One of the things on the minds of most fashion forward ladies is being – and remaining – fashionable. However, in order to ensure that one can always keep up with this lifestyle, it is necessary to ensure that one has multiple sources of income – one being your salary and the other, the income generated by your investments.

A lot of young people are of the opinion that when they get that dream job”, that comes with a ‘fat’ salary, then they can consider making financial investments. They joke that ‘their take home pay cannot take them home’. The reality is, there is no guarantee that when you get that dream job, you will find it any easier to save.
Most times, increased income is accompanied, if not preceded, by increased expenses. Therefore, you should cultivate the habit of investing a portion of what you currently earn, no matter how little.
While some people may be considering investing that small portion of their income, the challenges usually are: what to invest in, if the investment is secure, how to get the best services etc. If you are in this category, permit us to introduce you to mutual funds.

A mutual fund is an investment vehicle made up of a pool of money collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and other assets. That pool of money is then managed by a professional fund manager. The income generated by the investments (e.g. shares, Nigerian Government Bonds, Nigerian Government Treasury Bills, fixed deposits etc.) is then apportioned to all investors in the mutual fund on the basis of the respective sums invested and the period for which the investments were made.

5 REASONS WHY YOU SHOULD INVEST IN MUTUAL FUNDS

1. Professional Management
Managing an investment portfolio requires commitment of time, resources and expertise. This can be tough to keep
up with when one adds the demands of a job as well as maintaining an active social life to the mix. For this reason, one of the primary benefits of investing in mutual funds is that, with relatively small amounts of money, an investor enjoys the services of a professional fund manager. When you invest in a mutual fund, you are employing a professional manager to bear the burden of the day-to-day administrative task of making investment decisions on your behalf. The fund manager is charged with the duty of conducting extensive research and analysing investments in order to make informed investment decisions that will maximise the returns to investors.

2. Diversification
I am sure you may have heard the saying ‘do not put all your eggs in one basket’. In making your investments, we advise that you do not invest all your money in a single security. To diversify your portfolio means to invest in various securities, such as Bonds, Treasury Bills, Shares and Real Estate in order to spread your risk across different securities. Ordinarily an individual investor would require a sizeable amount of money to be in a position to achieve investment diversification on his/her own. However, the magic of mutual funds is that they provide even small investors access to a diversified portfolio with as little as N50,000.00.

3. Liquidity
The liquidity of an investment refers to how quickly the investment can be converted to cash. You don’t want a situation where you cannot access your money when you urgently need it to pay bills or meet up with unexpected
expenses. Investors in mutual funds will have access to their money within a maximum of 5 working days of notifying the fund manager of their intention to make a withdrawal (usually after an initial lock-in period of not more than 30 days).

4. Low Transaction cost
Remember that a mutual fund is a collection of pool of moneys collected from many investors. For this reason, fund managers are able to execute their transactions at lower costs. This is because with the large volumes of funds, fund managers are able to negotiate better pricing for all their transactions taking advantage of economies of scale. This means that the transactions’ costs borne by mutual funds are usually low, which enhances their returns to the benefit of the investors who are the unit holders.

5. Affordability
Investments in mutual funds usually do not require a huge amount of capital. Most mutual funds usually require less than what it costs to buy a very good hair
extension! The minimum initial investment is usually N50,000.00 or less and subsequent investments can
be a minimum of N10,000.00 or less. This means that everyone, who earns an income, can start investing today.

For more information on mutual funds,

Contact FSDH Asset Management Limited via email at coralfunds@fsdhgroup.com or call +234-1-2809740-1

www.investopedia.com

Leave a Reply

Your email address will not be published.

12 − seven =