Glossary
No jargon left unexplained. One line, plus a rupee example.
Aadhaar
A 12 digit national identity number.
Example: Your Aadhaar is often used to finish KYC in minutes.
Read more →AMC
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.
Read more →AMFI
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.
Read more →ARN
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.
Read more →AUM
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.
Read more →Compounding
When your earnings start earning too. A snowball effect.
Example: Interest on ₹100 becomes ₹110, then next year you earn on ₹110.
Read more →Credit bureau
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.
Read more →Custodian
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.
Read more →Demat account
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.
Read more →Diversification
Not putting all your money in one place, to lower risk.
Example: Spreading ₹10,000 across several things, not one single share.
Read more →EMI
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.
Read more →Exit load
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.
Read more →Financial literacy
Being able to answer basic money questions and make everyday money decisions.
Example: Knowing how interest, inflation, and a budget work is financial literacy.
Read more →Financial year (FY)
India's money and tax year, from April to March.
Example: FY25 means April 2024 to March 2025.
Read more →Folio
Your account number with a mutual fund, where your units are recorded.
Example: Your folio shows every purchase and redemption you have made.
Read more →Inflation
The speed at which everyday prices rise over time.
Example: A snack that cost ₹10 last year now costs ₹11.
Read more →KYC
A one time identity check, using your PAN and Aadhaar.
Example: Upload your PAN once and you can start investing.
Read more →Load
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.
Read more →Mark to market
Valuing holdings at today's market price, every day.
Example: Mark to market is what lets a scheme publish a fresh NAV each day.
Read more →Minimum due
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.
Read more →Mutual fund
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.
Read more →NAV
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.
Read more →NCFE
National Centre for Financial Education, set up by India's financial regulators.
Example: NCFE surveys measure how financially literate Indians are.
Read more →NISM
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.
Read more →ODR
Online dispute resolution, a route to settle an unresolved money dispute.
Example: An unresolved redemption dispute can go to ODR after SCORES.
Read more →Offer document
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.
Read more →PAN
Permanent Account Number, your tax ID in India.
Example: You need a PAN to invest in mutual funds or file your taxes.
Read more →RBI
The Reserve Bank of India, the country's central bank.
Example: The RBI sets the rules for banks and tries to keep prices stable.
Read more →Redemption
Selling your fund units back to get your money out.
Example: On redemption, the scheme pays you the current NAV for your units.
Read more →RTA
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.
Read more →SCORES
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.
Read more →SEBI
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.
Read more →Section 80C
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.
Read more →SIP
Investing a fixed amount automatically, every month.
Example: ₹1,000 on the 5th of every month into a fund, without thinking about it.
Read more →Sponsor
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.
Read more →Term insurance
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.
Read more →Trustee
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.
Read more →UPI
India's instant phone to phone money transfer system.
Example: Paying a shop by scanning a QR code is UPI.
Read more →