What is an Investment Fund?

Mutual funds are a form of collective investment of money that allows for the investment of money paid by those who participate in the fund. Each person who has paid a certain amount into the fund receives a share in it, which is evidenced by a certificate or unit of participation. Usually a large amount of money is not needed to invest in a fund.

Who can participate in an investment fund?

Anyone can become an investor, whether a natural person or legal entity, as well as territorial units and association, as well as organizational units, which do not have legal personality.

What can you invest in through the fund?

The people in charge of investing in the funds are usually high-level specialists who select specific companies, assess the risks and profit opportunities. The participant has no control over which specific company he will invest in. However, since funds are divided into many different types, it is possible to choose from various industries that occur on the stock market and so on. Investing is done not only in stocks, but also in bonds, real estate, debt securities and so on.

What types of mutual funds can be distinguished?

The main division that exists is between open-end funds and closed-end funds. The former have a variable number of participation shares, while the latter have a fixed number that usually does not change. The next already more detailed division of investment funds is really broad, as they can be divided by the risk the investor wants to take, the area of the investment, or the domestic and foreign markets.

Are mutual funds a safe form of investment?

Like any investment, mutual funds also involve some risk, but they are considered one of the safer solutions, thanks in part to the fact that small amounts can be invested and the risk is very diversified.

How to choose an investment fund?

Choosing the right fund is not easy. First of all it is worth noting whether the risk profile of individual funds corresponds to what you want to achieve. So, for example, we have aggressive (high risk) funds – they invest in stocks or commodities. Another type is funds that invest primarily in bonds (here the risk is much lower). Remember to also pay attention to management fees.