your covered hospital bills, up to a yearly limit, in return for a premium.
Example: On a 5 lakh policy, a 3 lakh covered hospital bill is paid by the insurer, leaving 2 lakh of cover for the rest of the year.
Health insurance pays covered hospital bills so one illness doesn’t wipe out your savings. Start with our health insurance guide, which maps the basics, claims, top-ups and the rules on your side.
Open full page →House Rent Allowance, a part of salary that can be partly tax-free if you pay rent, under the old regime.
Example: If you pay rent, HRA can lower your tax under the old regime.
HRA, or House Rent Allowance, is a part of many salaries meant to cover rent. If you actually pay rent, a portion of your HRA can be tax-free, but only under the old tax regime.
The tax-free part of HRA is the lowest of three amounts: the actual HRA in your salary, 50% of your basic pay if you live in a metro city (40% elsewhere), and the rent you pay minus 10% of your basic pay. Whichever of those three is smallest is the amount that escapes tax; the rest of your HRA is taxed as normal salary. Because the formula leans on rent and basic pay, two people with the same HRA can get very different exemptions.
You must actually pay rent and be able to show it, usually with rent receipts and, where the yearly rent is large, the landlord’s PAN. You cannot claim HRA for a home you own and live in. You can sometimes claim it even while paying a home loan, if you genuinely rent one place and own another, but the facts have to be real.
Like most salary deductions, the HRA exemption exists only under the old tax regime. Choose the new regime and HRA is simply taxed as part of your salary, in exchange for lower slab rates. So HRA is one of the things to weigh when comparing the two. For the detail, read HRA and common deductions and confirm the current rule on incometax.gov.in.
Open full page →Hallmark Unique Identification: a six-character code stamped on each hallmarked gold piece.
Example: Entering the six-character HUID from a bangle in the BIS CARE app checks it against the BIS record.
HUID stands for Hallmark Unique Identification. It’s the six-character code of letters and numbers stamped on every hallmarked gold piece, unique to that item, and part of its hallmark. You can verify it yourself in the BIS CARE app. See how in gold hallmark and HUID.
Open full page →A mutual fund that mixes shares, bonds and sometimes other assets like gold in one fund.
Example: An aggressive hybrid fund keeps 65 to 80% in shares and the rest mostly in bonds.
A hybrid fund blends asset classes, mainly shares and bonds, in a single fund. SEBI’s 2026 rules set seven hybrid categories, including conservative, balanced and aggressive hybrid, dynamic asset allocation, multi asset, arbitrage and equity savings. The equity share sets both its risk and its tax. See hybrid funds explained.
Open full page →A lender's claim on an asset, like a car, that you keep and use while the loan runs.
Example: A car bought on a loan is hypothecated to the lender: you drive it, but the lender's claim is on the RC.
Hypothecation is a lender’s claim on something you keep and use, most often a car or bike bought on a loan. You drive the vehicle, but the lender’s claim is recorded on its RC as security. It’s a form of collateral. Once the loan is repaid, you ask for the hypothecation to be removed, through the RTO.
Open full page →A mutual fund option that pays some money out to you instead of letting it compound.
Example: On an IDCW payout of ₹2 per unit, the NAV drops by ₹2 that day.
IDCW stands for Income Distribution cum Capital Withdrawal, and it replaced the older “dividend option” label, because the old name misled people. It is the mutual fund option that pays some money out to you instead of letting it all compound.
People assumed a fund “dividend” was extra income on top of their investment, like a bonus. It is not. The payout comes out of your own NAV, which falls by exactly that amount on the record date. If you hold units worth ₹100 and the fund pays ₹2, your units are now worth ₹98 and you have ₹2 in hand: your total is unchanged. SEBI renamed it IDCW to make clear that part of the “distribution” is simply your own capital being returned, not new money earned.
The alternative is the growth option, where any gains stay inside the scheme and keep compounding. For a long-term goal, growth usually suits better, because nothing leaks out and the whole amount keeps working, and you avoid the tax that an IDCW payout can attract. IDCW makes sense mainly for someone who genuinely wants periodic cash from the fund.
If you want a regular income from a fund, a systematic withdrawal plan is usually cleaner than IDCW: you choose the amount and timing, rather than leaving it to the fund’s irregular payouts. See why IDCW payouts are not free money.
Open full page →Insured's Declared Value: the sum insured on your vehicle, the most a motor policy pays for theft or total loss.
Example: If your car's IDV is 5 lakh rupees, that's the most you'd get if it were stolen.
IDV, the Insured’s Declared Value, is the sum insured on your vehicle under the own-damage part of a motor policy. It’s the most the insurer pays if the vehicle is stolen or a total loss, and it’s fixed at the start of each policy year.
Your own-damage cover pays to repair your vehicle after an accident, but if it is stolen or so badly damaged that repair makes no sense, a total loss, the insurer pays the IDV instead. So IDV is the ceiling on that worst-case payout. It roughly tracks the current market value of your vehicle, falling each year as the vehicle ages, because an older vehicle is worth less to replace.
Under IRDAI’s 2024 rules, each insurer’s product committee approves its own basis for IDV and the depreciation scale, publishes it, and shows it with an illustration in the policy’s Customer Information Sheet. There is usually a little room to adjust the IDV up or down within a band when you buy or renew.
Choosing a lower IDV cuts your own-damage premium, which is tempting, but it also cuts what you would receive if the vehicle were stolen or written off. So it is a trade-off between saving a little today and a smaller payout later. Setting the IDV close to the real value usually makes most sense. See motor insurance explained.
Open full page →Indian Financial System Code: the 11-character code that identifies a bank branch for transfers.
Example: To add a payee for NEFT, you enter their account number and their branch's IFSC, printed on their cheque.
Immediate Payment Service: an instant 24x7 bank transfer, up to ₹5 lakh per transaction.
Example: Sending ₹15,000 to a friend at midnight by IMPS lands in their account within seconds.
A band of income taxed at one rate; higher bands are taxed at higher rates.
Example: Under the new regime, income from 4 to 8 lakh rupees is taxed at 5%, and only the part inside that band pays 5%.
A tax slab is a band of income with its own tax rate. Your income climbs through the bands, and each part is taxed at its band’s rate, not your highest one. Read more in old vs new tax regime.
Open full page →A fund that simply copies a market index instead of trying to beat it.
Example: A Nifty 50 index fund holds the same 50 companies, in the same proportions.
An index fund buys the companies in an index in the same weights, so its return closely tracks that index. Nobody is picking stocks, so the expense ratio is usually far lower than an actively managed fund.
A market index, like the Nifty 50, is just a list of companies combined in set proportions. An index fund simply holds the same companies in the same weights and leaves them alone, rather than paying a manager to pick winners. When the index rises, the fund rises with it; when the index falls, so does the fund. There is no attempt to beat the market, only to match it cheaply.
Because there is no research team and little trading, an index fund charges a fraction of what an active fund does. That matters enormously over time, because the fee compounds against you every year. A fund that charges 0.2% instead of 1.5% keeps far more of your return over decades. You give up the chance of beating the market and, in exchange, avoid the real risk of badly trailing it, which many active funds do after costs.
An index fund still carries full market risk: it falls when the market falls, because it is designed to follow, not cushion. The main quality measure is tracking error, the small gap between the fund and the index it copies; lower is better. For beginners, a broad index fund is a low-cost, hands-off way to own equity. See active vs passive investing.
Open full page →Adjusting an asset's purchase price for inflation to reduce the taxable gain.
Example: Indexation raises your cost, so your taxable capital gain is smaller.
Indexation lifts the purchase price of an asset to account for inflation over the years you held it. A higher cost means a smaller taxable gain, and so a lower tax. It no longer applies to most financial assets under current rules, though some property sales may still use it. Check the current rule for your asset.
Open full page →The speed at which everyday prices rise over time.
Example: A snack that cost ₹10 last year now costs ₹11.
Inflation is how fast prices go up. A little inflation is normal, but it quietly eats the value of cash sitting idle, which is why money you do not need soon should be somewhere it can grow.
A single year of mild inflation feels harmless, but it compounds like interest in reverse. At around 6% a year, prices roughly double in about twelve years, so what ₹100 buys today may need ₹200 in just over a decade. Cash left in a drawer, or in an account paying less than inflation, slowly loses purchasing power even though the number on it never falls. That silent erosion is the real reason to invest rather than hoard.
The return you actually gain is your return minus inflation, called the real return. A fixed deposit paying 7% when inflation is 6% gives a real return of only about 1%, before tax. This is why a “safe” option can quietly lose ground: if the after-tax return trails inflation, your money grows on paper but shrinks in what it can buy. The aim is to beat inflation over time, not just to see a bigger number.
Inflation is why long-term goals need growth assets like equity, not just deposits, and why the cost of a goal years away is higher than it looks today. Future costs are worth estimating in both today’s money and tomorrow’s. Learn the full idea in inflation, and try your own numbers in the inflation calculator.
Open full page →A free, independent forum for policyholders whose complaint the insurer rejected or did not answer within a month.
Example: Your insurer cut a health claim and rejected your written complaint. You file with the Insurance Ombudsman within a year, at no cost, and the award must be honoured by the insurer within 30 days.
The Insurance Ombudsman is the step after the insurer, for disputes about claims, premiums or policy terms. It costs nothing, and it must decide within three months of getting everything it needs from you. Always complain to the insurer first. Our guide to a rejected health insurance claim walks through the full ladder.
Open full page →Buying and selling the same share on the same day, without taking it into your demat account.
Example: Buying 100 shares at 10 am and selling them at 2 pm the same day is an intraday trade.
Intraday means a trade opened and closed on the same day. You buy and sell before the market shuts, so the shares never reach your demat account. It’s trading, not investing: the bet is on the next few hours, costs come on every trade, and tax forms treat it as a speculative business rather than capital gains.
Open full page →Infrastructure Investment Trust: a SEBI-regulated trust that owns income-earning infrastructure such as roads or power lines and lists its units on the stock exchange.
Example: Buying a few InvIT units gives you a share of the toll or transmission income from assets you could never buy whole, paid out as regular distributions (an illustration).
An InvIT, or Infrastructure Investment Trust, lets you own a slice of income-earning infrastructure through units bought on the stock exchange. It works like a REIT, but for roads, power lines and similar assets. Payouts and unit prices can fall, so it’s a market-linked investment. See how it fits among other options in passive income in India.
Open full page →Initial public offering: when a company sells its shares to the public for the first time.
Example: After its IPO closes, a company's shares list on the stock exchange within three working days.
An IPO, or initial public offering, is a company’s first sale of shares to the public. You apply in lots, your money is only blocked through ASBA until allotment, and the shares list on a stock exchange within three working days of the issue closing. Our IPO explainer walks through the steps.
Open full page →Income tax return: the yearly form where you report your income and work out your tax.
Example: A salaried person files an ITR each year to report salary and interest, claim deductions and get any refund.
ITR stands for income tax return. It’s your yearly report of income and tax, and the only way to claim a refund. Read more in how to file your income tax return.
Open full page →A bank account held in the names of two or more people, run according to the operating mode they choose, such as 'either or survivor'.
Example: A married couple opens an 'either or survivor' joint account for rent and groceries. Either partner can use it, and if one dies, the bank can pay the balance to the other.
A joint account is a bank account in two or more names. The operating mode, such as “either or survivor” or “former or survivor”, decides who can use it and who is paid if a holder dies.
The mode you pick at opening matters more than people realise. “Either or survivor” lets any holder operate the account, and pays the survivor if one dies, which suits a couple’s shared account. “Former or survivor” lets only the first holder operate it while alive, with the second taking over on their death, often used for a parent-and-child or pension setup. “Jointly” needs all holders to sign for every transaction. Choose the mode that matches how you actually want the account used and inherited.
Under RBI’s 2025 directions, paying the surviving holder in an “either or survivor” (or similar) account is a valid discharge for the bank, once identity and death are verified, so the balance reaches the survivor without a long legal process. That is a big part of why couples hold one.
A joint account and a nominee work together, not instead of each other. RBI’s rules say that in a joint account, the nominee’s right arises only after all the holders have died. So name a nominee as well, to cover the case where every holder is gone. See couples financial planning.
Open full page →A standard summary a lender must give before a loan, showing its full yearly cost and every charge.
Example: Before signing a car loan, the bank must hand you a Key Fact Statement with the APR and all fees.
A Key Fact Statement, or KFS, is the one page to read before any loan. RBI requires it on retail term loans, and it shows the APR, every fee and the repayment schedule in a standard format. A charge left out of it can’t be added later without your consent. See it in action in car loan basics.
Open full page →A post office savings certificate that doubles a one-time deposit over a fixed period, 115 months at today's rate.
Example: Buy a Kisan Vikas Patra for 10,000 rupees at 7.5% a year, and you get 20,000 rupees back after 115 months.
Kisan Vikas Patra is the post office scheme built around one promise: your money doubles. The rate, tax and early exit rule are in Kisan Vikas Patra: the post office scheme that doubles your money.
Open full page →A one time identity check, using your PAN and Aadhaar.
Example: Upload your PAN once and you can start investing.
KYC stands for Know Your Customer. It is a quick, one time identity check that banks and investing apps must do before you can start. You usually finish it by uploading your PAN and Aadhaar.
The rules require banks, fund houses and brokers to confirm who you are before they take your money. It is there to stop fraud, money laundering and accounts opened in fake names. For you it is a one-time hurdle: once you are KYC-verified, opening the next account or investing in another fund is far quicker.
Most apps now finish KYC fully online. You enter your PAN, verify your Aadhaar with a one-time password, take a live selfie or a short video, and sometimes sign digitally. This is called paperless or video KYC. Older offline KYC meant submitting photocopies in person, which is now rare for everyday investing.
Mutual fund KYC is largely centralised. Once a registered agency has verified you, your status is shared, so you can usually invest across different fund houses without repeating the whole process. You only need to update it when your details change, for example a new address, or if an agency marks your KYC on hold and asks you to re-verify.
Keep the details on your PAN, Aadhaar and bank account matching, because a mismatch is the most common reason KYC gets stuck. And complete KYC only on an official app or website. Scammers send fake messages warning that your KYC will expire and linking to a form that steals your details; a genuine KYC update never happens through a random SMS link. See the KYC update scam for how that trick works.
Open full page →A fixed charge the bank adds if you miss paying at least the minimum due by the due date.
Example: Miss the due date and a late fee is added on top of the interest.
A late fee is a one-time charge the bank adds when you do not pay at least the minimum due by the due date. On Indian credit cards it is slab-based on how much you owe, from nil on small dues up to around ₹1,300 on large ones, plus GST.
The late fee and interest are two separate costs, and this trips people up. The late fee is a fixed, one-time penalty for missing the due date. Interest is an ongoing charge on whatever balance you did not pay, running at around 3.5% a month. You can be charged both at once: a late fee for being late, and interest on the unpaid amount. Of the two, the interest that keeps running is usually the bigger cost.
Paying at least the minimum due by the due date avoids the late fee and keeps your account regular. But it does not stop interest, and it does not clear your bill. So the minimum protects you from the penalty, not from the far larger cost of carrying a balance. Missing even the minimum can also hurt your credit score if the payment slips far enough past the date.
