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Principal Retirement Advisors (PRA)

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  • More than 65 years of experience in retirement planning.
 

Glossary

- A -
Annuity
A long-term investment that provides tax-free growth and income at regular intervals for as long as specified.
Appreciation
The increase in the value of an asset class or / and investment.
Asset Allocation
The process of distributing portfolio investments among the various available investment categories like equity, debt, gold, etc.
- B -
Balanced Fund
A mutual fund that maintains a balanced portfolio, generally 40% bonds and 60% equity.
Bear Market
A falling equity market.
Beneficiary
The person to whom the assets should be distributed upon the death of the account holder.
Blue Chip Stock
Stock of a company with a long, fairly stable record of earnings and dividend payments along with good expected future growth.
Bond
An interest-bearing promise to pay a specified sum of money -- the principal amount -- due on a specific date.
Budget
It is a tool to plan, monitor and control your income vis-à-vis your expenses and purchases.
Bull Market
A rising stock market.
- C -
Capital Gain
The difference between an asset's purchased price and selling price, when the difference is positive. A capital loss would be when the difference between an asset's purchase price and selling price is negative.
Compensation
Wages, salaries, tips, professional fees bonuses and other amounts one receive for providing services.
Compound Interest
It is the interest computed on the principal amount plus interest accrued during the previous period of investment.
Corpus
The money available with an investment scheme for investment. If already invested, then Corpus is the total value of the investment portfolio.
Cover
Another word for insurance, it refers to the amount of insurance.
Current Yield
The annual return on an investment stated as a percentage of the actual amount invested. With stocks, it is the annualized dividend divided by the stock's current market price. With bonds, current yield is the amount of return (the stated interest) divided by the current market price.
- D -
Dealer
A brokerage firm that buys or sells a security for its own account, and at its own risk, then charges the customer a mark-up or mark-down.
Debt
Amount of money borrowed by one party from another. Amount owed to a person or organization.
Debt/Income Funds
Specific to Mutual Fund: Funds that invest in income bearing instruments such as corporate debentures, PSU bonds, gilts, treasury bills, certificates of deposit and commercial papers. Although these funds are less volatile, the underlying investments carry a credit risk. Comparatively, these funds are the least risky and are preferred by risk-averse investors.
Deferred Annuity
An annuity plan where the first annuity payment becomes payable after chosen period that generally exceeds one year.
Deflation
The opposite of inflation. Prices fall when more goods are available more than demand requires. Can be a response to the tightening of credit.
Diversification
Investing in a variety of investments to reduce investment risk.
Diversified Fund
A type of mutual fund having most of its corpus (assets) invested in many types of asset classes and securities.
Dividend
Specific to Mutual Fund Income distributed by the Scheme on the Units.
- E -
Earnings Per Share (EPS)
Earnings returned on initial investment amount. It reflects a company’s profitability in the form of profit allocated to each outstanding share of common stock.
Estate Planning
A financial plan to ensure transfer / distribution of both physical and financial assets to your heirs after your death.
EMI (Equated Monthly Instalments)
The periodical (monthly) repayment of interest and principal of a loan by a borrower.
Earned Income
All wages, salaries, tips, professional fees and amounts received for providing services are earned compensation.
Equity
A stock or security representing an ownership interest.
- F -
Financial Planning
A process of setting objectives, assessing assets and resources, estimating future financial needs, and making plans to achieve monetary goals.
Fixed Assets
Long term physical assets like real estate, jewellery, furniture etc. which are illiquid in the short term. It is difficult to be converted into cash on an immediate basis or short time period likethe current or upcoming fiscal year.
Fund Manager
Individuals or investment companies responsible for making decisions to any portfolio investment to maximise benefits.
- G -
Government Securities
As defined under Section 2(b) of the Securities Contract (Regulation) Act, 1956, Government Security means a security created and issued, whether before or after the commencement of the Act, by the Central Government and/or a State Government and having one of the forms specified in clause (2) of Section 2 of the Public Debt Act, 1944 (18 of 1944) including any amendments thereto or any replacement or re-enactment thereof/clarification and guidelines in the form of notes or circulars etc. issued from time to time; Treasury Bills, such other instruments as may be declared by Government of India and/or SEBI and/or RBI and/or any other regulatory authority to be securities; and rights or interest in the securities.
Growth Fund
A mutual fund whose primary investment objective is long-term growth of capital. It invests principally in common stocks with significant growth potential. Growth Stocks of companies that have shown or are expected to show rapid earnings and revenue growth. Growth stocks have relatively more risk than other conventional forms of investment.
Gratuity
A compensation voluntarily given by an organization to an employee as an acknowledgement of services rendered for a minimum specified time period. It is payable when an employee completes 5 or more years of full-time service with the organization.
- I -
Inflation
The rate at which prices of goods and services rise consequently effecting a fall on purchasing power.
Insurance
Policy to insulate your financial, health and other personal requirements.
Interest
The price paid for the use of money.
Investment
Anything acquired with intent of producing income or a profit.
Investment Advisor
An advisor can and individual or organization employed by a company to advise it in the investment, supervision and management of the investment company's assets.
Investment Risks
This primarily includes interest rate fluctuations impacting your debt investments and equity market volatility leading to diminishing of value of the investment portfolio.
- L -
Liquidity
The ability to buy or sell an asset quickly or the ability to convert to cash quickly.
Liquidation
Conversion of assets into cash.
Lock-in Period
This refers to the time period during which investments cannot be withdrawn.
- M -
Mutual Fund
An investment that pools shareholders money and invests it toward a specified goal. The funds are invested by a professional investment manager usually called theAsset Management Company
Monthly Income plan (MIP)
Debt based investment schemes whose objective is essentially to generate modest but stable returns.
- N -
NAV
Net Asset Value of the Units in each plan of the Scheme is calculated in the manner provided in this Offer Document or as may be prescribed by Regulations from time to time. The NAV will be computed upto four decimal places.

