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You have already created a financial safety cushion for yourself by putting at least three salaries on the deposit, and now you want to take risks and invest in something more profitable. Investing in securities, currencies, or gold on your own is a good idea, but not for beginners. But mutual funds are just right for novice investors: you can invest a small amount, and it will be managed by professionals.
How does a mutual fund work?
A mutual investment fund (MIF) brings together the money of different investors in order to collectively invest them in some financial instruments: stocks, bonds, real estate or others.
You can buy a share - a share in this portfolio. Or several shares - their number depends on the price of the share and the amount you deposited.
A share can be sold, bought or pledged. Ideally, its price rises every day. After some time, you pay off the share at a higher price than you purchased, and you receive income.
A special financial organization, a management company (MC), manages the funds of the mutual fund. It decides which securities or other assets to buy, when to buy and when to sell.
What are the mutual funds?
The main characteristic of a mutual fund is investment directions . Some choose stocks, others - bonds, still others - currency, real estate or art. Many mutual funds combine assets of several types at once.
Experienced - skilled - investor funds can invest in virtually any asset. Mutual funds for retail (unqualified) investors channel funds into the least risky financial instruments.
The investment declaration of each mutual fund clearly regulates: what share of funds and in what the management company can invest.
Mutual funds also have different periods for the sale and purchase of units.
What are the advantages of mutual funds?
How much does a share cost?
The share price changes every day and directly depends on the value of the assets in which the funds are invested. The goal of the management company is to invest your money in such a way that this value is constantly growing. It is the rise in the share price that will bring you income when you decide to sell your shares.
To understand how effective your investments in one or another unit investment fund will be, follow the change in the value of this unit on the website of the management company. For open-ended funds, the price is published every day, for interval and closed-end funds - at least once a month. You can compare the rise in the price of a share with income, for example, from a deposit.
When buying shares, you also pay a premium, in fact, a commission. Its maximum size can reach 1.5%, depending on the volume of investments and on the agent through which you buy. And when a share is sold, its price is considered at a discount. It depends on the period of ownership of the shares and the conditions of the agent through which you repay the share, but does not exceed 3% of the total value.
Example:
You have decided to invest $ 1500 in a mutual fund. The cost of the share is $ 15, and the premium is 1%. As a result, you will buy one share at the price
What tax should be paid on this income?
It depends on when you bought shares, how quickly you decided to sell them and how much you earned on them.
If you bought shares of open-ended mutual funds after January 1, 2014, owned them for more than three years and the income received turned out to be less than $ 50000 per year, you do not need to pay personal income tax.
In other cases, you will have to deduct tax, the amount of which will depend on your total income for the year. If you earn, including on investments, up to $ 100000, personal income tax will be 13%. From the amount of income, which turns out to be more than $ 100000, it will be necessary to deduct 15% in tax. More information about the personal income tax rate can be found in the text "What taxes the investor pays".
Suppose that your income for the year was within 5 million rubles, and we will continue the previous example:
Your tax will be
Where can you buy and sell shares?
You can buy shares directly from the management company, from an agent organization (most often it is a bank) or through a broker on the stock exchange. You can sell shares in the same way.
What am I risking?
As the saying goes, those who do not take risks do not receive income from the share.
Main risks:
Investments are not insured
Unlike bank deposits, investments in mutual funds are not insured by the state, even if the units were purchased through a bank.
Income is not guaranteed
Investing in the financial market is always associated with risk. It happened, for example, that the entire stock market "sagged" and the shares of even the most successful companies lost in value. If the funds of the mutual fund were invested in shares, the shares also fell in price, and did not grow. The higher the possible profitability of a particular financial instrument, the higher the risk.
Don't keep all your eggs in one basket: investing the fund in different assets reduces the overall risk.
I decided to invest in a mutual fund. How to do it?
1. Decide which fund is right for you
For how long are you ready to invest in mutual funds?
If you need money at any time, it is better to choose an open-ended fund, whose shares can be sold whenever you want. Conversely, if you don’t need your investment for five or more years, a closed-end fund will do.
