Terminology explains all the terms used in the financial world in a simple language such as Investments, Insurance, Concept, Ideas and new words
A mutual fund that invests in index funds is a form of mutual fund. It is passive in nature, meaning that the decision to purchase and sell assets in the fund is not made actively by a fund manager. The index fund simply replicates an index’s composition. A Sensex index fund, for example, will invest …
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 …
This is the date from which the SIP is deducted from your account each month. The SIP date is chosen by the investor when the SIP is set up. If there is a holiday on the SIP day, the SIP can be deducted 1-2 days before or after the scheduled SIP date. This is why …
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 …
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 …
The difference between the interest income a bank receives from its lending operations and the interest it owes to its depositors is known as net interest income. ltwletsthinkwise.com
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 …
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 …
What is the Index of Industrial Production (IIP)? Read More »
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. …
A systematic investment plan (SIP) is a means of investing in a mutual fund or any asset. You pick a mutual fund to invest in, the principle behind SIP is that you invest a set amount of money at regular intervals. Most people think of mutual funds when they hear the term “SIP.” This is …
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
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
In economics and finance, we often use percentages to measure data from various points in time. Let’s say that in the year 2010, 1 lakh automobiles were sold in India. The next year, 1.2 lakh vehicles were sold in India. As a result, sales increased by 20% year over year. The growth can be measured …
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 …
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 …
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
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
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
A portfolio is a list of investments in the financial sector. It can be used in many contexts. Several of your portfolios, such as mutual funds, FDs, and real estate, will be included in your investment portfolio. All of your mutual funds will be included in your mutual fund portfolio.All of your shares will be …
Alpha is a term used in the financial sector to describe returns that are higher than the index or benchmark. A mutual fund has a benchmark against which it strives to outperform. The Sensex or Nifty index will be the benchmark for a large-cap portfolio. The returns that your mutual fund was able to get …
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 …
Best ELSS Fund to Invest in 2021- What, Why & How to Invest? Read More »
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
An actively managed fund is an investment fund in which the fund manager makes the decision to purchase or sell stocks. The staff of the investment manager chooses which stocks to purchase and sell, as well as in what amounts. Passively managed funds are the opposite of actively managed funds. The buy or sell choice …
STP is similar to SIP except that it is used to transfer funds from one mutual fund to another. In STP, you choose the beginning fund, or source fund, where your money is already invested; the target fund, or fund in which you want to invest; the monthly transfer amount; and the transfer date per …
CAGR- Compound annual growth rate is what it’s called. What CAGR tells you is the growth rate per annum of any amount It aids investors in determining how quickly or slowly an investment grows in comparison to other investments. The returns you see in mutual funds (3-year, 5-year, etc.) are in CAGR. CAGR Example Assume …
SWP is an acronym for “Systematic Withdrawal Plan.” An SIP is the opposite of SWP. You can set the sum you want to withdraw from a mutual fund per month in SWP. Each month, before you close the SWP or the money in the mutual fund runs out, the balance will be credited to your bank …
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 …
Net Asset Value The price of one unit of a mutual fund is known as its net asset value. That is the price of one mutual fund unit. The number of units you get when you invest a specific amount in a mutual fund is determined by the price of each unit (which is the …
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
The ease with which you can get your money (in the form of cash) out of an asset is referred to as liquidity. If your money is invested in debt funds, for example, you can redeem it and get your money back in just four working days. If you have money invested in real estate, …
Min SIP Amount is the smallest amount you can spend each month with a SIP. It varies from one mutual fund to the next. An SIP can be cancelled at any time after it has been started. You should not have to spend in a SIP for a set period of time. The minimum SIP …
There are two types of mutual funds: direct and regular. As opposed to its direct plan, every mutual fund’s regular plan yields marginally lower returns. This is due to the fact that a fee is paid to the broker/distributor by which the mutual fund is bought in the case of a regular plan. In the case …
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
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
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. …
Everything happens in units in the mutual fund world. When you invest in a mutual fund, Units are what you purchase and sell. When you invest in a mutual fund, you are purchasing mutual fund units. When you withdraw or reinvest from a mutual fund, you sell the mutual fund’s units. The price of each …
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 …
LTCG Tax applies to the tax levied on an investment in the case of any equity-related shares (equity mutual funds or stocks). If an equity mutual fund or bond purchase is withdrawn after one year, the owner must pay a 10% tax on the profits. To put it another way, 10% of the earnings must …
STCG Tax applies to the tax levied on any equity-related transaction (equity mutual fund or stocks). If an equity mutual fund or capital offering is sold within one year of purchase, the owner must pay a 15 percent tax on the income. In other words, 15% of the earnings must be collected in taxation. The …
What is Short Term Capital Gains Tax (STCG Tax)? Read More »
The ups and downs of any investment are referred to as Volatility. If stock ABC fluctuates a lot (in terms of quantity and/or number of times) over a short period of time, but XYZ fluctuates much less, ABC is said to be more volatile than XYZ. The volatility of FD returns is much lower than …
