Investment Terms
SIP (Systematic Investment Plan): Investing a fixed amount in a mutual fund at regular intervals (usually monthly). The most popular way Indians invest in equity markets. Minimum: ₹500/month with most AMCs.
Mutual Fund: A pool of money collected from many investors, managed by a professional fund manager who invests it in stocks, bonds, or other securities.
NAV (Net Asset Value): The per-unit price of a mutual fund. Calculated daily as (Total Assets - Liabilities) / Number of Units. When you invest ₹1,000 in a fund with NAV ₹50, you get 20 units.
ELSS (Equity Linked Savings Scheme): A tax-saving mutual fund with a 3-year lock-in period. Investments up to ₹1.5 lakh/year qualify for Section 80C deduction.
PPF (Public Provident Fund): A government-backed savings scheme with 15-year lock-in, tax-free returns, and Section 80C benefits. Current interest rate: ~7.1%/year.
FD (Fixed Deposit): A bank deposit for a fixed tenure at a guaranteed interest rate. Safe but returns often trail inflation after tax.
NPS (National Pension System): A government retirement savings scheme with market-linked returns. Additional ₹50,000 tax deduction under Section 80CCD(1B).
Tax Terms
ITR (Income Tax Return): The annual tax filing form submitted to the Income Tax Department. Due date: July 31 for individuals (usually).
TDS (Tax Deducted at Source): Tax automatically deducted by your employer, bank, or client before paying you. Shows up on your Form 16 and 26AS.
Section 80C: The most-used tax deduction. Allows ₹1.5 lakh deduction for investments in PPF, ELSS, life insurance, tuition fees, home loan principal, and more.
HRA (House Rent Allowance): A salary component that provides tax exemption for rent paid, subject to conditions and limits based on city and salary.
GST (Goods and Services Tax): India's indirect tax on goods and services, replacing multiple older taxes. Rates: 5%, 12%, 18%, and 28% depending on the item.
Banking Terms
UPI (Unified Payments Interface): India's real-time payment system linking bank accounts to mobile apps (Google Pay, PhonePe, Paytm). Free, instant, and processes 10+ billion transactions monthly.
CIBIL Score: India's most common credit score, ranging from 300-900. A score above 750 qualifies you for the best loan rates. Checked by banks before approving loans or credit cards.
EMI (Equated Monthly Instalment): Fixed monthly payment towards a loan, comprising both principal and interest. Lower EMI means longer tenure and more total interest paid.
Insurance Terms
Term Insurance: Pure life insurance — pays a lump sum to your family if you die during the policy term. The cheapest and most important insurance for any earning member. A 30-year-old can get ₹1 crore cover for ~₹700-900/month.
Health Insurance: Covers medical expenses including hospitalisation, surgery, and treatments. Premiums qualify for Section 80D tax deduction. Every adult needs at least ₹5 lakh individual cover.