Get to know Equity Mutual Funds and the Risks

Mutual funds are one of the capital instruments that many people choose. The reason is, this type of investment is comfortable and easy to try, especially for newcomers. Moreover, you can also invest in mutual funds with small capital.

Mutual funds themselves are divided into several types. One of them is a stock mutual fund. What is a stock mutual fund? Next is the explanation.

What is Equity Mutual Fund?

Stock mutual funds are a type of mutual fund that puts most of their legacy in the form of stocks. The remaining amount invested in the form of shares is at least 80 percent.

Equity mutual funds and share capital have little comparison from the method of activity. Share capital is regulated directly by investors. Meanwhile, equity mutual funds are regulated by the capital administrator.

The shares purchased by the capital administrator must also be shares that have been listed on the Indonesian Impact Money Market. This is certainly intended to discourage investors.

The Advantages of Equity Mutual Funds

Funding in stock mutual funds gives you some profit. The following are the advantages of stock mutual funds:

1. Bigger result reply

Stock prices are volatile. That is, it can go up and down in a relatively short time. This is what makes it more risky than other types of mutual funds, such as money market mutual funds. However, compared to other types of mutual funds, the returns or returns from stock mutual funds are also greater.

2. Requires relatively small capital

The capital you need to invest in stock mutual funds is also relatively small. This is because you don't need to directly buy 1 lot or 100 shares, like in stock investment. There are many applications for mutual funds that allow you to make investments starting from around Rp. 10. 000 only.

3. Not taxable

Another advantage of investing in mutual funds is that you don't want to be taxed at all. It's different with share capital. Every time you do marketing, you will be subject to a tax of 0.1%. In addition, for every dividend or industry profit allotment, you will also be subject to a 10% tax.

4. No need to carry out your own analysis

In stock mutual funds, the fund manager will set the budget by buying and selling shares. Before doing it, of course a capital administrator will estimate the profits and losses.

This is where the stock mutual fund profit position. You don't need to bother analyzing the industry's financial information before buying their shares. You also don't need to bother monitoring stock price movements. You simply deposit money and give budget management to the experts.

Disadvantages of Stock Mutual Funds

Even though they share profits, mutual funds also have some disadvantages. The following are some of the disadvantages of stock mutual funds that you need to know:

1. Unable to sort stocks

The first drawback of stock mutual funds is that you can't choose the stocks you want. The management of mutual funds is left entirely to the capital administrator. Likewise with the determination of shares in mutual fund products.

2. Longer budget disbursement

Compared to share capital, mutual fund disbursement usually requires a longer duration. This is because you are funding your shares through a managing agent. Disbursement of the stock mutual fund budget itself usually requires a duration of 3 to 7 days.

3. There is an investment fee

Another disadvantage of mutual funds is that you will be charged a capital fee. For example, the payment for the purchase of the part of the engagement (subscription fee) and the payment for the transfer of the part (switching fee). Not only that, there is also a bank transfer fee that will be charged when you do business.

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