Concepts — Asymmetrica

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Financial Orientation

Time Value of Money A rupee today is worth more than a rupee tomorrow because today's rupee can be invested to grow. Soon
Inflation The rate at which prices rise over time, eroding the purchasing power of money. India CPI has averaged 6–7% historically. Soon
Real vs Nominal Returns Nominal return is what your investment says it earned. Real return subtracts inflation — it is what you actually gained in purchasing power. Soon
Compounding Returns earning returns over time. The 8th wonder of the world — and the reason starting early matters more than investing more. Soon
Opportunity Cost The cost of choosing one option is the best alternative you gave up. Keeping money in a savings account has an opportunity cost. Soon

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Financial Independence The state where your passive income or corpus covers all living expenses indefinitely — work becomes optional. Soon
FIRE Variants (Fat, Lean, Barista) FIRE = Financial Independence, Retire Early. Fat FIRE is comfortable spending; Lean FIRE is frugal; Barista FIRE is semi-retirement with part-time income. Soon
Coast FIRE The point at which your existing corpus, left untouched, will grow to your FIRE number by retirement age — no more contributions needed. Soon
Retirement Corpus The total savings needed at retirement to fund all future expenses — typically 25–33× your annual spending (the '4% rule' and variants). Soon

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Expected Value The probability-weighted average of all possible outcomes. A coin flip that pays ₹100 on heads and ₹0 on tails has an expected value of ₹50. Soon
Standard Deviation A measure of how widely returns scatter around the average. Higher std dev = more volatile investment. Nifty 50 has ~22% annual std dev. Soon
Equity Risk Premium The extra return investors demand for holding equities over risk-free bonds. In India, roughly 4–6% over G-Secs historically. Soon
Index Investing Buying a fund that tracks a market index (e.g. Nifty 50) rather than picking stocks. Low cost, diversified, historically beats most active funds. Soon

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FD Ladder Strategy Split your FD corpus across five staggered tenures so one tranche matures every year — blending the higher rates of long-term FDs with the liquidity of short-term ones.
How Much of Your Portfolio Should Be in FDs? FDs are safe — but safe has a price: you need more capital to hit the same goal. A life-stage guide covering the 100-minus-age rule, Graham's band, the glide path, and the Deepak Shenoy capital-cost insight.
Asset Allocation The split between equity, debt, gold, and other assets. The single biggest determinant of your portfolio's long-term risk and return. Soon
Diversification Spreading investments across uncorrelated assets so that one loss does not sink the whole portfolio. The only free lunch in investing. Soon
Rebalancing Periodically restoring your portfolio to its target asset allocation by selling winners and buying laggards. Systematic, not emotional. Soon

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FD Interest Taxation in India FD interest is ordinary income taxed at your slab rate — in both old and new regimes. There is no exemption for any tenure, including 5-year tax-saver FDs.
LTCG & STCG Long-Term and Short-Term Capital Gains tax. Equity held >1 year: 12.5% LTCG on gains above ₹1.25L. Held <1 year: 20% STCG. Soon
National Pension System (NPS) Government pension scheme with EEE tax benefits. Mandatory 40% annuity at retirement; remaining 60% as lump sum. Useful for Tier-1 tax saving. Soon
Public Provident Fund (PPF) Government-backed 15-year savings scheme with 7.1% tax-free returns (EEE). ₹1.5L/year limit. Sovereign safety with zero market risk. Soon
Equity-Linked Savings Scheme (ELSS) Mutual funds with 3-year lock-in that qualify for ₹1.5L 80C deduction. Shortest lock-in among 80C options; full equity exposure. Soon

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Monte Carlo Simulation A technique that runs thousands of randomised future scenarios to estimate the probability of an outcome — rather than predicting one fixed future.
Sequence of Returns Risk The danger that poor market returns early in retirement permanently damage a portfolio, even when the long-run average return is acceptable.
Safe Withdrawal Rate (SWR) The maximum percentage of a retirement corpus you can withdraw annually without a high risk of running out of money over a 30-year retirement. Soon
Systematic Withdrawal Plan (SWP) Withdrawing a fixed amount from a mutual fund monthly. The accumulation-phase mirror of SIP — but comes with sequence of returns risk. Soon
Bucket Strategy Dividing a retirement corpus into time-segmented buckets: cash (0–2 years), bonds (2–7 years), equities (7+ years). Limits sequence risk. Soon
Bond Tent & Glidepath Temporarily increasing bond allocation in the 5 years around retirement (the 'tent'), then gradually shifting back to equities in retirement. Soon

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Efficient Frontier The set of portfolios that offer the highest expected return for a given level of risk. Points on the frontier are 'efficient'; below it are wasteful. Soon
Sharpe Ratio Return earned per unit of risk taken. (Portfolio return − risk-free rate) ÷ standard deviation. Higher is better. Soon
Correlation How closely two assets move together. Perfect correlation (+1) means they move identically; −1 means opposite. Low correlation = diversification benefit. Soon

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Loss Aversion Losses feel roughly 2× as painful as equivalent gains feel good. This causes investors to hold losers too long and sell winners too early. Soon
Recency Bias Overweighting recent events when forecasting the future. Leads to chasing last year's top-performing funds and panic-selling after crashes. Soon
Mental Accounting Treating money differently based on its source or intended purpose — e.g. spending a bonus freely but being frugal with salary. Soon

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Hindu Undivided Family (HUF) A legal entity for families under Hindu law with its own PAN and tax slab — can split income and investments to reduce the overall tax burden. Soon
Senior Citizens' Savings Scheme (SCSS) Government scheme for retirees 60+: 8.2% interest, ₹30L limit, quarterly payouts, 5-year term. Ideal for the fixed-income bucket in retirement. Soon
NRE vs NRO vs FCNR FD: Which Account for NRIs? NRIs can hold FDs in three account types: NRE (tax-free interest, fully repatriable), NRO (30% TDS, limited repatriation), or FCNR (foreign currency, no exchange-rate risk). Each suits different income sources.
Sovereign Gold Bonds (SGBs) Government securities denominated in grams of gold. Earn 2.5% interest + gold price appreciation. Zero GST or making charges vs physical gold. Soon

Last updated 28 May 2026 · site changelog