Terminology

Terminology explains all the terms used in the financial world in a simple language such as Investments, Insurance, Concept, Ideas and new words

What is XIRR?

What is XIRR?

Extended Internal Rate of Return (XIRR) It’s a tool for calculating investment returns when there are many transactions occurring at various times. Multiple transactions may include monthly SIPs or more than one lump sum investment in or out of a single mutual fund scheme. XIRR Mathematically, XIRR, is the single rate of return that, when …

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What is Mungerism?

What is Mungerism?

Berkshire Hathaway’s Vice President and Co-Chairman is Charlie Munger. Charlie Munger is regarded as one of the finest investors of all time, if not the best. Despite the fact that Warren Buffet is more well-known, Munger’s ideas and statements are believed to be more fascinating. Mungerisms refer to Charlie Munger’s views and statements. (Upstox is …

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What is Foreign Direct Investment (FDI)?

What is Foreign Direct Investment (FDI)?

Foreign direct investment (FDI) refers to investments made by foreign firms to establish businesses within a nation. The managing ownership of such a business remains with the international company, which is a core component of this. In India, the government makes FDI in various industries to differing degrees. Example: E-commerce, automobiles, manufacturing, and other industries …

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What is Bluechip?

What is Bluechip?

Big corporations are referred to as bluechip. The terms bluechip and large-cap are synonymous. Blue-chip stocks are the stocks of the top 100 largest firms in India. Bluechip mutual funds are mutual funds that invest in these stocks. The term “bluechip” or “large-cap” is described differently in different countries. It is the top 100 stocks …

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What is the Index of Industrial Production (IIP)?

What is the Index of Industrial Production (IIP)?

IIP keeps track of industrial production in the country across various industries. On a monthly basis, it is estimated. The three general sectors that are considered for the measurement of IIP are mining, manufacturing, and electricity output. Coal, power, cement, crude oil, steel, natural gas, fertilizers, and refining goods account for roughly 40% of the …

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What are Thematic Funds?

What are Thematic Funds?

Mutual funds that invest in a specific theme or sector are known as thematic funds. An infrastructure thematic fund, for example, will invest in stocks related to that theme. This fund may invest in stocks of companies that manufacture raw materials, vehicles used in infrastructure projects, logistics companies in the same industry, and so on. …

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What is PMI?

What is PMI?

The PMI is a market operation metric that is measured separately for the manufacturing and service industries. It keeps track of things like revenue, employment, costs, and inventories. ltwletsthinkwise.com

What is a Public Limited Company?

What is a Public Limited Company?

A public limited company is one whose shares are publicly traded or is listed on a recognised stock exchange. The owners of a private limited company are the only ones who own it. Their stock isn’t exchanged or listed on a stock exchange. ltwletsthinkwise.com

What is Inflation?

What is Inflation?

Everything becomes more costly with time. This is something we are all aware of. This is referred to as inflation. We won’t go into detail on why inflation is required. Governments all around the world, however, strive to maintain inflation within a safe range. It is deemed harmful if inflation is more or lower than …

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What are Futures and options (F&O)?

What are Futures and options (F&O)?

Futures and options (F&O) are two types of derivatives. What are Derivatives? Financial derivatives are contracts whose value is based on the value of an underlying asset or group of assets. Stocks, bonds, currencies, commodities, and market indexes are all common assets. In the derivative market, one speculates on the future price of assets in …

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What is Redemption?

What is Redemption?

The method of redeeming your mutual fund investment is known as redemption. Your mutual fund units are sold back to the fund. Redemption is a way for mutual fund owners to get out of their investments. You have the option of partly or entirely withdrawing the investment. ltwletsthinkwise.com

What is an Asset Management Company (AMC)?

What is an Asset Management Company (AMC)?

An asset management company (AMC) collects capital from investors and invests it on their behalf in a variety of different investments. They’re sometimes referred to as wealth managers or money management company. These could include stocks, bonds, real estate, gold, commodities, etc. An asset management firm is a company that also manages mutual funds. ltwletsthinkwise.com

What is Stimulus?

What is Stimulus?

Stimulus refers to monetary or fiscal policies that are used to grow the economy. When a country enters a recession, a stimulus package is often implemented to jump-start the economy. A stimulation does not necessarily have to be for the whole nation. It may also be for a certain industry or sector. ltwletsthinkwise.com

What are ELSS funds?

Best ELSS Fund to Invest in 2021- What, Why & How to Invest?

What are ELSS mutual fund? The term ELSS refers to an equity-linked savings scheme. It’s a form of mutual fund that invests in the stock market while still providing tax advantages under Section 80C. They have a three-year lock-in duration, unlike most other mutual funds. Many investors use them as a tax-saving investment strategy because …

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What are Holdings?

What are Holdings?

