Investment funds: How to choose a fund?

Debt investment funds
Debt mutual funds invest primarily in fixed-rate or floating-rate bonds. Some funds of this type invest 80% in Treasury securities, which entails a lower degree of risk. The other part, on the other hand, has 50% of corporate bonds in its portfolio, which increases the investment risk.

The portfolio model assumes 90% bonds and 10% cash. The risk of investing in this fund is slightly higher than investing in short-term funds. However, fluctuations usually do not exceed ten percent. On the other hand, the chance of profit is slightly higher than the return on investment. The management fee is 3% per annum.

Equity funds
Equity funds are characterized by a very active investment policy. As the name suggests, this fund mainly invests in stocks. He also buys other securities.

These funds are much more risky than the previous ones, which is associated with significant fluctuations on the exchanges. Most often, they generate high profits in a bull market and significant losses in a bear market. Thus, you should know that the yield can fluctuate during the year from minus a few tens to plus a few tens.

In the fund's portfolio model, 90% are shares and rights to shares, and 10% are cash. This is definitely a type of investment for those who are willing to take a high level of risk. The management fee is up to 5%.

Mixed media
Mixed funds, as you might guess, invest in various types of assets. So their wallets may vary significantly. Some funds invest 20% in stocks, while the rest of the money is invested in bonds, money market securities, and cash. Other funds may do the opposite, so you should carefully review the fund's portfolio structure before investing.

Mixed funds can generate higher returns than bond funds, but not as high as equity funds. It is also a means for people who carry a relatively high risk of cost reduction. The fund management fee is up to 5% per annum.

If you are just starting your adventure with this form of investing, you are probably wondering which investment funds are the best. The choice is not made easier by the variety of types, operating principles, and effectiveness of individual tools. What elements should you pay attention to before making a down payment to the fund?

First of all, you need to determine how long you want and can invest in the fund. If you care about time and expect fairly fast and stable growth, bond-investing funds are the best option. On the other hand, if you want to invest in the long term and in a more risky way, consider equity funds.

Before investing, you definitely need to compare how the funds you are interested in perform in the market. Please note whether the fund has had a significant decline and what caused it.

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