Pay the total amount due in full by the due date and you face neither the fee nor interest. If money is tight, at least pay the minimum on time to dodge the penalty, and set an auto-pay or a reminder so a due date never slips. Banks revise these charges often, so check your card’s schedule of charges for the current figure.
Open full page →An official document that names the legal heirs of a person who has died.
Example: With no nominee on the account, the family used a legal heir certificate to claim the savings from the bank.
A legal heir certificate is an official document naming the legal heirs of someone who has died. Families often need it to claim bank money when there’s no nominee. It’s issued by a state authority, and the process varies by state.
A legal heir certificate answers a single question: who are the recognised heirs of the person who died? It lists them, the spouse, children and parents as applicable, so that institutions, employers and authorities know whom to deal with. Families use it to claim bank balances, provident fund, pension, insurance and similar dues when there was no nominee, and for routine matters like transferring utilities or claiming salary arrears.
A competent state authority issues it, usually the local revenue office (the tahsildar or an equivalent), after verifying the family. Because it is a state document, the exact office, form and timeline differ across states, so check your state’s revenue department. It is generally quicker and cheaper to obtain than a court certificate.
These are often confused but are different. A legal heir certificate names the heirs and comes from a state revenue authority; a succession certificate comes from a civil court and specifically authorises collecting the deceased’s debts and securities, which banks may require for larger claims. Probate is a third thing again, relating to a will. See claiming a parent’s money after they die.
Open full page →When your spending rises with your income, so you save no more than before.
Example: A raise that turns straight into costlier habits is lifestyle creep.
Lifestyle creep is the slow habit of spending more every time you earn more, so a bigger salary leaves you saving the same as before. Each upgrade feels small and deserved, but together they lock in higher costs and quietly cancel the benefit of the raise. Saving a part of every raise before you adjust to it is the simplest cure.
Open full page →An order to buy or sell a share only at a price you set, or better.
Example: A limit order to buy at 400 rupees fills only if the price reaches 400 or lower.
A limit order lets you name your price. A buy limit at 400 rupees fills only at 400 or lower; a sell limit at 450 fills only at 450 or higher. You get price control, at the risk that the trade doesn’t happen. Its opposite is a market order, which fills fast at whatever the current price is.
Open full page →A mutual fund holding very short-term debt, used to park money you may need soon.
Example: Park ₹50,000 in a liquid fund and you can usually have it back the next working day.
A liquid fund invests in debt instruments maturing within 91 days. Because the holdings mature so quickly, the value barely moves when interest rates change, which is why people use these funds for an emergency cushion or for money waiting to be invested.
Debt prices fall when interest rates rise, and the longer a bond’s maturity, the harder it swings. A liquid fund deliberately holds only very short-term debt, under about 91 days, so there is almost no room for rates to move against it. That is what gives it its steadiness: the NAV usually inches up a little each day rather than jumping around, the opposite of an equity fund.
Two jobs suit a liquid fund well. One is a slice of your emergency fund or any money you might need within weeks or months, where you want it safe but earning a little more than a savings account. The other is parking a lump sum before feeding it into equity through an STP. Redemption usually reaches your bank the next working day, and some schemes offer instant credit up to a capped amount.
A liquid fund is low-risk, not risk-free. A credit problem with one of its holdings can still dent the NAV, as has happened occasionally, and the return is not guaranteed. It also has a small graded exit load in the first few days. Treat it as a safe parking spot, not a growth investment. See liquid funds and same-day money.
Open full page →A charge on entering or leaving a fund. Entry load is banned in India; some funds charge an exit load.
Example: An exit load may apply if you sell within a year of buying.
A load is a charge linked to buying or selling fund units. SEBI banned entry loads, so entering costs nothing extra, but some funds still charge an exit load if you leave early.
Open full page →How much a lender will lend as a share of the value of what you pledge, such as gold or a house.
Example: An LTV of 85% on gold worth ₹2 lakh means you can borrow at most ₹1.7 lakh.
Loan-to-value is the gap between what you pledge and what you can borrow. A lender never lends the full value, because prices move and the security has to cover the loan, plus interest, if things go wrong.
See how it works on gold in Gold loans: the real cost, and RBI’s new rules.
Open full page →A period during which you cannot withdraw an investment, however much you want to.
Example: An ELSS fund has a three-year lock-in, the shortest among tax-saving options.
A lock-in is a hard rule, not a fee. During it, redemption is simply not allowed, which is different from an exit load where you can leave but pay for it. Lock-ins usually accompany a tax benefit, because the government or scheme wants the money to stay put.
The two are easy to confuse but work very differently. An exit load is a price for leaving early; pay it and you are out. A lock-in is a locked door: during the period, no amount of urgency lets you redeem, so the money is genuinely unavailable. Knowing which applies tells you whether an investment can double as emergency money. An exit-load fund can; a locked one cannot.
Lock-ins cluster around tax-saving and retirement products. ELSS funds have a three-year lock-in, the shortest among section 80C options; PPF runs fifteen years with limited early access; and products like the NPS lock money until retirement. The common thread is a benefit in exchange for commitment: you accept that you cannot touch the money, and in return you get a deduction, a higher rate, or a tax break.
Before putting money into anything with a lock-in, be sure you will not need it during the period, and that the lock-in length matches the goal. A short lock-in on an equity product like ELSS is not the same as a safe horizon, because the value can still be down when the door opens.
Open full page →Profit on an investment held beyond the long-term period, usually taxed more gently.
Example: Selling equity held more than 12 months gives a long-term capital gain.
A long-term capital gain is the profit from selling an investment after holding it long enough to qualify, 12 months for listed equity and longer for most other assets. It is usually taxed at a lower rate than a short-term gain, and equity long-term gains get a yearly exemption. Rates and limits change at Budget time, so check the current rules.
Open full page →Liberalised Remittance Scheme: the RBI rule letting a resident individual send up to 250,000 US dollars abroad each financial year.
Example: Sending money to a foreign broker to buy US shares is a remittance under LRS, and it counts against your yearly limit.
LRS, the Liberalised Remittance Scheme, is the RBI rule that lets a resident individual send up to 250,000 US dollars abroad each financial year, April to March. Investing in US shares through a foreign broker uses this limit, and big remittances attract TCS. See how to invest in US stocks from India.
Open full page →What a jeweller charges to craft a piece, on top of the gold's value; not regulated and varies by shop.
Example: On 1 lakh rupees of gold, making charges of 12% add 12,000 rupees to the bill (an illustration).
Making charges are what a jeweller adds for crafting a piece, on top of the value of the gold in it. They aren’t regulated, they vary by shop and design, and you rarely get them back when you sell. Ask for them on a separate line of the bill, next to the hallmark details. More in gold hallmark and HUID.
Open full page →Valuing holdings at today's market price, every day.
Example: Mark to market is what lets a scheme publish a fresh NAV each day.
Mark to market means a scheme values everything it holds at the current market price each day, not the price it paid. This daily valuation is what produces a fresh NAV.
Imagine a fund bought a share at ₹100 and it now trades at ₹120. Marking to market means the fund records that holding at today’s ₹120, not the ₹100 it paid. It does this across every security it owns, every business day, after markets close. Add up all those current values, subtract what the scheme owes, divide by the units, and you get the day’s NAV. So the price of your units always reflects what the holdings are worth now, not some older cost.
Mark to market is why your fund value moves daily and honestly. You are never shown a stale or flattering number: a gain shows up only when the market actually values the holdings higher, and a fall shows up straight away too. It also means a fund cannot hide a drop by pointing to the price it originally paid. The flip side is that short-term paper swings are visible, which is normal; what matters is where prices are when you redeem. The idea applies to debt funds too, which is why even “safe” funds can wobble when interest rates move.
Open full page →The total market value of a company, used to sort companies into large, mid and small cap.
Example: The 100 largest listed companies are large-cap; from the 251st onward is small-cap.
Market capitalisation is the share price multiplied by the number of shares. In India, companies are ranked by it: the largest 100 are large-cap, the next 150 are mid-cap, and everything from the 251st onwards is small-cap.
Market cap is simply what the whole company is worth on the market: a ₹500 share with 100 crore shares is a ₹50,000 crore company. It is not the same as size by sales or profit; it is the market’s price tag on the business. Because it is easy to measure and compare, the fund industry uses it to slot companies into tidy buckets.
The pattern as you move down the ladder is consistent: smaller companies usually have more room to grow, but also more volatility and more business risk. Large-caps are the established giants, steadier but slower; small-caps can grow fast or stumble badly. Mid-caps sit in between. None is “better”; they suit different horizons and nerves.
Fund categories are defined by these bands, so the label on a fund tells you roughly how bumpy the ride is likely to be. A large-cap fund will be steadier than a small-cap fund by design, whatever their recent returns. Diversification across caps, often through a single diversified or index fund, spreads the risk. See large, mid and small cap explained.
Open full page →An order to buy or sell a share at once, at the best price available right now.
Example: A market order for 5 shares fills in seconds, at whatever price sellers are offering then.
A market order says “buy now” or “sell now” at the best price on offer. It fills quickly, which is handy, but you accept the price at that moment, which can be a little different from what you last saw. If the price matters more than speed, a limit order gives you control.
Open full page →The part of a health policy that pays pregnancy and delivery costs, usually after a waiting period and up to a set limit.
Example: A policy with maternity cover might pay delivery costs only after a waiting period, and only up to a cap below the full sum insured.
Maternity cover pays for pregnancy and delivery costs under a health policy. It often isn’t included by default: maternity is a standard exclusion insurers may apply. Where it is offered, expect a waiting period and a cap below the full sum insured. Our lesson on planning for a baby shows what to check.
Open full page →The least amount, usually a monthly average, a bank asks you to keep in a savings account.
Example: Illustration: if the required average is 10,000 rupees and you keep 6,000, you are 4,000 short.
The minimum balance is the price of a regular savings account. Miss it and the bank can charge a penalty, within RBI’s guardrails: notice first, at least a month to top up, a charge in proportion to the shortfall, and never a negative balance. The simplest escape is a Basic Savings Bank Deposit Account, which has no minimum at all.
Open full page →The small amount a card asks you to pay; the rest carries very high interest.
Example: Paying only the minimum due can turn a small bill into a large debt.
The minimum due is the smallest amount your credit card asks for each month. Paying only that keeps the account regular, but the unpaid rest carries very high interest, which is how card debt snowballs.
The minimum due is usually about 5% of your bill, sometimes with any EMIs and fees added on. Its only job is to keep your card from being marked overdue and to avoid a late fee. It is not a discount or an instalment plan; it is the least you can pay to stay regular. The bank is happy for you to pay just that, because the rest earns it interest.
Pay the minimum and the unpaid balance carries interest at around 3.5% a month, roughly 42% a year. You also lose the grace period, so new purchases charge interest immediately. Because the printed minimum shrinks as your balance falls, it barely dents what you owe, and a bill can drag on for years and cost more in interest than the original spend. The chart in the cost of a slow card payoff shows how long and how much.
The only way to pay no interest is to clear the total amount due, the full bill, by the due date. If a tight month means you cannot, pay as much above the minimum as you can, stop using the card until it is clear, and if the balance is large, read how to get out of credit card debt.
Open full page →A bank account in a child's name, run by a guardian, or by the child from an age the bank sets, not below 10.
Example: A parent opens a savings account for a 7-year-old and runs it as guardian until the child can operate it alone.
A minor account is a bank account in a child’s name. Under RBI’s April 2025 rules, a parent or guardian can open and run one at any age, and a child can be allowed to run it alone from an age the bank sets, which can’t be lower than 10. It can never go into overdraft. At 18, the bank takes fresh instructions and a new signature. It’s a simple way to give a child real practice with a savings account.
Open full page →Most Important Terms and Conditions, a bank document listing a card's key charges like interest and fees.
Example: Check the MITC for your card's current interest rate and late fee.
MITC stands for Most Important Terms and Conditions. It is the short document a bank or card issuer must give you that lists the key terms of the product, including the interest rate, the late fee, and other charges. When a figure like a fee can change, the MITC is where you confirm the current number.
A full card agreement runs to many pages of legal text that almost nobody reads. The regulator requires issuers to also provide the MITC, a plain, short summary of the things that actually affect your wallet, so the important terms cannot hide in the fine print. It is the honest one-pager behind the glossy card marketing.
For a credit card, the MITC is where you find the monthly interest rate (often around 3.5%), how the late fee is slabbed, the annual fee and when it is waived, cash-withdrawal charges, the grace period, and foreign-currency markups. Because banks revise these from time to time, the MITC and your statement’s schedule of charges are the right places to confirm the current figures, rather than an old brochure.
Before taking a card, or when something on a bill surprises you, read the MITC. It takes a few minutes and tells you exactly what the card can cost you, which is the information that matters most once the sign-up perks fade.
Open full page →A person whose bank account is used to receive and pass on scam money, often for a small 'commission'.
Example: A 'part-time job' asks you to receive Rs 50,000 in your account and forward it, keeping Rs 2,000. That makes you a money mule.
A set period when a loan needs no repayment, though interest usually keeps adding up.
Example: An education loan with a moratorium over a two-year course needs no EMI until the course ends.
A moratorium is a break from repaying a loan. It’s most common on education loans, where no EMI is due while you study. The catch: interest usually keeps running during the break, so the loan grows before your first payment.
Open full page →A shared basket where many people's money is invested together by a manager.
Example: Your ₹500 joins thousands of others to buy a mix of shares.
A mutual fund pools money from many people and a professional manager invests it across many companies. It lets a small amount get spread across lots of shares, which lowers your risk compared to buying a single share.
You and thousands of others put money into the same scheme. In return you get units, each worth the fund’s per-unit price, its NAV. The fund house, called an AMC, uses the pooled money to buy a basket of shares, bonds or both, following the scheme’s stated goal. When those holdings gain value your units are worth more; when they fall your units are worth less. You can sell your units back to the fund whenever you need the money.
Buying a spread of good companies on your own takes a lot of money and research. A mutual fund does the spreading for you: your ₹500 is split across dozens of holdings, so one company doing badly does not sink you. A professional handles the picking, and you can start small, as a one-time amount or a monthly SIP. This is why funds are the usual first step for new investors.
A fund is not free. It charges a yearly fee called the expense ratio, taken out of the fund itself, so you never get a separate bill, but it does reduce your return. A direct plan of the same fund has a lower fee than a regular plan. And no fund is guaranteed: funds are market-linked and can fall in value. Spreading money lowers risk but does not remove it.
Funds come in types by what they hold: equity, debt and hybrid, with sub-types inside each. Which one fits depends on your goal and how long you can stay invested. Start with types of mutual funds and how to pick a mutual fund.
Open full page →Net Asset Value, the per-unit price of a mutual fund, set once a day.
Example: If a scheme's NAV is ₹42, one unit costs ₹42 that day.
A non-bank finance company: a lender regulated by the RBI that is not a bank.
Example: A loan app that lends through a named NBFC is borrowing that company's money, not the app's own.
