The best moment to invest in a mutual fund is yesterday and the next best is now. This old financial maxim is still effective today.
You work and earn your money with effort but you are wondering how to secure a good extra income. Or you have turned forty and are now wondering what pension you will receive one day. Or you have accumulated free funds over time, on which your daily life does not depend, and you are wondering where to invest them, but the financial markets seem too complicated and risky, and the banks have too low interest rates.
The solution is mutual funds. The sooner a person starts investing, the better for them. This is especially true now that interest rates on deposits are symbolic. Unfortunately, most people start investing too late and at some point they realize that it is very difficult for them to live their whole lives with a salary as their only income.
Mutual fund investments are characterized by high liquidity, economies of scale, diversification, transparency and professional management. They give people the feeling that they are investing on an equal footing with the "big boys". By owning shares in a mutual fund, you become an experienced investor without the relevant experience.
One of the most important rules that both large and small investors follow is asset diversification. In order to achieve a truly diversified portfolio it may be necessary to buy shares of companies from different industries and bonds with different maturities from different issuers. And for the individual investor, this can be quite an expensive initiative.
Mutual funds solve this problem through the economies of scale they achieve. If you had to create a stand-alone diversified portfolio, it would certainly cost more. Just imagine how many trades need to be made to achieve the diversification that a fund offers. Transaction fees would be relatively high, thus consuming some of the funds. The costs will increase with each desire to change the portfolio. However, mutual funds are able to make transactions on a much larger scale and the fees for their clients are many times lower than if they invest alone.
Behind the management of a mutual fund, which in our country is carried out by management companies, is a team of experts in the form of portfolio managers, professional analysts and back office specialists.
As long as they are properly selected, the contractual funds can be an excellent investment instrument for investors with smaller portfolios as well as larger ones.
The key to success is in the selection of assets. Funds that select companies with unique competitive advantages (such as innovative products or services, experienced management and a large potential for profit and loss) which operate in the sectors of the economy with the strongest strength, have an advantage. Companies that follow the development of long-term global trends such as demographic change, globalization, the technological evolution which we have all witnessed in recent years, changes in the educational systems in different parts of the world and others.
The good selection of the companies includes many years of research and analysis of the global markets and industries.
The biggest risk for every single investor is the wrong estimate, which can be made when choosing a contractual fund and this depends on the definition of the exact investor profile.
That is why the specialists advise when selecting a fund to be careful about the amount of all costs related to the investment (transaction costs, management fees, taxation) as well as about the ability of the management to realize the highest return on investment profile for the longest period of time.
The fund's portfolio is monitored and managed on a daily basis in order to reduce unnecessary risk and increase returns.
You can sell back to the fund a part or all of the units you own at any time. You can enter or exit the investment at any time.
You can choose a fund without initial fees but only with a fee for successful performance. In this way, you pay a commission only when you have realized a positive return. Profits from mutual funds in Bulgaria are not taxed.
There are funds with savings products that give you a great opportunity to achieve a good return on your free funds in the long run by choosing how much to deposit (there are funds without a minimum investment threshold).
Unlike bank deposits, savings plan offers higher expected returns, tax-free profits and free access to the funds at all times.
You determine what funds and for what period you could invest so that you do not burden yourself and can maintain the strategy for a period of at least one year. Then just follow your savings plan, making regular contributions to it.
The time horizon for the best return is between 1 and 5 years, but nonetheless, you can withdraw your funds at any time.
For example, with monthly installments of 100 BGN and an average annual return of 10% for 10 years, you will accumulate a total of 20,485 BGN. This is the power of savings.
✔ If you are looking for an individual solution for you and your funds, you insist on professionalism, transparency and reliability - contact your personal Investment Advisor Compass Invest JSC;
✔ See how you can invest through MF Compass Global Trends: http://www.compass-invest.eu/landing-compass-global-trends/;
✔ Choose the ready solution - Savings plan through investments in MF Compass Global Trends: http://www.compass-invest.eu/spestoven-plan/.
The article is part of the joint educational project "Alphabet for Investors", launched by Investor.bg and the management company "Compass Invest" JSC. The project will last for six months and aims to expand peoples’ knowledge about investment opportunities in the markets, among those who have an interest in trading various financial instruments.
Important information: You should keep in mind that the value of the shares and the income from them may decrease, profits are not guaranteed and there is a risk that you will not return the full amount of the invested funds. Past performance is not a reliable indicator of future performance, unit prices and their returns may decrease as well as increase, and investors may not receive the amount they originally invested. No profits are guaranteed. Investments are not guaranteed by a guarantee fund set up by the state or another form of guarantee. The prospectus and the document with key information about the investor can be obtained on paper and/or electronic media in Bulgarian in the office of the management company on the address: Sofia, 19 Georg Washington Str., 2nd floor every working day from 9 am to 5 pm and on the website of Compass Invest JSC.
The material is of an educational nature and is not advice for buying or selling financial assets. Trading on the stock markets can be extremely risky and bring not only profits but also serious losses for investors. Make sure you are fully aware of all the risks before you decide to invest in the financial markets. If possible, it would be good to consult with certified financial advisors.