So i am happy that my last 2 blogs was much appreciated by readers and i get a good response from them so i decided to write more about mutual funds and make it understand them in an easy way.After knowing much about mutual funds i know now you can invest in mutual funds without any doubt but there are still some common things or terms that you need to know before investing,Let’s know some common terms that you must know terms before investing in mutual funds :

NAV

Nav(Net Asset Value) is the sum total of investment value minus expenses divided by the number of units available. Nav shows the performance of mutual funds,Whenever there is any increase in profit NAV will also increase without any change in allocated units and Vice-versa.

Rating

Rating is the score given to financial product after analysing and evaluating it on multiple factors.This is the first step of selecting a mutual funds based on its rating, these rating are given by top rated credit agencies.

Expense Ratio

It is amount charged by Asset management companies to manage your investment,always give special attention to expense ration because your return on mutual funds is somewhere based on that,Always buy mutual funds of less expense ratio because more the expense ratio means less your return and less expense ratio means more return available to you.

AMC

AMC or asset management companies are the companies that runs and o manages the fund.Examples are HDFC Mutual Fund, ICICI Prudential Mutual Fund. List of AMCs is here. Top AMCs have good and professional fund managers.

Holdings

Holdings are the content of portfolio where the fund manager have invested the money.The holding shows you the percentage of money invested by fund manager across different sectors and different companies .These are names of companies whose shares or bonds are bought by the scheme.

Lock-In-Period

This is the given period of time till which the investment cannot be withdrawn. for example ELSS have a lock-in-period of over 3 years. It is the Period during which an investor is restricted from selling a particular investment

AUM

AUM or asset under management is the total value of investment a mutual fund scheme holds.

Fund Manager

Fund Manager is the person who invest and manages your money,he/she decides in which sector the money should be invested by thoroughly researching and analysing companies.

Entry Load

It is the percentage of fee levied on the purchase of mutual funds scheme, it reduced the investor’s investment For instance, a mutual fund scheme with 3% entry–load would deduct entry–load from the amount invested into the scheme and invest the remaining amount

Entry Load is a percentage of fee levied on the purchase of a mutual fund scheme. The levying of entry load reduces the investors’ investment.

Exit load

• An exit load refers to the fee that the Asset Management Companies (AMCs) charge investors at the time of exiting or redeeming their fund units. . Not all funds levy an exit charge
• In case of open-ended funds, the investors have the choice to exit the scheme as and when they want.
• Sometimes, investors fail to stay invested for the specified period for which they had agreed to invest in a fund. Hence, an exit load discourages investors from prematurely exiting the fund.
• Hence, while choosing a plan, do consider the exit load too, along with its expense ratio. You need to note that the exit load is not part of the expense ratio.

These are some of common terms that you first need to understand before investing in mutual funds because it always says “Mutual funds are subject to market risk,read all schemes related documents carefully” and yes there are risk in mutual risk and there is only one way to foregone the risk out by getting more knowledge about personal finance,there are various source to knowing about personal finance like books,blogs,financial advisers but the main thing is making yourself aware of it and don’t invest money without proper knowledge,So i hope you enjoy some knowledgeable stuff above.Thank You