A mutual fund investment is one of the most lucrative ways to expand your capital and secure your future. However, like everything in the financial market, it requires knowledge and skill to wade through the junk and find a fund that aligns perfectly with your investment goals. You can’t do that without knowing the language of the trade. Lucky for you, we are here to help.
Below are some of the most important terms that will not only acquaint you with the investing world, it will also provide you with keywords to look for to get the best mutual funds scheme:
- AMC: Stands for Asset Management Company, which is basically the fund house or company that manages the investment, marketing, accounting and all important operations related to the mutual fund.
- NAV: Stands for Net Asset Value. NAV is the sum total of the market value of all the shares held in the portfolio including cash, less the liabilities, divided by the total number of units outstanding. To put it simply, it’s the price per share of the fund.
- SIP: A Systematic Investment Plan is a flexible plan of investments in mutual funds. Through SIP you can invest money at regular intervals (daily, weekly, monthly or quarterly).
- SWP: Systematic Withdrawal Plan is the reverse of SIP. SWP provides investors with a certain amount of pay out at regular intervals (daily, weekly, monthly or quarterly). It is mostly opted by investors to meet living requirements after retirement or for tax benefits.
- Load: The fee charged when you purchase or sell a unit of the fund. When you invest in a fund, i.e. when you buy some units of the fund, you pay some percentage of it as fee. This fee is called the entry load. The fee you pay when you sell mutual fund shares is called the exit or back-end load. Usually, only one load is charged.
- Balanced fund: A fund that invests in both equity shares and debt instruments.
