When investing, it is normal for us to think about how much we are going to earn or generate with the investment and in how long. And one of the investment mechanisms that has become popular due to its ease of management and amount of capital required are mutual funds. Therefore, if you plan to start in the world of financial markets through this investment vehicle, you may wonder: how much do you earn in mutual funds?
How much do you earn in mutual funds?
To know how much you earn in mutual funds, it is important to determine what types of mutual funds there are since depending on their nature they will have an expected profit. There are short, medium and long term mutual funds; conservative, diversified or risky profile; of national or international investment; etc. Depending on the configuration of the mutual fund, it will be the estimated profit that it will provide to its investor.
It should be noted that the profitability of mutual funds is recorded daily, and depends on the following factors:
- Interest and readjustments produced by fixed income instruments, both short and long term.
- The variations that occur in the market for equity instruments.
- Dividends paid by companies.
- The administrator’s commission discount.
- The term of the investment.
When verifying how much is earned in mutual funds, it is important to remember that the profitability or profit obtained in a mutual fund of a certain manager does not guarantee that it will be repeated in the future. That is, if you invest in a mutual fund considering the history of the manager and her profitability, this may be a good indication, but it is not an infallible one. Also, the only funds that have a sure profit are guaranteed mutual funds.
How Much Do You Make in Conservative Mutual Funds?
Conservative mutual funds are the safest, but also those with the lowest profit margin in terms of interest rates, since these funds invest in fixed income instruments, which generate low returns but previously known to the investor , that is, it is not a random interest or that depends on market movements.
Another factor that determines how much you earn in conservative mutual funds is the term of the fund: the shorter the term, the lower the percentage of profit.
How much do you earn in diversified mutual funds?
Diversified mutual funds are designed to increase your profit margin over conservative mutual funds but without being too risky. In other words, they invest a large part of the fund in fixed income instruments, but a part is allocated to equity instruments such as stocks and indices. This way they can offer a better profit, although it is a little riskier.
Diversified mutual funds are often classified by profile as not all moderate investors are the same or want to invest in the same proportions. In some, the ratio can be 90-10 (90% in fixed income instruments and 10% in variable income), 80-20 or 70-30.
How much do you earn in stock mutual funds?
Stock or risky investment funds are those whose investment strength is variable income instruments, which is why they offer a higher percentage of expected profit. At this point it is worth mentioning that the risk is much higher, but if you are a good strategist in the financial markets, you can obtain good profits with these investment funds. Once again, these will depend on the administrator and the term of the investment.