Money Market Mutual Funds, Equity Mutual Funds, Fixed Income, Balanced, and so on are the types of Mutual Funds that you can choose as an investor. But before that, every investor must know their risk profile to choose the appropriate instrument.
This risk profile serves to determine the type of investment or Mutual Funds that you will choose. Basically, there is an easy way to find out your risk profile.
This can be done by knowing your investment objectives and the limits of your ability to bear the risks of losses. To know for sure, find out the following types of risk profiles and their characteristics.
Mutual Fund Investment? Know the Risk Profile First
Every investor has their own risk profile. The profile is determined by how much risk you can bear in investing. In addition, consider the timeframe for investing.
There are investors who dare to take high risks or prefer to be in a safe zone. Investment risk can make you lose funds in small or large amounts. But keep in mind, the risk is proportional to the profit to be gained.
Let's just look at the risk profile explanation below:
Conservative investors prioritize stability. Investors with the conservative type do not want to experience losses so they tend to avoid risk.
This type is also very suitable for short and medium term investments to obtain maximum profits. They usually make investments over a period of one to three years.
In addition, this type tends to withdraw investment funds when experiencing a decline. The reason is because they don't want to lose their initial capital. This type prefers relatively safe investments to keep capital intact.
Conservative investors usually allocate relatively smaller capital in an investment instrument. They also aren’t brave enough to risk a loss.
This type of investor does not pay attention to the amount of potential returns. They prioritize security and stable profits.
This investor profile is perfect for investing in Fixed Deposits, savings, and investing in Money Market Mutual Funds. In addition, investment instruments such as Fixed Income Mutual Funds or Bonds can also be their options.
This moderate type of investor has understood that Mutual Fund investments can experience rise and fall. They can accept short-term fluctuations, as they target higher value gains compared to Fixed Deposits and inflation.
Even though they already understand Mutual Funds, a moderate type of investor still doesn't want to lose funds when investing. They are also not too brave to take risks in investing.
Therefore, Balanced Mutual Fund is a suitable option. The mutual fund has medium risk. Even so, the potential benefits received are as attractive as other types of Mutual Funds.
Aggressive type investors are ready to accept losses and profits from their investments. Investors with this profile also dare to invest in a variety of instruments, from Mutual Fund investments to stocks trading.
Many of these types come from businessmen or property entrepreneurs who have experience in investing.
Those are the four types of risk profiles every investor needs to know. Know your risk profile and find the right investment instrument. Don't forget to consider whether you are the type of investor who prefers to invest long term or short term.
Regardless of the level of risk you take, make sure your investment is fit for purpose.
Types of Mutual Funds for Your Investment Assets
There are various types of Mutual Fund products, each with its own risks and benefits. You need to choose the right type of Mutual Fund, before deciding to invest in one.
Mutual Funds have a variety of types that you can choose from. In deciding the right investment instrument, adjust it to your risk profile and financial goals. The following are the types of Mutual Fund products that you need to know about. Read through the following explanation:
Money Market Mutual Funds This Mutual Fund investment is carried out by placing funds in the money market. For example Fixed Deposits, current accounts, and debt securities. This type of Mutual Fund investment is commonly found and is suitable as a means of developing investment capabilities.
This type of Mutual Fund has a relatively low risk. However, the value of the return is commensurate with the risk, which is quite low compared to several other types of Mutual Funds. Because it has a low risk, this type of investment is suitable to diversify your investment.
Balanced Mutual Funds are a type of instrument that you choose or as diversification. This type of investment is done by spreading funds in various assets.
These assets can be in the form of stocks, money markets, and bonds. It should be noted that the maximum limit of fund allocation for each asset cannot be more than 79%.
Why so? When the fund allocation exceeds 79%, the type of Mutual Fund has changed. Investment in Mixed Mutual Funds is considered safe due to the placement of funds in a variety of different assets. In addition, the potential return to be received is also quite high.
Equity Mutual Funds are different from stock investments. Equity Mutual Funds are investments where the funds will be managed by Investment Managers who are highly professional. Meanwhile, stock investment can be done independently with a relatively higher risk.
The return comes from the difference in the rise or fall in the price of the stock. The potential return on Equity Mutual Funds is quite high, reaching 20%.
Fixed Income Mutual Funds Fixed Income Mutual Funds are investments made by allocating funds to fixed income-producing securities. Examples of fixed income-producing securities are bonds and debentures.
Both can provide regular fixed profits within a certain period. This investment is known for its relatively safe management. The return that will be generated also has great potential.
Those are the types of Mutual Funds that you can choose from. Each investment instrument has its own characteristics and risks. These types of Mutual Funds are highly popular and you can make a choice.
Choosing Assets According to Risk Profile and Investment Period
The next section will explain the selection of assets according to the risk profile and investment period. It is very important to invest according to the financial profile and planned goals.
Let's look at the choice of assets that have been adjusted to the risk profile and investment period:
Low Risk First, investors with a low risk profile. The conservative type is included in this group. As previously mentioned, this type of investor tends to avoid losses and prefers a safe zone in investing.
Investing in Money Market Mutual Funds is perfect for this type of investor. With low risk and attractive return opportunities, this type of Mutual Fund is the right choice. Fixed Income Mutual Funds can also be used as a second option.
The two types of Mutual Funds are suitable for short and medium term investments to gain optimal returns.
Moderate Risk Medium risk, namely investors with a moderate type. This type of investor is bolder than conservative investors in taking risks. These investors tend to choose short to medium term investment instruments.
This type of investor is suitable for Balanced Mutual Funds. This investment has a moderate risk with a relatively high profit potential. Even so, it is highly recommended to make medium-term or long-term investments so that the potential returns are more optimal.
High Risk The type of investor in the high-risk category is not afraid of losing capital as long as the profits have a large potential. This investor is suitable for both short and long term investments.
As long as the profit potential is high, they will not hesitate to invest large amounts of capital. The right type of investment is Equity Mutual Fund.
Compared to other Mutual Funds, this type of Mutual Fund has a higher risk. However, the potential gains are also higher. This investment is perfect for those who dare to take greater investment risks.
Investment assets must be adjusted to your risk profile and period when you invest. So you can gain the profit you want.
Invest in Money Market Mutual Funds with DBS Treasures
Out of all types of Mutual Funds, this Mutual Fund can easily match any risk profile that you have. This investment has stable profit potential and low risk. In addition, this type of Mutual Fund is suitable for diversification for those of you who have a lot of investments spread across various instruments.
To do this investment, you can make DBS Treasures your priority banking partner to support your wealth management. Moreover, you will gain a wealth of benefits as follows:
Investments are Managed by Professionals Your investment funds will be managed by professional Investment Managers to optimize the performance of your Mutual Fund products.
You Will Be Guided While Investing You will gain insights about the latest opportunities and market analysis from a financial team who are experts in their field, tailored to your risk profile so that you can make confident decisions.
Diversification to Reduce Risk Funds will be spread in various investment assets to reduce the risk of loss.
Buying, selling, switching, and even the SID (Single Investor Identification) registration process can be done anywhere and anytime easily through the digibank by DBS Application
Those are the advantages when you decide to invest with DBS Treasures. Be sure to invest carefully according to your capabilities and goals. Now, investing in Money Market Mutual Funds and other instruments can be done easily. So, don't hesitate to become a DBS Treasures priority banking Client.
To find out complete information about Mutual Fund investments, you can visit the following link https://www.dbs.id/id/treasures/investasi/mutual-funds/what-is-mutual-funds-and-equities..
