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Investment funds. All you need to know
Perhaps you wonder what mutual funds are and how you can use them to your advantage . Well, in this article you will find the answers.
Imagine that you like the bag. Or rather, you might like to invest in the stock market in securities markets.
You have said it's a good way to put your money to work and, specifically, you can generate passive income in it (with dividends).
But you also said that, although you do not need college degrees , the information itself is necessary. In other words, you need to know, you need to have knowledge, you need to learn, because if mistakes can be huge.
And of course, you do not have time. Maybe you not win. There is always so much to do ...
Which is the solution then? Or at least one solution ... Mutual funds , exactly what we will discuss in this article.
What is an investment fund?
A fund investment is a mechanism for collective investment in which various people (various participants) provide amounts of money that are managed by others in order to achieve profitability.
Put another way: you have a capital and you contribute, along with the capital of others into a common fund (hence the name), who happens to be invested by professional managers how they consider most appropriate.
Features of these instruments would therefore be:
- They are a way to channel savings. You have saved some money and you can destine there.
- They are an investment. The aim is to give a return on that money.
- That investment is channeled into assets, ie things that can give more money (money calls money or put your money to work). The best known funds invest in shares of stock, but must also do in real estate, foreign exchange, derivatives, etc.
- That, ultimately, are a good tool for leverage , because thanks to the management and knowledge of others can make a profit with your money.
Do not confuse the funds to savings funds . A savings fund (or a savings plan) is a mechanism for broader investment, you can invest in mutual funds or pursue other strategies.
So what are the pros and cons of investment funds are?
Put another way: they are a good strategy? You should invest in them?
Well, as almost everywhere, they are neither good nor bad, nor can advise you whether or not a valid strategy. It all depends. I explain.
In principle, there is nothing like having the knowledge one to act for himself without others. You do what you think and without explanation. Of course, for that we must learn, which is spend time, money, etc.
If you are an expert in the stock market and investments obviously you do not need any background, unless you want to use it as part of your strategy.
But if you do not have enough knowledge and you have money to invest, why not? Most often, you get a higher return than if you had saved in the bank. In addition, according to your investor profile you can choose a type of fund or other (conservative, risky ...). It is not as accurate as if you were to invest yourself, but it is quite suited to the type of risk you want to assume. Do not forget that we are talking about investing, profitability, earnings, wealth ... but the tradeoff is risk, losses ... and that's something to consider also.
Investing through a fund , however, you will be a cost in commissions, of course, since there are managers who manage for you, but everything has a price. Would you rather not get a return on 10 not paid 1 ( for example)?
So, the answer to whether you should or not depends on you, what your situation and knowledge of the subject. It also depends, of course, that have saved money, money you do not imminent failure and not going to use in the short or medium term. If it is not the case and have an uncertain economy, would not recommend. If you have debts, for example, the first thing is to leave them .
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