NBFC stands for non-banking financial company. It’s a lender that the RBI regulates but that isn’t a bank. Many loans you see on apps, from small personal loans to buy-now-pay-later credit, are actually given by an NBFC working behind the app. The key difference for you: an NBFC can’t give you a savings account, and money you deposit with one is not covered by DICGC deposit insurance.
Open full page →National Centre for Financial Education, set up by India's financial regulators.
Example: NCFE surveys measure how financially literate Indians are.
NCFE (National Centre for Financial Education) was set up by India’s financial regulators to spread financial education. Its national surveys are a common, citable source for financial-literacy numbers.
Open full page →National Electronic Funds Transfer: a bank-to-bank transfer that settles in half-hourly batches, 24x7.
Example: Paying ₹40,000 rent by NEFT from your app reaches the landlord's bank in the next half-hourly batch.
Everything you own minus everything you owe.
Example: Own 3.3 lakh rupees in savings and investments, owe 1.45 lakh in loans, and your net worth is 1.85 lakh.
Net worth is everything you own minus everything you owe. Add up your savings, deposits, EPF and investments, then subtract loans and card dues. Checking it every few months shows whether you’re getting ahead. Our lesson on tracking spending and net worth walks through an example.
Open full page →A new fund offer, the first time a mutual fund scheme is open for investment.
Example: Units in an NFO are usually offered at ₹10 each before the scheme starts investing.
An NFO, new fund offer, is the launch period of a brand-new mutual fund scheme, when its units are usually offered at ₹10 each before it starts investing. The key thing to know: an NFO is a launch, not a bargain.
The ₹10 starting price tempts beginners into thinking an NFO is “cheap” next to an existing fund at a NAV of ₹400. It is not. Price is not value for a fund: ₹10,000 buys 1,000 units at ₹10 or 25 units at ₹400, and both are worth ₹10,000. What you own is the same; only the unit count differs. The ₹10 is just the arbitrary starting point of a new scheme, with no discount in it at all.
A new scheme has no track record, no portfolio to examine, and no performance to compare against a benchmark. You are buying a promise and a strategy on paper, in the offer document, rather than something you can judge. An existing fund with years of history is almost always easier to assess.
Occasionally an NFO offers genuinely new exposure you cannot get elsewhere, which can justify it. But for most beginners, the sensible approach is to ignore the ₹10 marketing and judge the strategy, or simply pick a proven existing scheme. Note that the usual NAV cut-off timing rules do not apply during an NFO.
Open full page →An index tracking 50 large companies on the National Stock Exchange, weighted by tradable value.
Example: When the news says the Nifty 50 rose 1%, the 50 companies in it gained about 1% in value overall.
The Nifty 50 is a stock market index that tracks 50 large companies on the National Stock Exchange. Each company counts by the value of its free-float shares, the ones that actually trade. It started at a base of 1,000 in November 1995, so its level shows how much the basket has grown. An index fund on the Nifty 50 buys the same 50 companies in the same proportions.
Open full page →National Institute of Securities Markets, a SEBI body that runs market certification exams.
Example: The NISM Series V-A exam is the one mutual fund distributors must pass.
NISM (National Institute of Securities Markets) is an institution set up by SEBI. It runs the certification exams that people working in India’s securities markets must pass. For mutual fund distributors, the relevant one is the NISM Series V-A exam.
Open full page →Extra health cover added free for every year you do not make a claim.
Example: A no-claim bonus can grow a 10 lakh cover over the years at no extra premium.
A no-claim bonus rewards a claim-free year by raising your sum insured at no extra cost, usually up to a cap. It is a quiet benefit of staying healthy and not making small claims, because your cover grows for the year you might really need it.
For each policy year you do not make a claim, the insurer adds a slice to your cover, often somewhere between 10% and 50% of the base sum insured, accumulating year after year up to a ceiling (commonly double the base). Some policies give the bonus as extra cover; a few give a premium discount instead. Either way, you pay the same premium while your protection quietly compounds, which matters because medical costs keep rising.
Here is the catch worth knowing: making a claim can reduce or reset the bonus you have built. So for a small, easily affordable bill, it can be worth paying out of pocket to protect the growing cover, rather than claiming and losing the accumulated bonus. The bonus is most valuable precisely when you need the cover large, so guarding it on minor costs can pay off.
The no-claim bonus is tied to continuous cover, so renewing on time preserves it, and portability lets you carry it when you switch insurers. See how much health cover you need.
Open full page →Paying for a purchase in instalments with no interest shown. The interest usually does not vanish, it is recovered as a forgone discount or a processing fee.
Example: A Rs 30,000 phone on no-cost EMI may cost Rs 30,000, against Rs 28,500 if you pay upfront and take the discount.
No-cost EMI is paying for a purchase in instalments with no interest shown on the bill. The interest usually does not vanish, though. It is recovered another way, most often as a discount you give up by not paying upfront, or folded into a processing fee. RBI has said the concept of zero percent interest is non-existent, and that the interest is often camouflaged as a fee or through adjusted pricing. It is not a scam, and splitting a payment can be convenient, but it is rarely truly free. The quick check is to compare the cash price with the total you would pay on EMI, fees included.
Open full page →The person you name to receive the money in an account if you die.
Example: If you name your spouse as the nominee on your bank account, the bank can hand over the balance to them quickly if something happens to you.
A nominee is the person you name to receive the money in an account, policy or investment if you die. It lets the bank, fund or insurer release the money to a known person quickly, instead of your family having to prove their claim through a long legal process.
Without a nominee, money in your accounts can be frozen when you die, and your family may have to produce a succession certificate or a legal heir certificate to get it released, which takes months and money. A nominee skips that: the institution has a named person it can pay. Adding one to every bank account, deposit, mutual fund, demat account, insurance policy, EPF, PPF and NPS takes minutes and spares your family real grief later.
This is the part people get wrong. A nominee receives and holds the money, but does not automatically own it. Who finally owns it is decided by your will, or by succession law if there is no will. The nominee is a trustee for the rightful heirs, who are often, but not always, the same person. So a nominee speeds up access; it does not replace a will.
Review your nominations after big life events, marriage, a child, a death in the family, so the money never goes to someone you no longer intend. Learn the full picture in nomination.
Open full page →The time you must work, or pay for, between resigning and leaving, as set by your employment contract.
Example: With a 60-day notice period, someone resigning on 1 March would normally work until about 30 April, unless the employer agrees otherwise.
A notice period is the time between handing in your resignation and your last working day, as set in your employment contract. If you leave early, the shortfall is often recovered from your full and final settlement.
The notice period gives the employer time to arrange a handover: to redistribute your work, hire a replacement, and get you to document what you do. That is why the length is set in your contract, commonly 30, 60 or 90 days depending on the role and seniority. It runs from the day your resignation is accepted to your agreed last day.
Life does not always wait for a notice period, for instance when a new job wants you to start sooner. Most contracts offer two routes: a buyout, where you pay the employer for the days you will not serve, or recovery, where the employer deducts pay for the unserved days from your settlement. A new employer sometimes reimburses a buyout. The exact terms, and whether the period can be negotiated, are in your offer letter.
Read the notice clause before you hand in your resignation, so there are no surprises in your last paycheque, and line up the timing with your next role. See the money steps around leaving a job in if you lose your job.
Open full page →The National Pension System, a low-cost, government-regulated retirement account you build yourself.
Example: By putting money into the NPS each month during your working years, you build a pot that gives you a pension after 60.
Online dispute resolution, a route to settle an unresolved money dispute.
Example: An unresolved redemption dispute can go to ODR after SCORES.
ODR (online dispute resolution) is a way to resolve an unresolved money dispute online, through mediation or arbitration. In the grievance ladder it comes after raising the issue with the fund and with SEBI.
Open full page →The document set that describes a scheme, the detailed SID and the short KIM.
Example: The offer document tells you a scheme's objective, risks and costs before you invest.
The offer document describes a scheme so you can decide before investing. The Scheme Information Document (SID) is the detailed version; the Key Information Memorandum (KIM) is the short summary that comes with the application form.
The offer document is the official rulebook for a mutual fund scheme, filed with SEBI. It sets out the scheme’s objective (what it aims to do), where it will invest, its riskometer level, the costs including the expense ratio, any exit load, the benchmark it will be judged against, and the rules for buying and redeeming. In short, everything a scheme is allowed and intended to do is written here, not left to the manager’s whim.
The two serve different needs. The SID is the full, detailed document for anyone who wants to read the fine print. The KIM is a short summary of the key points, which by rule accompanies the application form, so a buyer at least sees the essentials. There is also a Statement of Additional Information covering the fund house. For most investors the KIM, plus the latest factsheet, covers the practical points.
It is the one place to confirm what a scheme actually does before you trust it with money, which matters most for a new scheme or NFO that has no track record yet. Skim at least the objective, the riskometer and the costs.
Open full page →One-time password: a short code sent to your phone or email to confirm it is really you, valid once and for a few minutes.
Example: Your bank sends a 6-digit OTP to approve a card payment. Anyone who asks you to read it out on a call is trying to steal that payment.
A facility that lets you take out more money than your bank account holds, up to a set limit, as a short-term loan you repay with interest.
Example: Your Jan Dhan account has 500 rupees and a 2,000 rupee overdraft. You can withdraw 2,500 rupees, and the extra 2,000 rupees is a loan.
An overdraft is a safety net built into a bank account: you can go below zero, up to a limit, and pay interest on the gap. Jan Dhan accounts offer one of up to 10,000 rupees to eligible holders. It is useful for an emergency but costly if left unpaid, so clear it quickly. Read more in Jan Dhan account benefits.
Open full page →A mutual fund that lends for a single day at a time, the lowest-risk fund category.
Example: Money in an overnight fund is invested in securities that mature the very next day.
An overnight fund holds securities that mature the next day, so it carries almost no interest rate risk and very little credit risk. Returns are correspondingly low. It suits money that needs somewhere safe to sit for a few days rather than money you want to grow.
Because an overnight fund lends for just one day at a time and reinvests the next, there is barely any window for interest rates or credit problems to hurt it. The holdings turn over constantly at very short maturity, which makes it the lowest-risk category of mutual fund. The trade-off is plain: the lower the risk, the lower the return, so an overnight fund earns only a little, usually close to the overnight money-market rate.
An overnight fund and a liquid fund are cousins. The liquid fund holds debt maturing within about 91 days, taking slightly more risk for slightly more potential return; the overnight fund holds one-day paper, taking even less. For money you might touch within days, an overnight fund is the more conservative choice; for a few weeks or months, a liquid fund may edge ahead.
Use it as a very short-term parking spot: cash awaiting a specific use, the safe leg of an STP, or the most cautious slice of a cushion. It is not a growth investment, and like any fund it is not guaranteed.
Open full page →The optional part of motor insurance that pays for damage to, or theft of, your own vehicle.
Example: After a crash, own-damage cover pays to repair your car, up to its IDV.
Own-damage cover pays for damage to, or theft of, your own vehicle, up to its IDV. It’s optional, unlike third-party insurance, and claim-free years earn a no-claim bonus discount on it.
Own-damage, often shortened to OD, is the half of motor insurance that looks after your vehicle. It pays to repair accident damage, and it pays out if the vehicle is lost to fire, a natural event like a flood, or theft. The most it will ever pay is the vehicle’s IDV, the sum insured, so a total loss or theft is settled at the IDV, while a repair claim is settled at the cost of repair after any depreciation.
Own-damage is rarely sold alone: combined with the compulsory third-party insurance, it makes a comprehensive policy, the cover most people mean by “car insurance”. Third party protects others; own-damage protects you. You can also tune OD with add-ons like zero depreciation.
By law you only need third-party cover, but that leaves your own vehicle unprotected. Own-damage is worth it for most vehicles with real value, and a lender usually insists on it while a vehicle loan runs. For a very old, low-value vehicle, some drivers drop it. See motor insurance explained.
Open full page →Price-to-earnings: a share's price divided by the company's yearly earnings per share.
Example: A share at 500 rupees with earnings per share of 25 rupees has a P/E of 20 (illustration).
The P/E ratio is a share’s price divided by the company’s earnings per share for a year. It tells you how many rupees buyers are paying for each rupee of profit. A high P/E usually means people expect strong growth; a low one can mean they expect trouble. It’s a starting point for questions, not a buy or sell signal.
Open full page →Permanent Account Number, your tax ID in India.
Example: You need a PAN to invest in mutual funds or file your taxes.
PAN (Permanent Account Number) is a ten-character tax identity number from the income tax department. It is required for most financial transactions, including investing in a fund.
A PAN is a ten-character code made of letters and numbers, printed on a small card with your name, date of birth and photo. It never changes, which is why it is called permanent, and each person should have only one. It is the single thread that ties all your financial activity to your tax record.
You need a PAN to open a bank account, open a demat account, invest in mutual funds, buy or sell property above a limit, and file your income tax return. Banks and fund houses quote your PAN when they report large transactions and any TDS to the tax department, which is how the system knows the income is yours.
PAN is your tax identity; Aadhaar is your identity number from UIDAI. They are different documents, but most people are required to link the two. An unlinked PAN can become inoperative, which blocks investing and can mean tax is deducted at a higher rate, so it is worth checking that yours is linked.
Because PAN sits at the centre of your finances, treat the number with care. Share it only where it is genuinely required, and be wary of anyone asking for a photo of your PAN card out of context, as it can be misused to open accounts in your name. To see where it fits in filing, read how to file your income tax return.
Open full page →An unsecured loan from a bank or lender, repaid in fixed monthly EMIs, that you can use for almost anything.
Example: A 5 lakh rupee personal loan at 12% for 3 years has an EMI of about 16,607 rupees and total interest of about 97,858 rupees.
A personal loan is quick to get but costs more than a secured loan. Work out your EMI and see the month-wise schedule with our personal loan EMI calculator, and weigh it against card debt in personal loan vs credit card.
The full picture, with fees, APR and foreclosure rules, is in our personal loan guide.
Open full page →A fake message or site that tricks you into sharing passwords, OTPs or card details.
Example: A KYC SMS with a link to a lookalike bank page is phishing.
Phishing is any fake message, email or website built to look real so you hand over sensitive details like a password, OTP or card number. The classic sign is a link with urgency, such as a KYC or account-blocked warning.
A phishing attempt impersonates someone you trust: your bank, a delivery company, the tax department, a wallet. The message creates pressure, “your account will be blocked”, “your KYC expires today”, “claim your refund now”, and gives you a link. The link leads to a page that looks exactly like the real one, but anything you type, your password, card number or the OTP sent to your phone, goes straight to the scammer. With those details they drain the account or make purchases.
Urgency is the biggest red flag: real institutions rarely demand instant action through a link. Others include a slightly wrong web address, spelling mistakes, a request for an OTP or PIN (which no genuine staff member ever needs), and messages from an unknown number claiming to be your bank. A refund or prize you did not expect is almost always bait.
Never act on the link. If a message worries you, ignore its link entirely and open the official app, type the website address yourself, or call the number printed on your card. That single habit neutralises almost every phishing attempt, because the scam depends on you using their link. Learn more in protect yourself from online fraud.
