First of all, what exactly are investment funds?
Investment fund is the common name for an Undertaking for Collective Investment (UCI). The fund collects investments from individual investors and invests them collectively based on a predefined investment strategy."
Investment funds have many advantages.
1. Diversification – ‘don't put all your eggs in one basket’
If you invest in a small number of shares, your return is impacted more if one of those shares performs badly. Funds, on the other hand, enable you to invest smaller amounts in a large number of different products and companies, which means that your risk is spread more evenly.
2. Product offering – ‘something for everyone’
With KBC providing a wide range of funds, most investors can find something to their liking. However, investing in funds entails risks, the extent of which depends on the type of investor you are.
Depending on the fund's investment policy, you may run a greater or a lesser risk of losing all or part of your initial investment. To limit this risk, KBC also has funds that offer a certain degree of protection for your investment.
If you are interested in certain investment themes or want to place your own particular stamp on your investment portfolio, we have a wide range of funds suited to these preferences.
However, you should bear several things in mind:
1. A sufficiently long investment horizon
It is important that you have a sufficiently long investment horizon. Investing often only becomes interesting in the longer term.
2. Potential return is related to the risk you're willing to take
If you play it safe, your potential return will probably be lower. If you take more risk, the return may well be higher, but the risk of incurring a loss is higher too.
3. Invest in products you are familiar with and which you have experience of
What happens to the income generated by the fund?
When you invest in a fund, you usually decide what happens to the income generated by the shares or the bonds in which the fund invests.
- Reinvest it
The fund will reinvest the income, which in turn may generate more gains. These are known as capitalisation funds. That can result an attractive additional gain in the longer term.
- Have it paid out
The fund pays out the income, which is an interesting option if you want to take an income from your investments. In this case, you opt for distribution funds
However, certain fees and charges have to be paid, the best known of which are entry and exit charges, management fees and transaction charges. The exact amount you pay can be found in the fund's prospectus. Find out more about ‘What it costs to invest in funds’.
Who can invest in investment funds?
You don't need to be well off to invest in an investment fund. If you set up an investment plan, you can put away from as little as 25 euros a month and earn a potentially higher return.
You don't have to be an expert either on international financial markets, with their daily price fluctuations. Instead, the manager adjusts the positions in the fund to take account of the current situation on these markets.
Interested in investing? We'll be happy to assist you.
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Larger investment amounts require a more specific approach. KBC Premium Banking gives you just that. Click or tap below to find out more.
How much does it cost to invest in investment funds?
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