Top 20 Terms — Investor Cheat Sheet
One-line definition · Quick investor takeaway · Micro-example. Printable A4-friendly layout.
1. NAV Net Asset Value
Definition: Per-unit value of a mutual fund calculated daily.
Takeaway: NAV alone doesn't show returns; compare % returns over time.
2. AUM Assets Under Management
Definition: Total market value of assets managed by a fund or AMC.
Takeaway: Higher AUM shows scale but not necessarily better returns.
3. Expense Ratio
Definition: Annual percentage fee the fund charges to cover costs.
Takeaway: Lower expense ratio boosts net returns, crucial for long-term investing.
4. SIP
Definition: Systematic Investment Plan — regular fixed investments into a fund.
Takeaway: SIPs average cost over time and enforce discipline for goal-based investing.
5. Benchmark
Definition: Index used to compare a fund’s performance (e.g., Nifty 50).
Takeaway: Always compare a fund with an appropriate benchmark.
6. Exit Load
Definition: Fee charged if units are redeemed within a specified period.
Takeaway: Check exit load for short-term needs to avoid surprise charges.
7. Equity / Share
Definition: Unit of ownership in a company representing claim on profits.
Takeaway: Equities offer long-term growth but carry volatility; match with horizon.
8. Market Capitalisation
Definition: Share price × outstanding shares; categories: large-, mid-, small-cap.
Takeaway: Use market-cap to align portfolio risk (small-cap = higher risk/reward).
9. Beta
Definition: Measure of volatility relative to the market (beta >1 = more volatile).
Takeaway: Beta shows systematic risk but don’t use it alone to judge suitability.
10. Alpha
Definition: Excess return over the benchmark attributable to manager skill.
Takeaway: Positive alpha over multiple periods suggests consistent outperformance.
11. ETF
Definition: Exchange Traded Fund that trades like a stock and tracks an index or asset.
Takeaway: ETFs offer intraday liquidity and usually lower costs than active funds.
12. Demat Account
Definition: Electronic account to hold securities in dematerialised form.
Takeaway: Required to trade and hold stocks/ETFs in India; secure your credentials.
13. Debt Fund
Definition: Fund investing in fixed-income instruments like bonds and money-market papers.
Takeaway: Debt funds carry interest-rate and credit risk; match tenor with your horizon.
14. CAGR
Definition: Compound Annual Growth Rate — annualised return over a period assuming reinvestment.
Takeaway: Use CAGR to compare multi-year performance; it smooths short-term volatility.
15. KIM / SID
Definition: Key Information Memorandum and Scheme Information Document summarise a scheme’s strategy, costs and risks.
Takeaway: Read KIM for a quick overview; SID for full disclosure before investing.
16. Liquidity
Definition: Ease of converting an asset to cash without significant price impact.
Takeaway: Ensure adequate liquidity for emergency needs; ETFs and liquid funds are highly liquid.
17. Diversification
Definition: Spreading investments across assets/sectors to reduce single-name risk.
Takeaway: Diversification reduces idiosyncratic risk but not market risk; rebalance periodically.
18. Capital Gains (LTCG / STCG)
Definition: Profit on sale of assets classified as short-term or long-term for tax purposes.
Takeaway: Holding period affects tax rate—plan redemptions to optimise post-tax returns.
19. Fund Manager
Definition: Professional who implements the fund’s strategy and manages portfolio construction.
Takeaway: Check fund manager tenure and track record; continuity matters for active funds.
20. SIP vs Lump-sum
Definition: SIP = phased investing; Lump-sum = one-time investment.
Takeaway: SIP reduces timing risk; lump-sum can be better when valuations are attractive.