Open full page →The person who owns an insurance policy and pays for it.
Example: A parent who buys a health policy covering the whole family is the policyholder.
A policyholder is the person who owns an insurance policy. They pay the premium and can change details like the nominee. IRDAI’s rules on policyholder protection set out their rights, from the free look period to claim deadlines.
Insurance has three distinct parties, and confusing them causes real problems. The policyholder owns the policy and pays for it. The insured, or life assured, is the person whose life or health is actually covered. The nominee is who receives a life insurance payout. Often one person is both policyholder and insured, as with your own health or term plan, but not always: a parent can own a policy on a child, or buy a family floater where several people are insured under one owner.
As the owner, the policyholder controls the policy: paying or changing the premium mode, updating the nominee and contact details, adding a rider, porting the policy, or cancelling it within the free-look period. They are also the point of contact for the insurer and the one who can escalate a dispute to the insurance ombudsman.
Getting these roles right on the form prevents claim trouble later. Keeping the nominee and bank details current, in particular, is what lets a claim reach the right person smoothly. See how insurance works and nomination.
Open full page →Post Office Monthly Income Scheme: deposit a lump sum once and get interest paid every month for five years.
Example: Put 9 lakh rupees in POMIS at 7.4% a year and you get about 5,550 rupees a month for five years, then the 9 lakh back (illustration).
POMIS turns a lump sum into a fixed monthly income for five years. The rate, a payout example and the early exit cost are in the post office monthly income scheme explained.
Open full page →A fraud that pays old investors with new investors' money, not real profit, so it always collapses.
Example: A plan promising a guaranteed 3% a month, paid by signing up new members, is a classic Ponzi scheme.
Your right to move your health policy to another insurer and keep the credits you have built.
Example: After three years with one insurer, you port to another and the three years already served on waiting periods carry over.
Portability lets you change health insurers without starting your waiting periods again. The credits move with you, to the extent of your sum insured. How to port, step by step: health insurance portability. Read the other buyer rules in our health insurance guide.
Open full page →Everything you hold, taken together. Also the full set of securities a fund owns.
Example: A portfolio of one stock is a bet. A portfolio of forty is an investment.
The word works at two levels. Your portfolio is every investment you own across accounts and asset types. A fund portfolio is the list of securities that fund holds, published every month.
At the personal level, your portfolio is the whole picture: your equity funds, debt funds, fixed deposits, PPF, gold, shares, everything, taken together across every account. The reason to think this way is that risk and return live in the combination, not in any one holding. A single stock is a bet; forty holdings is an investment. Looking at the total also reveals hidden overlaps, so you can see your true asset allocation rather than a scattered list.
A common mistake is mistaking many funds for diversification. Six funds that all hold the same large companies are really one bet wearing six hats, with more paperwork and no extra safety. Real diversification comes from holdings that behave differently, not from the number of funds. Checking the underlying portfolios of your funds shows whether you are truly spread out.
For a mutual fund, the portfolio is the list of shares or bonds it owns, which fund houses must disclose monthly. Reading it tells you what you actually own and how concentrated the fund is. Keeping your own portfolio simple, balanced and reviewed once in a while beats chasing many products. See rebalancing for keeping it in shape.
Open full page →A cheque safety check: you pre-share a big cheque's date, payee and amount so your bank can match it.
Example: Before handing over a ₹1 lakh cheque, you enter its date, payee and amount in your bank app under positive pay.
The post office's fixed deposit, for 1, 2, 3 or 5 years, at a rate set by the government each quarter.
Example: 1 lakh rupees in a 5-year post office time deposit at 7.5% earns interest every year, and the 5-year version can lower tax on the old regime.
The post office time deposit works like a bank FD, backed by the government. Its 5-year version is the post office’s answer to the bank tax saver FD; see every post office option side by side in post office schemes.
Open full page →A document that lets a trusted person act for you, for example to run your bank account or sign papers.
Example: A parent gives an adult child a power of attorney to operate their bank account while they are well enough to decide.
A power of attorney lets someone you trust act for you: run an account, sign papers, deal with property. It’s most useful when age or illness makes those tasks hard. Timing matters, because under the Indian Contract Act the authority ends if the person who gave it becomes of unsound mind or dies. After death, a will and nominations take over. For anything beyond the basics, a lawyer can help draft one.
Open full page →Public Provident Fund, a 15-year government savings scheme with tax-free, government-set interest.
Example: Money in a PPF grows tax-free, but it is locked in for 15 years.
PPF, the Public Provident Fund, is a long-term savings scheme backed by the government. You can put in ₹500 to ₹1.5 lakh a year, it earns a government-set interest rate reviewed every quarter, and the deposits, interest and maturity are all tax-free. The catch is a 15-year lock-in, so it suits long-term goals, not money you may need soon.
You open a PPF account at a bank or post office and add money any time during the year, up to the ₹1.5 lakh cap, in one go or in parts. Interest is calculated monthly and credited yearly, and because it compounds untouched for 15 years, a steady contribution grows into a large, tax-free sum. See how its rate sits against other safe options in the small savings rates chart.
PPF is one of the few schemes where the money is tax-free at all three stages: your deposit qualifies under section 80C in the old regime, the interest is tax-free, and so is the final maturity amount. That combination is what makes it so effective for long-term, low-risk saving.
The 15-year lock-in is real, but not absolute. You can take a partial withdrawal from the seventh year, borrow against the balance in the early years, and at maturity either close the account or extend it in five-year blocks. PPF sits alongside EPF, which is only for the salaried; PPF is open to anyone. Compare the two in PPF vs EPF.
Open full page →A health condition diagnosed or treated in the 36 months before a health policy starts, covered only after a waiting period.
Example: Your father was diagnosed with diabetes two years ago. When you buy him a policy, diabetes is a pre-existing disease, so claims linked to it are paid only after the policy's waiting period, which can be at most 36 months.
A pre-existing disease, or PED, is a condition you already had when the policy began: one diagnosed or treated in the 36 months before cover starts. It is covered, but only after a waiting period of at most 36 months, and only if you disclosed it. Buying cover for older parents? Read health insurance for parents, and see how waiting credits move with you in health insurance portability.
Open full page →The amount you pay an insurer, monthly or yearly, to keep your cover active.
Example: A term plan with a premium of 12,000 rupees a year keeps the life cover running as long as you pay it.
A premium is the price of insurance: the amount you pay, monthly, yearly or once, to keep your cover active. Many people paying premiums into one pot is what lets an insurer pay the few who make a claim.
A premium reflects risk: the more likely and larger a payout, the higher it is. For term insurance, your age and health drive it, which is why buying young and healthy locks in a low rate for the whole term. For health cover, age, the sum insured and the city matter; for motor cover, the vehicle’s value. Choices that make you share more of a claim, a deductible or a co-pay, lower the premium, because the insurer carries less.
A premium keeps the cover switched on, and only while it is paid. Miss it and, after a short grace period, the policy lapses and the cover stops, often at the worst possible moment. A pure term plan simply ends; a savings-type policy may hold a small surrender value. Auto-pay and reminders are worth setting up so a lapse never happens by accident.
A bigger premium does not mean better value. A cheap term plan can protect your family far more than an expensive bundled policy. What matters is buying the right cover for the need, then paying the lowest premium that secures it. See how insurance works.
Open full page →A simpler tax scheme where your income is taken as a fixed share of your receipts.
Example: A freelance developer with 30 lakh rupees of receipts can declare 15 lakh, or 50%, as income.
Presumptive taxation is a simpler way to work out income for small businesses and some professionals. Instead of keeping detailed accounts, you declare a fixed share of your receipts as income: 50% for listed professions, 6% or 8% for small businesses.
For a small business or a freelancer, maintaining full books of account and getting them audited is a burden out of proportion to the tax involved. The presumptive scheme, in section 58 of the Income-tax Act, 2025, lets eligible taxpayers skip detailed accounts and simply presume their income as a set percentage of turnover or receipts. Tax is then charged on that presumed income at the normal slab rates.
For listed professions (legal, medical, engineering, architecture, accountancy, information technology and a few others), gross receipts up to ₹50 lakh, or ₹75 lakh if cash receipts stay within 5%, qualify, and income is taken as 50% of receipts. For small businesses, turnover up to ₹2 crore, or ₹3 crore if cash receipts are within 5%, qualifies, and income is taken as 6% of digital receipts and 8% of the rest. In every case, you may declare a higher actual profit if there is one.
Choosing the scheme also simplifies advance tax: you can pay the whole year’s in one instalment by 15 March. But if you opt in and later declare lower profit, you may be pulled into keeping accounts and an audit. It suits steady small operations more than complex ones. See managing an irregular income.
Open full page →A court's official confirmation that a will is genuine, granted to the executor.
Example: Before 2025, probate was compulsory for certain wills dealing with property in Mumbai, Kolkata and Chennai.
Probate is a court’s confirmation that a will is genuine, granted to the executor. It used to be compulsory for certain wills in India, but Parliament removed that rule in December 2025, so it’s now optional.
When a court grants probate, it certifies that the will is the valid last wishes of the person who died and gives the executor clear, official authority to deal with the estate: to collect assets, pay any dues, and distribute what is left to the people the will names. Banks, registrars and buyers can then rely on the executor’s authority without second-guessing the will.
No. Section 213 of the Indian Succession Act once made probate compulsory for certain wills, mainly in the former presidency towns of Mumbai, Kolkata and Chennai. The Repealing and Amending Act, 2025 omitted that section from 20 December 2025, so an executor may still apply for probate but is no longer forced to. Separately, RBI’s 2025 directions say a bank cannot insist on probate where there is a nominee or survivor, and SEBI’s 2026 framework removed probate as a mandatory document for transferring shares and fund units to heirs.
Probate relates to a will. Where there is no will, heirs use a succession certificate or a legal heir certificate instead; these are different documents for different situations. See writing a will.
Open full page →A one-time charge a lender takes for setting up your loan, on top of the interest.
Example: A 1% processing fee on a 5 lakh rupee loan costs 5,000 rupees upfront (illustration).
A processing fee is the one-time charge for setting up a loan. It’s easy to overlook because it’s small next to the loan, but it raises the real cost of borrowing. Always compare loans on APR, which counts fees, not on the interest rate alone.
Open full page →The Reserve Bank of India, the country's central bank.
Example: The RBI sets the rules for banks and tries to keep prices stable.
RBI stands for Reserve Bank of India. It is the central bank, which means it manages the country’s money supply, sets key interest rates, and regulates all the other banks. When you read that the RBI changed rates, it affects your loan EMIs and your savings interest.
The RBI sits above the banking system. It issues the currency, holds the country’s reserves, runs the payment systems that make UPI and bank transfers work, and supervises banks so your deposits are safe. Crucially, it steers monetary policy: by moving a benchmark rate, the repo rate, it makes borrowing across the economy cheaper or costlier, which is its main tool for keeping inflation in check.
When the RBI raises the repo rate, banks tend to raise loan rates, so EMIs on floating-rate home and other loans rise, and fixed deposit rates often follow upward. When it cuts the rate, the reverse happens over time. So an RBI announcement that sounds abstract actually flows through to what you pay on a loan and earn on savings, usually with a lag. See how an RBI rate change reaches you.
The two main regulators split the field: the RBI oversees banks, money and payments, while SEBI oversees the securities markets and mutual funds. Your bank account and loans sit under the RBI; your shares and funds sit under SEBI.
Open full page →The RBI's online portal that lets individuals buy and sell government bonds and T-bills directly.
Example: Through RBI Retail Direct, you can bid for a 182-day T-bill from 10,000 rupees without a broker.
RBI Retail Direct is the RBI’s portal that lets you hold government securities in your own gilt account with the RBI, no broker needed. You can bid in primary auctions for Treasury bills, dated G-secs and state development loans, and trade them later. See bonds and government securities.
Open full page →Registration certificate: the official record that a vehicle is registered, and to whom.
Example: While a car loan runs, the lender's name sits on the car's RC as hypothecation.
RC stands for registration certificate. It’s the official record that a vehicle is registered with the transport authority, and in whose name. If you bought the vehicle on a loan, the RC also records the lender’s claim on it, called hypothecation, until you get it removed through your RTO after the last EMI.
Open full page →Your return after subtracting inflation. What your money can actually buy, not what it says.
Example: Earn 7% while inflation runs 6% and your real return is roughly 1%.
The nominal return is the headline number an investment advertises. The real return is what survives inflation, and it is the only one that decides whether your buying power grew.
Real return is roughly the nominal return minus inflation. An option paying 6% while inflation runs 6% leaves you exactly where you started: the number in your account grew, but it buys the same basket of goods. Earn 7% against 6% inflation and your real return is only about 1%. The headline rate flatters; the real return tells the truth about whether you actually got richer.
It gets worse after tax, because tax is charged on the nominal gain, not the real one. If you earn 7% and pay tax on that whole 7%, but inflation ate 6%, you can end up paying tax on a return that barely improved, or even reduced, your buying power. This is the hidden trap in “safe” options like a plain fixed deposit: the number always rises, so it feels like a gain, while the real, after-tax return can be close to zero.
Real return is the reason money for long-term goals usually needs growth assets like equity, not just deposits, because only beating inflation over time preserves and grows what your money can buy. See inflation and try the inflation calculator.
Open full page →The day a company checks its list of shareholders to decide who gets a dividend, bonus or other corporate action.
Example: If a company's record date is Friday and your shares are in your demat account at the end of Friday, the dividend it declared is paid to you.
The record date is the cut-off a company uses to decide who gets a dividend, a bonus issue or another corporate action. If the shares are in your demat account at the end of that day, you are on the list. Because Indian shares settle on T+1, you need to buy at least one trading day before the record date, which is why the ex-date and record date usually fall on the same day. Read the full guide in record date vs ex-date.
Open full page →A person from an outside agency hired by a bank or NBFC to collect overdue loan payments, bound by RBI's rules on conduct.
Example: After two missed EMIs, a bank tells the borrower which agency has the case, and the agent who calls shows a bank authorisation letter and calls only between 8 am and 7 pm.
A recovery agent collects overdue loan payments on behalf of a bank or NBFC. The lender must tell you which agency has your case, and the agent should carry identity proof and the lender’s authorisation letter. RBI rules limit calls to between 8 am and 7 pm and ban threats and harassment. Read the full rules, and where to complain, in loan recovery agent rules.
Open full page →A bank or post office deposit where you put in a fixed amount every month, at a rate fixed on day one.
Example: Depositing 5,000 rupees a month for 5 years at 7% builds about 3.6 lakh rupees, of which about 60,000 is interest.
A recurring deposit is a monthly savings habit with a guaranteed rate. See what yours would build with our RD calculator, and compare it with a SIP in recurring deposit vs SIP.
How the interest is worked out, bank vs post office, and the tax: recurring deposit explained.
Open full page →Selling your fund units back to get your money out.
Example: On redemption, the scheme pays you the current NAV for your units.
Redemption is when you sell your mutual fund units back to the scheme and receive money. Open-ended funds allow it on any business day, priced at that day’s NAV.
