What should I consider when choosing an investment fund?
The first thing I have to consider is my profile as an investor. In other words, the return that I want to get bearing in mind the risk that I am ready to accept, how long I wish to keep the investment to reach my goals, and also my possible liquidity needs. Once my investor profile is defined, it will be easy for me to choose the investment fund that suits me best.
Is it better to invest in one or more funds?
It is always advisable not to invest in just one type of asset. Diversifying investment means reducing risk. You can diversify and invest in different assets with different levels of return/risk. Under the same market conditions, different assets also tend to behave differently, i.e. the risk is also diversified.
I'm going to need the money in six months, should I invest in equities?
This type of fund is recommended for investors who are looking to enjoy long-term returns. In a short-term investment, the risk is greater. Equity funds invest in equities, i.e. they are high-risk funds because their return is linked to that of the markets. This means you may get a high return in the short term, but also that there are other periods in which the return is negative.
Who can own an investment fund?
Individuals and legal entities can be holders. Funds may also have a single owner or several owners (called "co-owners"). If there are several holders, the fund is owned by all of them in equal parts.
Do I have to open a foreign currency account to open a foreign currency fund?
It is not necessary, you can do it through your account in euros.
What is a guaranteed fund?
A guaranteed fund is a fund whose investment policy is aimed at obtaining a certain return on a specific date, guaranteeing the capital invested at that date. There are guaranteed fixed-income and equity funds.
Guaranteed fixed income funds include some which guarantee a return on the maturity date in addition to the capital invested.
What is the difference between a cumulative fund and a distributive fund?
Cumulative funds are the most common. The dividend is not paid into the current account associated with the fund, but is included in the net asset value of the fund. One of the advantages of investment funds, and one of the reasons they are so interesting from a fiscal and financial standpoint, is that they are not taxed until they are reimbursed.
Distributive funds pay the dividend into the account associated with the fund. The dividend can be annual, quarterly, etc., and is subject to the withholding tax applicable when the funds are credited to the account.