PLAIN-LANGUAGE GLOSSARY

Money words, minus the jargon

Each term comes with a rupee example and the misconception people most often have about it.

A SIP is a method, not a product. It automates a regular purchase of mutual fund units. When prices are low your money buys more units, when high it buys fewer. This averages out your purchase cost over time.

INR EXAMPLE

₹2,000 every month on the 5th into an index fund. After 12 months you have put in ₹24,000. What it is worth depends on the market.

MISCONCEPTION

"SIPs give guaranteed returns." They don't. A SIP into an equity fund can show a loss, especially over short periods.

SIPSystematic Investment Plan: investing a fixed amount on a fixed date, usually monthly, into a mutual fund.

Mutual FundA pool of money from many investors, managed by a professional, invested in stocks, bonds or both.

ETFExchange-Traded Fund: a fund that trades on the stock exchange like a share.

DiversificationSpreading money across different investments so one bad outcome does not sink everything.

InflationThe rise in prices over time, which reduces what your money can buy.

RiskThe chance that an investment's value goes down, or that you can't get money out when you need it.

ReturnWhat you gain or lose on an investment, usually shown as a percentage per year.

Compound GrowthEarning returns on your earlier returns, not just on what you put in.

FDFixed Deposit: you lend money to a bank for a fixed period at a fixed interest rate.

PortfolioThe full collection of everything you have saved and invested.