Risks of Investing in Mutual Funds

[Suba]

According to many people, mutual funds are one of the safest instruments and have little risk because they are regulated and managed by skilled and experienced investment managers. Moreover, mutual funds are very suitable for everyone, both students and parents, because investors only need a small amount of capital to start joining a mutual fund platform. Mutual funds are also considered more profitable compared to deposits and bonds. Even though mutual funds are considered safe, that doesn't mean they are without risk. To anticipate future losses, it would be good if we could discuss what risks do mutual funds have?

 

[Kirubel]

You are right mutual investments are less risky than investing individually, and since it have more than one mind and pocket then the chance of losing the business is lower, but the problem is when the two parts don't have similar effort for the business and when one try's to outsmart the other investor then the business will have bad future and will end shortly.

 

[Suba]

Mutual fund investing involves risks such as market volatility affecting fund performance, the potential for losses, management risk based on fund manager decisions, liquidity risk, interest rate risk for bond funds, and external economic factors influencing overall market conditions. Understanding and controlling these risks is critical for making sound investing choices.

I agree with you, it turns out that mutual funds also have investment risks which may occur from external factors such as the political and economic conditions of a country, as well as internal factors such as defaults which may occur in stock, fixed income and money market mutual funds.

 

[neku]

Some people invest in mutual funds when the share prices are very high, resulting in losses. In other cases, the fund manager may not be competent due to which the fund may make less profit or even a loss.

 

[Suba]

Some people invest in mutual funds when the share prices are very high, resulting in losses. In other cases, the fund manager may not be competent due to which the fund may make less profit or even a loss.

This may happen because each mutual fund platform managed by an investment manager has different skills, and it is possible that many of them lack experience so they allocate customer funds to instruments incorrectly.

 

[Starmix]

If you invest in a mutual fund, you the owner must also monitor your fund everyday because it's also like trading. I invested in mutual funds with a capital of $50 and after 6 years the interest isn't attractive. It's because it's affected with the inflation problem.

 

[Kirubel]

When considering a mutual funding business we need to be professional and not focus on only growing one person business and pocket, we need t focus on growing the business not the one side pocket, i have state that it is good to run a mutual fund business above but beings wise is mandatory.

 

[Suba]

Mutual funds have the possibility of a risk of decline in value, the price of mutual fund assets can also change depending on market prices. So the Net Asset Value per investment unit is calculated from all assets and the number of units in circulation.