It’s been 5 years since Raj married his childhood love Maya. A gradual increase in expenses has been a concern for Maya, even after her conscious efforts of not falling prey to unnecessary expenses. But Raj doesn't give a heed to Maya’s worry and almost every Sunday morning there is a light tension in the air when they discuss about the weekly expenses.
Numerical examples explaining the methodology of calculating the subscription price of units:
Ongoing price for subscription (purchase)/switch-in (from other Schemes/plans of the mutual fund) by investors.
Purchase Price = Applicable NAV (for respective plan and option of the scheme)
Example: An investor invests Rs. 10,000/- and the current NAV is Rs. 10/- then the purchase price will be Rs. 10/- and the investor receives 10,000/10 = 1000 units.
India has two recognized indices
With a wide range of mutual fund schemes available for investment, it is always good to be aware of the key features of the schemes you are comparing and ultimately making an investment decision.
Here are some important terms that you ought to know while investing in a mutual fund scheme:
Types of mutual fund schemes based on asset classes:
Sector funds are those mutual fund schemes, which carry the mandate to invest in the companies working in the specified sector predominantly. Such funds invest a minimum of 80% in equity instruments of that particular sector. For example, a banking fund can help you have a focused investment in banking stocks.
Historical data suggests that no asset class has been consistently a winner always. As such, having an optimum asset allocation is your key to long term wealth creation, as it allows the portfolio to perform across the market trends and economic cycles.
Mutual funds are suitable for the investors who don’t want to invest directly into equity and debt markets but still wish to have such investment exposure in their portfolio.
Mutual funds provide you with a wide range of investment options, including opportunities to invest across the asset classes, market caps, sectors, and companies.
A prudent financial plan not only requires a well-chalked out investment journey for the achievement of financial goals but also maintaining a contingency fund for any future emergencies. As such, an emergency corpus of at least six months’ expenses is always desirable, so that you can enough financial cushion towards any unforeseen situation.
