Sat. Nov 28th, 2020

Investment Funds

How to invest in stocks if you don’t have time to trade on your own? Contact the investment fund. We will tell you what it is and how it works so that you can decide whether or not it suits you.

  • How it works
  • How to invest
  • Benefits of an investment fund as an asset
  • What are the funds

If you do not have the time or knowledge to trade on the stock exchange yourself, ask for help from intermediaries. A good option is to invest in investment funds.

An investment fund is a company that brings together the capital of investors to buy shares and form a large investment portfolio. Due to the large cash turnover, a fund can buy a large number of shares on favorable terms, which gives it an advantage over other market participants. Investors make a profit in proportion to their contribution in the form of interest from the fund’s earnings on shares. Owners of the fund receive remuneration for the management of funds in the form of a fixed percentage of total profits.

There are four types of investment funds:

  • are mutual;
  • Stock exchange funds;
  • Money market funds;
  • Hedge funds.

The most popular among them are the first ones. Investors do not need to sign a contract with the fund or experience other paperwork, they just buy the shares of the company and receive income. If you know what UIFs are, imagine that they are, only here instead of shares.

How does it work?

The value of one fund share is calculated based on the value of all assets per share and is updated daily.

Each shareholder may request the sale of shares back to the fund at any time. In the case of unit investment funds, this will not be possible, as the minimum investment terms apply.

According to the ratings on TheStreet and Moneycontrol, the yield ranges from 12 to 40% per annum.

If you want to invest for several years, you should look at the statistics of profitability not for the last year, but for the past 5-8 years, because the profits of the funds are unstable.

How to invest

U.S. financier Peter Lynch has formulated three golden rules for working with investment funds:

Invest only in funds that are easy to understand. If there is something dubious and incomprehensible in the scheme of the fund’s work, it means that it is so. Specific techniques can harm the investor, choose those who work transparently.

Count on long-term investments. If you are promised high returns, this automatically means high risks. It is not rational for this type of investment.

Calculate your expenses in advance, agreeing only to the justified ones. Calculate net income, deduct taxes and other expenses to understand how much you will get in the end. Income should justify your expenses.

Fortunately, to find an investment fund and invest money, there is no need to look for a point on the map and go there for consultation. All issues related to investing can be solved online.

Study the ratings of the funds on the resources we talked about above and choose a broker. Give preference to intermediaries who have authority and good reviews.

Each broker has a minimum initial capital, and one of the most popular Russian stock brokers has 200 dollars.

Benefits of an investment fund as an asset

Diversified assets. It is important for successful investment to mix different industries within the same portfolio. This approach reduces the overall risk and provides the investor with a balanced instrument for capital growth.

Benefit from volumes. Any wholesale purchase of goods helps to reduce costs and get the optimal value. This principle is also applicable to securities. The fund buys shares in large quantities, which gives it the opportunity to use all the benefits of wholesale purchase.

Broad investment opportunities. Not every investor can freely lay out a hundred thousand dollars for a package of shares. This will not be a problem for the investment fund, and small investors can simply join in.

Professionalism. The percentage of the fund depends on the investors’ profit, so the securities are managed by professional managers on their behalf.

What are the funds?

We have talked a lot about what investment funds are, but we have not seen what they are. Before you decide where to invest the money, study its variants in more detail.

There are companies that have shares in the assets of companies from different industries. For example, they combine shares of trade, manufacturing and services sectors in their portfolios.

Others are gaining shares from industry leaders. For example, there is the InTheGame Foundation, which manages 11 giants of the video game industry, such as Sony, Activision Blizzard, Electronic Art.Inc. Those who believe that this is the future can invest and get their 38% in a year.

And third parties are copying the assets of famous companies or even stock indices.

From this diversity choose only you. The main thing to remember is that the risks should be justified and not threaten the basic financial well-being.

Investment Analytics

To succeed in business, you must have a network of contacts.

In the offline business you attend specialized events where you get to know important contacts. You exchange business cards to start cooperation on the same day. In online business, everything is different: the company must promote itself on the Internet.

Below are the basic principles that will help to find funding through the promotion of the company on the Internet.

Want to find an investor? Let him come to you!

Everything revolves around sales on the Internet, as Manica learned from his own experience. LinkedIn has many entrepreneurs writing to him every day to present his project. However, he is only interested in those who have made a name for themselves on the internet.

If there is no information about the product, the company or its founder online, the investor is 100% likely to refuse to invest.

Investors are only clients of your ideas.

Tell your users about your ideas and goals

To succeed on the network, a company needs to build a reputation in the digital world. Manicure advises you to prove yourself as a reliable business partner and expert in your business. It is important to tell users about yourself, to present your idea and tell them about the goals of the project.

If I see that a company knows which way it is going, I will definitely invest money in them.

Investors often study projects online – for example, looking for information in Google or LinkedIn. If they see your achievements and study the direction of the project, it will definitely increase the chances of getting funding.