Financial Glossary
The money terms you will meet across our calculators and guides, explained without the jargon.
- Amortization
- Paying off a loan in equal installments, where early payments cover mostly interest and later ones mostly principal.
- APR
- The yearly cost of a loan including interest and most fees, shown as a percentage so you can compare offers fairly.
- Asset
- Anything you own that has value, such as cash, a home, a car or investments.
- CAGR
- The smoothed yearly growth rate of an investment over several years, as if it grew at a steady pace.
- Compound Interest
- Interest that earns interest. You earn returns on your original money and on the returns it has already made.
- Credit Score
- A number lenders use to judge how likely you are to repay. Higher scores usually mean better rates.
- Credit Utilization
- How much of your available credit you are using. Keeping it low generally helps your score.
- Diversification
- Spreading money across different investments so one bad result does not sink your whole portfolio.
- Down Payment
- The cash you pay upfront when buying something on finance, like a home or car. The rest is borrowed.
- EMI
- Equated Monthly Installment. The fixed amount you repay on a loan each month.
- Emergency Fund
- Money set aside for surprises like a job loss or repair, usually three to six months of expenses.
- Inflation
- The gradual rise in prices over time, which slowly reduces what your money can buy.
- Liability
- Money you owe, such as a loan, credit card balance or mortgage.
- Liquidity
- How quickly you can turn something into cash without losing much value.
- Net Worth
- What you own minus what you owe. A simple snapshot of your financial health.
- Principal
- The original amount you borrow or invest, before any interest is added.
- ROI
- Return on Investment. The profit or loss from an investment compared with what you put in.
- SIP
- Systematic Investment Plan. Investing a fixed amount on a regular schedule instead of all at once.
- Term
- The length of a loan or investment, for example a 30 year mortgage or a 5 year deposit.
- Yield
- The income an investment pays out each year, shown as a percentage of its value.