What risks are you ready for?
What is the amount of temporary losses at which you will not feel anxiety and the desire to immediately sell shares? Depending on the degree of risk, you can choose the appropriate assets.
2. Compare different mutual funds:
Detailed information about mutual funds is available on the website of the National Association of Securities Market Participants. There you can see which management company manages a particular fund, as well as compare the profitability of mutual funds for a period from a week to five years. In addition, the site has a filter that allows you to compare funds of a certain type - for example, only open funds or only interval funds.
3. Find out everything about the management company of the selected mutual fund
Check its license for managing funds of mutual funds on the website of the Bank. There you can also read the regulations that govern the activities of management companies.
The return on investment in mutual funds depends most of all on the quality of management, so it is important to take into account the qualifications and reputation of the fund manager.
Higher remuneration will be justified only if the value of shares under the management of this management company grows faster than in other similar mutual funds.
What if the management company violates my rights?
If you believe that your rights as an investor are being violated, file a complaint with the Bank. This regulator controls the work of all financial institutions, including mutual funds and management companies.
How does a mutual fund work?
A mutual investment fund (MIF) brings together the money of different investors in order to collectively invest them in some financial instruments: stocks, bonds, real estate or others.
You can buy a share - a share in this portfolio. Or several shares - their number depends on the price of the share and the amount you deposited.
A share can be sold, bought or pledged. Ideally, its price rises every day. After some time, you pay off the share at a higher price than you purchased, and you receive income.
A special financial organization, a management company (MC), manages the funds of the mutual fund. It decides which securities or other assets to buy, when to buy and when to sell.
What are the mutual funds?
The main characteristic of a mutual fund is investment directions . Some choose stocks, others - bonds, still others - currency, real estate or art. Many mutual funds combine assets of several types at once.
Experienced - skilled - investor funds can invest in virtually any asset. Mutual funds for retail (unqualified) investors channel funds into the least risky financial instruments.
The investment declaration of each mutual fund clearly regulates: what share of funds and in what the management company can invest.
Mutual funds also have different periods for the sale and purchase of units.
- Open funds. You can buy and redeem their shares every business day. The money for the canceled shares will not be credited to your account immediately, but in a few days.
- Interval funds. Units can be bought and sold only at specific intervals, usually several times a year.
- Closed funds. Units can be bought only when the fund is formed, and sold only when the fund is closed.
Open-ended funds invest, as a rule, in liquid assets, that is, those that can be quickly sold at a fair price. For example, in securities for which there is always a demand.
Interval and closed-end funds - to less liquid ones. There are more risks, but the profit can be larger.
What are the advantages of mutual funds?
- Availability. The initial investment in the fund can be small - at least $ 15.
- Professionalism. Your money is managed by investment experts.
- Likely high income. The profit from investments in the fund may be higher than the income on the deposit.
- Low costs. If we compare investment in mutual funds with self-investment, the costs are lower. A mutual fund as a large investor has more favorable conditions for managing funds.
- Liquidity. Units of open-ended funds can be sold at any time without additional losses.
- Preferential taxation. There is no need to pay income tax when the value of the mutual fund's assets increases. Income tax (personal income tax) will have to be paid in three cases: if you invested in mutual funds before 2014, or earned more than 3 million rubles a year on shares, or sold them earlier than three years after purchase.
How much does a share cost?
The share price changes every day and directly depends on the value of the assets in which the funds are invested. The goal of the management company is to invest your money in such a way that this value is constantly growing. It is the rise in the share price that will bring you income when you decide to sell your shares.
To understand how effective your investments in one or another unit investment fund will be, follow the change in the value of this unit on the website of the management company. For open-ended funds, the price is published every day, for interval and closed-end funds - at least once a month. You can compare the rise in the price of a share with income, for example, from a deposit.
When buying shares, you also pay a premium, in fact, a commission. Its maximum size can reach 1.5%, depending on the volume of investments and on the agent through which you buy. And when a share is sold, its price is considered at a discount. It depends on the period of ownership of the shares and the conditions of the agent through which you repay the share, but does not exceed 3% of the total value.
