Hey there! It’s money here!

The past few weeks have not been the best for me in this part of the world, and I am sure you would say the same. I had to deal with so much uncertainty in relation to my value and this translated to higher prices and an overall spike in the cost of living for you.

As the highly-demanded individual I am, there’s no doubt you are probably being bombarded with information on how to make more of me. 

There are many unsolicited and unsafe options to help me grow. But, I’ll let you in on one of my most trusted ways to grow over time i.e. Mutual funds.

As a newbie to the investment space, you’ve probably heard about the benefits of mutual funds before, but find it difficult to understand the whole hype around it. Don’t you worry, Money has got you!

In this article, I’ll discuss all you need to know about mutual funds.

First, let’s start with the basics… What is a Mutual Fund?

A mutual fund is a pool of money collected from various investors with the aim of investing in different assets such as stocks, bonds, and other instruments. 

The trading of assets in a mutual fund is performed by professionals referred to as Fund/Portfolio managers.

Money managers channel the pool of money generated into various asset classes. These actions by the managers are done to generate capital appreciation for the investors. 

The performance of a mutual fund is measured by its Net Asset Value (NAV). That is, NAV is the market value of the securities held by the fund. 

The total units of a mutual fund are known as its portfolio and each unit represents the investor’s ownership and entitlements to the gains or losses generated or suffered by the fund respectively.

What are the types of Mutual Funds Available for Investment in Nigeria?

  • Equity Funds: This fund invests principally in stocks or equities.
  • Fixed Income Funds: It focuses on investments that pay a set rate of return, such as government bonds, corporate bonds, or other debt instruments.
  • Money Market Funds: consist of short-term instruments, such as treasury bills, which usually mature in less than a year.
  • Real Estate Funds: these are funds that make investments in the housing and real estate sector.
  • Mixed or Balanced Funds: it’s a mix of asset classes such as stocks, bonds, or other instruments. This is usually embarked on to reduce the risk of exposure across asset classes.
  • Index Funds: are those that are used to match the return of a major stock market index.

As explained earlier, mutual funds have a lot of amazing benefits, some of my favourites are;

  • Diversification of portfolio
  • Easy access to various assets
  • Professional management of portfolio
  • Minimal investment requirements.

Just like everything else in life.. while mutual funds are great, they also have some limitations.

Relax… It’s important that you’re able to weigh your options before investing me. Here are some of the risks involved with investing in mutual funds;

  • All investment funds carry some level of risk depending on the performance of the portfolio.
  • The potential risks associated with mutual fund investment include:
  • High fees and commissions
  • Difficulty in comparing the performance of the mutual fund
  • Volatility in returns
  • Not all mutual funds guarantee your principal and returns e.g. equity funds

Now that you understand the basics of Mutual Funds- Here’s how you can invest in them.

Using the Zedcrest Wealth app, you can begin investing with as low as N1000. 

  • Download the Zedcrest Wealth app here
  • Create your account
  • Push the Invest button
  • Tap Mutual funds
  • Then choose your preferred option based on your risk profile.
  • Woo-hoo welcome to the mutual funds club.

Take that step

Wealth cannot be achieved by leaving me in a bank or a kolo, but I understand that investing me can be a daunting task. All you need to do is take that step, even with a N1000, you can learn about investments and gradually develop a healthy investing habit.

There you go, I can go on and on- but that’s a summary of all you need to know about Mutual Funds! I hope you had an amazing read. If you have questions for me? Drop them below and my friends at Zedcrest Wealth would be glad to explain further.