Written by R. A. Stewart
Investors have a choice to invest in managed funds or individual companies but which one is appropriate for your type of situation.
Managed Funds
When you purchase managed funds you have a share in several companies. Your money is combined with other investors and you get a share of any profit. The fund is managed by a fund manager which means that once you have decided where to invest your money it is up to the fund manager to invest on your behalf. The advantage of this is that you can just get on with life and let your fund manager do the work; after all, that is what they are paid to do.
There are still some choices which you have to make such as which fund you are going to invest in.
The decision of which fund to invest in can be summed up in one question, “What is your timeline?”
Are you needing the money in the short-term, medium-term, or long-term?
Short-term is up to three years
Medium-term 3 years to 5 years.
Long-term is more than 5 years.
The three types of funds available are conservative funds, balanced funds, and growth funds.
Conservative funds are the least risky but have less scope for increased returns. Growth funds have the potential to grow your savings but are volatile while balanced funds are a mixture of both.
Individual Companies
Investing in individual companies is much easier these days thanks to all of the online investing platforms available. Sharesies, Hatch, and Kernel Wealth are three in New Zealand which are popular, there are others. If you are outside of New Zealand then you will have them in your own country.
The problem with investing in one or two companies is that unless you have a lot of money to invest it becomes difficult to diversify even using one of these micro platforms. Myself, I just do this for an interest and no other reason. I choose one company per year to invest in and drip-feed money into this company throughout the year. If it falls over, then no harm is done because it is not going to affect my lifestyle one little bit.
Some people invest in individual stocks with the idea of trying to beat the market. That is hard to do , you may have successes from time to time, but it is trying to be more right than wrong which is the problem.
Financial experts advise against trying to beat the market but rather play a numbers game instead by investing in managed funds.
Summary
Choosing between Managed Funds and individual companies is dependant on your goals and timeline. It is your personal circumstances which should be the deciding factor in which is the better option for investing.
About this article
The contents of this article are of the opinion of the writer and may not be applicable to your personal circumstances, therefore discretion is advised. You may use this article as content for your blog/website or ebook.
Read my other articles on www.robertastewart.com
Tired of seeing your bank charge you $5-10 every time you withdraw cash abroad PLUS that hidden foreign transaction fee? 🤯 That’s money that should be buying you a gelato, a beer, or a souvenir. Wise gets you the real mid-market exchange rate with only tiny, transparent conversion fees from 0.42%. Stop funding your bank’s next vacation. Fund yours. 👉 Link in bio to get your Wise card!
#TravelHacks #WiseCard #NoHiddenFees
