Things to keep in mind while Investing in Equity Mutual Funds
Mutual funds have recently embraced the label of developing asset classes to create funds for various financial purposes or goals, one of which is retirement. More people are choosing to invest in mutual funds, whether for short- or long-term objectives.
Here are certain things one should keep a note of while investing in equity mutual funds.
Investment Objective: According to experts, an investor’s decision to invest in a particular mutual fund scheme should be based on the scheme’s relevance to the investor’s requirements. The level and type of returns in the fund and the risk associated are determined by the investment aim.
Units: The units created from a mutual fund’s investment amount indicate the investor’s holding. The fund’s overall worth is calculated when it is liquidated, depending on the number of units held by the investor and the current NAV.
Net Assets: A mutual fund scheme’s assets are the current value of the securities portfolio it holds. The scheme’s total assets may consist of only a few existing assets, such as cash and receivables.
Net Asset Value(NAV): The NAV is the method or procedure by which the net asset per unit of a scheme is computed, calculated as net assets/number of outstanding units of the system. With each change in the scheme’s net assets, the scheme’s NAV is regarded to change.
Mark to Market: The current value of the portfolio serves as the foundation for the scheme’s net assets and, as a result, the NAV. This would be the value realized and dispersed to the investors if the portfolio was to be liquidated.