Most investors are confused while choosing mutual funds for investment, ‘Should I invest in a fund with low NAV (Net Asset Value) to get better returns? ‘This is a often asked question. People believe that low NAV means that these funds are cheap and they are likely to grow rapidly. Does this really happen? Let us understand the whole truth and know which things are actually important. We will also understand what is “Nivesh Ka Sahi Kadam” for you and what are the criteria for it.
What are Navs and why is it important for us?
If you say in easy language, then a mutual fund is priced per unit, it is calculated like this:
NAV = Total remaining units/(Total Property – Total Liability)
This shows the current market value of a unit of a fund. NAV varies daily on the basis of changes in the properties of the fund. However, it cannot be considered the basis of the quality of a fund, the possibilities of development or the expected returns.
Truth: NAV cannot affect returns in any way
No fund of a fund is ₹ 10 or ₹ 100, the return on your investment depends on the return percentage of the fund and not on the net position of NAV. If you invest ₹ 10,000 in a fund which is NAV ₹ 10, then you will get 1,000 units. This amount gives you 100 units in a NAV of ₹ 100. Now let us assume that both funds increase by 10%, so your investment in both funds increases to ₹ 11,000 – even if the initial NAV has been.
What things should be taken care of while investing?
● Display of funds: Analyze the ability to give returns in a long time of any fund. Especially in a period of 5- and 10-year. Also see how the fund has been displayed amidst the ups and downs of the market.
● Quality of portfolio: Before investing in a fund, see which properties and fields that fund or company invests. A strong and variety -filled portfolio is rich in stability and possibilities of better returns.
● Record of fund manager: Fund manager’s strategy and expertise play a big role in continuously giving better returns.
● Investment Strategy: Choose funds for investment keeping in mind your economic goals and the ability to take risks.
SIPS and NAV: Two grounds of victory in the investment world
Systematic Investment Plan (SIPS) is a facility under which you can invest regularly. When NAV is low, more units should be purchased. When NAV is high, the prices of per unit also increase during that time, then less units should be purchased. This reduces your average cost price over time. It reduces the risk in the market in the ups of ups and downs in the market. This is called a strategy to reduce average cost.
Nivesh Ka Sahi Kadam: Go ahead of Nav
Raising “Nivesh Ka Sahi Kadam” means to go beyond NAV and pay attention to the possibilities of better returns. When you invest keeping in mind the performance, portfolio and management of a fund, not only on the basis of NAV, then the Mutual Funds Sahi Hai is proved to be true.
Watch this video, in this, Subbu has stated that the portfolio of the fund, the quality of management and how the performance of a fund in the past should be focused on things – not just on NAV.
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Disclaimer: Disclaimer: Mutual fund investment is subject to market risk. Read all the documents related to the scheme carefully before taking the investment decision. Performance of a fund in the past is not a guarantee of performance in future.