Amortization
The process of paying off a loan over time through scheduled EMIs.
Balloon Payment
A large lump-sum payment due at the end of some loan structures.
Capital Gain
Profit earned from selling an asset for more than its purchase price.
Credit Utilization
Portion of available credit currently being used; affects credit score.
Debt-to-Income Ratio
Total monthly debt payments divided by monthly income.
Escrow
Funds held by a third party until conditions of an agreement are met.
Fixed Deposit
A bank deposit locked for a tenure at a predetermined interest rate.
Grace Period
Time after a due date when payment can be made without penalty/interest in some products.
Hedging
Strategies used to reduce risk from price or market movements.
Index Fund
A mutual fund/ETF designed to track a market index.
Joint Account
A bank account shared by two or more people.
Liquidity
How quickly an asset can be converted to cash without large loss.
Moratorium
A temporary pause on loan repayments under specific conditions.
Nominal Interest Rate
Stated interest rate before adjusting for inflation or fees.
Overdraft
Spending more than the available account balance, usually with fees/interest.
Portfolio
A collection of investments held by an individual or institution.
Recession
A significant decline in economic activity across the economy.
Refinance
Replacing an existing loan with a new one, often for better terms.
Take-Home Pay
Net salary received after deductions like tax and PF.
Underwriting
Process lenders use to evaluate risk before approving a loan.
Volatility
How much an investment’s price fluctuates over time.
Yield
Income return on an investment, such as interest or dividends.
Budget
A plan for how you will spend and save income over a period.
Cash Flow
Money moving in (income) and out (expenses) over time.
Asset
Something you own that has value.
Liability
Money you owe — loans, credit cards, EMIs.
Net Worth
Assets minus liabilities.
Inflation
Rising prices that reduce purchasing power over time.
SIP
Systematic Investment Plan — invest a fixed amount regularly in mutual funds.
EMI
Equated Monthly Installment for loan repayment.
ROI
Return on Investment — gain or loss relative to amount invested.
Credit Score
A number summarizing credit history used by lenders.
Mutual Fund
A pooled investment vehicle managed professionally.
ETF
Exchange-Traded Fund that trades like a stock.
Diversification
Spreading investments to reduce concentration risk.
Emergency Fund
Cash reserve for unexpected expenses.
APR
Annual Percentage Rate — yearly cost of borrowing.
Principal
Original loan or investment amount.
Compound Interest
Interest earned on both principal and accumulated interest.
Fixed Expense
Regular costs that stay mostly stable (rent, EMI).
Variable Expense
Costs that change month to month (food, fuel).
Savings Rate
Percentage of income saved or invested.
How to use this glossary for better money decisions
Search terms when you read bank offers, loan documents, or investment pages. Understanding EMI, SIP, APR, net worth, and inflation helps you avoid costly confusion. Explore related guides in the Learn hub.
Frequently asked questions
Why learn finance terms?
Clear vocabulary helps you compare loans, investments, and budgets without depending only on sales pitches.
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