Fund investments are very well suited for asset accumulation if it is to be a long-term investment. Because this requires the investor – unlike stock – no stock market knowledge. Nevertheless, of course, there are some things to consider, which we will describe in more detail below.
Advantages of fund investments
Anyone who wants to build up assets with fund investments should invest in investments that offer high returns but only a low risk. The advantage of fund investments is that they are managed by experienced asset managers. These invest the capital of investors in several securities that are promising. Another advantage is that the risk is dispersed, because even if a value from the fund is not profitable, this has only a very small impact on the fund’s assets.
Another advantage in addition to the risk diversification is the creditworthiness. As with equities, funds are separate funds that are held in trust by the other assets of the Investment Company and are segregated from the remaining assets. This protects the investors’ money even if the custodian bank or fund management company is insolvent. Another advantage is that fund investors are not tied to certain holding periods, because the shares can be sold at any time, but also bought.
Tips for fund investments
There are a few things investors should consider:
1. Fondsdepot Bank search
Fund investments can be purchased through the normal bank or through a fund agent. However, there are also online banks, such as MoneYou , which manage the corresponding bonds. Investors must be aware of the issue surcharge . Here can partially be incurred 5% and more.
2. Select the correct fund type
There are different funds, all of which differ according to their return, risk appetite and duration. Which asset class is suitable for whom now, can not be answered flat rate. There are funds that aim for very high returns, the so-called offensive funds, and there are defensive funds that are usually lower yielding but less risky.
3. Differences distributing funds and accumulating funds
In the case of fund investments, there are distributing and accumulating investment forms. Sometimes there is the same fund with different security ID numbers in both variants. In the case of a distributing fund, income is distributed to investors and reinvested in the case of a capitalization fund, which increases the fund’s share.