Close Menu
    What's Hot

    UAE’s Economic Diversification Fuels Projected 5.7% GDP Growth in 2024

    February 4, 2025

    Will AI Replace Entrepreneurs?

    February 2, 2025

    SGF Expands to Bhopal: A Culinary Revolution in MP Nagar Bhopal

    January 26, 2025

    SGF Expands to Gurgaon: A New Culinary Journey at Baani Square

    October 1, 2024
    Facebook X (Twitter) Instagram
    Facebook X (Twitter) Instagram LinkedIn
    UBOUBO
    NOMINATE FOR AWARDS
    • Home
    • Top Global News
    • INFO-TECH
      1. Social Media
      2. How-To
      3. Computer & Laptops
      4. Mobile & Tablets
      5. Gadgets
      6. View All

      Social Media Trends CMOs Should Look Out For In [2023]

      April 10, 2023

      5 Best Video Editing Apps For Social Media

      March 30, 2022

      Effective Social Media Strategies: Tips and Tactics for Success

      March 15, 2022

      WeChat: What You Need To Know

      March 7, 2022

      How to Write a Tagline That Truly Works

      March 31, 2022

      Creative Writer vs Content Writer: Key Differences

      March 25, 2022

      16 Knockout Article Ideas: How to Write Regularly for Your Blog

      March 9, 2022

      How to get a job in the finance industry

      March 2, 2022

      Intro to Cloud Computing: A Beginner’s Guide

      March 9, 2022

      OnePlus 10 Pro- The launch we are waiting for!

      March 29, 2022

      Best Android Phones For 2023

      March 15, 2022

      The most valuable brands in 2023

      March 14, 2022

      Huawei launches Smart Glasses with Detachable Front Frame along with MateBook X Pro.

      December 25, 2021

      UAE’s Economic Diversification Fuels Projected 5.7% GDP Growth in 2024

      February 4, 2025

      Will AI Replace Entrepreneurs?

      February 2, 2025

      SGF Expands to Bhopal: A Culinary Revolution in MP Nagar Bhopal

      January 26, 2025

      SGF Expands to Gurgaon: A New Culinary Journey at Baani Square

      October 1, 2024
    • Markets
    • Crypto
    • Funding
    • More
      • Retail
      • Entrepreneurs
      • Automotive
      • Healthcare
      • Industries
      • Technology
      • Companies
        • Apple
        • SamSung
      • Fintech
      • Marketing
      • Real Estate
      • Sales
    UBOUBO
    Home»Finance»Mutual fund: Must know terms for investors

    Mutual fund: Must know terms for investors

    Investing in mutual funds might be a useful option for people who want to invest in stocks but don't have the time or knowledge to do so personally.
    Aditi GuptaBy Aditi Gupta6 Mins Read Finance February 22, 2022
    Facebook Twitter LinkedIn Telegram Pinterest Tumblr Reddit WhatsApp Email
    Mutual fund: Must know terms for investors
    Image credit: www.freepik.com
    Share
    Facebook Twitter LinkedIn Pinterest Email

    A mutual fund is a collection of assets managed by a professional fund manager.

    It’s a trust that takes money from a group of individuals with similar financial goals and invests it in shares.

    Also bonds, money market instruments, and/or other securities.

    After deducting appropriate expenses and taxes, the income/profits generated from this collective investment.

    Mutual funds allow you to sit back and relax since they are professionally managed,

    However, there are a number of often-used mutual fund phrases that investors should be familiar with.

    In order to comprehend the “how,” “what,” and “where” of mutual fund investment.

    Simply explained, a Mutual Fund is a collection of money contributed by a large number of investors.

    Here’s a quick guide to help you grasp the notion of a Mutual Fund Unit.

    Let’s imagine you have a box of 12 chocolates that costs $40.

    Four friends decide to purchase the same item, but they only have ten dollars between them, and the shopkeeper only sells by the box.

    So the pals decide to pool their money and buy the box of 12 chocolates for ten dollars each.

    They now each earn 3 chocolates or 3 units based on their contribution.

    Although, they’re each getting three chocolates, or three units if they’re comparing Mutual Funds.

    And how can you figure out how much one unit costs? Just multiply the total sum by the number of chocolates: 3.33 = 40/12

    As a result, multiplying the number of units (3) by the cost per unit (3.33) yields a total initial investment of $10.

    Mutual fund: Must know terms for investors
    Investing in mutual funds might be a useful option for people who want to invest in stocks but don’t have the time or knowledge to do so personally. (Image Source: Pixabay)

    As a result, each friend becomes a unit holder in the box of chocolates that they all own collectively, and each person becomes a part-owner of the box.

    Let’s look at what “Net Asset Value,” or NAV, is. A mutual fund unit’s Net Asset Value per Unit is the same as an equity share’s trading price. The NAV stands for net asset value.

    The NAV is the total market value of a fund’s shares, bonds, and securities on any given day (as reduced by permitted expenses and charges).

    The market value of all Units in a mutual fund scheme on a particular day, net of all expenses and liabilities plus accrued income.

    It is divided by the outstanding number of units in the scheme to arrive at the NAV per Unit.

    Mutual funds are perfect for individuals who don’t have a lot of money to invest.

    Or either nor have the time/ interest to investigate the market but still want to grow their money.

    Mutual funds are a great way to diversify your investment portfolio.
    Also, it allows you to invest in a variety of funds and assets, such as debt, equities, and gold. 
    Expert fund managers oversee mutual funds.
    Thereby, allowing investors to develop a substantial portfolio to suit their financial objectives. 
    In addition, mutual funds are a great way to save money on taxes.

