Whether it is favorable to invest in mutual fund

Whether it is favorable to invest in mutual fund

In mutual fund, or share fund, management of the incorporated funds from investors is carried out according to the investment strategy directed on receiving profit. Such form of investments allows to increase in a year a contribution twice without applying special efforts.

Between a bank deposit and an investment into mutual fund there is one essential distinction. If, for example, you opens the deposit in bank, according to the contract receive the fixed interest rate, and other profit gets to bank. And here in mutual fund you get all earned profit except for compensation for service. By the way, the sum for service should be stipulated in advance. Why banks offer investors such low interests for deposits? According to the law, banks reserve a part of money in the Central bank (an obligatory reserve), that is, in fact, they use only a part of money of the investors. Unlike banks mutual funds invest all money of the investors, so, profitability at them is higher. The profit mutual fund depends not only on specialization and the correct investment strategy, but also from professionalism of the managing director of fund.

In our country investors of mutual funds are protected at legislative level. Besides obligations of the Federal Service for Financial Markets include control of activity of mutual funds and observance of the current legislation by them.

Functioning mutual fund is provided by management company which conducts fund accounts department. Besides in staff of fund it is obligatory to eat the legal entities having the special license (the registrar, specialized depositary). Duties of the registrar include opening of personal accounts, charge and writing off of shares, and the specialized depositary conducts control over property of fund and considers the rights to securities. Activity mutual fund assumes existence in the staff of the auditor which duties include check of a condition of accounting of property mutual fund.

Thanks to such debugged system in our country there are no cases of deception of shareholders or fraud in mutual funds. Moreover, such funds are obliged to open daily information on cost of assets and shares on the Internet, mass media etc. One more advantage the mutual fund is that fact that the shareholder can at any time suggest to sell the companies the share. Such transaction is carried out at the exchange that allows the shareholder to receive the money quickly.

If you decided to invest savings in mutual fund, prefer investments for the term from 1 till 3 years. Attentively familiarize with costs which will be withdrawn from your income within the law.

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Whether it is favorable to invest in mutual fund
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