Beginners tend to prefer investing in stocks over mutual funds. For one thing, not many people know how to make money from mutual funds. Stocks can be traded and earn dividends, but mutual funds cannot be traded and do not pay dividends. So, how can we make money from mutual funds?
First of all, we must first correct perspective. Investors are not really “making money”, but should “let the money expand” until its value has multiplied in value at a later date. So the question about how to make money from mutual funds is actually related to the question of “which mutual fund product is the most profitable?” and “what is the right mutual fund investment strategy?”
- Choosing the Most Profitable Mutual Fund Product
Thanks to advances in technology, we can buy mutual fund products easily. Simply download the mutual fund investment application from PlayStore, fill out the registration form, wait for approval, then choose a mutual fund product according to our risk tolerance and investment goals.
Conventional investors who want to avoid the risk of loss can choose money market mutual fund products. Aggressive investors who are more tolerant of risk and have long-term targets can choose equity fund products. Another alternative for moderate investors is to invest in fixed income mutual funds products.
We can also buy several mutual fund products at once to reduce risk and manage money to meet various goals. For example, depositing emergency funds at the RDPU, then buying RDPT for children’s education savings. Because everyone’s investment goals and risk tolerance are different, the “most profitable mutual fund product” for each person is different. We can customize it ourselves.
- The Right Mutual Fund Investment Strategy
We will get a profit if the unit value we have in a mutual fund increases from time to time. This profit can be disbursed together with the principal investment when we sell a mutual fund (redemption) with a value per unit of participation higher than the value per unit when we buy it (subscription).
Note, the value of mutual funds continues to increase over time. In the short term, say in less than a year, the value of a mutual fund could decline. Especially if we buy RDS which has higher risk and fluctuation. But over a much longer period of time, the value can increase to several fold.
From these discussions, we can conclude several strategies to help investors make money from mutual funds. Among other things, investors need to:
- Keeping mutual funds for a long time.
- Purchase units in stages, not lump sum .
- Invest in 2-3 different types of mutual funds at the same time, not just in one product.
For starters, choose one RDPU product each and any one RDPT product. Ensure that mutual funds are managed by well-known investment managers and have a consistent upward performance chart. Set aside around $10 to buy each mutual fund product every week or at any time interval you want. Do it continuously for more than a year. Undoubtedly in the same month next year, you will find the value of mutual funds has increased. Good luck!