Good afternoon friends! After two weeks of “vacation” here on the blog, I return to our series today by answering the following question: What is an Investment Fund?
Did you know that you can invest in buildings, businesses, dollars, fixed income, all together and mixed even with little money?
One way to do this is by buying the quota from an Investment Fund, which is our subject today.
Before you start, if you came here now on the blog, the series Investing My Money began in this post:
In the previous 9 posts we talk about Fixed Income, Treasury Direct, Investments peer-to-peer, stocks, in a very quiet and practical way! I’m suspect to talk, but it’s worth saving to the favorites to give a read when you need it. (I.e.
Anyway, let’s get to it!
What is an investment fund?
A background is a lot of money together. It’s a huge kitty.
An investment fund is a gathering of several people who come together to invest. Each puts money there and they invest together. It’s like an investor’s condominium.
And why is this a good one?
Imagine you think it’s a great idea to invest in building a Shopping Center. It sounds interesting, but unless you have a lot of money, you’re going to erase that absurd idea.
If you join with a few more friends – say, maybe 500,000 friends – that idea will no longer be absurd! Each one boots a little bit and that’s it: you can invest in the construction of this mall.
That is, the existence of a fund allows you to invest in large and diversified things. Through investment funds you will have access to things you could not do yourself.
Thus, by buying the quota of a single fund, you can invest – at the same time – in a building, on the stock exchange, in dollars, gold, ox, anyway! The possibilities of combination are endless!
It all depends on the rules of the fund you choose.
That is: by investing in a fund you can diversify your investments, and thus, can often reduce the risk of your portfolio of applications.
And if you want to get rid of that investment, you do not have to look for someone who wants to buy a mall. Simply request that you redeem your fund quota through the broker’s website. Much quieter.
Stay tuned for redemption deadlines! They vary from background to background. It may take hours or days! So if you need to redeem the money, anticipate not to be taken by surprise.
And who decides these miraculous fund investments? I?
No. You hire someone to solve it for you. It’s like a condominium, where you hire a trustee to take care of the porters, solve the plumbing problem …
In an investment fund, we call this Fund Manager “liquidator.”
And it is paid for this service through the Administration Fee , which is a percentage of the fund’s income that is discounted before you receive your income.
In addition, some funds reward the manager who is very good through a Performance Fee . Thus, the fund seeks to encourage the manager to strive for above-average results.
The Performance Fee also pays the Fund Administrator , who is the day-to-day fund manager. He takes care of all the bureaucratic part of the thing, while the manager takes care of the background strategy.
So, it’s up to you to look at this: Does this fund have very high rates? Do they make sense with the return I expect from this fund? Did they so overeating my money and giving me little?
Also think that more complicated funds, which invest in many products, require higher remuneration: after all, you have to hire more competent people.
Note: You obtain this information by reading the Blade and the Rules of the Fund. The income you will receive in your account is already discounted from all of it there. You do not have to pay anything for more after receiving.
Okay, but the world is running out, look at this crisis! Is it a good investment in that?
The crisis hit, and many funds went awry. Unlike Fixed Income, you do not have a Credit Guarantee Fund protecting you. The fund’s quota may vary, and the fund’s yields may not be satisfactory.
The risk is very much like the risk of actions. That is, you are subject to Market Risk .
I’ll get you the worst side of the thing, so you will not tell me after I did not warn you.
But despite all this, even in 2015, there were funds with excellent performance!
The crisis is often a time of opportunity, not despair.
You can see, for example, this article from the blog Terraza Econômico: “The most profitable investment funds of 2015”. Some funds have yielded more than 50% in the year!
One more place you can take a look is this Infomoney Fund Ranking.
Last year, for example, funds that managed to invest in foreign companies and the dollar did very well! What is difficult for the small investor is not at all impossible for a gigantic fund.
Thus, having quotes of funds seems to be a reasonable attitude for those who are not expert in the subject, but want to have a diversified portfolio.
Cool, sounds good! So, how do I get a look and buy?
Like a store, stock brokers put at your disposal various fund options to choose from.
But let’s leave it for next week! I’ll make you a classic step-by-step and show you how to buy an investment fund quota.
Did you like the theme? Do you have any questions, criticisms or suggestions? Talk to us in the comments!