Financialtreat – will explain the Definition of Investment Returns, Types and Risks of Mutual Funds that you will get in the following article. let’s look at this article carefully!
Mutual funds are one of the investment alternatives for the people of financiers, especially small investors and financiers who do not have much time and expertise to calculate the risk of their investments. Mutual funds are designed as a vehicle to collect funds from residents who have capital, have the desire to run investments, but only have limited time and knowledge.
Not only that, mutual funds are also expected to increase the role of local financiers to invest in the Indonesian capital market. Generally, mutual funds are defined as a forum used to raise funds from the investor community to finally be invested in an impact portfolio by the investment manager.
Definition of Investment Returns, Types and Risks of Mutual Funds
There are three things that are relate to this definition, namely, first, the existence of funds from the financier population. Secondly, the fund is investe in an influence portfolio, and third, the fund is manage by an investment manager. Thus, the funds in the mutual fund are funds with financiers, while the investment manager is the party truste to manage the fund.
Mutual Fund Investment Advantages
As with other types of investments, mutual funds offer a competitive advantage to strengthen your financial situation. Knowing the meaning of mutual funds fundamentally can be one of your provisions in investing at a young age. The following is the definition of mutual funds regarding the benefits provide for those of you who just want to start investing.
1. Easy to Learn
As previously explaine, knowing the meaning of mutual funds is not a difficult thing. You only need to go to an investment management provider such as a bank or insurance provider to start buying mutual fund products.
Together with the investment manager, you will also get more detaile news regarding the understanding of mutual funds and the products you want to invest in. After successfully buying, you will get a report on the growth of mutual fund investments every month made by the investment manager of your choice.
2. Various Offers
When you start to know the meaning of mutual funds, you will also be given an understanding of the mutual fund products that exist for you. This mutual fund offering is generally divide into two, there are conventional mutual funds and Sharia mutual funds.
As an investor, you will be given the flexibility to choose which type of mutual fund product is tailore to your liking. You will also get news about what forums provide mutual fund products that you can buy for investment.
3. Very Affordable Initial Capital and Very Low Risk
Unlike stocks that require you to buy in units of lots with a large enough accumulation of funds. By understanding the meaning of mutual funds in the aspect of transactions, you can buy mutual funds according to the numbers you have prepare or set aside, just like saving.
The level of profit you get will be fairly given according to the investment capital you have. By spending money tailore to your needs and situation, the risk you get in investing in this mutual fund tends to be small and can be anticipate.
4. Professionally Manage and Transparently
As your investment manager, the investment manager must have high experience and knowledge, as well as good professionalism. Before becoming investment managers, these managers are also require to obtain certificates in order to maintain integrity and know mutual funds in total.
To help carry out the investment of customers. Investment managers will also always report the growth of your investment transparently, so that you can feel conducive and comfortable to continue investing and know the meaning of mutual funds further.
5. Access Investment Through Online Channels
In this all-digital era, it will be even more annoying if financial transactions are not maximize online. In order to make your investment easier, transactions and info about your mutual funds can already be done online. You can access it through mobile banking applications and internet banking, anytime and anywhere.
After knowing the meaning of mutual funds and their benefits, you also need to pay attention to the risks in investing in mutual funds. Because basically, every investment does have risks, even with different strata. The risk that can be found in mutual fund investment is a decrease in the value of the participation unit or the value of the mutual fund product that you have.
This risk is usually present due to a decrease in the impact value of stocks, bonds, or other securities that are include in the part of the mutual fund. Not only that, another risk that is often present is the case of liquidity. This risk is usually experience by investment managers who want to resell mutual fund units according to investor conditions.
Types of Mutual Funds
In general, the mutual fund model is divide into four, namely money market mutual funds, fixe income, mixe and stocks.
1. Money Market Fund
A money market mutual fund is a type of mutual fund that invests in a type of money market investment instrument and has a maturity period of less than one year. The form of investment instruments can be in the form of time deposits, certificates of deposit.
Bank Indonesia Certificates (SBI), Money Market Securities (SBPU) and various other types of money market investment instruments. The goal is to maintain liquidity and capital maintenance. The risk is very lowest compare to other model mutual funds.
2. Fixe Income Fund
A fixe income mutual fund is a type of mutual fund that invests at least 80 percent of its assets in the form of debt or bond influence. The goal is to produce a stable rate of return. The risk is very much greater than that of money market mutual funds.
3. Balance Mutual Fund
Mixe mutual funds are a model of mutual funds allocating their investment funds within a varie portfolio. Its investment instruments can take the form of stocks and combine with bonds. The goal is for the development of prices and income. The risk of mixe mutual funds is moderate with a very higher potential rate of returns than fixe income mutual funds.
4. Equity Fund
A stock mutual fund is a type of mutual fund that invests at least 80 percent of its assets in the form of equity influence. The goal is to develop the stock or unit price in the long term. The risk is very higher than money market mutual funds and fixe income mutual funds, but it has the highest potential rate of return.
Advantages of Investing in Mutual Funds
Mutual fund investment brings a variety of profit opportunities. Mutual fund investors can diversify their investments without having to have a large capital. For example, investors with limite funds can have a portfolio of bonds, which is unlikely to be owne if the investor does not have large funds.
In the Bareksa marketplace, a number of mutual fund products can be purchase with a capital of only RP100,000. Moreover, there are products with a minimum purchase of IDR 50,000 only. Check the list of products here. Through mutual funds, large amounts of funds will be collecte so that investment managers can diversify investment products in the capital market and in the money market.
In other words, investments are carrie out in various investment products such as stocks, bonds, deposits, adjuste to the policies of each type of mutual fund under management. Through mutual funds, even ordinary investors can also feel the sweetness of the benefits of investing in the capital market.
Like investing in stocks, in terms of determining what stocks are good for collection is not an easy job. This requires special knowledge and expertise that not all investors have.
By investing in mutual funds, investors don’t have to bother to monitor their investment performance. Because, this has been handle by professional investment managers who are experience in terms of fund management.
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Risks of Investing in Mutual Funds
As with other investment platforms, in addition to bringing various profit opportunities, mutual funds also contain various risk opportunities. For example, the risk of reduce value of participation units. The risks affecte by falling prices from the impact of stocks, bonds, or other securities include in the mutual fund portfolio can be minimize by the investment manager (as the manager) with the diversification principle applie.
Liquidity risk is a risk regarding the difficulties faced by investment managers if most mutual fund investors carry out redemptions (resale) of their units. Circumstances like this can potentially make it difficult for investment managers in terms of providing cash for these redemptions.
Those are some reviews that discuss mutual funds, hopefully this article can help so much and thank you.