You place a redemption request for some or all of your units, and the fund buys them back at the applicable NAV, then transfers the money to your registered bank account. Unlike a share, you are not finding a buyer on an exchange; the fund itself redeems your units, which is what “open-ended” means. The NAV you get follows the cut-off rules, so the timing of your request matters.
For equity funds the money usually reaches your bank in a business day or two; liquid and overnight funds are faster, and some offer instant redemption up to a capped amount for emergencies. Two costs can apply: an exit load if you redeem within the scheme’s stated period, and capital gains tax on any profit, depending on the fund type and how long you held it.
If you need a regular income rather than a one-off, a systematic withdrawal plan redeems a fixed amount each month instead of selling everything at once. And since the NAV on the day decides what you get, redeeming into a sharp market dip locks in that lower price, so for long-term money it is worth not redeeming on impulse.
Open full page →Interest charged only on the loan amount you still owe, so the interest part of each EMI falls as you repay.
Example: On a 1 lakh rupee loan at 12% for 3 years, a reducing balance rate costs about 19,600 rupees of interest (illustration).
A reducing balance rate charges interest only on what you still owe. As you repay, the balance shrinks and so does the interest, which is why each EMI shifts from mostly interest to mostly repayment. It’s the standard method for bank loans. See it worked through in how an EMI works.
Open full page →A fund version that pays a distributor a commission, so it costs more than the direct plan.
Example: A regular plan has a higher expense ratio than the same fund's direct plan.
A regular plan is the version of a mutual fund you buy through an agent, app or bank, where the fund pays them a commission for the sale. That commission is built into a higher expense ratio, so you pay it every year. The same scheme’s direct plan skips the commission and costs less.
The extra cost in a regular plan is not wasted by definition; it is how a distributor or adviser gets paid. Known as a trail commission, it is a slice of the fund’s fee paid to them for as long as you stay invested. If that person genuinely helps you choose funds, plan around goals, or simply keeps you invested through a scary market, the cost can be money well spent.
The problem is holding a regular plan while getting nothing for it. Many people are sold a regular plan once and then never advised again, yet keep paying the commission every year through the higher expense ratio. Because that gap compounds against you, over decades it can quietly cost a sizeable chunk of your returns, for an identical portfolio.
Ask one question: am I actually receiving advice worth this yearly cost? If yes, a regular plan can be fair. If you pick and manage your own funds, the direct plan of the very same scheme leaves more with you. See the difference in the same fund for a lower cost.
Open full page →Real Estate Investment Trust: own a slice of rent-earning commercial property via exchange-listed units.
Example: By buying REIT units worth a few thousand rupees, you earn a share of the rent from office parks you could never buy whole.
The interest rate at which RBI lends short-term money to banks. Many floating loan rates are linked to it.
Example: When RBI moved the repo rate from 5.25% to 5.50% in October 2026, home loans linked to it became costlier at their next reset.
The repo rate is the price banks pay to borrow from RBI for a short time. When it rises, banks pay more for money, and they pass that on. Loans linked to the repo rate get costlier at their next reset, and deposit rates often follow, though banks decide that themselves.
Read how the October 2026 rise works through to your loan in RBI raised the repo rate: what it means for your EMI and FD.
Open full page →An optional add-on to an insurance policy that gives an extra benefit, such as accident or critical illness cover, for an extra premium.
Example: Adding an accidental death benefit rider to a 1 crore term plan means the family gets an extra payout if death is caused by an accident.
A rider is an add-on to an insurance policy. You pay a little more premium, and the policy pays an extra benefit when a listed event happens, such as an accident or a serious illness. It sits on top of a base policy, usually a term insurance plan, and ends when that policy ends.
A few riders come up again and again. An accidental death benefit adds an extra payout if death is caused by an accident. A critical illness rider pays a lump sum on diagnosis of a listed serious illness. A waiver of premium rider keeps the policy going without further premiums if you are disabled or critically ill. Each addresses a specific gap the base cover does not.
IRDAI’s 2024 master circular caps how much riders can cost relative to the base policy: health and critical-illness riders together cannot exceed 100% of the base premium, and all other riders together cannot exceed 30% of it. These limits stop a policy from being loaded with pricey add-ons that dwarf the cover you actually came for.
A rider is convenient and usually cheaper than a standalone policy, but it is also tied to the base policy, so it stops if that lapses, and its cover can be smaller. For a big need like critical illness, a separate policy may give more. Weigh it up in term insurance riders explained.
Open full page →A dial on every mutual fund that shows how risky the scheme is, on six levels from Low to Very High.
Example: A small cap fund usually sits at Very High on the riskometer, while a liquid fund sits near Low.
The riskometer is a simple gauge SEBI requires on every scheme, so you can see at a glance how much risk it carries. It has six levels: Low, Low to Moderate, Moderate, Moderately High, High, and Very High.
The riskometer is a dial, like a speedometer, pointing at one of the six levels. A liquid fund sits near Low; a diversified equity fund around Very High; a small-cap fund firmly at Very High. It is a quick, standardised way to compare the risk of very different schemes, and SEBI mandates it on scheme documents and marketing so no fund can hide how bumpy it may be.
The riskometer shows the kind of ride, not the destination. A high reading does not mean high returns, and a low reading does not mean a good deal; it only signals how much the value may swing. It is also not fixed: funds must review it regularly and update it as their holdings change, so a scheme can move up or down the dial over time.
Match the riskometer to your horizon and nerves, not to the return you hope for. A Very High fund can be right for long-term money you will not touch for years, and wrong for money you need soon, however good its past looks. Pair it with the risk and return basics before deciding.
Open full page →A cap on the daily hospital room charge a health policy will pay.
Example: With a 5,000 a day room limit, a costlier room means you pay the gap.
A room rent limit caps the per-day room charge your policy covers. Choose a costlier room and you pay the difference, and in many policies the rest of the bill is then scaled down in the same proportion. A policy with no room rent limit, or a high one, avoids this nasty surprise.
The obvious part is that if your room costs ₹8,000 a day and the limit is ₹5,000, you pay the ₹3,000 gap. The sting most people miss is proportionate deduction: because you took a room above the cap, many policies scale down the entire bill, surgery, doctor’s fees, tests, in the same ratio (here, 5,000 of 8,000, so about 62%). A small room overage can therefore shrink your whole claim far more than the extra room cost, leaving you with a large, unexpected shortfall.
This is one of the most important things to check in a health policy, and it is easy to overlook because the headline sum insured looks generous. A limit stated in rupees or as a percentage of the sum insured can quietly undercut that cover the day you are admitted. Along with co-pay and waiting periods, it is where a cheap-looking policy reveals its real limits.
Prefer a policy with no room rent limit, or at least one high enough for a private room at a good hospital in your city. See how much health cover you need.
Open full page →Registrar and Transfer Agent, the firm that keeps investor records and processes transactions.
Example: When you buy units, the RTA records the purchase against your folio.
An RTA (Registrar and Transfer Agent) keeps the investor records for a mutual fund and processes purchases, redemptions and updates. Names you may have seen, such as CAMS and KFintech, are RTAs. The AMC appoints the RTA, and every RTA registers with SEBI.
Open full page →Real Time Gross Settlement: a bank transfer for ₹2 lakh and above that settles one by one, in real time.
Example: Sending a ₹6 lakh car down payment by RTGS gets it into the dealer's account within about 30 minutes.
Regional transport office: the state office that registers vehicles and issues driving licences.
Example: After your last car loan EMI, you apply to the RTO to remove the lender's name from your RC.
RTO stands for regional transport office. It’s the state office that registers vehicles and issues driving licences. For a car or bike bought on a loan, it’s also where you go, often online, to remove the lender’s name from your RC once the loan is paid off. The steps vary a little by state.
Open full page →Investing a fixed amount regularly, so you buy more units when prices are low.
Example: A monthly SIP uses rupee-cost averaging, smoothing out your buying price.
Rupee-cost averaging is what happens when you invest a fixed amount at regular intervals, like a monthly SIP. Your money buys more units when the price is low and fewer when it is high, so your average cost evens out over time.
Because you invest the same rupee amount each month regardless of price, the arithmetic quietly works in your favour. When the NAV is low, your fixed amount picks up more units; when it is high, it picks up fewer. Over many months this pulls your average buying price below the simple average of the prices, and it removes the impossible job of guessing the perfect day to invest. You are never all-in at a peak, and you keep buying through the dips when units are cheap.
Rupee-cost averaging smooths your entry and takes the emotion and timing out of investing, which is its real value: it keeps you investing steadily through good markets and scary ones. What it does not do is guarantee a profit. Your final outcome still depends on where the market is when you need the money, and in a market that only ever rose, a lump sum invested early would have done better. It is a discipline and a risk-smoother, not a magic trick.
Every monthly SIP uses rupee-cost averaging by default. Learn the full picture in SIP and mutual funds and SIP vs lumpsum.
Open full page →A bank account for keeping your own money safe, earning a little interest, and making payments.
Example: Your salary lands in a savings account, and you pay rent from it by UPI.
A savings account is the everyday home for your money. It is safe, easy to reach and pays a little interest, which makes it right for money you will need soon. That low interest is also why it is the wrong place for money meant to grow over many years. Most regular savings accounts ask for a minimum balance, so read the bank’s schedule of charges before you open one.
Open full page →SEBI's online system for lodging and tracking a complaint against a market entity.
Example: If a fund does not resolve your issue, you can escalate it on SCORES.
SCORES is SEBI’s complaints redress system. If a mutual fund or its RTA does not resolve your complaint, you can lodge and track it with SEBI through the SCORES portal.
Open full page →Securities and Exchange Board of India, the market regulator that sets and enforces the rules.
Example: SEBI's rules decide how a mutual fund must be run and what it must disclose.
SEBI (Securities and Exchange Board of India) is the regulator for India’s securities markets, including mutual funds. It registers funds, sets the rules, inspects them, and can penalise anyone who breaks them.
SEBI is the referee for the stock market and the fund industry. It writes the rules that mutual funds, brokers, exchanges and listed companies must follow, registers and inspects them, and takes action, fines, bans or worse, when they break the rules. Much of what protects an ordinary investor comes from SEBI: how a fund must disclose its holdings and costs, how the daily NAV is priced, how your money is kept separate from the fund house, and what a scheme is allowed to do with it.
You deal with SEBI’s rules every time you invest, usually without noticing. The riskometer on a fund, the cut-off timing for your purchase, the cap on charges, the standard documents, and the complaint system are all SEBI requirements designed to make the market fairer and more transparent. If you have a grievance against a fund or broker, SEBI runs an official complaint platform to escalate it.
One caution: SEBI regulates the market, it does not guarantee returns or vouch for any scheme. A fund being SEBI-registered means it follows the rules, not that it is safe or that it will do well. GreenFunds is independent and not affiliated with SEBI. For who else oversees funds, see AMFI.
Open full page →A part of the tax law that lets you lower your taxable income with certain savings.
Example: Investing ₹1.5 lakh in approved options can cut the income you are taxed on.
Section 80C lets you reduce your taxable income by up to ₹1.5 lakh a year, if you put that money into approved options. It applies under the old tax system, so it only helps if you choose the old regime.
Under the old regime you subtract qualifying 80C amounts from your income before tax is worked out, so you are taxed on a smaller figure. If you are in, say, the 20% band, a full ₹1.5 lakh of 80C cuts your tax by about ₹30,000. The ₹1.5 lakh is a single combined cap across every 80C option, not a separate limit for each.
Common qualifying options include your EPF contribution, PPF, ELSS mutual funds, life insurance premiums, the principal part of a home loan EMI, five-year tax-saving fixed deposits, and Sukanya Samriddhi for a daughter. Some of these are investments you get back later; some, like insurance premiums, are costs. The right mix depends on your goals, not just the tax saving. See them compared in ELSS vs PPF vs FD.
This is the catch that trips people up. Section 80C does nothing in the new regime, which instead offers lower slab rates and a large rebate but almost no deductions. So before chasing 80C, check which tax regime leaves you paying less overall, using your real numbers. The income tax calculator and old vs new tax regime help you compare. The exact 80C list can change, so confirm it on incometax.gov.in.
Open full page →The tax deduction for health insurance premiums, now section 126 of the Income-tax Act, 2025. Old regime only.
Example: Paying 20,000 rupees for a family health policy and 40,000 for senior parents' cover lets you deduct 60,000 rupees on the old regime.
Section 80D, now section 126 of the Income-tax Act, 2025, lets you deduct health insurance premiums from your taxable income on the old regime, in two buckets: your own family, and your parents. Read the limits and a worked example in health insurance tax benefit: the 80D deduction.
Open full page →A credit card given against your own fixed deposit, which the bank holds as security; easy to get with no credit history.
Example: A Rs 25,000 fixed deposit might back a secured card with a limit near Rs 20,000 to Rs 25,000.
A secured credit card is given against your own fixed deposit, which the bank keeps as security. Because the deposit covers the risk, the card is easy to get even with no credit history, and it reports to the credit bureaus like any card, so it builds your credit score. The limit is usually close to the deposit amount.
Open full page →The 3-digit code on the back of a card that proves you hold the physical card during online payments. Never share it.
Example: An online payment may ask for the 3-digit CVV printed on the back of your card, along with the card number and expiry.
The CVV, or Card Verification Value, is the 3-digit security code printed on the back of a credit or debit card. It proves you are holding the real card during an online payment, where nothing is swiped or inserted. Treat it like a password: you type it yourself on a payment page, and you never share it with anyone, because no bank or company needs you to tell it your CVV.
Open full page →An index tracking 30 large companies on BSE, weighted by the value of their tradable shares.
Example: If the Sensex falls 500 points, the 30 companies in it lost value overall that day.
The Sensex is a stock market index of 30 large companies listed on BSE. It’s weighted by free-float market value, so the biggest, most traded companies count most. BSE set a base of 100 in April 1979, so a level in the tens of thousands means the basket has grown many times over. It usually moves in step with the Nifty 50.
Open full page →Sovereign Gold Bond: a government bond priced in grams of gold, paying 2.5% a year; no new issues since 2024.
Example: Someone holding 10 grams of SGB earns 2.5% a year on what they first invested, and is paid gold's value at maturity.
SGB stands for Sovereign Gold Bond, a government bond priced in grams of gold. It paid 2.5% a year on top of gold’s price movement over an 8-year term. No new ones have been issued since early 2024, and the tax on redemption changed in April 2026. If you hold some, read what existing SGB holders need to know.
Open full page →A measure of how much return a fund earned for the amount of risk it took.
Example: Of two funds with the same return, the one with the higher Sharpe ratio took less risk to get there.
The Sharpe ratio divides a fund’s return, above a safe risk-free rate, by how much its returns swung around. A higher number means more return for each unit of risk taken.
Return alone is a half-truth, because a fund can post a big number by taking wild risks. The Sharpe ratio corrects for that. It takes the fund’s return, subtracts what you could have earned risk-free (say from a government security), and divides the result by the fund’s standard deviation, its volatility. So it answers a sharper question than “how much did it make?”: it asks “how much did it make for the stomach-churning it put you through?”