Holdings in the context of mutual funds apply to the contributions made by the fund. Based on the mutual fund’s type, it will include securities, shares, and other asset types. A large-cap mutual fund’s portfolio, for example, will include all of the stocks in which the fund has invested. ltwletsthinkwise.com

What is Small-cap?

What is Small-cap?

Small-cap stocks are those that belong to small businesses. Small-cap firms are those that are smaller than the top 250 companies in India. A small-cap mutual fund is one that invests mostly in small-cap stocks. Since small-cap stocks are smaller businesses with a greater opportunity for growth but also a higher risk of declining, they are …

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What is NFO?

What is NFO?

A new fund offer is a means of launching a new mutual fund. An NFO is issued by a mutual fund or asset management company (AMC) and attracts initial investment. The NFO then becomes a mutual fund until it is launched. ltwletsthinkwise.com

What are Contra funds?

What are Contra funds?

Contra funds are a form of equity mutual fund. They invest in stocks of businesses that are controversial or go against public opinion. Contra funds usually retain a limited amounts of stock. ltwletsthinkwise.com

What is PSU?

What is PSU?

Public Sector Undertaking In India, a PSU is a government-owned company. The central government or the state government owns the majority of ownership in a PSU. In India, there are over 300 PSUs. ONGC, Indian Oil, Coal India, NTPC, Power Grid, and a number of other PSUs are among the most well-known. ltwletsthinkwise.com

What is a Demat Account

What is a Folio?

A folio number is a unique number assigned by the mutual fund corporation to each mutual fund investor. The mutual fund company assigns a folio number to an investor as they make their first investment in a fund. If you invest in two funds from the same AMC, your folio numbers can be same to both. …

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What is Lock-in Period?

What is Lock-in Period?

Lock-in period applies to the time period from which you are unable to withdraw funds from a mutual fund. The majority of mutual funds do not have a lock-in date. Open-ended mutual funds are what they’re called. Closed-ended mutual funds, on the other side, have a predetermined lock-in duration. Furthermore, while ELSS or tax saver …

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What are Sectoral funds?

What are Sectoral funds?

There are funds that put their money into a certain business or market. Unlike other equity funds, which invest in companies based on their size, sectoral funds invest in companies based on their industry/sector. Telecom, infrastructure, pharmaceuticals, and other industries are examples. Investors who have a thorough knowledge of a particular industry are advised to …

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What is a Multi-cap fund?

What is a Multi-cap fund?

A multi-cap fund invests in stocks of all sorts, including large, mid, and small-cap companies. Multi-cap funds are required to spend 25% of their investments in large, mid, and small-cap stocks, according to the current definition. ltwletsthinkwise.com

What is a Demat Account

What is a Demat Account?

Demat is the abbreviation for “dematerialized account.” It is a way of holding securities such as stocks and bonds that is done electronically. Prior to the introduction of demat accounts, all stock ownership was done by paper certificates. In India, two organizations manage all Demat accounts: the National Securities Depository Limited (NSDL) and the Central …

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What is Mid-cap?

What is Mid-cap?

The term “mid-cap” applies to businesses that are mid-sized. Mid-cap companies are those, that are the 100 to 250th largest and are listed on the Indian stock exchange. These companies’ stocks are known as mid-cap stocks. Mid-cap funds are mutual funds that invest exclusively in these stocks. ltwletsthinkwise.com

What is Expense Ratio?

What is Expense Ratio?

It refers to the fees that mutual fund firms charge to manage your portfolios. Fees for portfolio managers, marketing, and other expenses are included. If a mutual fund’s exit load is 1% each year, for example, it implies the mutual fund will take 1% of your entire invested amount as fees for managing your money. …

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What is Benchmark?

What is Benchmark?

Each mutual fund is measured against a benchmark index. A fund manager does not actively manage the index. As a result, the aim of a mutual fund is to outperform the index. Large-cap portfolios, for example, are measured against the Sensex or the Nifty. ltwletsthinkwise.com

What is a Gilt Fund?

What is a Gilt Fund?

Gilt funds are a form of debt fund or a subcategory of it. They only invest in bonds and other fixed-income securities issued by state and federal governments. They are considered to be in the very low-risk category in terms of risk. ltwletsthinkwise.com

What is Dividend?

What is Dividend?

Dividends are paid to shareholders when a corporation distributes income to its shareholders. This is generally in the form of money deposited into the bank account of the shareholders. It may also take the form of more shares. A shareholder must keep the stock on a specific date to be eligible for dividends (declared by …

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What is the circle of competence

Understanding what is the circle of competence?

Anything that falls within your skill set, knowledge, or experience is considered to be within your Circle of competence. Amazon is really good at one thing. Selling products on the internet. Well, it does other things as well, but few can argue with its experience in selling online. Amazon operates in the United States, Canada, …

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What are Corporate Bond Funds?

What are Corporate Bond Funds?