Example:
You have decided to invest $ 1500 in a mutual fund. The cost of the share is $ 15, and the premium is 1%. As a result, you will buy one share at the price
and get
A year later, you decided to redeem the shares, that is, to withdraw the money. The share during this time has risen in price to $ 20. With a 1% discount, you will sell your 99 shares for
Your income will be:
What tax should be paid on this income?
It depends on when you bought shares, how quickly you decided to sell them and how much you earned on them.
If you bought shares of open-ended mutual funds after January 1, 2014, owned them for more than three years and the income received turned out to be less than $ 50000 per year, you do not need to pay personal income tax.
In other cases, you will have to deduct tax, the amount of which will depend on your total income for the year. If you earn, including on investments, up to $ 100000, personal income tax will be 13%. From the amount of income, which turns out to be more than $ 100000, it will be necessary to deduct 15% in tax. More information about the personal income tax rate can be found in the text "What taxes the investor pays".
Suppose that your income for the year was within 5 million rubles, and we will continue the previous example:
Your tax will be
As a result, you will get
For the year, the actual yield after taxes will be
Suppose you redeem your shares not in a year, but in 3 years and receive $ 190,000 upon sale. Income in the amount of $ 90,000 is not taxed. And your actual yield will be
for 3 years, or an average of 30% per year.
Where can you buy and sell shares?
You can buy shares directly from the management company, from an agent organization (most often it is a bank) or through a broker on the stock exchange. You can sell shares in the same way.
What am I risking?
As the saying goes, those who do not take risks do not receive income from the share.
Main risks:
Investments are not insured
Unlike bank deposits, investments in mutual funds are not insured by the state, even if the units were purchased through a bank.
Income is not guaranteed
Investing in the financial market is always associated with risk. It happened, for example, that the entire stock market "sagged" and the shares of even the most successful companies lost in value. If the funds of the mutual fund were invested in shares, the shares also fell in price, and did not grow. The higher the possible profitability of a particular financial instrument, the higher the risk.
Don't keep all your eggs in one basket: investing the fund in different assets reduces the overall risk.
I decided to invest in a mutual fund. How to do it?
1. Decide which fund is right for you
For how long are you ready to invest in mutual funds?
If you need money at any time, it is better to choose an open-ended fund, whose shares can be sold whenever you want. Conversely, if you don’t need your investment for five or more years, a closed-end fund will do.
What risks are you ready for?
What is the amount of temporary losses at which you will not feel anxiety and the desire to immediately sell shares? Depending on the degree of risk, you can choose the appropriate assets.
2. Compare different mutual funds:
- in terms of profitability for different periods of time - it is better not in one year, but at least in 3-5 years;
- by assets in which they invest;
- on allowances and discounts that they take when buying and selling shares;
- by the amount of funds raised and the value of net assets.
Detailed information about mutual funds is available on the website of the National Association of Securities Market Participants. There you can see which management company manages a particular fund, as well as compare the profitability of mutual funds for a period from a week to five years. In addition, the site has a filter that allows you to compare funds of a certain type - for example, only open funds or only interval funds.
3. Find out everything about the management company of the selected mutual fund
Check its license for managing funds of mutual funds on the website of the Bank. There you can also read the regulations that govern the activities of management companies.
The return on investment in mutual funds depends most of all on the quality of management, so it is important to take into account the qualifications and reputation of the fund manager.
- Study the instruments in which the management company invests the funds of the selected mutual fund. The investment declaration must describe possible assets, restrictions on their choice and risks.
- Find out the amount of remuneration of the management company and other expenses that are paid at the expense of the fund's property.
Higher remuneration will be justified only if the value of shares under the management of this management company grows faster than in other similar mutual funds.
What if the management company violates my rights?
If you believe that your rights as an investor are being violated, file a complaint with the Bank. This regulator controls the work of all financial institutions, including mutual funds and management companies.