Transaction costs
Trading & ordersThe total of brokerage, STT, stamp duty, GST, spread and impact.
In plain terms
Charged per trade, so frequency is the largest controllable drag on returns.
1492 terms
Glossary
Every term is defined twice: once the way a filing would put it, and once the way somebody would explain it to you across a table. The second one is usually the one that sticks.
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Finance cost
AccountingThe profit and loss account line containing interest on borrowings together with interest on lease liabilities, unwinding of discount on provisions and amortisation of transaction costs.
In plain terms
A container rather than a single item, and it excludes interest capitalised into an asset under construction. Dividing it by borrowings without reading its note gives a rate the company was never offered.
Reversibility
Risk & psychologyAlso called: Reversible decision, Irreversible decision, One-way door, Two-way door, Cost of reversing
How much it costs, in money and in time, to undo a commitment — transaction costs, price impact, any load or penalty, the tax event crystallised, and whatever a lock-in prevents you doing.
In plain terms
Deliberation should be proportionate to this, not to the amount involved. A ₹15 lakh index fund purchase can be undone on Tuesday; ₹3 lakh of booking money on an under-construction flat cannot be undone at any price you would accept.