Of two funds with a similar return, the one with the higher Sharpe ratio got there with less turbulence, which usually makes it the better-run choice and the easier one to hold. It is most meaningful when comparing funds within the same category, like two large-cap funds, because comparing across very different asset types can mislead.
The Sharpe ratio looks backward at past data and is never a promise about the future; a fund’s risk and return can both change. It also treats all volatility as bad, including upside swings, which some argue is unfair. Read it as one useful lens among several, alongside the riskometer and the fund’s mandate, not as a single verdict.
Open full page →Profit on an investment sold within the short-term holding period, taxed at a higher rate.
Example: Selling equity shares within 12 months makes the profit a short-term capital gain.
A short-term capital gain is the profit from selling an investment before it has been held long enough to count as long term. For listed shares and equity mutual funds that line is 12 months. Short-term gains are usually taxed more heavily than long-term ones. Rates change at Budget time, so check the current rules.
Open full page →A SEBI-regulated fund that keeps at least 95% of its money in silver and silver-linked instruments and trades on the stock exchange like a share.
Example: Buying 20 units of a silver ETF through your broker gives you a share in the fund's silver, held in your demat account, at a price that follows the Indian silver price.
A silver ETF is a fund that holds silver and is listed on the stock exchange, so you buy and sell it like a share through a demat account. SEBI has allowed them since November 2021. Its price follows the Indian price of silver, which swings more than gold. Read the full guide in silver ETF explained.
Open full page →When a scammer gets a new SIM issued for your mobile number, so your calls and OTPs go to them.
Example: Your phone loses signal for hours, and meanwhile someone uses OTPs sent to your number to log in to your bank app. That is a SIM swap fraud.
Investing a fixed amount automatically, every month.
Example: ₹1,000 on the 5th of every month into a fund, without thinking about it.
SIP stands for Systematic Investment Plan. It is the simple habit of putting the same amount into an investment every month, on autopilot, so you do not have to time the market or remember to do it.
You pick a mutual fund, an amount and a date, and set up an auto-debit from your bank. On that date each month the money is pulled and used to buy units of the fund at that day’s NAV. When prices are low your fixed amount buys more units; when prices are high it buys fewer. Over time this averages out your purchase price, an effect called rupee cost averaging.
A SIP removes two hard problems: timing and discipline. You stop trying to guess the best day to invest, and you keep investing through good months and bad without deciding each time. Because you invest a little and often, even a modest amount adds up. A ₹5,000 monthly SIP is ₹60,000 a year, and left to compound over many years the growth can dwarf what you put in. The exact figure depends on the return, which is never guaranteed.
Say you invest ₹5,000 a month. In a month when the NAV is ₹50, you get 100 units. If the NAV falls to ₹40 the next month, the same ₹5,000 buys 125 units. You end up owning more units at the lower price, which helps when the market recovers. These are made-up numbers to show the idea.
A SIP is only the method; the risk comes from the fund you choose. A SIP into a market-linked fund still rises and falls in value, and spreading purchases smooths the ride but does not remove the risk. You can pause, stop or change a SIP at any time. Learn the full picture in the mutual funds and SIP guide.
Open full page →Government savings schemes, like PPF, NSC and Sukanya Samriddhi, sold at post offices with rates reset every quarter.
Example: For October to December 2026, the government kept PPF at 7.1% and NSC at 7.7%, unchanged from the quarter before.
Small savings schemes are the government’s own savings plans, mostly sold at the post office. See every scheme’s rate, lock-in and tax in one table in post office schemes side by side.
Open full page →SMS phishing: a scam text message with a fake link or number that tries to steal your details or money.
Example: An SMS says 'Your electricity will be cut tonight, update your details at this link'. The link is fake. That is smishing.
A regular report that checks how many active funds actually beat the market.
Example: The SPIVA India Scorecard has shown most active funds trail the market over time.
SPIVA, short for S&P Indices Versus Active, is a long-running study by S&P Dow Jones Indices that compares actively managed funds against the market index they are trying to beat. Its India scorecard has repeatedly found that most active funds do worse than the market over the long run.
Twice a year, SPIVA checks what share of active funds in each category actually beat their benchmark, after fees, over various periods. It also corrects for a quiet bias: funds that did badly and were shut down or merged are counted, so the picture is not flattered by looking only at survivors. The result is one of the most honest, independent scorecards of whether paying for active management pays off.
The consistent finding, in India and around the world, is that over long periods most active funds trail their index, and the longer the period, the larger that majority. A fund can beat the market for a year or three, but staying ahead for ten or fifteen years is rare, and today’s winners are not reliably tomorrow’s.
SPIVA is the evidence behind the case for low-cost index funds: if most active managers cannot beat the index after fees, simply buying the index cheaply is a sensible default for long-term money. It does not mean active funds are useless, only that picking a lasting winner in advance is hard. See active vs passive investing.
Open full page →The promoter who sets up a mutual fund, much like the promoter of a company.
Example: A bank acting as sponsor must show a five year track record before starting a fund.
The sponsor is the party that establishes a mutual fund, much like the promoter of a company. SEBI checks its track record, and it must contribute a set share of the AMC’s net worth. It starts the fund, then steps back.
To launch a mutual fund in India, a sponsor, often a bank or a financial group, sets up the whole structure: it creates the trust, appoints the trustees, and establishes the AMC that will run the schemes. SEBI vets the sponsor before allowing this, requiring a sound track record, usually several years in financial services, and a financial commitment to the AMC, so that only serious, stable players can start a fund.
This is the reassuring part. Once the fund is set up, the sponsor largely steps back. The AMC makes the investment decisions, the trustees oversee it on investors’ behalf, and the custodian holds the securities separately. This separation of roles, sponsor, AMC, trustees and custodian, is a deliberate safeguard: no single party both controls and holds your money.
You rarely think about the sponsor, but it is part of why mutual funds are trustworthy. A well-regulated sponsor and the trust structure behind it are the reason a scheme run by a private company is still safe to invest in, even if you have never heard of the people managing it day to day.
Open full page →A flat amount cut from your salary before tax, with no proof needed.
Example: The standard deduction lowers your taxable salary automatically.
The standard deduction is a fixed amount subtracted from your salary before tax is calculated, and you do not need to show any bills or proof for it. It is the simplest tax benefit a salaried person gets.
Before this flat deduction, salaried people could claim small work-related expenses with paperwork. The standard deduction replaced that with one no-questions-asked amount, so everyone earning a salary or pension gets the same cut automatically. Your employer applies it when working out the tax to deduct, so you usually do not have to do anything.
For FY2025-26 it is ₹75,000 under the new regime and ₹50,000 under the old, for salaried people and pensioners. Unusually, it is one of the very few benefits that applies in both regimes, which is part of why the new regime can still work out well for a plain salary. The amount can change at any Budget, so confirm the current figure on incometax.gov.in.
Because it comes off the top with no effort, the standard deduction quietly raises the salary at which tax begins. Under the new regime for 2026-27, for example, the ₹75,000 deduction is what stretches the tax-free point from ₹12 lakh of taxable income to about ₹12.75 lakh of salary. You can see that effect in the income tax by salary chart and work your own figure in the income tax calculator.
Open full page →A measure of how much a fund's returns swing up and down around their average.
Example: A fund with a high standard deviation has bigger year-to-year swings than a steadier one.
Standard deviation measures volatility: how far a fund’s returns stray from their own average. A low number means steady, predictable returns, and a high number means wild swings.
Every fund has an average return, but the average hides the journey. Standard deviation captures that journey by measuring how widely the actual returns scatter around their average. A debt or liquid fund has a low standard deviation, its returns barely move; a small-cap equity fund has a high one, lurching up and down. Two funds can share the same average return while one was calm and the other a roller-coaster, and standard deviation is what tells them apart.
The practical point is not the maths but the holding. A high-volatility fund is harder to stay invested in, because the deep drops tempt you to sell at exactly the wrong time. For money you will need sooner, or if steep falls would rattle you, a lower standard deviation is usually worth a slightly lower return. It is the number that turns “risk” from a vague word into something you can compare.
Compare standard deviation within a category, since different asset types naturally swing differently. It also feeds the Sharpe ratio, which weighs return against this volatility. Like all such measures it is based on past data, so treat it as a guide to a fund’s character, not a forecast. See risk and return.
Open full page →An order to your bank to move a fixed amount on a fixed date, every month or as set.
Example: A standing instruction can move 5,000 rupees from your salary account to a recurring deposit on the 2nd of every month.
A standing instruction is an order to your own bank to move a fixed amount on a fixed date, such as moving savings out on payday to a separate savings account. It’s a simple way to pay yourself first. An e-mandate does the same job for merchant payments.
Open full page →Dividing each share into smaller ones, so you hold more shares at a lower price each.
Example: In a 1-for-2 split, 100 shares at 1,000 rupees become 200 shares at about 500 rupees.
A stock split divides each share into smaller pieces. You get more shares, each at a lower price, and your holding’s value stays about the same. A company’s market capitalisation doesn’t change because of a split. Compare it with a bonus issue in our corporate actions explainer.
Open full page →Hand-choosing which company shares to buy, hoping to beat the overall market.
Example: An active fund manager does stock-picking; an index fund does not.
Stock-picking means choosing individual company shares to buy and sell by hand, in the hope of doing better than the market as a whole. It takes research, judgment and time, which is the job an active fund manager is paid for.
A stock-picker studies companies, their businesses, finances, management and prospects, and tries to buy the ones that will do well and avoid the ones that will not. Done seriously, it is a full-time craft requiring data, skill and discipline. It is the opposite of simply owning the whole market: instead of accepting the average, you are betting you can beat it by choosing better than everyone else.
The uncomfortable truth is that most people, professionals included, do not beat the market by picking stocks over the long run, as the SPIVA scorecard shows. Prices already reflect what is widely known, so a genuine edge is rare, and mistakes, plus the cost of frequent trading, add up. For a beginner, concentrating money in a few hand-picked shares is closer to a bet than an investment.
An index fund skips stock-picking entirely and holds a slice of every big company, which is why it costs far less than an active fund that pays for the picking. For most people, owning the market cheaply beats trying to outguess it. See active vs passive investing.
Open full page →A plan that moves a fixed amount from one mutual fund to another every month, usually from a safe fund into an equity fund.
Example: Park ₹6 lakh in a liquid fund and STP ₹50,000 a month into an equity fund over a year.
STP stands for Systematic Transfer Plan. It is a way to invest a lump sum gradually: you keep the money in a low-risk fund, often a liquid fund, and move a fixed amount into an equity fund each month.
Say you have ₹6 lakh to invest but do not want to put it all into equity on a single day. You park it in a liquid fund and set up an STP of ₹50,000 a month into an equity fund of the same house. Each month that amount transfers across automatically, so over a year your whole sum is deployed in steady steps. It works just like an SIP, except the money comes from another fund rather than straight from your bank.
The point is to average your entry and avoid the bad luck of investing a large sum right before a fall. Meanwhile the waiting money earns a little in the liquid fund instead of sitting idle, which a bank account might not match. It suits someone who receives a windfall, a bonus, a maturity or a sale, and wants to move it into equity without timing the market.
A transfer is a redemption from the source fund, so it can attract capital gains tax and, rarely, an exit load. STPs run between schemes of the same fund house. It is a disciplined tool for deploying a lump sum, not a way to boost returns on its own.
Open full page →Securities transaction tax: a small tax charged on every share and derivatives trade on an exchange.
Example: Buying shares worth 1 lakh rupees for delivery attracts 100 rupees of STT.
STT, or securities transaction tax, is a small tax on every trade in shares and derivatives on an exchange. Your broker deducts it and shows it on your contract note. It’s one of several costs on a trade, alongside brokerage. See the real cost of buying shares.
Open full page →A civil court certificate that lets a person collect a deceased person's debts and securities.
Example: For a large deposit with no nominee, the bank asked the heirs for a succession certificate.
A succession certificate is issued by a civil court and authorises a person to collect money and securities owed to someone who has died. Banks may ask for one for large claims where there’s no nominee, though RBI now lets them accept a legal heir certificate or an affidavit instead.
A succession certificate deals with the movable financial estate of someone who died without a will: bank deposits, shares, bonds and similar debts owed to them. A civil court, after a formal application and a notice period for objections, issues it to the rightful heir, giving them legal authority to collect those assets and giving the bank or company the comfort that paying that person is safe. It typically does not cover immovable property like land.
Under RBI’s 2025 directions, a bank should ask for a succession certificate only when there is no nominee or survivor and the claim is above the bank’s threshold, at least ₹15 lakh for most banks and ₹5 lakh for co-operative banks. Even then, the bank can instead accept a legal heir certificate or a sworn affidavit, and where there is a nominee or survivor it cannot insist on a succession certificate at all, whatever the amount.
Keep three documents straight: probate confirms a will; a legal heir certificate simply names the heirs, from the state revenue office; a succession certificate, from a court, authorises collecting debts and securities when there is no will. See claiming a parent’s money after they die.
Open full page →The most a health or general insurance policy will pay in a year.
Example: On a 10 lakh sum insured, that is the maximum the policy pays for the year.
The sum insured is the ceiling on what your policy pays in a policy year. If your bills cross it, you pay the rest. Pick a sum insured that matches real treatment costs where you live, not a round number.
In health insurance, the sum insured is the most the policy pays towards your hospital bills in one policy year, across one or more claims. Once you hit it, further costs that year are yours. It is not a per-claim limit by default, though some features, like a room rent limit or a co-pay, can reduce what you actually get even within the sum insured.
The common mistake is picking a comfortable round number rather than a realistic one. A single serious hospital stay in a metro can run into several lakhs, and medical costs rise faster than ordinary inflation, so a cover that looked ample a few years ago can fall short today. As a guide, size it against the cost of a major treatment at a good hospital in your city, and lean higher rather than lower, since the gap is exactly the bill you bought cover to avoid.
You do not always need a huge base policy to get a high sum insured. A no-claim bonus raises your cover for free in years you do not claim, and a top-up or super top-up policy adds a large extra layer cheaply above a threshold. See how much health cover you need and family floater vs individual.
Open full page →Extra health cover that pays once all your bills in a year cross a set deductible.
Example: With a 5 lakh deductible, two bills of 4 lakh and 3 lakh in one year cross it together, so a super top-up pays the extra 2 lakh.
A super top-up adds a layer of health cover above a deductible that is counted across the whole policy year. Once the year’s bills cross it, the super top-up pays, up to its own cover. See the rupee example in super top-up vs top-up health insurance.
Open full page →An extra tax charged on top of income tax for people with very high incomes.
Example: Someone with income of 60 lakh rupees pays a 10% surcharge on their income tax, then cess on top.
A surcharge is a tax on your tax, for high earners only. It starts above 50 lakh rupees of income and rises in steps. Most people never pay it. Read more in old vs new tax regime.
Open full page →The amount a life insurer pays if you end a savings policy before it matures.
Example: Surrendering an endowment plan after two years returns its surrender value, and the life cover stops.
Surrender value is what a life insurer pays if you end a savings policy early. Under IRDAI’s 2024 rules you get the higher of the guaranteed and the special surrender value, usually less than you paid, and your cover ends.
