Mutual investment funds what they are and how we invest

How can you invest in the capital market market / stock?

When we talk about investments on the stock market, it seems complicated, risky and «not for us». I include myself in this «we» because my staff took a long time (too much) to take a first step.

There are two simple variants that each of us can use:

• Mutual funds e

• ETF

Common investment funds: the easiest option to invest.

What are mutual investment funds?

There are open investment funds that attract and share people’s money and then invest them in financial instruments: actions, bonds, state securities, warehouses.

A management company (Sai ​​- Investment Management Company) receives money from investors and therefore manages them to provide them with the best efficiency. Against these services he charges a commission.

How do you invest in a common fund?

To invest in a common fund of the purchase of substantial units or participation qualifications, it is also called Subscription.

Substantial units can be purchased directly from its headquarters, Banks or Brokerage partners (SSIF).

So, if a person wants to invest in a common fund, he can go to the bank where he receives his salary and talk to a consultant on which funds of funds they have. If after a while he wants to sell his substantial units, he also goes to the bank and completes a request for withdrawal. In a few days he will receive the up -to -it value of his substantial units.

What should we know when we choose a common fund?

We read the KIID document – key information for investors – which contains a synthesis of basic information. There is also the prospect of the show but at least the child must be read.

• What the commissions perceive the fund, in particular the administrative commission – as as small as possible.

• What the performance has produced the fund in the past, as long as possible – to be as large as possible. It does not guarantee performance and in the future, but we have an idea.

• If a fund brings an annual 8%efficiency but has an administrative commission of 3%, we actually remain with 5%. The value of net activity (Van), or the current value of the portfolio of activities held by the substantial (purchased with the money of the investors).

• The greater the strongest and therefore more stable background.

• If it has a redemption commission. That is, if it charges a commission when the man withdraws from the background.
  
  

Types of mutual investment funds:

• Monetary funds – These funds that invest over 90% in monetary tools (warehouse certificates, government securities) and banks. Here we have a low risk yield, low but relatively constant.

• Bond funds – those funds that invest over 80% in bonds (municipal, state or corporate). They have a reduced degree of risk, however higher than that of monetary funds and made slightly higher;

• Action funds: Invest over 85% in shares. These are the most risky because they are exposed to the fluctuations of the equity markets. However, returns can be like risks.

• Mixed funds (diversified) – There are funds that combine in different proportions the types mentioned above.

We can do our division: if we have 200 she per month and we want to invest 50% shares and bonds of 50%, we buy 100 units of you funds for a common fund of investment on shares and other 100 units of you in a common fund for the obligations.

Advantages of mutual investment funds: easy to access – go to the bank and complete some modules

• Easy to automate, set the automatic cut and the money starts monthly from the predetermined date

• Diversification-Through a unit of funds we purchased a piece of a diversified basket of shares/bonds

• Professional management – The selection of investments and monitoring of investments is carried out by professionals

• Liquidity: we can redeem the substantial units at any time and we will receive their value from that moment, mandatory.

• Larger commissions: investing without making practically any effort implies a price. These commissions are an important factor to consider.

• Risk: If the cross -country managers do not do a good job, they will be low.

From Note: the mutual investment funds are not deposits and the value of investments is not guaranteed. It can grow or decrease depending on the evolution of the markets. That’s why a balance between funds and bonds is recommended.

The authority that regulates and supervises these funds is ASF (Financial Supervisory Authority).