What is iNAV in ETF?

What is iNAV in ETF?

Indicative net asset value (iNAV) is a measure of the intraday net asset value (NAV) of an investment. iNAV is reported approximately every 15 seconds. It gives investors a measure of the value of the investment throughout the day. 

Net Asset Value (NAV) vs Indicative Net Asset Value (iNAV).

NAV represents the end-of-day value of a fund or an ETF. For example, Nifty bees NAV is 191.

iNAV represents the real-time value of a fund.

How iNAV is calculated?

As per above Nifty bees closing NAV is 191 and if Nifty 50 index opens 1% up the next day, the iNAV will be 191 + 1.91 or 192.91. This value changes every 15 seconds based on movement of the Nifty 50 index.

The iNAV price represents the “fair” cost of an ETF in real-time. iNAV allows investors/traders to compare the price of ETF on NSE when buying and selling them on the market. They should trade them at a price close to the iNAV value.

inav etf

The above example is theoritical one. In reality, the prices will not trade at iNAV. Why?

There should be someone to provide liquidity for the ETFs in the market, only then investors/traders could buy and sell them.  There is an entity called market markers or authorized participants, who provide liquidity on the stock exchanges.

Market makers are appointed by the AMC, providing continuous two-way quotes on the exchange, meaning they buy at the bid and sell at the offer. So, they provide buy quotes at lower than iNAV and sell quotes at higher than iNAV. 

In the above example of iNAV 191, they will provide buy quote at 190.5 and sell quote at 191.5. 

Hence investors cannot buy exactly at iNAV; buy at a premium and sell at a discount. The explanation given above is just an illustration, in real-time price difference could be smaller.

iNAV is available for international ETFs as well, but since the markets and live indices are not available, the iNAV is calculated based on previous day NAV + live futures prices of the indices.

iNAVs are available in the AMC websites and select brokers.


Why We Procrastinate Investing And How to Overcome It.

We all know and struggle with procrastination, particularly starting our investing journey.

Many of us know that it’s the best way for us to achieve our financial goals, but yet we still put off making our first investment.

A major reason we put off investing is because we’re "afraid of losing money."

This is known as "loss aversion", a cognitive bias in which we tend to prefer avoiding losses, even if it will give substantial profits in the future.

mutual funds


How you can overcome it?

Change your thoughts about investing from “I’m afraid of losing money” to “I will definitely make money”. 

This small shift in your mindset, can help you get over your inertia in investing.

It may have been a difficult first step to make, but once you do it, you’ll not regret starting your investing journey.

Do it now!

What Is the 50/20/30 Budget Rule?

What Is the 50/20/30 Budget Rule?

The 50/30/20 budgeting rule – also referred to as the 50/20/30 budgeting rule – divides after-tax income into three different buckets:

  • Essentials (50%)
  • Wants (30%)
  • Savings (20%)

503020 rule


Essentials: 50% of your income.

Your essential expenses are those you would almost certainly have to pay, regardless of where you lived, where you worked, or what your future plans happen to include. In general, these expenses are nearly the same for everyone and include: Housing, Food, Transportation costs and  Utility bills.

Wants: 30% of your income.

The second category, and the one that can make the most difference in your budget, is unnecessary expenses that enhance your lifestyle. Some financial experts consider this category completely discretionary, but in modern society, many of these so-called luxuries have taken on more of a mandatory status. It all depends on what you want out of life and what you are willing to sacrifice. 

The fewer costs you have in this category, the more progress you’ll make paying down debt and securing your future.

Savings: 20% of your income.

The next step is to dedicate 20% of your take-home pay toward savings. This includes savings plans, retirement accounts, debt payments and rainy-day funds

Summary:

This budget rule is a simple method that can help you reach your financial goals.

Saving is difficult, and life often throws unexpected expenses at us. By following the 50-20-30 rule, individuals have a plan with how they should manage their after-tax income. 

If they find that their expenditures on wants are more than 20%, they can find ways to reduce those expenses that will help direct funds to more important areas such as emergency money and retirement.

Life should be enjoyed, and it is not recommended to live like a Spartan, but having a plan and sticking to it will allow you to cover your expenses, save for retirement, all at the same time doing the activities that make you happy. 

SGX Nifty Futures to start trading at GIFT City

 SGX Nifty Futures to start trading at GIFT City.

Nifty futures contracts on Singapore Exchange (SGX) are set to start trading at the International Financial Service Centre (IFSC) from Friday, 15th July  2022. Prime minister Narendra Modi will launch dollar-denominated Nifty futures and inaugurate the India International Bullion Exchange on Friday.


SGX NIFTY GIFTY CITY

SGX Nifty will trade simultaneously in GIFT City and Singapore initially, before discontinuing in Singapore. SGX Nifty will reportedly trade at GIFT City for close to 19 hours a day.

Nifty derivatives contracts on the SGX are among the most traded ones. They are used by global investors to hedge their exposure to India.