Demystifying financial jargon
A comprehensive dictionary of investing and insurance terms to help you navigate your financial journey with confidence.
Alpha
A measure of the active return on an investment compared to a market index. An alpha of 1.0 means the fund outperformed its benchmark by 1%.
AUM (Assets Under Management)
The total market value of the investments that a mutual fund manages on behalf of its investors.
Beta
A measure of a fund's volatility in relation to the overall market. A beta greater than 1 indicates higher volatility than the market, while a beta less than 1 indicates lower volatility.
Expense Ratio
The annual fee that all funds or ETFs charge their shareholders. It is expressed as a percentage of assets deducted each fiscal year for fund expenses.
LTCG (Long-Term Capital Gains)
The profit earned on the sale of an asset that has been held for a specified long period. In equity mutual funds, holding for over 1 year qualifies for LTCG tax rates.
NAV (Net Asset Value)
The price per share/unit of a mutual fund. It is calculated by dividing the total value of all the cash and securities in a fund's portfolio, minus any liabilities, by the number of outstanding shares.
SIP (Systematic Investment Plan)
An investment strategy where an investor commits to investing a fixed amount of money at regular intervals (usually monthly) in a mutual fund.
Standard Deviation
A statistical measurement that sheds light on historical volatility. A volatile fund will have a high standard deviation, meaning its returns have swung widely in the past.
Term Insurance
The purest form of life insurance that provides coverage at a fixed rate of payments for a limited period of time (the term). It pays out only if the insured dies during the term.
ULIP (Unit Linked Insurance Plan)
A product offered by insurance companies that, unlike a pure insurance policy, gives investors both insurance and investment under a single integrated plan.