Before starting to invest, let’s learn about Mutual Funds and their things first. Let me go faster!
Millennials have seen the investment trend now. This awareness is certainly a positive signal to advance the role of local investors in investing in the capital market. But what exactly is an investment and what are the benefits?
Investment is an activity to invest directly or indirectly in the hope of making a profit.
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There are many types of investment, one of which is mutual funds. For those of you who don’t know, let’s look at the following information to learn more about mutual funds.
Definition of Mutual Funds
Mutual funds are a platform used by small investors to make investments.
In the process, the Mutual Fund will accommodate the money invested by the investor community and then channel it to investment managers to invest in portfolios in financial instruments such as stocks, bonds, and the money market.
This investment manager (MI) is a professional whose role is quite critical. MI can be an individual or a company that has received a business license from the OJK to do business as a financial manager.
MI’s duties include managing investors’ assets or money, conducting analysis to select and determine investment instruments to buy, making decisions when you want to sell the instruments, and finally reporting the investment results.
In other words, Mutual Funds are a safe step for those of you who are new to the investment world so that you can get profit through the help of an investment manager as the party who plans to manage your assets in Mutual Funds.
Types of Mutual Funds
Based on the portfolio, there are many types of Mutual Funds, such as:
Money Market Funds
Money Market Funds are a type of investment in debt securities or money market instruments with a maturity of less than one year. The goal is to maintain liquidity and maintain capital.
Some examples of forms of investment instruments of this type include time deposits, certificates of deposit, Bank Indonesia certificates, money market securities. Compared to other types of Money Market Funds, they have a relatively smaller risk.
Fixed Income Fund
If you want to generate stable returns then you can buy Fixed Income Mutual Funds.
This type invests at least 80% of its total assets in bonds or debt. The risk of Fixed Income Mutual Funds is slightly higher than Money Market Mutual Funds
Compared to the previous two types of Mutual Funds, this is a type with a higher risk but also has a higher potential for refund.
Fixed Income Mutual Fund is a type of investment that has at least 80% of its total assets in equity securities. This investment aims to grow share prices in the long term.
Mixed Mutual Funds
Finally, there are Mixed Mutual Funds. This type has a diverse portfolio where you can combine investment instruments in the form of stocks and bonds. The goal is to maintain price and income growth.
It is not surprising that this type has a moderate level of risk with a higher potential refund than the Fixed Income Mutual Funds.
Mutual Fund Benefits
If you are a layman in the investment world and don’t have much time to learn about investing, then Mutual Funds can be the most profitable alternative for you. Some examples of other advantages of buying Mutual Funds include:
Allows small investors to invest even with USD. 100.00 only
Make it easier for investors to invest in the capital market to determine high potential stocks
With Mutual Funds, you can make time-efficient thanks to investment managers who diversify and get maximum profit.
Investing in Mutual Funds has a lower risk, with profits of up to 3-4% annually.
Mutual Fund Risk
Investing in Mutual Funds does have a smaller risk. However, there are some things you need to know before investing in Mutual Funds, such as:
There is a risk of reducing the value of the unit due to falling prices for bonds, stocks, and other securities
The existence of liquidity risk or refunds by the financial manager in the event of an economic crisis, natural disaster, and others.