What is NAV... How & When it is calculated? | Investment Ideas by APDaga

What is NAV... How & When it is calculated? | Investment Ideas by APDaga
While talking about Mutual Fund Investments, you might have come across the term NAV. Do you know...
  • What is NAV?
  • How it is calculated?
  • How frequently it is calculated?
  • When it is calculated?
Here, We will answer all these questions.


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What is NAV?

NAV stands for Net Asset Value

When you invest your fund through Mutual funds, Your fund manager invests your money into some group of stocks. We can imagine, your fund manager creates a bundle of stocks. 

We will call that 1 bundle as a 1 Unit of the Mutual Fund. and the Price of the 1 Unit of the Mutual Fund is known as NAV (Net Asset Value)




How & When it is calculated?

As you know, the price of the stock changes in each second. but that is not the case with the NAV of the Mutual Funds.

Every day, after the end of the trading session (i.e. after 3:30 PM), Every stock has a closing price.
Using the closing price of each stock, the NAV of the mutual fund is calculated. 




How frequently NAV is calculated?

That means the NAV of the mutual fund is calculated only once a day, unlike the price of the stock.

NOTE:
  • The expense ratio of the mutual fund is adjusted (included) in the NAV. You don't need to pay the expense ratio explicitly.
If you have any doubt about investing, feel free to drop it in the comment box below. I will try my best to help you and smoothen your investment journey. 

Thank you,
Akshay P Daga
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