Investors who are involved in the pooling of their finances, which is often known as mutual funds, need to be familiar with what a net asset value or NAV is. This I because whatever figures will be reflected when determining its worth, these figures will be used to determine the current liability and asset position of the whole company- in this case, the group of people who have indulged in mutual funds.

Figures that are reflected in a NAV represent the per share worth of a particular investment fund. When an interested investor would like to trade- buy or sell- shares in a company that is made up of mutual funds, he will use the NAV to process the trade. Simply put, investors will be able to calculate the number of shares that they will hold depending on the current NAV of the company he is staking his finances on.

To better understand this term, if a certain company has a NAV of about two million dollars and has about a hundred shares in a particular day, and an investor wishes to put in an amount of two hundred thousand dollars, the NAV per share based on these figures will be twenty thousand dollars. Hence, the investor will be able to buy ten shares from the shares in issue. This is regardless of whether you invest in no load funds or not.

Determining the worth of these figures is very essential so that every potential investor will not only know how much shares he will get if he goes along with staking his finances on the venture, but he also gets to weigh in his options especially if he interested in putting his finances in, yet could not decide which, would be a better choice between two competing companies.

Determining the net asset value means determining the total worth that the company has when all its liabilities are subtracted from the current funds that it holds. Thus, people who would wish to calculate the exact value of this figure will need to deduct from all the total worth of securities and cash that the entity has accumulated in a particular portfolio all the liabilities and debts that the company has incurred.

Once a figure has been successfully determined, one can verify the per share worth of the NAV by determining the number of outstanding shares, and then use this figure to divide the actual NAV. What one will come up with is a figure that will determine how much it will cost an interested investor to buy a share and how many number of shares he will be able to buy using the finances that he has incurred.

Knowing these figures is very crucial to investors since they do not only determine the investor's possible number of shares, but it will also help them calculate beforehand the interests that the funds that they are staking in will likely produce as a return which, they can then redeem as their profit from such an investment.

One does have to remember though that even if a net asset value is very indispensable information to every investor, it does not, in any way hold any considerable effect to the performance of the funds that are being invested. For lower costs you will want to go with no load funds. Investors only refer to them to verify if using their finances to buy shares from a particular business entity would be a good decision based on the number of shares that he will get and the likely profit that they can generate from these number of shares.