There are several if not countless ways of investing money and one of them is equity funds. But is it the right type of investment that will help you to achieve your financial goals? You can check vermeer capital association air to learn more about equity investments. This article digs deeper and explains what this kind of investment entails.
What you know about equity investments
Understand the Basics
It is vital you understand this kind of investment before you make a move. Equity fund is a fund that invests in stocks and most cases; it deals with the small amount of money. There are other types of funds such as bonds, money funds and other securities, but these deal with the greater amount of cash.
Objective of the Funds
The general purpose of equity funds is a long-term growth through capital gains. For example, the goal of the funds could be achieved by investing in stocks of companies that have had a reputation and long history of dividend payments. Not so, equity funds can be chosen based towards a targeted level of risk or specific market sectors.
Several features distinguish equity funds; style- it does not matter whether it is from one country or multiple, size and management style- whether it is actively managed or if it follows indices of a stock market. There other types of equity fund types like growth fund, index fund, the value fund, sector fund among other funds.
Value funds invest in companies of stocks that are more established or older while index funds invest in securities that follow a strict and specific market index. Growth funds are invested in stocks of companies that are growing rapidly and sector funds invest in one area of an industry, and they offer high appreciation potential.
It is important that when you are thinking of investing in an equity fund, you solemnly don’t base your financial decisions on the stock market past performances. In essence, it does not mean that that since a particular stock market has performed well in the past, it will still do well in the future and vice-versa. There are chances that those equity markets that have performed poorly in the past might play much better in future.
One important factor you should keep in mind because share prices are always fluctuating, you might not get back your original investment. Being aware of risks is, therefore, important before you make a big financial move like an investment; also, you are willing to encounter all financial consequences that come along.