Corporate bond funds invest at least 80% of their overall assets in corporate bonds with the highest credit ratings. Debt securities issued by public or private entities are known as corporate bonds. Bonds issued by financially stable businesses with a good chance of repaying their lenders on time are granted high ratings. ltwletsthinkwise.com

What are Real Returns?

What are Real Returns?

Real returns are those earned by an investment that are effective in nature, i.e., in terms of purchasing power. Consider the following scenario: 10% return on investment Inflation rate: 6% Returns on investment: 10-6 = 4% Investors should consider the actual returns when choosing where to invest. Some investments yield real returns of less than …

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What is Union Budget?

What is Union Budget?

The Annual Financial Statement is another term for it. India’s annual budget is known as the Union Budget. The first week of February is usually when it is presented. It is a financial statement of the Indian government. The budget announces new economic policies such as taxes, bonuses, and expenditures on various sectors such as …

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What is a Tax Return?

What is a Tax Return?

A tax return is a form that taxpayers must complete each fiscal year. This form includes all of an individual’s income details from all sources. Other information that may be needed to complete the tax filing process is also included on the form. It can include expenditures, exemptions, and other things in certain situations. ltwletsthinkwise.com

What is an Emerging Market?

What is an Emerging Market?

The word “emerging market” is often used to describe an economy or country that is rapidly evolving but not yet developed. Emerging markets include countries such as India, Brazil, Vietnam, and others. Since emerging markets are rising at a faster rate than developed countries, foreign investors expect higher returns. Indian investors who invest in India …

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What is Rebalancing?

What is Rebalancing?

When it comes to investing, many people adhere to a target ratio of 80 percent equity and 20% debt. Certain assets grow faster than others over time. As a consequence, the ratio becomes different. As a result, in such a situation, investors are more likely to withdraw funds from one asset and invest them in …

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What are Tangible Assets?

What are Tangible Assets?

Anything that has value or may have value in the future is considered an asset. All investments are assets. Assets include stocks, bonds, real estate, gold, silver, and precious metals. This is why mutual fund companies, which manage mutual funds, are also known as asset management companies (AMC). Tangible assets are commonly applied to assets …

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Asset Allocation

What is Asset Allocation?

When it comes to investing, asset allocation relates to how capital is spread among various assets. Let’s assume you can invest in a variety of assets: shares, mutual funds, gold, bonds etc. The way you spread your overall investment across various assets is referred to as asset allocation. Many fund managers think the distribution of assets …

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What is Haircut in finance?

Haircut in finance

Haircut refers to the decrease made to the value of an asset in finance. This arises when the lender has to settle for a lower valuation (like a bank) than it was expected to get back. For instance, let’s assume a bank gives a borrower a loan of Rs 2 crore. The borrower is unable …

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What is Real Estate Investment Trust (REITs)

What is Real Estate Investment Trust (REITs)?

REITs are entities that own and manage a variety of real estate properties, either commercial or residential. REITs pool capital from investors and invest in real estate, similar to mutual funds. Usually, a significant amount of money is required to invest in real estate. Investors may begin investing in real estate with very little capital …

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Red Herring Prospectus

What is Red Herring Prospectus?

Red Herring Prospectus is the initial filing for an IPO by a businesses. It includes information about the company’s business activities, promoters, financials, where it stands in the market, why it wants to go public, and other pertinent information. It offers investors a sneak peek into the company’s activities. Prior to deciding to invest in …

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Stock Exchange

What is a Stock Exchange?

A stock exchange is a place where investors can purchase publicly traded companies’ shares or sell them. It’s comparable to a shopping mall for stock. From one exchange, you can buy stocks and sell them on another exchange. A phone from a specific brand may be bought from a variety of different shopping malls. It has no effect …

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What are Securities?

What are Securities?

Securities are assets that are financial. They are classified into two types: debt and equity. Securities like shares, banknotes, etc. exist under debt. Securities such as securities and exchange-traded funds (ETFs) come under the category of equity. ltwletsthinkwise.com

Nominal and Real GDP

Nominal and Real GDP

The market value of all goods and services produced in a country’s economy is known as GDP. For inflation, nominal GDP is modified. Nominal inflation for GDP is adjusted for real GDP. The nominal GDP is thus numerically greater than the real GDP. ltwletsthinkwise.com

What is Depreciation

What is Depreciation?

Depreciation refers to the decline in the value of something. Many properties, such as your money, car, electronics, etc, lose their value over time. Appreciation is the opposite of depreciation. The justification for investing is the value of your investment over time. Depreciating assets are called assets that lose value over time. ltwletsthinkwise.com

Net Worth means

What Net Worth means?

As a metric to calculate how rich an individual is, net worth is widely stated. Net worth is the amount of all financial and non-financial assets minus a person’s or an organization’s liabilities. An aspect of this calculation is all that can be valued: real estate, metals, factories, land, securities, bonds, patents, etc. Loans and …

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