As an investment in mutual investment funds

How do you choose to build your investment wallet?

Do you feel comfortable to invest your money via ETF or do you prefer mutual funds?

There is no generally valid recipe, the genre invests in ETF because they are more convenient and profitability is even better than mutual investment funds. Or go to 80% of shares and bonds of 20% for greater profitability. The tools included in the investment portfolio depend on age, on the appetite of risk, on the personal and family situation, on the level of knowledge, on the skills to use a computer, time horizon. Each of us has specific needs and the choice of an inappropriate investment tool can lead to a disaster: either you do not start investing because it seems too complicated or too risky or starting, and the first reduction in the sale and outside the market.

Both experiences are both frustrating and harmful.

Between not investing and investing in a common fund with an annual commission 2%-3%(I know that an ETF has an annual commission of less than 1%) my choice is clear. Choose a mutual background and go on with your investments. Perhaps in the future you will make a change to the ETFs or maybe not, for you the best investment is the one that allows you to sleep well at night because you understand it, you can manage it and do not create anxiety.

In some way we have the feeling that investments are only for people with a certain level of education, but it is not, investments are for mature financial financials, who understand that they age, that life is not always pink, which will be more than being in the hands of old age or that they do not want to work for up to 65 years.

A common investment fund is an open investment fund managed by an investment manager, which attracts money from a multitude of investors, to place it in various financial instruments: shares, bonds, monetary market tools and other similar activities.

A common fund is managed by an investment management company (Sai), continuously issues the funds, depending on the requests of investors.

A mutual background is like a basket of financial instruments and buy a piece of this basket. The Paniere administrator permanently deals that he enters or exits the basket trying to make a greater profit.

How do you invest in a common fund?

The investment (subscription) in a common fund is reached by purchasing funds and liquidation (refund) is carried out by selling them to the fund. The value of a basic unit varies according to the value of the fund’s activities and is calculated daily.

The easiest way, go to some big banks (2-3). All large banks collaborate with investment funds and talk to a financial consultant. Ask for an offer and then compare.

What are the general aspects of a common fund?

• It offers investors a simple and relatively low cost to invest their money and obtain a diversified and specialized wallet on certain types of financial instruments or certain areas.

• It allows access to different types of financial instruments, therefore the diversification of the portfolio reduces the risk of losing money.

• It is an investment that can be easily managed and offers the opportunity to withdraw the money at any time.

• There is no minimal amount to invest.

• Provides transparency on the management of the wallet.

What types of mutual investment funds exist?

Monetary funds – They are those funds that invest mainly, that is, at least 90% of the value of the portfolio, in monetary tools (such as warehouse certificates, government securities, other tools of the monetary market) and deposits set up at credit institutions (banks).

The monetary funds are characterized by a low degree of risk and, in general, by a modest but relatively constant increase in the value of the securities. In addition, access to money is very fast and cheap in terms of taxes and subscription/refund commissions.

This type of funds can be considered an alternative to the classic current account, providing liquidity

Bond funds – are those funds that invest mainly, that is, over 80%, in fixed financial instruments (such as municipal, state or corporate obligations or other financial instruments with fixed income).

They have a low degree of risk, even if higher than that recorded by monetary funds, but usually offers better yields.

Action funds: Invested mainly, that is, over 85% of their activities, in shares. Action funds are the most risky class of funds, being strongly exposed to the bucr of equity markets. But the expected returns are greater.

Mixed funds (diversified): There are funds that combine the types of positions mentioned above. Their degree of risk is determined by the share of risky financial instruments in relation to that of less risky financial instruments in the total portfolio.

It can be divided, in turn, into:

• Defensive – who may require exposure not exceeding 35% on shares

• Balanced – which can make an exhibition on shares between 35% and 65%

• Dynamics – which have exposure on actions of over 65%

• Flexible – which have mixed tools with weight and duration of variable detention, so that the exposure on shares can pass between 0% and 100%.

What elements do we take into consideration when we analyze a common fund?

• Historical performance: no matter how much advertising is, it is very important to check how well the bottom has performed in the past. Even if the past performance does not guarantee the future, it gives us some clues.

• Associated risk: before entering a common fund, ask yourself: «How big is the risk of losing my money?». Can I sleep at night knowing that I have this risk?

• Commissions: each common fund is provided with a series of commissions. Some funds managers are like those friends who ask you «only one child», but that «child» can empty your wallet. Very important to verify all the expenses charged.

• Diversification: a diversification on different areas, industries, types of companies or activities of activity significantly reduces the risk associated with any investment. The difference between a common fund and the investments in individual shares is that if a portfolio company is bankrupt, this is only a part, the rest continues to bring performance, the investment in a single action that if you close you have lost all the money.

What documents should you read when you invest in a common fund?

The prospect of the problem of the fund: This document is available on the website of the management company, as well as on the distributors of the fund and includes all information relating to its organization and operation (regarding the administrative team, relevant information relating to its partners, such as custodians, distributors, etc.).

Docume with key information for investors (say) It offers a first impression on an investment fund. You will find information synthesized on: objectives and investment policy, risk and performance profile, funds expenses, previous services. This type of document is useful when comparing more funds.