Money & Work
Spend less than you earn, invest the rest
Novice
Subdomain
The non-negotiable basics: spend less than you earn, track where it goes, and build savings before lifestyle. Everything else is decoration.
Spend less than you earn
The whole subject in five words. Income minus spending leaves the surplus that everything else builds on.
Open
Compounding
The process by which returns earned in earlier periods themselves earn returns in later periods, so that a portfolio's growth curve accelerates over time rather than rising in a straight line.
Open
Inflation
The sustained rise in the general price level of goods and services over time, which reduces the purchasing power of a unit of currency.
Open
Lifestyle inflation
Lifestyle inflation is the silent creep where spending rises in lockstep with income, so a bigger salary leaves you with the same savings rate as before.
Open
50-30-20 rule and its critique
A budgeting heuristic that allocates 50 percent of post tax income to needs, 30 percent to wants, and 20 percent to savings and debt repayment.
Open
Emergency fund
3-6 months of essential expenses kept liquid and accessible.
SIP
Systematic Investment Plan, automatic monthly investment into a mutual fund.
Expense ratio
Annual % a fund deducts to run itself. Lower = better, all else equal.
Index fund
Fund that tracks a market index (e.g. Nifty 50). Low fee, no stock-picking.
Term insurance
Pure life-cover for a fixed term. No payout if you survive, that's the point.
Inflation
General rise in prices, the silent tax on cash.
Compounding
Earning returns on past returns. The longer the runway, the bigger the effect.
ELSS
Equity-Linked Savings Scheme, tax-saving mutual fund under Section 80C in India, with a 3-year lock-in.