A savings-type policy, an endowment plan or ULIP, front-loads costs: commission, charges and the cost of cover come out of your early premiums, so little is left invested at first. Surrender early and you get back only what has built up, which in the first few years can be well below the total premiums you paid. The Guaranteed Surrender Value is a minimum fixed by the contract; the Special Surrender Value reflects the policy’s actual accumulated worth, and the 2024 rules require the insurer to pay the higher of the two.
Per IRDAI’s 2024 Master Circular, a regular-premium policy acquires a surrender value once the first policy year is complete and one full year’s premium is paid. Single-premium and short-pay policies acquire it as soon as the first full premium is received. A pure-risk plan like term insurance has no surrender value at all, because nothing is being saved.
Surrendering locks in the loss and ends your cover. Sometimes it is still the right call, but options like making the policy paid-up are worth weighing first. See surrendering a life insurance policy.
Open full page →A facility that moves spare savings balance into a fixed deposit, and back when you need it.
Example: Illustration: with a sweep-in FD set at 25,000 rupees, anything above that in savings moves into an FD.
A sweep-in FD tries to give you the best of both: FD interest on cash you are not using, and savings-account access when you need it. The bank does the moving for you. Thresholds, minimum amounts and early-break terms are set by each bank, so the details on your bank’s sweep terms page matter more than the name.
Open full page →A plan that pays you a fixed amount from your mutual fund every month, the reverse of an SIP.
Example: A ₹20,000 monthly SWP sells just enough units each month to pay you ₹20,000.
SWP stands for Systematic Withdrawal Plan. Instead of putting money in each month like an SIP, it takes money out: the fund sells just enough units to pay you a fixed sum on a set date, while the rest stays invested.
You tell the fund an amount and a date, say ₹20,000 on the 1st of each month. On that day it redeems exactly enough units to pay you ₹20,000 and credits it to your bank, leaving everything else invested to keep growing. It is the mirror image of an SIP: regular, automatic and hands-off, but flowing out instead of in. You can start, stop or change it whenever you like.
The classic use is retirement: you turn a lump sum, perhaps your EPF or accumulated investments, into a steady monthly income without pulling it all out at once, so the remaining balance can still earn returns. It also gives more control than a fund’s payout (IDCW) option, because you decide the amount and timing.
Each withdrawal is a redemption of units, so it can trigger capital gains tax depending on the fund type and holding period; rates change at Budget time. And because units are sold at the day’s NAV, drawing a fixed amount while the market is down sells more units, so too high a withdrawal rate can deplete the corpus faster than expected. Size it sensibly, and try the SWP calculator.
Open full page →A cut in your tax bill for lower incomes, which can bring the tax to zero.
Example: Under the new regime, someone with regular taxable income of 11 lakh rupees owes no tax, because the rebate cancels it.
A tax rebate is money taken off your tax bill, for people with lower incomes. It’s why regular income up to 12 lakh rupees owes no tax under the new regime. Read more in old vs new tax regime.
Open full page →The extra income tax you paid during the year, returned to you after you file your return.
Example: If 40,000 rupees of tax was cut but you owe only 25,000, the 15,000 difference comes back as a refund.
A tax refund is the extra tax you paid, coming back. It usually comes from tax cut at source being higher than your final tax. You claim it by filing your return. Read more in income tax refund: claim, track and fix a delay.
Open full page →One of two ways to be taxed in India: new regime (lower rates, few deductions) or old (higher rates, more deductions).
Example: Salaried people can pick the tax regime that taxes them less each year.
A tax regime is the rule set your income tax is worked out under. India has two: the new regime, with lower rates and a large rebate but few deductions, and the old regime, with higher rates but many deductions. The new regime is the default; you can opt for the old one.
The new regime gives you lower slab rates and a rebate that makes a moderate income tax-free, but you give up almost every deduction. The old regime charges higher rates, but lets you claim section 80C, HRA, home-loan interest and many others. In short, the new regime rewards a simple salary; the old regime rewards someone with a lot of genuine deductions to claim.
There is no universal answer; it depends on how much you can actually deduct. Add up your real 80C, HRA, home-loan and other claims. If they are large, the old regime’s higher rates may still leave you paying less; if they are small, the new regime’s lower rates usually win. The standard deduction applies in both, so it does not tip the choice. Compare both on your own numbers every year, because your deductions and the rules both change.
The quickest way is to run both regimes with your figures in the income tax calculator, and read old vs new tax regime for the full walkthrough. Slabs and rules change each Budget, so confirm the current position on incometax.gov.in before you lock in a choice.
Open full page →A bank fixed deposit locked for 5 years whose deposit counts towards the 1.5 lakh rupee deduction on the old regime.
Example: Putting 1.5 lakh rupees into a tax saver FD can cut tax by up to 46,800 rupees at the 30% slab on the old regime, but the interest is still taxed.
A tax saver FD is a 5-year fixed deposit that lowers your taxable income on the old regime, in exchange for no early exit. The interest is still taxed. Read the rules and a worked example in tax saver FD: a fixed deposit that cuts your tax.
Open full page →The 12 months from 1 April to 31 March whose income is taxed. It replaced 'previous year' and 'assessment year' in 2026.
Example: Income you earn from 1 April 2026 to 31 March 2027 belongs to tax year 2026-27, and you file its return in 2027.
The tax year is just the year your income is earned, named once. The old law used two names for one period: the previous year, when you earned, and the assessment year, when it was taxed. The Income-tax Act, 2025 drops that and calls it the tax year.
Read what else changed in India’s new Income-tax Act, 2025: what changed for you.
Open full page →Tax collected at source: tax a seller or your bank collects from you at the time of payment, counted as tax you've already paid.
Example: Send 12 lakh rupees abroad to invest in a year, and your bank collects 20% on the 2 lakh above 10 lakh, or 40,000 rupees, as TCS (illustration).
TCS, or tax collected at source, is tax collected from you when you pay, rather than cut from money paid to you like TDS. The common case for investors is a large foreign remittance under LRS. It isn’t lost money: you claim it in your return. See how to invest in US stocks from India.
Open full page →Tax deducted at source: tax the payer cuts before paying you, such as a bank on your FD interest.
Example: If a bank pays you ₹60,000 of FD interest in a year, it deducts 10%, or ₹6,000, as TDS when you have given it your PAN.
TDS is tax cut at the point of payment. Your employer does it on salary, and your bank does it on interest once it crosses a yearly limit. It’s an advance on your tax, not the final bill, so the real number is settled only when you file your return.
See how it works on deposits in TDS on FD interest.
For salary, rent, fees and how to claim excess TDS back, see TDS explained.
Open full page →Cheap, pure life cover that pays your family if you die during the term.
Example: A ₹1 crore term cover can cost a young person a few hundred rupees a month.
Term insurance is the simplest kind of life cover. You pay a small premium, and if you die during the policy term, your family gets the sum assured. It has no investment part, which is why it is cheap.
A term plan pays out only if you die during the term. If you outlive it, nothing comes back, and that is exactly what makes it affordable: the insurer is covering a pure risk, not managing a savings pot. Because most policyholders survive the term, the cost of covering each one is low, so a healthy young person can often get ₹1 crore of cover for a few hundred rupees a month. The younger and healthier you buy, the lower the premium, and it is locked in for the whole term.
A common rule of thumb is cover of about 10 to 15 times your yearly income, enough to replace your earnings and clear big debts like a home loan, adjusted for your family’s needs and existing savings. The term should run at least until your dependents are financially independent or your major loans are paid off. Work out a figure for your own case in how much term cover do you need.
People often resist a plan that returns nothing if they survive, but that is a feature, not a flaw. You are buying protection, not a return. Bundling investment into insurance, as an endowment plan or ULIP does, usually means smaller cover and lower returns than buying term cover and investing the difference separately. For a homemaker’s cover and riders, see term insurance for homemakers.
Open full page →Motor cover for harm you cause to others; compulsory by law for every vehicle on a public road.
Example: If your car damages someone's scooter, third-party insurance pays for their loss, not for your car.
Third-party insurance is the part of motor cover that pays for harm you cause to other people: injury, death or damage to their property. The Motor Vehicles Act makes it compulsory for every vehicle used in a public place. It pays nothing for your own vehicle.
The law requires it because an accident can ruin a third party, someone you injure, or whose vehicle or property you damage, through no fault of their own. Third-party cover guarantees they can be compensated even if you could not afford to pay. Section 146 of the Motor Vehicles Act, 1988 bans using a vehicle in a public place without it, and under section 196 (as amended in 2019) a first offence can mean up to three months in jail, a ₹2,000 fine, or both.
It covers the “third party”, the other person, not you and not your vehicle. Injury or death you cause to others is covered without a monetary cap; damage to their property is covered up to a limit. For injury or damage to your own vehicle, you need own-damage cover. The two together make a comprehensive policy.
Third-party cover is the legal minimum, but it leaves your own vehicle unprotected. For anything beyond an old, low-value vehicle, a comprehensive policy is usually worth it. See motor insurance explained.
Open full page →An extra loan given on top of an existing home loan, against the same property, repaid in its own EMIs.
Example: If you owe 30 lakh rupees on your home loan, a lender may offer a 5 lakh rupee top-up loan on the same house, with its own rate and tenure.
A top-up loan lets you borrow more against a house that already has a home loan on it. It’s a separate loan with its own EMI, rate and charges, shown in the Key Fact Statement. Many people take one while moving their loan to a new lender: see home loan balance transfer.
Open full page →Your full credit card bill for the month; pay this by the due date to owe no interest.
Example: Paying the total amount due, not just the minimum, keeps you interest-free.
The total amount due is your full credit card bill for the statement month, sometimes shown as current outstanding. Pay it in full by the due date and you owe no interest. Pay only the minimum due instead and the rest carries high interest.
The total amount due adds up everything on your statement: your purchases during the cycle, any cash withdrawals, EMIs on the card, fees, and any interest or taxes charged. It is the one number that, paid in full and on time, keeps you completely interest-free. Banks sometimes print it as current outstanding or total amount payable, but it means the same thing.
This is where most people slip. The statement shows two figures: the total amount due, the whole bill, and the minimum due, a small slice often around 5% of it. Paying the minimum keeps the card from going overdue, but only paying the total in full avoids interest. The names look alike, so read carefully; the one that keeps you interest-free is the total, not the minimum.
The moment you leave any part of the total unpaid, two things happen: the leftover starts carrying interest at around 3.5% a month, and you lose the grace period on new purchases, so fresh spends charge interest from day one. Paying the full total each month is the only way to use a card genuinely free. If you cannot pay it all this month, pay as much above the minimum as you can, and see what a slow payoff costs.
Open full page →The all-in yearly fee of a mutual fund, as a percentage of your investment.
Example: A 1% total expense ratio on 1 lakh rupees is about 1,000 rupees a year.
The total expense ratio, or TER, is the complete yearly cost of running a mutual fund, including management and other charges, shown as a percentage of your money. It is taken out of the fund automatically, so it quietly lowers your returns every year.
The TER is the all-in figure. It bundles the fund manager’s fee, administration, registrar and custodian costs, marketing, and, in a regular plan, the distributor’s commission. Because it is a single percentage charged on the whole scheme, you never receive a bill; it is deducted before the daily NAV is struck, which is why the return you see is already net of it. In everyday use, “TER” and “expense ratio” mean the same thing.
A fee that sounds small compounds against you every year, so over decades the gap between a cheap and an expensive fund can be large on an identical portfolio. Index funds usually carry the lowest TER, often a fraction of a percent, because no one is picking stocks; active funds charge more for the manager’s work. A direct plan always has a lower TER than the regular plan of the same scheme, because it leaves out the commission.
SEBI caps how high a fund’s TER can go, with the limit depending on the scheme’s size and type; larger funds must charge less. Check a scheme’s current TER in its factsheet before investing.
Open full page →How far an index fund's return drifts from the index it copies.
Example: A low tracking error means the fund closely mirrors its index.
Tracking error is the small gap between an index fund’s return and the index it is meant to copy, caused by costs and cash holdings. The lower it is, the more faithfully the fund mirrors its index, which is exactly what you want from a passive fund.
Open full page →The ongoing yearly fee a fund pays a distributor for as long as you stay in a regular plan.
Example: A trail commission is paid every year you hold a regular plan, not just once.
A trail commission is the recurring cut a distributor earns each year you remain invested in a regular plan, paid out of the fund’s expense ratio. Because it continues year after year, it is the main reason a regular plan costs more than a direct plan over the long run.
Unlike a one-time sales fee, a trail commission is ongoing. For as long as your money stays in a regular plan, the fund house pays the distributor who sold it to you a small yearly percentage of your investment, drawn from the scheme’s expense ratio. You never see a separate charge; it is baked into the fee that quietly reduces your return every year. The bigger your balance grows, the larger the rupee trail the distributor earns.
The trail is how distribution is funded, and it is fair if you genuinely receive advice. The problem is that it keeps being paid even if you were sold the fund once and never advised again, so you can pay a yearly cut indefinitely for nothing. Over decades, that recurring drag compounds into a meaningful chunk of returns on an identical portfolio.
A direct plan of the same scheme carries no trail commission, which is exactly why its expense ratio is lower. If you choose and manage your own funds, the direct plan keeps that yearly trail in your pocket instead. See the same fund for a lower cost.
Open full page →Moving a deceased investor's shares or fund units to their nominee or legal heirs.
Example: After her father died, the shares in his demat account were moved to hers through transmission.
Transmission is how shares and mutual fund units pass from someone who has died to their nominee or legal heirs. With a nominee, it’s simple. Without one, SEBI’s 2026 rules allow simplified documents up to ₹30 lakh per demat account.
The two words are easy to mix up. A transfer moves securities between living people, usually when you sell shares or gift them. Transmission is specifically the movement caused by death: the holdings of a person who has died pass to the nominee or heirs. One is a market or gift transaction; the other is a succession process, triggered by a death certificate rather than a trade.
If the deceased named a nominee, transmission is straightforward: the nominee submits a death certificate and basic documents, and the units or shares move to them. Without a nominee, the heirs supply succession documents, and SEBI’s 23 July 2026 framework simplified this: claims up to ₹30 lakh per demat account, or ₹10 lakh for physical holdings and fund units, can use simplified documents, and small claims up to ₹30,000 in demat can use a quick route for close relatives.
SEBI’s 2026 framework removed probate of a will as a mandatory document for transmission, in line with the change to succession law. The nominee or heir then holds the assets subject to the will or succession law. See claiming a parent’s money after they die.
Open full page →A short-term government loan of 91, 182 or 364 days, sold at a discount and repaid at face value.
Example: A 91-day T-bill bought at 98.20 rupees and repaid at 100 earns 1.80 rupees, about 7.35% a year.
A Treasury bill, or T-bill, is the government’s short-term IOU. It’s issued for 91, 182 or 364 days, pays no coupon, and is sold at a discount to its face value. The RBI’s own example: a 100-rupee, 91-day bill issued at 98.20. You can buy them through RBI Retail Direct. See bonds and government securities.
