You multiply the number of units with the Net Asset Value (NAV) to get the value.
Each Mutual Fund comes in two plans – Regular and Direct plan. The NAVs are different. So choose the plan carefully. Regular plans leak commission.
Illustration
- Say you invested Rs 1000 in the direct plan at NAV of 10. The regular plan NAV was 8. This means the number of units were 100 and 125 respectively.
- A year later the NAV of the direct plan would grow more than the regular plan. So your NAV will appreciate more and hence you will have higher value in the direct plan.
- For e.g.: Direct plan NAV reaches 12 whereas the regular plan NAV becomes 9.44. The value of the direct plan becomes Rs 1200 whereas the regular plan is 1180.
Some people may focus just on the NAV and may get misled into purchasing the regular plan. What matters is the NAV growth, not the actual NAV.
