What are investment funds and why should I invest in them?
An investment fund refers to an investment product consisting of a portfolio of securities. The people who have invested in the fund own the portfolio jointly in proportion to the number of fund units they hold. It’s basically a huge piggy bank that individual investors contribute to. In return for your investment in the fund, you are allocated fund units in proportion to the size of your investment. Investing in funds is easy since they are managed by a professional portfolio manager who looks after your investments on your behalf. This means you don’t have to spend time monitoring the markets. You can get started with as little as 10 euros a month.
When choosing a fund, it is good to remember that expected return and risk go hand in hand. Low-risk funds have lower expected returns than high-risk funds.