Open full page →A benchmark index that counts both price gains and dividends, used to judge mutual funds fairly.
Example: A fund is compared against the Nifty 50 TRI, not just the Nifty 50 price index.
TRI stands for Total Return Index. A plain price index only tracks share prices, but real investors also receive dividends. The TRI adds those dividends back in, so it reflects the full return a holder would earn.
A price index, like the plain Nifty 50, only measures how share prices move. But if you actually owned those shares, you would also pocket the dividends they pay. A total return index assumes those dividends are reinvested, so it captures the complete return, price gains plus income. Over years, the reinvested dividends add up to a meaningful gap, so the TRI always ends up ahead of the price-only version of the same index.
Before 2018, many Indian funds compared themselves against the price index, which quietly flattered them: the fund earned dividends, but the yardstick did not. Since February 2018, SEBI requires funds to be measured against the TRI version of their benchmark. That raised the bar and made it harder for a fund to look like it beat the market when it had not, because now both the fund and the yardstick count dividends.
When you compare a fund’s return to an index, make sure it is the TRI, not the price index, so the comparison is fair. The move to TRI is one reason the case for low-cost index funds strengthened: beating a dividend-inclusive benchmark after fees is genuinely hard.
Open full page →The unit used to price gold and silver around the world, equal to 31.1035 grams; world gold prices are quoted in US dollars per troy ounce.
Example: At an illustrative 4,000 dollars per troy ounce, one gram of gold costs 4,000 ÷ 31.1035, or about 128.60 dollars.
A troy ounce is the weight unit for precious metals on world markets, equal to 31.1035 grams. When you see gold “at so many dollars an ounce”, it means a troy ounce. To compare with an Indian rate, convert to grams and rupees, then add import duty and GST. Read the worked example in gold price in India vs the international price.
Open full page →The guardian who holds a fund's assets in trust for investors and watches over the AMC.
Example: The trustees must approve big changes to a scheme to protect investors.
Trustees hold a mutual fund’s property in trust for the unit holders. They do not manage the money; they oversee the AMC and make sure it follows the rules. A fund needs at least four trustees, most of them independent.
An Indian mutual fund is legally set up as a trust, and this is part of why your money is well protected. The sponsor sets up the fund, the AMC runs the schemes day to day, a custodian holds the securities, and the trustees sit over all of them as guardians for investors. They are the layer whose job is to look after your interests, not the fund house’s.
Trustees hold the scheme’s assets in trust, oversee how the AMC invests and operates, check that it keeps within SEBI rules and the scheme’s stated objective, and must approve major changes, such as altering a scheme’s features or merging it. Because they are meant to be a genuine check, the rules require a majority of them to be independent of the sponsor and AMC.
You never deal with the trustees directly, but their existence is a quiet safeguard. If an AMC tried to do something against investors’ interests, the trustees are the body meant to stop it. Together with the custodian holding the assets separately, this trust structure is why a mutual fund run by a private company is still safe to use.
Open full page →Universal Account Number, a 12-digit EPFO number that stays the same across jobs and links your EPF accounts.
Example: Activate your UAN to see your EPF balance online.
UAN stands for Universal Account Number. It is a 12-digit number from EPFO that stays with you across jobs and ties all your EPF accounts together. You activate it once to see your provident fund balance, download your passbook, and manage your account online.
Each time you join a new employer a fresh EPF account is created, but it sits under the same UAN. So instead of a trail of disconnected accounts, your UAN gives you one identity that follows you for your whole career. When you change jobs you use it to transfer the old balance into the new account, rather than leaving money stranded or withdrawing it early.
After a one-time activation on the EPFO member portal, your UAN lets you check your balance and passbook, update your KYC and bank details, raise a withdrawal or transfer claim, and track its status, all online. You can also check the balance by a missed call or SMS once registered. Keeping your mobile number and KYC updated against the UAN is what keeps these services working smoothly.
Your employer usually generates the UAN when you first join, and you then activate it yourself. For the step-by-step, read how to activate your UAN and PF withdrawal rules. The UAN is the key to your retirement savings, so it is worth setting up early rather than scrambling when you change jobs.
Open full page →A plan that bundles life insurance with market-linked investment in one product.
Example: A ULIP splits your premium between life cover and investment funds, after charges.
A ULIP, or unit-linked insurance plan, mixes life cover with investment in market-linked funds inside a single policy. Part of your premium buys cover, the rest is invested after several charges.
Each premium is split: a slice pays for life cover, and the remainder buys units in funds you choose, much like a mutual fund, with a five-year lock-in. Your investment value rises and falls with the market. Over the years the insurer deducts charges, for fund management, administration and the cost of the cover itself, before your money is invested, which is the main drag on returns.
Because a ULIP tries to insure and invest at once, it often does neither as well as a focused product. The life cover is usually modest relative to the premium, and the layered charges pull down the market return compared with a low-cost mutual fund. Newer ULIPs are cheaper than old ones, but the structure still bundles two decisions that are usually better kept apart.
The common advice is to separate the jobs: buy cheap term insurance for a large cover, and invest the rest in a plain mutual fund, typically through a SIP. You get bigger protection and clearer, lower-cost investing, and you can change either one without disturbing the other. See why bundling insurance and investment rarely wins.
Open full page →One share of a mutual fund. You buy units, and their price is the NAV.
Example: Invest ₹2,000 at a NAV of ₹40 and you receive 50 units.
When you invest in a mutual fund you do not buy the fund itself, you buy units of it. The number you get is your money divided by that day’s NAV, and you can hold fractions of a unit, so nothing is rounded away.
Think of the fund as a cake and units as slices. Invest ₹2,000 when the NAV is ₹40 and you get 50 units; invest the same ₹2,000 when the NAV is ₹20 and you get 100 units. Your holding at any time is simply the number of units you own multiplied by the current NAV. When the NAV rises, each unit is worth more and so is your total; when you redeem, the fund buys your units back at the day’s NAV.
This is the single most common beginner mistake. A fund with a NAV of ₹15 is not “cheaper” than one at ₹450. Put ₹10,000 into each and you simply get more units of the first, each worth less; both holdings are worth ₹10,000, and both grow by the same percentage if the funds rise equally. Your return comes from what the fund holds and how it performs, never from the NAV number.
Your units are recorded against your folio with the fund house, or in your demat account if you hold them there. The statement you receive lists the units, NAV and value for each scheme.
Open full page →India's instant phone to phone money transfer system.
Example: Paying a shop by scanning a QR code is UPI.
UPI stands for Unified Payments Interface. It lets you send money from one bank account to another in seconds, using just a phone, a UPI ID or a QR code. You approve a payment with a secret UPI PIN, and you only ever need that PIN to send money, never to receive it.
UPI links your bank account to an app. Instead of sharing your account number and IFSC, you use a simple UPI ID, like a name followed by a bank handle, or you scan a QR code. When you pay, the app asks for your UPI PIN, checks it with your bank, and moves the money straight from your account to theirs. There is no wallet in between, and usually no fee for a normal personal payment.
It is instant, works all day every day, and runs from the smallest shop to large bills. You can send as little as one rupee, split a bill, or set up recurring payments. Because the money moves directly between bank accounts, you do not need to load a separate wallet first.
UPI itself is protected by your PIN, so the danger is rarely the technology; it is being tricked. The rule is simple: you enter your PIN only to pay, never to collect. If someone sends you a collect request or asks you to enter your PIN to receive a refund, prize or payment, it is a scam, because receiving money never needs your PIN. Never approve a request you did not start.
Check the name shown before you pay, keep your PIN private, and ignore calls pressuring you to approve something urgently. For the common tricks and how to avoid them, read UPI safe habits and common UPI scams.
Open full page →The secret code you enter to send money on UPI; it is never needed to receive.
Example: You enter your UPI PIN to pay a shop, never to receive a payment.
A UPI PIN is the 4 or 6 digit code you set to authorise payments on UPI. You enter it only to send money out of your account. You never need it to receive money, so anyone asking for your PIN to give you a payment or refund is a scammer.
Almost every UPI scam relies on getting you to enter your PIN when you think you are receiving money. You are not. Entering your PIN always sends money out. There is no screen, anywhere, where typing your PIN pulls money in. If a “buyer”, “refund team” or “prize” asks you to approve a request or enter your PIN to receive funds, it is a theft attempt, every time.
You set the PIN inside your UPI app, tied to your bank account and your phone, and you enter it fresh for each payment. The app never shows it, your bank never asks for it over a call, and no genuine staff member needs it. Treat it like the key to your bank account, because that is exactly what it is.
Never share your PIN, never enter it to “receive” anything, and be suspicious of a collect request you did not expect, which asks you to approve a payment out of your account. Ignore urgency and calls that pressure you to act fast. For the common tricks in full, read common UPI scams and UPI safe habits.
Open full page →Voice phishing: a scam phone call where the caller pretends to be a bank, company or official to steal your money or details.
Example: A caller says they are from your bank's fraud team and asks you to read out the OTP to 'block a suspicious payment'. That is vishing.
The gap after buying a health policy before certain claims are allowed.
Example: A pre-existing illness may have a waiting period of a few years before it is covered.
A waiting period is the time you must hold a health policy before it will pay for certain things. New policies have a short initial waiting period, and pre-existing conditions and some specific illnesses have longer ones.
A single policy usually has several, stacked together. There is a short initial period, often 30 days, when only accidents are covered. Specific illnesses and procedures, such as cataracts or hernias, commonly have a waiting period of a couple of years. And a pre-existing disease, a condition you already had when you bought the policy, carries the longest wait before it is covered. Maternity cover has its own waiting period too.
Waiting periods are the main reason to buy health cover while you are young and healthy, rather than waiting until you think you need it. The clock starts when the policy begins, so if you buy early, the long waits are already behind you by the age when claims become more likely. Buy late, with a condition already present, and you may face years before that very condition is covered.
Waiting periods are tied to continuous cover, so they can lapse if you let a policy expire. Renewing on time keeps the credit you have built, and when you switch insurers, portability lets you carry your completed waiting periods across so you do not start over. See health insurance portability and family floater vs individual.
Open full page →A signed, witnessed document saying who gets your money and property after you die.
Example: A will can leave a flat to one child and a fixed deposit to another, whoever the nominees are.
A will is a written document that says who gets your money and property after you die. You sign it and two witnesses attest it. It works alongside your nominees: they collect the money, and the will decides who keeps it.
A will does not need a lawyer, a stamp or fancy language to be valid. Under section 63 of the Indian Succession Act, you sign the document (or make your mark), and at least two witnesses attest it, each having seen you sign and each signing in your presence. Keep it clear and specific: list your assets, say who gets each, and avoid vague wording that invites a dispute. You can change it any time by writing a new one.
This is the distinction people most often get wrong. A nominee is only a receiver: the bank, fund or insurer hands the money to the nominee quickly, but the nominee holds it for whoever the will, or succession law, says truly inherits. The will is what actually decides ownership. So a nominee is not a substitute for a will; you want both.
Name an executor to carry out the will, someone organised you trust. Registration is optional: a properly signed and witnessed will is valid without it, though registering can make it easier to prove. Our lesson on writing a will walks through the steps; see also will registration.
Open full page →The share of your retirement savings you take out each year to live on.
Example: Taking 4 lakh rupees a year from a 1 crore rupee corpus is a 4% withdrawal rate.
Your withdrawal rate is how fast you spend your retirement savings: the share of the corpus you take out each year. Small changes make a big difference. In our illustration, a 1 crore rupee corpus earning 7% a year, with withdrawals rising 6% a year for inflation, lasts about 28 years starting at 4 lakh rupees, and about 18 starting at 6 lakh. Keeping it modest is the simplest way to make savings last.
Open full page →The yearly return measure built for investments made on many different dates, like an SIP.
Example: An SIP where you invested ₹1.2 lakh in instalments and it grew to ₹1.6 lakh might show an XIRR of about 14%.
XIRR is the right way to measure the return on an SIP, because you invested on many dates and each instalment was in the market for a different length of time. A simple average cannot handle that.
In a SIP, your January instalment has been invested for the whole period, while your December one has barely had time to grow. Averaging the returns, or using a plain CAGR on the total, would be wrong, because it ignores how long each rupee was actually working. XIRR, extended internal rate of return, solves this by treating every instalment as its own small investment with its own start date, then finding the single annualised rate that ties all of them to your final value.
XIRR gives you one percentage, an annualised return, that you can compare against a benchmark or another investment on a fair basis. A statement showing an XIRR of 14% means your SIP effectively grew at about 14% a year, accounting for the staggered timing. It works for irregular contributions and withdrawals too, not just a tidy monthly SIP.
You do not have to calculate it by hand. Spreadsheets have an XIRR function where you list each cash flow and its date, and most fund statements and apps show the XIRR of your investments for you. The rule of thumb stays simple: a single lump sum uses CAGR; anything invested across many dates uses XIRR.
Open full page →The yearly return you'd earn on a bond if you bought it at today's price and held it to the end.
Example: A 7% bond bought below its face value has a yield to maturity above 7%, since you also gain the discount at maturity.
Yield to maturity, or YTM, is the return a bond would give you each year if you bought it at today’s price and held it to maturity. It differs from the coupon because the price moves. When rates rise and a bond’s price falls, its YTM rises for a new buyer. Debt funds publish a portfolio YTM, a rough guide to what their bonds would earn before costs. See bonds and government securities.
Open full page →A motor add-on that stops the insurer deducting depreciation on replaced parts in a claim.
Example: With zero depreciation, a claim for new bumpers and lights pays close to the full repair bill.
Zero depreciation is an add-on to own-damage cover. Normally the insurer deducts depreciation on parts it replaces after an accident, so you pay part of the bill. With zero depreciation, that deduction goes away.
When a part is replaced after a crash, a normal policy does not pay its full price, because a used part had already lost value to wear and age. The insurer applies a depreciation percentage, higher for plastic and rubber parts than metal, and you pay that share. On a claim full of bumpers, lights and panels, those deductions can add up to a large chunk of the repair bill. Zero depreciation removes them, so the claim pays close to the full repair cost.
Zero depreciation costs extra premium, and it matters most on newer and premium vehicles, where parts are costly and depreciation deductions bite hardest. On an old vehicle with cheap parts, the add-on may cost more than it saves. IRDAI’s rules require each add-on’s premium to be shown separately, so you can see exactly what this one costs before deciding, and the 2024 rules also bar applying depreciation to non-original parts used in repairs.
For a new or expensive vehicle, zero depreciation usually pays for itself the first time you claim. Weigh it against your vehicle’s age and parts cost. See motor insurance explained.
Open full page →RBI's rule that you lose nothing in an unauthorised transaction that you report quickly.
Example: A stranger uses your card details, you report it the next working day, and the bank must refund it.
Zero liability comes from RBI’s 2017 rules on unauthorised electronic banking transactions. It covers cards, net banking and other electronic payments. The key is speed: the clock starts when the bank alerts you, and every working day you wait can move you from zero loss to a capped loss. If you shared your OTP or PIN yourself, you can bear the loss until you report it. Check the current RBI rules before you rely on these timelines.
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