Basics
What is Inflation?
The general rise in prices over time. ₹100 today buys less next year, so savings need to grow faster than prices to keep their real value.
If your money grows 5% while prices rise 6%, you are quietly getting poorer.
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Concept of the day
What is Credit Risk?
The chance that a borrower, such as a company issuing a bond, fails to pay interest or principal.
Higher bond yields often mean higher credit risk, not free extra return.
Returns & Risk
What is CAGR?
Compound Annual Growth Rate, the smoothed yearly return of an investment over several years. It ignores the ups and downs along the way.
It lets you compare two investments held for different lengths of time on the same scale.
Investing
What is NAV?
Net Asset Value, the per-unit value of a mutual fund, calculated daily as fund assets minus liabilities, divided by units outstanding.
A low NAV does not mean a fund is cheap; it only reflects the size of each unit.
Investing
What is a Mutual Fund?
A pooled investment vehicle where money from many investors is managed by professionals according to a stated strategy.
It gives small amounts access to a spread of holdings that would be costly to buy individually.
Investing
What is SIP?
Systematic Investment Plan, investing a fixed amount at fixed intervals instead of one lump sum.
It removes the need to time the market and turns investing into a routine.
Portfolio
What is Diversification?
Spreading investments across assets, sectors and geographies so that one bad outcome does not decide your result.
It is the simplest way to reduce risk without predicting anything.
Portfolio
What is Asset Allocation?
How you divide a portfolio across equity, debt, gold and cash. Research consistently shows it drives most of long-term outcome variation.
Choosing the mix matters more than picking individual winners.
Investing
What is an ETF?
Exchange-Traded Fund, a basket of assets that trades on an exchange like a share, usually tracking an index.
It combines fund-style diversification with share-style buying and selling.
Markets
What is Market Capitalisation?
The total value of a company's outstanding shares: share price × shares outstanding. Companies are grouped as large, mid or small cap.
Company size is a rough guide to how stable or volatile a stock tends to be.
Markets
What is the P/E Ratio?
Share price divided by earnings per share, how much investors are paying for each rupee of profit.
It only makes sense when compared with the same company's history or its peers.
Investing
What is a Dividend?
A share of company profits paid out to shareholders, usually quarterly or annually.
Dividends are part of your total return, not a bonus on top of price gains.
Returns & Risk
What is Compounding?
Earning returns on both your principal and on returns already earned, the mathematical engine of long-term wealth.
Time in the market matters more than the size of the first cheque.
Portfolio
What is Rebalancing?
Periodically resetting a portfolio to its target mix by trimming what has grown and adding to what has lagged.
It keeps risk where you intended it, instead of drifting with the market.
Basics
What is Liquidity?
How quickly an asset can be sold without a meaningful loss of value. Cash is the most liquid; property among the least.
Emergency money belongs in liquid places, whatever the return on offer elsewhere.
Returns & Risk
What is Volatility?
How much a price moves up and down over time. Higher volatility means larger swings in both directions.
Volatility is the price of higher expected returns, not proof of a mistake.
Investing
What is a Bond?
A loan you make to a government or company; you receive periodic interest and your principal back at maturity.
Bonds usually behave differently from shares, which is why portfolios hold both.
Returns & Risk
What is Yield?
The income return on an investment, expressed as a percentage of its price. Common for bonds and dividend-paying shares.
When a bond's price falls, its yield rises, the two always move in opposite directions.
Returns & Risk
What is Beta?
A measure of how a stock moves relative to the market. A beta of 1 moves with the market; above 1 moves more sharply.
It tells you how bumpy a holding is likely to feel when markets swing.
Markets
What is a Bull Market?
A sustained period of rising prices, usually alongside optimism and improving economic conditions.
Strong runs make risk feel smaller than it is, a good moment to check your allocation.
Markets
What is a Bear Market?
A sustained decline of 20% or more from recent highs, often linked to an economic slowdown.
Knowing the definition in advance makes a fall easier to sit through calmly.
Basics
What is an Emergency Fund?
Money set aside in a safe, easy-to-access place to cover 3 to 6 months of essential expenses.
It stops a job loss or hospital bill from forcing you to sell investments at a bad time.
Basics
What is Simple Interest?
Interest calculated only on the original amount: principal × rate × time.
Comparing it with compound interest shows why reinvesting returns matters.
Returns & Risk
What is Real Return?
Your return after subtracting inflation. A 7% return with 5% inflation is roughly a 2% real return.
Real return is what actually grows your buying power.
Basics
What is a Credit Score?
A three-digit number (300 to 900 in India) summarising how reliably you have repaid loans and credit cards.
A higher score usually means easier loan approval and lower interest rates.
Basics
What is an EMI?
Equated Monthly Instalment, the fixed monthly payment that repays a loan's principal and interest over its term.
Early EMIs are mostly interest, so prepaying early saves the most.
Investing
What is an Expense Ratio?
The yearly fee a mutual fund or ETF charges, shown as a percentage of your investment.
A 1% difference in fees compounds into a large gap over 20 years.
Investing
What is an Index Fund?
A fund that simply copies a market index such as the NIFTY 50 instead of picking stocks.
It offers market returns at low cost, without relying on a manager's choices.
Investing
What is a Fixed Deposit?
A bank deposit that pays a fixed interest rate for a fixed period. Bank deposits are insured up to ₹5 lakh per bank by DICGC.
It is predictable, but its after-tax return can trail inflation.
Markets
What is an IPO?
Initial Public Offering, when a company sells its shares to the public for the first time and lists on an exchange.
Listing-day excitement does not tell you whether the business is worth its price.
Markets
What is the Sensex?
An index of 30 large, established companies listed on the BSE, used as a barometer of the Indian market.
Index moves describe the market, not how your own portfolio did.
Markets
What is the NIFTY 50?
An index of 50 large companies listed on the NSE, weighted by free-float market capitalisation.
Many index funds and ETFs in India track it.
Markets
What is a Stop-Loss?
An order that sells a holding automatically if its price falls to a level you set in advance.
It turns a loss limit into a rule instead of a decision made in panic.
Returns & Risk
What is Risk Tolerance?
How much ups and downs you can accept, both financially and emotionally, without abandoning your plan.
A plan you cannot stick with in a bad year is the wrong plan.
Returns & Risk
What is Drawdown?
The fall from a peak value to a later low, usually shown as a percentage.
A 50% fall needs a 100% gain just to get back to where you started.
Investing
What is Rupee Cost Averaging?
Investing a fixed amount regularly, so you buy more units when prices are low and fewer when high.
It smooths your average buying price without needing to predict the market.
Basics
What is Capital Gains Tax?
Tax on the profit made when you sell an asset. Rates depend on the asset and how long you held it.
Holding period can change how much of your profit you keep.
Portfolio
What is Correlation?
A measure from −1 to +1 of how two investments move together.
Combining assets that do not move together is what makes diversification work.
Portfolio
What is an Emergency vs Goal Bucket?
Keeping separate pots of money for safety, short-term goals and long-term growth, each invested to suit its timeline.
Money needed in two years should not ride the stock market's swings.
Returns & Risk
What is Credit Risk?
The chance that a borrower, such as a company issuing a bond, fails to pay interest or principal.
Higher bond yields often mean higher credit risk, not free extra return.
Returns & Risk
What is the Rule of 72?
A shortcut: divide 72 by the yearly return to estimate how many years money takes to double.
At 8% money doubles in about 9 years; at 12% in about 6.