NAV
Definition
Net Asset Value — the per-unit value of a mutual fund scheme. Calculated daily as (Total Assets − Total Liabilities) ÷ Number of Units. When you invest via SIP, units are allotted based on the NAV on that day.
Why is NAV Important?
In the context of wealth creation and investing in India, NAV is a fundamental concept. Whether you are investing in mutual funds via SIPs, fixed deposits, or retirement schemes like PPF and NPS, this metric helps evaluate potential returns and risks. The power of compounding and market volatility make it essential to track this indicator for any long-term portfolio.
Investors are encouraged to use specific investment calculators to project the future value of their corpus. Understanding this term enables better asset allocation, inflation protection, and consistent progress toward your ultimate financial goals.
What is NAV?
Net Asset Value (NAV) is the per-unit price of a mutual fund scheme. It is calculated by dividing the total value of all assets in the fund (minus liabilities) by the total number of outstanding units.
NAV Formula
NAV = (Total Assets − Total Liabilities) ÷ Number of Outstanding Units
Common Myths About NAV
| Myth | Reality |
|---|---|
| Low NAV = cheap/better fund | NAV has no relation to a fund being cheap or expensive. Returns depend on portfolio quality, not NAV. |
| High NAV = expensive fund | A fund with NAV ₹500 can give the same 15% return as one with NAV ₹15 |
| Always buy low NAV funds | A newer fund with low NAV is not inherently better than an older fund with high NAV |