A friend of mine recently stated that she thinks the market is affordable, however she does not have money to invest in the equities market. This I believe is a problem easily solved with mutual funds.
Mutual fund is a professionally managed investment for a pool of investors by investing in many different types of investments. The investments can be equities, bonds and others. The investor buys a unit or share of the fund and gets a profit proportional to the amount the investor holds as compared to the whole fund.
It is good to start off investing in a mutual fund as there is diversification. It is good to read the fund's prospectus to understand what is purchased and whether it fits the objective desired by the investor. Also the investor should know the risks involved and whether the fund would suit the goals of the investor.
Next would be the fees involved in the funds (implicit and explicit - it is always good to ask the person selling the fund what the underlying costs are) and minimum buy in. The fees can be when buying the fund, administrative cost throughout the holding of the fund and when selling the fund.
Mutual funds (open-ended fund) can be redeemed at its net asset value (NAV). Hence it is similar to stocks in the sense that it is a market decided price.
Remember to shop around for the best suited fund and have fun with it.
Mutual fund is a professionally managed investment for a pool of investors by investing in many different types of investments. The investments can be equities, bonds and others. The investor buys a unit or share of the fund and gets a profit proportional to the amount the investor holds as compared to the whole fund.
It is good to start off investing in a mutual fund as there is diversification. It is good to read the fund's prospectus to understand what is purchased and whether it fits the objective desired by the investor. Also the investor should know the risks involved and whether the fund would suit the goals of the investor.
Next would be the fees involved in the funds (implicit and explicit - it is always good to ask the person selling the fund what the underlying costs are) and minimum buy in. The fees can be when buying the fund, administrative cost throughout the holding of the fund and when selling the fund.
Mutual funds (open-ended fund) can be redeemed at its net asset value (NAV). Hence it is similar to stocks in the sense that it is a market decided price.
Remember to shop around for the best suited fund and have fun with it.
