How to invest in funds? Before answering this question, we must first talk about what is a fund? Many people regard the fund as a stock, which should be sold at a high price and sucked at a low price, or as a deposit, and think that it is totally risk-free. This is actually a biased view. In fact, the fund is a tool for collective financial management, that is, the public's funds are pooled and invested by professional financial personnel in order to obtain a relatively high return on investment. The fund investment target can be any investment tool, which can be stocks, bonds or bank deposits. In foreign countries, the investment targets of funds can include real estate, gold, futures and other investment products that ordinary people rarely contact.
For most people, it is time-saving and labor-saving to use the income from fund investment. Some experts take care of the complex and tiring investment for you, and at the same time reduce the potential investment risks through the diversification of the fund portfolio, and fully achieve the effect of "not putting eggs in one basket". But if you think that buying a fund can be done once and for all, you are wrong. In recent years, there are more and more kinds of funds in the market, including stock funds, bond funds, balanced funds, principal guaranteed fund funds and monetary funds. , dazzling. Due to the different investment targets and investment methods of each fund, its characteristics are also very different. Here, let me briefly introduce:
Equity fund: refers to the main investment target of the fund. Usually, the proportion of stocks in the portfolio is greater than 70% before it can be called equity fund. Empirical research shows that the long-term performance of equity funds is higher than that of other investment funds, but its problem is that the price fluctuation is small. This kind of fund usually performs best in a bull market cycle, but it will perform poorly in a bear market. If you want to invest in stocks, such funds should be a good substitute.
Bond funds: As the name implies, bond funds mainly invest in the bond market. The investment income of such funds is relatively low, but the income is stable and the price fluctuation is small, which is suitable for investors with low risk tolerance. It is very important that bond funds are not risk-free. Although the interest rate is relatively fixed, bond funds usually lose their principal when the interest rate rises. Therefore, once the economic boom improves and inflation occurs, it is not suitable to invest in bond funds.
Monetary Fund: Invest funds in short-term bills, bonds, bank time deposits and other fixed-income investment tools, with the goal of obtaining a higher rate of return than bank time deposits. This kind of fund usually has low risk, but relatively low return. It is basically a substitute for bank deposits. If you want to put your money in the bank, you might as well buy a money fund, but if your purpose is to get higher returns, money funds are not a good investment variety.
Balanced fund: Simply put, a balanced fund holds stocks and bonds in a fund, and the fund manager adjusts the ratio of stocks and bonds in time according to his own judgment on the market to obtain better returns. This kind of fund is a stable product, which is not very good in good times and not too bad in bad times. If you know nothing about investment, this is the simplest investment tool.
Principal guaranteed fund: principal guaranteed fund also holds stocks and bonds at the same time, but in order to get the principal back at least a few years later, the proportion of investment in bonds is very large, so the return on investment should not be too high, usually only a little higher than that of the money fund. In addition, the capital preservation fund must maintain its capital preservation function for a certain period of time. If you expect the funds that may be needed in the next year or two, it is best not to put them in the capital preservation fund.
What kind of fund is best for you? That depends on personal needs. If you don't know anything about investment and don't want to manage anything, you'd better put your money in a balanced fund first and let the fund manager manage it for you. If you know a little about investment, you can choose several funds to build a portfolio according to your personal situation. Portfolio allocation generally does not take off stocks, bonds and cash. Generally speaking, if your money is idle, there is no other use in the short term, and your job is stable and you have a fixed income, then you can put a relatively large investment in stock funds and strive for the greatest return. If your funds will be used in a year or two, put most of them in bonds and balanced funds to ensure the safety of the principal. And if this money is your life-saving money and pension, then most of your investment should be put in bond funds with fixed dividends. Although the return is low, regular interest distribution and low risk may be more in line with your needs.
Finally, everyone should understand that risks and rewards are always relative. Nothing for nothing. If you want to have a better return, you must be psychologically prepared to withstand relatively large short-term price fluctuations. If you don't take risks at all, the return on investment will be very low. But what kind of investment is best for you? This can only be answered by yourself!