    How to get started:

    If you’re a newcomer, you might be unfamiliar with some of the terms discussed on the internet or the newspaper.
    Open-end, entry load, exit load, and so on. 
    In this article, we’ll go over several key mutual fund terminologies that every investor should be familiar with in order to make an informed investment decision.
    • Asset Management Company (AMC):

      A company that manages assets. If you invest in mutual funds, you’ve almost certainly heard of AMC.

      An asset management company is a company that handles investors’ money. All AMCs are required to register with SEBI and follow the SEBI requirements.

      The AMC can introduce a variety of funds to fulfill

      the needs of different investors. It is in charge of managing your finances.

      They collect money from many investors, invest it in various funds, evaluate the funds’ performance, and proportionally divide the earnings.

    • NAV stands for Net Asset Value:

      Another typical mutual fund jargon you’ll come across.

      whilst discussing mutual fund investment is net asset value or NAV.

      NAV is the price of a mutual fund unit in basic terms. NAV is the price of a mutual fund unit in basic terms. Mutual funds, like stocks, have a net asset value (NAV).

      So, if you’re purchasing 100 units of a mutual fund, you’ll have to pay the NAV.

      Investing in mutual funds might be a useful option for people who want to invest in stocks but don't have the time or knowledge to do so personally.
      Image source: Pixabay

      The importance of NAV is that it serves as a barometer of a fund’s success over time. If you watch the fund’s NAV over time.

      You may get a sense of how the fund is performing and make an informed investment decision.

    • SIP (Systematic Investment Plan)

      One of the most widely used mutual fund terminologies is SIP.

      This is a term that even non-mutual fund investors are familiar with.

      SIP stands for a systematic investment plan, and it is a method of investing in mutual funds.

      Along with, where you can put a small sum of money aside at regular periods (it can be weekly, monthly or quarterly).

      It is a good way for modest investors, such as daily wage employees, to gain experience with mutual funds.

      With as little as Rs. 500 every month, you can start a SIP.

      Another useful feature of SIP is that it allows you to link your bank account to your investment account, and the pre-determined amount is automatically taken on a regular basis.

      This, as a result,  allows you to be more disciplined with your money.

    • STP stands for “Systematic Transfer Plan.”

      The flexibility of a Systematic Transfer plan allows you to utilize the funds in a disciplined manner.

      For example, instead of investing the entire sum of Rs. 1 lakh in equities mutual funds, you may invest the entire sum of Rs. 1 lakh in debt mutual funds.

      Rather than investing the entire cash at once.

      Instead of risking exposure, you can put it in debt funds managed by the same fund firm and select STP.
      As a result, a pre-defined amount will be moved to an equity fund at a prespecified interval (weekly or monthly) as determined by you.

      Thus, the entire sum is transferred to equity funds over time.

      As a result, protecting your investment from market volatility.

      However, If you feel that your investment in equities funds has not yielded enough profits after a certain number of years, you can choose STP again and shift the money to debt funds.

    • Systematic Withdrawal Plan (SWP)

      If you plan to invest in mutual funds, as the name implies, allows you to withdraw collected funds over time.

      In your post-retirement life, you can also use the money as a pension fund.

      For example, if you start a SIP and invest Rs. 5000 per month for 30 years, your investment value would be Rs. 18 lakhs.

      Assuming a 12-percent annual return, the funds in your account will be around Rs. 1.5 crores.

      As a result, after you reach retirement age, you can withdraw a pre-determined sum at a pre-determined date.

    • AUM stands for Assets Under Management.

      Another key mutual fund term that every investor should be aware of is AUM.

      It shows the overall number of investors as well as the value of AMC’s assets.

      The fund’s AUM fluctuates throughout the day as new investments are made and redemptions are made on a daily basis.

      It is one of the most crucial factors that investors should examine when evaluating AMC’s performance and reputation.

    • Load Exit Depart load is a term used in mutual fund terminology to describe the costs that investors must pay when they exit a fund.

      This fee is typically imposed by AMCs to deter investors from withdrawing their monies.

      Aside from the terms mentioned above, there a plenty of more mutual fund-related terms to be familiar with.

      Understanding these concepts will help in making better financial choices and achieving high returns.

    Blogs Businessblogs Finance Investment Mutual fund Savings
    Share. Facebook Twitter Pinterest LinkedIn Tumblr Telegram Email
    Previous ArticleMutual funds: A starters guide to investing
    Next Article Queen Elizabeth Tests Positive For Coronavirus
    Aditi Gupta

    A writer and a photography enthusiast, with a zest for reading and traveling. Wants to bring change to the world, and when not editing, she spends her time on the guitar.

    Related Posts

    NFT at a Glance: Everything You Need to Know

    May 29, 2023

    How to manage stress and anxiety as an entrepreneur

    May 16, 2023

    Personal branding: Everything you need to know

    May 16, 2023
    View 1 Comment
    Leave A Reply Cancel Reply

    Subscribe to Updates

    Get the latest sports news from SportsSite about soccer, football and tennis.

    Advertisement
    advertisement@unitedbusinessoutlook.com

    United Business Outlook Is An Online Magazine Providing Comprehensive Coverage And Analysis Of International Businesses From All Industries.

    We're social. Connect with us:

    Facebook X (Twitter) Instagram YouTube LinkedIn
    Top Global News

    UAE’s Economic Diversification Fuels Projected 5.7% GDP Growth in 2024

    February 4, 2025

    Elon Musk’s Rate Limit on Twitter: A Move to Combat Data Scraping and System Manipulation

    July 3, 2023

    Tesla to Partner with India for Business Expansion

    May 16, 2023
    Get Informed

    Subscribe to Updates

    Get the latest creative news from FooBar about art, design and business.

    © 2025 United Business Outlook | A Venture by Famezop Media.
    • Home
    • Get In Touch
    • Our Authors

    Type above and press Enter to search. Press Esc to cancel.