Equity and debt funds are the two major types of mutual funds. Debt funds are mutual funds that invest in bonds and other fixed income instruments, while equity funds invest in stocks. Debt funds are divided into several subcategories depending on the types of securities they invest in. Liquid funds, ultra-short bond funds, low duration …
AUM stands for Asset under management It simply refers to the entire amount of money that a manager is in charge of. AUM is the cumulative amount of money that a mutual fund owns. It contains the present value of all securities or shares (in case of equity), fixed income securities (in case of debt) or …
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 …
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
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 …
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
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. …
Exit Load is a fee or tax that is levied on money withdrawn from mutual funds. It is normally only valid for a limited time and then there is no exit load. To deter early withdrawals from mutual funds, an exit load is imposed. It is usually about 1% of the value withdrawn in the …
The various variants/versions of a mutual fund are referred to as a scheme. For instance, a mutual fund can provide a direct plan, a standard plan, a dividend plan, and so on. When it comes to investments on new platforms, most people opt for the direct-growth scheme without noticing there are other options available in …
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
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
It refers to moving from a mutual fund’s standard plan (where commissions are paid) to a mutual fund’s direct plan (where no commissions are paid) (where there are no commissions). In the case of a transfer, your old units are sold and newer units in the direct plan are purchased. Taxes and, in some cases, …
Overnight funds are funds that invest in securities that settle overnight. Overnight securities are the safest type of mutual funds due to their extremely low risk. Many investors use overnight funds to keep their money safe for very short periods of time. They have lower returns than most mutual funds, but they are considered secure. …
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 …
Market capitalization is sometimes abbreviated as m-cap. It refers to the combined value of all of the company’s shares in Rupees. So, if a company’s share price is Rs 20 and there are 3000 outstanding shares, the company’s m-cap is Rs 60,000 (20 X 3000). When you learn of the world’s largest corporations, their market …
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, …
A non-performing asset (NPA) is a loan on which no principal or interest payments have been received in over 90 days. When a bank reports a loan as nonperforming, it will indicate that the bank is having difficulty recovering the funds it has loaned out. To some extent, every bank has a nonperforming asset (NPA). …
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
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 …
The FIFO concept is used to calculate capital gains and exit loads. This theory dictates that you sell the oldest units first. As a result, it’s first-in-first-out. The units that were purchased earlier are the first to be redeemed. FIFO refers to any situation in which the first to enter a framework is often the first to …
The terms 52-week high and 52-week low are widely used to describe the highest and lowest a stock has traded in the previous 52 weeks (1 year approx). Many investors use it to make informed assumptions on how the stock will do in the future. Market traders sometimes use it. Many inexperienced investors use it …
Something whose value depreciates over time is referred to as a depreciating asset. The cost of a car normally decreases after you buy it. Electronic devices, such as smartphones and televisions, are in the same boat. Investing in assets that depreciate over time is a bad idea. As a general rule, it’s wise to stop …
In the financial world, the word “exposure” refers to the amount of money you have invested in a particular asset.You may say your investment portfolio has exposure to the IT sector if you have invested in IT stocks, for example. You may also say you have exposure to the Gold if you own a significant amount of Gold. …
A consolidated account statement (CAS) is a monthly statement that lists all of an investor’s financial transactions through various mutual funds. It also tracks the opening and closing balances of the various PAN-linked portfolios. Non-financial transactions, such as changes to bank account information, address, nominees, and so on, are not tracked in a CAS. Either …
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 …
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
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 …
Insider trading is the act of buying and selling securities in companies where an individual has access to information that is not publicly accessible. In this scenario, the investor enjoys a strategic advantage over other investors. Insider trading was once perceived to be a competitive advantage. It is now illegal in most markets, including India …
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 …
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 …
The intention behind coffee can investing is to invest in good assets and then not make any adjustments. People who follow this style of investment tend to assume that until the money is needed if assets (shares, mutual funds, etc) are chosen well, they need not be touched. This mechanism contributes to lower taxation, transaction fees, …
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 …
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 …
Value funds- A subcategory of equity mutual funds Value funds invest in undervalued companies’ stocks, according to the fund manager. Some stocks are deemed overvalued in the stock market if their price is too high in comparison to the underlying sector or company. On the other hand, if the stock price is too low with …
A ‘bear market’ is a situation in which stock prices drop from a recent peak by more than 20%. When the stock price grows by more than 20%, it is considered a ‘bull market.’ These words are derived from the manner in which animals attack their foes. While a bull attacks by moving its horns …
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 …
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 …
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 …
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
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
Risk-adjusted returns are a way of calculating the returns that you get as opposed to the risk that you take. In finance, it is widely discussed that equity investing is more risky than investing in FD. It is also recognised that equities have achieved better returns than FD historically. But if we calculate returns on …
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
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 …
