Whats in an NAV?
While choosing an ELSS, do not be misguided if somebody advises you to invest in a scheme which has a lower net asset value (NAV) as against the one which has a higher NAV. There is a myth that lower NAV is cheap and higher NAV is expensive. Let me illustrate with an example. Let us assume that you invest Rs 10,000 in scheme A with NAV of Rs 10 and also in scheme B with NAV of Rs 100. You get 1,000 units in scheme A and 100 units in scheme B. The markets are expected to deliver, say, 20 per cent return. One year later the NAV of scheme A will be Rs 12 and of scheme B Rs 120. If you redeem both the schemes, you will get Rs 12,000 from scheme A (1,000 units* Rs 12) and Rs 12,000 from scheme B as well (100 units*Rs.120). Think of your financial goals If you have to choose between ELSS and the administered (fixed) interest rate schemes, your decision should be based on your need (financial goals) rather then any other reasons. • Market crash: ‘I lost Rs 1 lakh in 60 seconds’ While making a
