Calculator Glossary

The yearly interest rate charged on a loan or earned on an investment, including fees. APR is more comprehensive than a simple interest rate.

The effective annual rate of return on a savings account or investment, accounting for compound interest. Higher than APR for the same nominal rate.

The process of paying off a loan through regular instalments over time, with each payment covering both interest and principal.

The distribution of investments across different asset classes (stocks, bonds, cash, real estate) to balance risk and return based on goals and risk tolerance.

The rate at which an investment grows from its starting to its ending value, assuming profits are reinvested each year. The 'smoothed' annual return.

The profit made from selling an asset (stock, property, etc.) for more than its purchase price. Can be short-term (under 1 year) or long-term, with different tax rates.

Your total monthly debt payments divided by your gross monthly income. Lenders use DTI to assess your ability to manage monthly payments.

Investing a fixed amount at regular intervals regardless of market price. Reduces the impact of volatility by buying more shares when prices are low.

Equated Monthly Instalment. The fixed monthly payment amount on a loan, comprising both principal and interest components.

See EMI.

The annual fee charged by a mutual fund or ETF as a percentage of assets under management. A 1% expense ratio means $10 per year per $1,000 invested.

A financial movement based on extreme savings and investment to retire far earlier than the traditional age. Typically requires accumulating 25× annual expenses.

The value of a current asset at a specified date in the future, based on an assumed growth rate. The core output of most investment calculators.

Total income before taxes, deductions, or other withholdings. Contrasted with net (take-home) income.

The portion of your home that you own outright, calculated as the property's current market value minus the outstanding mortgage balance.

The rate at which the general level of prices rises over time, eroding purchasing power. A 3% inflation rate means $100 today buys only $97 worth of goods next year.

The discount rate that makes the Net Present Value (NPV) of all cash flows equal to zero. Used to compare the profitability of investments.

The ratio of a loan to the value of the asset purchased. An 80% LTV on a $400,000 home = a $320,000 loan. Higher LTV typically means higher rates or PMI.

The difference between the present value of cash inflows and outflows over a period of time. A positive NPV means an investment adds value.

Total assets (savings, investments, property, etc.) minus total liabilities (loans, credit card debt, etc.). A key measure of financial health.

The current value of a future sum of money, discounted at a specific rate. $100 in 5 years is worth less than $100 today due to inflation and opportunity cost.

The original amount of money borrowed in a loan, or the initial investment amount, before interest is added.

A measure of the profitability of an investment, calculated as net profit divided by the cost of investment, expressed as a percentage.

The percentage of a portfolio that can be withdrawn annually without running out of money over a given period. The '4% rule' is the most widely cited SWR.

Systematic Investment Plan. A method of investing a fixed amount regularly (typically monthly) in mutual funds. The Indian equivalent of Dollar-Cost Averaging.

The concept that a sum of money is worth more now than the same sum in the future due to its potential earning capacity.

Extended Internal Rate of Return. A function used to calculate the IRR for investments with irregular cash flows (unlike IRR which assumes regular intervals).