- When an investment management company is declared bankrupt, will my funds be gone?
- When a Custodian Bank is declared bankrupt, will my funds be gone?
- Is my investment at GAP Capital secure?
- Do I have to withdraw my investment funds from Mutual Fund, now?
- What is GAP Capital's strategy at this moment?
- In present market conditions, is it possible that the Net Asset Value of a Mutual Fund becomes zero?
- What is a Mutual Fund?
- Why is everyone advised to have a Mutual Fund?
- What are the advantages of investing in Mutual Fund?
- How does the ownership and price of Mutual Fund stocks work?
- What kind of Mutual Fund that you can buy?
- Why is LONG-TERM VISION important in investment?
- How do you choose a Mutual Fund?
- How do you choose an Investment Management Company?
- What will it cost you?
- How to buy and sell?
- Is mutual fund tax deductable?
- Mutual Fund investment (especially in equity funds) is a long-term goal.
- So, what lessons can be taken from Stock Market fluctuation?
- Do you need a big fund to invest in Mutual Funds?
What are the advantages of investing in Mutual Fund?
1. Professional Managers
Mutual Funds are managed by superior Investment Managers who know how to find the best investment opportunities. Investment Managers research thousands of investment opportunities for a Mutual Fund's stock/unit holders, choosing the types of investment that will best achieve the Fund's Investment objectives.
Liquidity refers to the ability to manage the flow of cash in and out of the Mutual Fund. In this case, the most suitable product is a Mutual Fund for stock that is listed at the Stock Market where transactions happen everyday, unlike Future Deposits or Term Deposit Certificates.
Diversification refers to avoiding placing all your funds in one investment opportunity. The objective of diversification is to distribute the risk factor. An Investment Manager will select a range of stocks from a number of different types of companies, so that the performance of one stock will not affect the overall Mutual fund performance.
By way of comparison, if you buy stocks direct, on your own, you are allowed to buy only one kind of stock, and your portfolio value will be fully dependent to the performance of that stock value. If the performance is good, you will get a good return. But, If the value decreases, your loss percentage could be as much as your investment. Diversification helps to balance it out.
Example of the benefits of diversifications:
Imagine you Invest IDR 5,000,000 in a Mutual Fund comprising many different stocks. 1 % of your fund Is Invested In Company XYZ. The next day, the biggest competitor of XYZ has a major win and XYZ stock value decreases 25 percent. If you Invested all your funds In XYZ stock, then your lDR 5,000,000 will decrease to lDR 3,750,000. But with a Mutual fund, where XYZ stock only represents 1 percent, that decrease of value has very little effect.