NAV Formula :
Market/Fair Value of Scheme's investments (+) Receivables (+) Accrued Income (+) Other Assets (-) AccruedExpenses (-) Payables (-) Other Liabilities
---------------------------------------------------------
Number of Units Outstanding
Nominee
The person(s) nominated by a security holder to receive the benefits under the security in the event of his death.
- O -
Open-ended Schemes/Funds
A Mutual fund scheme whose units are redeemable at any time at asset value, Except for funds that no longer accept new unitholder, new units are offered continuously.
- P -
Pension Fund
A fund to facilitate and organize the investment of employees' retirement funds contributed by the employer and employees. The pension fund is a common asset pool meant to generate stable growth over the long term, and provide pensions for employees when they reach the end of their working years and commence retirement.
Premium
The amount paid to the insurer by the insured to buy cover.
Price to Earning (PE) Ratio
The value obtained by dividing the price of a stock on a particular day by its per share earnings. This value obtained generally reflects whether a stock is overvalued, undervalued or trading at a fair value.
- R -
Return
The gain from an investment in percentage terms.
Retirement Planning
Retirement planning is the process of planning and managing finances to help achieve financial dreams of an individual both during working years and retired life. It involves analyzing his financial objectives, current financial position and expected cash flow in the future to develop a comprehensive retirement roadmap.
Retirement Advisors
Retirement Advisors are experts who advise and develop tailor-made solutions across various asset classes to help plan for an individual’s retirement.
Risk Appetite
Risk appetite is an investor’s capacity for financial risks, keeping in mind the objectives and goals in his life.
Risk-return Portfolio
The risk appetite that determines the nature of an investor’s portfolio.
- S -
Savings
Overall realised wealth of a person from all investment sources.
Systematic Investment Plan(s)
A plan enabling the investors to systematically save and invest in the Scheme on monthly/quarterly (such other defined periodicity) basis by submitting post dated cheques / payment instructions.
Systematic Transfer/Switch Plan(s)
A Plan enabling the investors to transfer sums on a monthly, quarterly, semi-annually or annual basis from the Schemes to the other Schemes of the Mutual Fund existing or launched in future from time to time, by giving a simple instruction.
Systematic Withdrawal Plan(s)
A Plan enabling the investors to withdraw amounts from the Scheme on a monthly, quarterly, semi-annually or annual basis by giving a simple instruction.
- T -
Term Plan
Term plan is an insurance plan that provides coverage for life only. It can be opted for different periods or terms at a very low premium. Hence, benefits of term insurance is payable only on death of the policyholder/insured within the term.
Tax Deduction
A deduction from gross income that arises due to various types of expenses incurred by a taxpayer. Tax deductions are removed from taxable income (adjusted gross income) and thus lower the overall tax-expense liability.
- V -
Valuation
The monetary worth of the account is the fair market value of the investments held as of that date.
- W -
Wealth
The difference between the values of what one owns (assets) and what is owed (liabilities).
Wealth Creation
The systematic step by step process to streamline assets – both financial and physical and savings so as to generate maximum returns. This is done by spreading money through various investment instruments to multiply them and maximising their value.
Will
A document that designates the assets of a person to various family members and other heirs/beneficiaries.


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