Simpa Adaba_
The process of wealth management is like
tending a beautiful garden- you need to start with good soil and a good
set of tools. Just as good soil has the proper fertility to nourish a
plant, having the right
foundation in financial literacy should empower
you to potentially cultivate a successful investment portfolio.
Today, investing in Mutual funds is one
of the best methods to build and manage wealth. Mutual funds often
referred to as either collective investment schemes, unit trusts or
funds, is a financial vehicle that allows various investors pool money
together. It is usually managed by a team of investment professionals to
create a greater buying power which in turn allows investors the
opportunity to invest in a wider range of funds than would have been
possible for individual investors.
Mutual Funds serve all types of
investors with diverse portfolios. Depending on an investor’s need and
priorities, there are many types of Mutual Funds but most prominent are
four main categories – Equity (Stock) Funds, Bond (Fixed income) Funds,
Money Market Funds and Hybrid Funds.
Equity or Stock Fund is a Mutual Fund
that invests principally in stocks. In most cases, it focuses on a
investment strategy; such as growth, value, large caps and small caps or
themes such as property, energy and health care. The stock fund is in
many ways ideal for investors with relatively little capital and people
with little financial know-how.
On the other hand, Money Market Fund is a
type of open-ended Mutual Fund that allows for short-term investments
in debt securities such as Treasury Bills, Commercial Papers and
Certificates of Deposit. It is often regarded as one of the safest and
most stable securities available, and it is suitable for investors
seeking short term investment.
Amongst the several benefits accrued to Mutual Funds investors, there are three key ones:
a) Investors’ portfolios are exposed to a low level of volatility as investment risk is spread across many securities, b) Investors enjoy professional management. because the Funds are managed by financial experts with years of experience, so investors are almost certain that their investments are properly managed. c) Mutual Funds that are open-ended and priced daily are very liquid and can be redeemed promptly at the prevailing price of the Fund.
a) Investors’ portfolios are exposed to a low level of volatility as investment risk is spread across many securities, b) Investors enjoy professional management. because the Funds are managed by financial experts with years of experience, so investors are almost certain that their investments are properly managed. c) Mutual Funds that are open-ended and priced daily are very liquid and can be redeemed promptly at the prevailing price of the Fund.
In as much as Mutual Funds are one of
the safest investment options, we also acknowledge the risk. It is
important that any individual looking to invest in Mutual Funds is aware
of some of these factors. The Fund is affected by market movements.
This means that the price may fluctuate in response to volatility in the
market which invariably affects the component investments or underlying
assets in the Fund
At Standard Chartered Bank, with as
little as $100 for the Retail Savings Plan and $1,000 for the lump sum
investment, investors can buy Funds which invest in the equities and
bond markets around the world.
- Simpa Adaba is the Head of Wealth Management at Standard Chartered Bank Nigeria Ltd
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