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Turning the mutual funds: A worthwhile investment November 23, 2016

We have heard the stories of the global economic crisis and are still hearing. The fall in commodity prices set in emerging markets have continued through the year and questions of when these economies will rebound are on the minds of investors.

Findings have shown that the majority of citizens in emerging markets have one source of income and/or the aggregate of the sources of income on the average is still not sufficient. This is all the more reason why, even in the midst of the economic challenges, investing must continue to be deliberate when looking to solidify one’s financial freedom. It is not about how big your income is, but instead about how effectively the income is utilised, even if it is just a small amount. Mutual Funds offers investors a practical means to investing bit by bit.

Now, you may have heard of Mutual Funds, but do you know how they ‘actually’ work? If not, do not fret. Our step by step guide explains the different types of Mutual Funds so that you can identify the right option that will suit your investment appetite.

Types of Mutual Funds

Balanced Fund:
The Balanced Fund offers unitholders the benefit of a diversified portfolio of securities that cuts across the different asset classes and recommended for investors looking for growth without taking too much risk. These funds are also partly affected by fluctuations of share prices in the stock markets.

Bond Fund:
The Bond Fund have pooled funds that are invested in Federal Government Bonds, Corporate Bonds and high-quality money market securities. These funds are not affected by the fluctuations in the equity markets. However, opportunities for capital appreciation are also limited in such funds.

Equity Fund:
The Equity Fund involves investment in quoted equities that are traded on the NSE and can achieve high returns over short and long-term periods. Equity schemes are suitable for investors having a long-term outlook, which seeks appreciation over a period of time, but could be affected by fluctuations in stock prices.

Money Market Fund:
The Money Market Fund is invested in high-quality money market instruments like Treasury Bills and Certificates, Commercial Papers and Banker’s Acceptance. They are also income funds and provide easy liquidity, preservation of capital and moderate income. Such funds are appropriate for corporate and individual investors as a means to park their surplus funds for short periods of time. Banks are major participants in this segment.

Other types of Mutual Funds include the aggressive growth fund, asset allocation fund, blend fund, capital appreciation fund, clone fund, closed fund, crossover fund, fund of funds, global fund, growth fund, growth and income fund, hedge fund, income fund, index fund, international fund, municipal bond fund, prime rate fund, regional fund, sector fund, specialty fund, stock fund, and tax-free bond fund. United Capital manages the following: Bond Fund, Equity Fund, Money Market Fund, and Balanced Fund.

Features and Benefits
Some Mutual Fund managers accept a minimum investment of N10,000 and multiples of N5,000 thereafter.  Which makes it much easier to begin investing without a lot of capital. This helps makes ‘financial freedom’ an attainable goal.  In addition to the low cost of entry, there is easy entry and easy exit; quick redemption on maturity (within five days); tax exemption on dividend payout; and availability of experts, management and professional advice by the Fund Manager.

Wisdom, they say, is “crying out on the streets” and only takes discernment and will power to listen to it. Remember, the boom-bust cycle is a perpetual flux that touches its points along the cycle at one time or the other. It is only with right decisions ahead of time that one can be successful at each point. Think Mutual Funds, make the ‘Intelligent Choice’ today.

Click here to invest in a mutual fund for as little as N5000.

Source: The Guardian