Mutual Fund is a pool of money collected from a large number of investors. The money collected is invested in multiple securities like equities, bonds, or a combination of these assets with a certain investment objective. The investors share is known as “unit” and the value of the unit is known as Net Asset Value (NAV).
Investing the money in multiple securities is done by professional fund managers to achieve the highest possible returns with due diligence. Not to forget, the investment portfolio is created keeping in mind the investment objective of the fund. So before investing in Mutual Funds, one has to consider the investment objective of that mutual fund.
Note before investing:-
Cut-off time:The cut-off time is a tool used to determine the NAV/Price of the mutual fund you, get when you buy or sell a mutual fund. There are different cut-off timings for equity, liquid and debt mutual funds. The cut-off time for Liquid fund is 2pm and the cut-off time for Debt & Equity fund is 3pm.
Sounds complex right? Let me simplify it for you with an example:
If Mr. Prateek buys an equity mutual at 2 pm, he will allotted the NAV of the same day. Had he bought it after 3 pm, he would be allotted the next days NAV. If Mr. Prateek is investing more than 2 lakhs, and wants to get the same days NAV, he has to make sure he submits the application and money is deposited to the broker or mutual fund house before the cut-off time.
In case if Mr. Prateek buys a liquid find at 1 pm, he will be allotted the NAV of the previous day. Had he bought it after 2 pm, he would be allotted the NAV of the same day. In case of liquid funds, he has to submit the application and deposit the money to the broker or mutual fund house before the cut-off time regardless of how much he is investing.