A Mutual Fund is a financial vehicle that pools money from many investors to invest in a diversified portfolio of stocks, bonds, or other securities. Each investor owns “units,” representing a portion of the fund’s holdings. Professional fund managers manage these assets according to specific objectives (like growth or income), making it an ideal choice for those who lack the time or expertise to pick individual stocks.

A Systematic Investment Plan (SIP) allows you to invest a fixed amount regularly (e.g., ₹1,000 every month), which helps in “rupee-cost averaging”—buying more units when prices are low and fewer when they are high. A Lumpsum investment is a one-time deposit of a larger corpus. SIPs are generally preferred for long-term wealth creation as they reduce the risk of timing the market incorrectly.

Net Asset Value (NAV) is the unit price of a mutual fund scheme. It is calculated at the end of every business day by taking the total value of all assets in the portfolio, subtracting any liabilities (like management fees), and dividing by the total number of outstanding units.$

The Expense Ratio is the annual fee charged by the Asset Management Company (AMC) to cover administrative, management, and advertising costs. It is expressed as a percentage of the fund’s daily net assets. A lower expense ratio means a higher portion of the fund’s returns goes back to you, which can significantly impact your total wealth over a 10–20 year horizon.