INVESTMENT CONCEPTS TO LEARN ABOUT

 It is a bold assertion to make, saying that how bright one’s future is, is a function of how much that individual understands about investing and investments. No matter how successful one gets, there is always the realization that you can not always hold liquid cash, and it would be a smart choice to start making investments that would pay in the future. Many come to this realization and start learning whatever they can about investments and investing. This is a good thing. This read is aimed at addressing four concepts that potential investors might want to know about. These concepts are

·       Mutual funds

·       Hybrid funds

·       Equity funds

·       Dynamic asset allocation fund

 

Mutual funds

Mutual funds are concepts in finance that contain a value from different investors that include a portfolio of stocks, bonds, and other assets. This type of investment is the culmination of money collected from various different investors that can be accessed by smaller investors for a reduced price. Mutual funds are like companies on their own. To understand mutual funds, look at this analogy

A certain farmer is well acquainted with the price fluctuations of foodstuff in the market decided to buy food of different types (that hypothetically does not spoil) and keep them until they appreciate well enough to be sold for a whopping profit. That is the farmer’s investment. A teenager who doesn’t know anything about such price fluctuations comes along hoping to get a share of the farmer’s profit when he eventually sells. Instead of buying foodstuff himself, the teenager just buys a share of the farmer’s diversified assets (the different types of food) and then, shares in the performance of the product in the market

This is how mutual funds are. People buy a share of this diversified portfolio and then partake in a share of its value. Please note, however, that owning a share in a mutual fund does not give one voting power like a stock does.

 

Hybrid funds

This is more or less a type of mutual fund. In this fund, a diverse range of assets is invested. This produces a portfolio that is very diverse with different asset classes. This is good for investors, because they get access to a wide range of asset classes, through a single fund. Balanced funds and blended funds are examples of this kind of fund. They are also called asset allocation funds

 

Equity funds

These are a kind of mutual fund in which stocks for the major part of the investment pool. The value of the portfolio is determined by the market capitalization and it is usually managed both actively and passively. This type of fund is perfect for new investors, and for investors who do not have enough capital to buy a much more diversified fund.

 

Dynamic asset allocation fund

This is somehow related to the concept of the hybrid fund. It entails the use of a highly diversified portfolio, managing it with the concept of dynamic asset allocation. This concept is the managing of a portfolio with regard to risk management. In dynamic asset allocation, investment in assets that are not doing well are pulled, and committed to assets that are doing well on the market