Mutual Funds 101 (1)
A mutual fund, also known as an Equity Variable Investment Company. An investment trust organization that provides investments for small property owners and distributes shares that are readily convertible to cash. In Western countries, with developed markets for securities and high levels of speculation, it is impossible to decide which stocks to buy or when to buy and when to buy them. Selling is preferable. Some people with experience in the securities business have organized "mutual funds" for the purpose of seeking income, capital appreciation and even speculation. self-funding and pooling investors' funds to purchase a variety of securities, while offering investors alternative purchase options. A commission is received from this. The investor may also exchange investment types for a fee if desired. The price at which the shares are sold is not directly influenced by the market, but is determined only by the price of the securities held by the mutual fund. Usually, each share represents only the net asset value (total assets minus total liabilities divided by the number of shares) of the mutual fund.
It is a kind of investment instrument that collects a lot of small money to make big money, and hands it over to a special person or a professional institution to operate and manage it in order to obtain profits.
In the U.S., a mutual fund invests not only in securities, but also in gold (or other precious metals), futures, options, and real estate.
In addition, funds in the UK system (including many overseas mutual funds that are issued to all parts of the world) are called "unit trusts" and the investment targets are quite diverse.
Diversification of investment risk
The assets of a mutual fund are larger than those of other investors, so it is possible to diversify the funds among different stocks and even different investment instruments to achieve true risk diversification, rather than incurring significant losses due to one wrong stock pick.
Professional Operations Management
Mutual fund companies employ professional fund managers and research teams to conduct market research on the general and individual investment environment in China and abroad. and the status of individual companies are thoroughly understood. In addition, for a small amount of fund management fee, you can enjoy the services of experts, which can be said to be the best gospel for small investors.
Invest globally with a small amount of money
A mutual fund is a fund that spreads its investments across different underlying financial markets (regions, countries). With as little as $3,000 (fixed amount), investors can share the fruits of economic growth in different parts of the world. Compared to other investment vehicles, the investment threshold is much smaller.
Mutual funds adopt the principle of separation of custody and operation. In the unfortunate event of the collapse of the fund company or the custodian bank, creditors are not allowed to seize the assets of the fund or exercise other rights, and investors' rights are protected. Interests will not be affected as a result.