Module 2: Reviewing Your First Investment
Topic: Understanding Your Investment
Once your investment is successful, you will receive an email from the AMC confirming your investment. This email will likely contain the following details:
Full Name of the scheme you have invested in:
Every mutual fund scheme has to follow a particular naming convention. This naming convention is followed to give you details of the mutual fund that is offering the scheme and the category of scheme available for investmentThe below image highlights an example of a Nifty 50 Index Fund offered by a hypothetical AMC named ‘Galaxy’. We will go through all the categories in the next module.
Folio No:
This is one of the unique numbers that identifies your account in a mutual fund. You might need this number in case you need any help with your investments.
Units allotted:
When you invest in a mutual fund scheme, you essentially buy units offered by the fund. The number of units you own is determined by the amount of money you invest and the applicable Net Asset Value (NAV) at the time of your investment. For example, if you invested ₹1,000 in a Mutual Fund and the NAV of the fund is ₹10 per unit, you will be allotted 100 units of the Mutual Fund.
Applicable NAV (Net Asset Value):
Every unit of a mutual fund scheme has a Net Asset Value. You might have noticed this when purchasing the mutual fund units that there is a value associated with each unit which is nothing but the NAV.If the NAV is ₹ 10, then that means the value of each unit of the mutual fund scheme is ₹ 10. As the market value of securities of your scheme changes every day, the NAV of the scheme also varies on a day-to-day basis. NAVs of mutual fund schemes are published on respective mutual funds’ websites every business day.
Stamp Duty:
If you had invested ₹1000/- in a particular scheme, you might have seen that the actual invested amount is a little bit less than ₹1000/-. This is because of something known as Stamp Duty that is charged by the Govt of India. It is a one-time charge on the purchase of units of a mutual fund scheme. The rate applicable would be 0.005% of the value of the units you have purchased.
Task:
Familiarize yourself with these details but resist the urge to check your investment daily.
Now that you have understood the basic details about your first investment, you can start looking at other mutual fund schemes. Pick any 5 mutual fund schemes from your investment app/website and observe their names closely.
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The Nifty Indices mentioned herein are owned by NSE Indices limited. All information provided is for informational purposes only.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
An Investor education and awareness initiative by Zerodha Mutual Fund.
