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Everyone purchases investments to make money, Purchasing mutual funds is generally the safest way to invest in the financial market. The funds are managed by experts in the market, and offer many choices in the types of funds available. Some mutual funds are design for long term growth , or retirement others are more risky, but pay out higher dividends.
The value of the mutual funds go up and down on a daily basis, depending on the market, and the funds performance. There is a primary accounting system that determines the value of each share of the mutual fund.
The Net Asset Value, also known as the NAV, is the primary way of determining the value of the fund. Just like common stock, mutual funds are purchased, in the form of shares. Each share is assigned a dollar value, which is the net asset value. If you had 100 shares of a mutual fund and the Net Asset Value (NAV) is $10, the total value of the account would be $1000. This figure is devised by an accounting system which is updated every week day at the end of the trading day. The NAV changes on a daily basis, thus making the purchase of the share , and the redemption of the share, change as well.
The Net Asset Value (NAV) is determined by a simple math formula. The total assets for the funds is determined, the expenses, and all liabilities are then subtracted from the assets. That figure is then divided by the total amount of shares that are outstanding (owned by investors). The final figure is the NAV, which is the buying and selling price for the next business day. The NAV will vary from day to day depending on the performance of the fund and the overall market condition. The NAV is a good way to determine how the fund is doping, but only over a period of time. Mutual funds are not deigned to be bought and sold , like many stocks. Some funds charge fees every time a fund is redeemed. Most mutual funds are for long term growth. Keeping track of the NAV of a fund can be a good tool to see how its performing , but that's not the only thing to take in consideration. Market performance has a lot to do with the NAV of mutual funds. |
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