Before you invest in a Mutual Fund, you need to read the experience of a Nigerian Researcher, Solomon Udoh, so you won’t get your fingers burnt. Udoh invested N10,000 monthly for 10 years only to get less than he would have had if he had just saved the money for that same period.
Udoh’s disclosure provoked reactions from Nigerians who pointed out the problem with Mutual Funds and how to properly invest.
Udoh disclosed his disappointment in a post via his Twitter account, @laz_inc, with images to back his claim. In the post, Udoh stated that Nigeria as an entity defies all logic one could possibly think of after his balance from the N10,000 monthly investment of 10 years in ARM Discovery Fund showed N936,621.
What you need to know about Mutual Funds
Mutual Funds are pools of money collected from many investors for the purpose of investing in stocks (Equity), bonds, derivatives. Mutual funds are owned by a group of investors and managed by professionals (ARM).
The types of Mutual Funds are explained below
Money Market Funds: Money market funds invest in short-term fixed-income securities. Example of short-term fixed-income securities would be government bonds, Treasury bills, commercial paper, and certificates of deposit. These types of fund are generally safer investment but with a lower potential return than other mutual funds.
Fixed Income Funds: Fixed income funds buy investments that pay a fixed rate of return. This type of mutual fund focuses on getting returns coming into the fund primarily through interest.
Equity Funds: Equity funds invest in stocks. Furthermore, there are different types of equity funds, this includes, funds that specialize in growth stocks, value stocks, large-cap stocks, mid-cap stocks, small-cap stocks, or a combination of these stocks.