NAV (Net Asset Value) is the per-unit value of a mutual fund. It represents the price at which investors buy or sell one unit of a mutual fund scheme.
If you are new to investing, you can first learn what a mutual fund is and how mutual fund schemes work before understanding NAV in detail.
For example, suppose you invest ₹1000 in a mutual fund with an NAV of ₹10. In this case, you will receive 100 units of the mutual fund.
If the NAV later increases to ₹12 and you invest another ₹1000, you will receive only 83.33 units because the NAV is now higher.
Later, if the NAV falls to ₹9 due to a market decline and you invest another ₹1000, you will receive 111.11 units because the NAV is lower.
So, after investing three times, your total investment becomes ₹3000 and your total units become:
100 + 83.33 + 111.11 = 294.44 units
Now, if the NAV later rises to ₹15, the total value of your investment will become:
294.44 × ₹15 = ₹4,416.6
This shows that the value of your mutual fund investment changes based on the NAV, which fluctuates according to market performance.
If you want to learn more about mutual funds, SIPs, returns, diversification, and investing basics, you can explore our Mutual Fund Learning Hub, where we answer 100+ beginner-friendly mutual fund questions in simple language.
Also learn:
1. What are the benefits of investing in mutual funds?
