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Finance GlossaryCarrying Charge
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Carrying Charge

Definition of Carrying Charge

Carrying charge or cost of carry is the money involved in the upkeep or general holding of an asset or financial instrument. Examples of carrying charges include maintenance costs, insurance, and others.

A carrying charge can increase the cost of owning an asset. At times, the cost of carry may exceed the potential returns, in which case an investor must evaluate whether the asset is worth keeping.

Related Terms

Asset Allocation

Asset allocation is a strategy or method in which an investor decides how much money they should allocate to an investment based on their risk profile, financial goals, and other factors to maximize returns and minimize risk.

Liquidity Trap

A Liquidity Trap is an economic event where the general public stashes cash in their bank savings account instead of investing in bonds because of the assumption that a rise in interest rates is imminent, even though interest rates are low.

Averaging Down

Averaging down means buying more shares when the price drops, thereby bringing down your overall average cost of investing. For example:

Day 1 (Normal price)

  • Shares bought of XYZ: 10
  • Price of each share: Rs. 1000
  • Total cost of investing: Rs. 10,000
  • Average investment cost: Rs. 1000


Day 2 (Lower price)

  • Shares bought of XYZ: 10
  • Price of each share: Rs. 900
  • Total cost of investing: Rs. 9,000
  • Average investment cost: Rs. 900


Averaging Down

  • Initial average cost of investing (Day 1): Rs. 1000
  • New average cost of investing (Day 1 & Day 2): Rs. 950

Alpha

An Alpha indicates the measure by which a stock or portfolio has managed to outperform a benchmark like an index of shares.

A positive Alpha means that the security or portfolio is beating the market while a negative Alpha means that it is lagging.

Alpha can also be used to measure the competence of a fund manager and their strategies.

Depository Participant

A depository participant is a financial institution that acts as a bridge between a depositories like NSDL/CDSL and investors. Moreover, a depository participant is responsible for holding shares in the Dematerialized format in a Demat account.

At the same time, a depository participant gives traders and investors access to an online trading account that can be used to buy and sell securities. The right depository participant will also ensure that your securities are safe.

Bombay Stock Exchange

Established in 1875, Bombay Stock Exchange or simply BSE is a place where stockbrokers and traders can buy and sell securities like stocks, bonds, ETFs, and more. 5000+ securities are listed on BSE, which is the oldest stock exchange in India and Asia.



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SEBI Stock Broker Registration No: INZ000006031 | Depository Participant (CDSL) ID: IN-DP-289-2016
Exchange Membership No. : NSE: 90133 | BSE: 6593 | MCX: 56320
Registered Office: Office No. 14D, 4th Floor, Shri Krishna Chambers, 78, Bentick Street, Kolkata - 700001, West Bengal, India.
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Attention investors:

  1. Stock brokers can accept securities as margins from clients only by way of pledge in the depository system w.e.f September 01, 2020.
  2. Update your e-mail and phone number with your stock broker / depository participant and receive OTP directly from depository on your e-mail and/or mobile number to create pledge.
  3. Check your securities / MF / bonds in the consolidated account statement issued by NSDL/CDSL every month.

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