What are mutual funds?
For those who want to apply their money, there is no shortage of possibilities in the market for this. Whether in fixed income, as in direct treasury, investing in the stock market or putting your nuts in investment funds. What are mutual funds? One of the most common application methods in the country. That’s what we’ll explain and uncomplicate to you!
What are mutual funds?
The investment fund is a type of application formed by the union of several people, who invest their money together. The money invested in the fund is divided by quotas. With this, the investor is called a shareholder and has a number of shares in the fund equivalent to how much he invested. That way, whoever invested the most in the fund, guarantees a greater percentage on it.
The management of an investment fund is carried out by professionals and specialized companies. They are responsible for investment decisions in the quest to bring the highest returns to investors.
To be clear, the shareholder lives on the gains in the financial market after the application of the money is performed by the fund manager.
Mutual funds are also managed through internal regulations, in addition to the specific legislation of the financial authorities.
Could you understand what investment funds are? Let us then go on and better understand what types there are.
Types of investment funds
There is a range of options for those who want to invest in mutual funds. Of course, as in any other application, it is necessary to take into account the investor’s reasons and conditions when choosing the most appropriate fund. Are they:
- Short term: securities with a maturity of less than 1 year, which guarantees low risk and high liquidity;
- Fixed income: the application of capital in fixed income securities, whether public or private;
- Shares: at least 67% of the funds invested in the stock exchange are required;
- Multimarket: mixed investments, such as stocks, fixed income and real estate.
In addition, there are more specific types, such as exchange and referenced.
Why invest in investment funds?
Now that you already know what mutual funds are, it’s time to figure out why investing in them.
First, you do not need to be any savvy investor to start applying for a fund. In the case, there are professionals who specifically act to manage the fund in the market.
Another advantage is the reduction of risks and costs. As the fund represents a pool of quotaholders, administrative (for example management) costs and fees are shared among all fund investors.
The shareholder also gains one more benefit: diversification. To enter mutual funds, the minimum values are low and allow you to add more people to the same group. The investor diversifies the portfolio of the fund and even reduces the risks of the investments added – since there is more money available to the manager and more simultaneous applications.
How to invest?
To get started, you need to look for a bank, brokerage or talk to a resource manager.
Then, spare no effort to know everything before putting of put your money. See fund characteristics, initial investment, fees to be charged, fund history, fund risk rating, etc.
Know in particular which is your profile as an investor and matches the fund chosen.
Read also the investment policy and internal regulations of the fund, since no fund is the same as another.
Inquire about taxes: Income Tax and Tax on Financial Transactions (IOF).
Although a skilled and experienced financial market manager will be taking care of your fund, it does not mean that you need to wash your hands and expect to earn good returns. Stay tuned!
Learn more about private pension.