Thousands of people know litte about Mutual Funds & its terminologies. Here are some basic terms which they should know about:-
- SIP: Called, Systematic Investment Plan. One of the most popular methods to invest wherein investor can invest their fund in monthly installments with a specific lock-in period, say 3 years. Return on investment here is not bound by one time period, but multiple period..
- NAV: Called, Net Asset Value. It indicates the value of one unit. The higher the NAV, the more investor will benefit and the lower value means the notional loss per unit.
- Equity Mutual Fund: These are the funds invested in the Stock Market and its return depends upon the quality of shares chosen by the investors.
- ELSS (Equity Linked Savings Schme): Here 90% of the investors' fund is invested in equity market. The investment in ELSS avails tax benefit..
- Debt Mutual Fund: Most private companies prefer Debt Mutual Funds as they carry the debt instruments with low risks.
- Regular Income Fund: These are the investments in Govt., Corporate and Money Market Instruments which ensure payment of income to the investors on a periodic basis.
- Transaction Fee: This is the fee charged by the mutual fund companies or by the distributors of funds for the transactions.
- Management Fee: This is the fee charged by the Mutual Fund company for the management of investors' fund and other operational expenses.
- Advisory Fee: If an investor wants to have a large portfolio of investments in Shares, Debentures, Banks, FDs & other securities, brokers charge this fee.
- Investment Advisors: These Advisors are those who help the investors with their professional advice for investing in mutual funds.
- Banks: Banks market mutual funds through their employees who help their customers in investing in mutual funds.
- Brokerage Houses: These houses are professional managed persons who can be approached either personally or over phone or on online to seek advice on mutual funds investment.