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6 Mutual Fund Risks You Must Know Before Trying It

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Sources of income can indeed come from anywhere, one of which is stocks or mutual funds which are now sufficient boom among other ways. The reason is that by putting money into mutual funds in a certain nominal amount, the owner will benefit without trying much. However, there are also some mutual fund risks that you need to be aware of in order to be prepared.

Actually there are several types of mutual funds that can be tried for novice investors who have just joined the investment world. Usually novice investors who join and give their money to mutual funds are attracted because of the profits. On the other hand, investors must also be aware of the risks of mutual funds, including the following:

1. Income Instability or Profit Daily

The first thing that investors should know is that mutual fund investments have daily returns, but are not stable in value. Because every profit earned every day will be different, it could be a profit today and tomorrow it will be a loss. For that, every investor must be ready and able to assess the investment product that is suitable to be chosen.

2. Loan Financing

Actually, the risk of this one mutual fund applies to people who make loans just to buy mutual funds. Because mutual fund profits are unstable, even losses may be obtained and make it difficult to return money. In addition, for example, money market mutual funds have fewer advantages than other types and should be considered as well.

3. General Capital Market Problems

Then the risk of mutual funds is that there are effects that will occur and are influenced by national and global economic developments. In addition, the rise and fall of the graph is also influenced by government policies and the political situation of the country’s investment products. Plus other circumstances that arise suddenly such as natural disasters or social disasters that can shake the economy.

4. Investment Manager who Manages Mutual Fund Products

In contrast to stocks, which require investors to choose the right time independently and are always ready to see profits. Mutual fund products have investment managers who are experts and tasked with classifying or putting investors’ money into the product. It should also be noted that in one mutual fund product there are several companies that are incorporated.

Then the investment manager is tasked with selecting companies that are suitable for investors in the mutual fund product. Well, the bad thing is, when you get an investment manager who is less capable or not an expert, the investment results will also be less good. The function of the investment manager is indeed very important in the investment process because it has different methods or techniques.

5. Mutual Fund Investment Liquidity Value

In short, the liquidity value in a mutual fund product will help whether the product is easy to sell or not. When the product is easy to sell, the liquidity value is high and vice versa. On the other hand, this liquidity value is closely related and influenced by the company’s position in the mutual fund product on the sales exchange which determines the price.

6. Sales Depend On Daily Circumstances

The last discussion, as previously stated, is that every day the market’s profits and positions continue to change, as well as mutual funds. Therefore, when investors will sell products mutual funds then be careful. Because it could be that when selling mutual funds there can be profit or loss.

Those are some of the mutual fund risks that investors should at least know in order to maintain and store their money properly. Through this, investors can also indirectly learn how to manage and play money in mutual fund investments. Thus the explanation this time, hopefully it can be useful to know the advantages and disadvantages of mutual fund investment.

Read also: Steps to Get Started How to Invest in Mutual Funds for Beginners



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