Fund investors should be fully aware that the past performance promoted by fund companies often does not represent future returns. When selecting and investing in funds, beware of the following three major misunderstandings.

Misunderstanding 1: You can make a lot of money by buying funds. Since last year, some fund companies have used high yields as a selling point to sell funds to investors, but they have not fully explained to investors that the high yields in 2006 are difficult to replicate.

A large amount of overseas historical data proves that stock funds are high-risk financial products. Only by insisting on medium and long-term investment for more than 3 to 5 years can they effectively resist the cyclical decline risk of the stock market and share the long-term average return of the stock market of 8% to 10% per year.

.

Misunderstanding 2: The cheaper the net value of the fund, the better. Many residents lack sufficient financial knowledge and think that the lower the net value of the fund, the better.

As professional institutional investors, fund companies are obliged to inform holders when selling funds to holders that the quality of the fund has nothing to do with the net worth.

In fact, a fund with a higher net worth is often proof of its better historical performance.

However, many fund companies have gone in the opposite direction. Instead of fulfilling their obligation to educate investors, they have adopted methods such as copying, spin-offs, and high dividends to normalize net values ??to cater to this demand, exacerbating market chaos.

.

Misunderstanding 3: Funds with more dividends are better. Unlike closed-end funds, open-end funds can be redeemed at any time. Except for a few funds that clearly stipulate regular dividends in the contract, open-end funds do not need to pay large dividends in a bull market.

Yes, because stocks must be sold before large dividends are paid, which will harm the interests of holders.

Funds only need to pay high dividends when they are bearish on the market outlook.

So far, dozens of funds have distributed high dividends, achieving the purpose of expanding their scale, but reducing the income of old holders, which is an act that runs counter to the integrity of the fund company.