Citizens who do not have the time or are not able to track the movement of share prices on the stock market, and would like to increase their savings, they can invest extra money in investment funds. To start you should open an account and transfer the money to a fund, which includes the capital market.
Dragoslav Velickovic, Broker-Dealer Department in Societe Generale bank, said that the main advantage of investment funds in a reduced risk of investment. According to him, the potential investor should first become familiar with the strategic objectives of the Fund. Then to buy its investment unit if it agrees with the stated objectives.
The advantage of investment funds
The advantage of investment funds is that small individual investors do not have to act independently in the capital market. But it instead makes fund whose work is strictly regulated and monitored by the Commission for Securities. The advantage of the funds and the fact that they managed by professionals who can respond promptly. In case of changes in prices of some shares from their portfolios, selling them and buying another, whose value, according to their estimates, growth. In this way, small investors are protecting although not govern the fund – says Velickovic.
He interlocutor point out that investors need to decide where their money will be invested in accordance with its own risk preferences. For example, whether it will opt for the trading of shares representing a riskier investment, in which the profits, but also higher potential losses, or to invest in bonds, where the yield is much smaller, but also more certain. If investors want to achieve a high rate of profit, say 50 percent of the total invested amount of money, must preparing that it is not possible to invest in “safe” securities. But only by buying risky stocks whose value may increase significantly, but also pitfalls.
Investing in investment funds
Investing in investment funds, depending on the investment policy of the fund, can bring a profit of 10 to 20, and even 30 percent of the investing amount of money per year. Which is considerably more than the average annual interest rates of around five percent, which banks offer savings.
Velickovic says that the fund management company, which is a separate legal entity. The Management Company is established solely as a closed joint stock company and can handle a large number of funds. It could establish, it shall employ at least one portfolio manager for each investment fund and one certified internal auditor.
Velickovic believes that the open-ended investment funds are most suitable for small investors who do not want to independently engage in determining which securities to invest money. The reason for their popularity lies primarily in professional management and minimal involvement of investors. Which means that the investment units of such fund and sell at a much simpler procedure. While the amount of funds in them can invest relatively small, in accordance with the minimum to the Fund.
Open investment funds operate on the principle of buying investment units. Investors investing funds in the open-end fund, in fact, buying a certain number of investment units of the fund. If you wish to withdraw their shares from the fund they do selling of a number of investment units. Minimum Investment in mutual funds is generally 1,000 pounds. The unique initial value of the investment unit allows comparison between funds – explains Dragoslav Velickovic.
Recent years, many investment funds to their investors’ rates of return significantly higher than bank interest. In the world, this form of investment has a tradition since before World War II.
In principle all open investment funds, including our own, people invest funds for various reasons and for various purposes. Such as larger purchases, real estate, education of children, supplement retirement. Among the investors in investment funds alike are represented by those who have invested heavily as and those with lower investments.