What to consider when investing in mutual funds – Nigeria Observer | Jobs Vox


Investing and earning from multiple streams of income has become very important in the international community and the Nigerian economy. The economic recession and uncertainty in Nigeria has made it impossible for you to build wealth based on your monthly salary.

Mutual fund investment has proven to be the perfect recipe for wealth creation and accumulation, offering a wide range of investment opportunities and flexibility to investors.

Mutual funds are investment funds that pool money from many investors to buy securities such as stocks, bonds, money market instruments, and other assets. Interestingly, the main advantage of mutual funds is that they are managed by professional money managers who want to put together the right mix of funds keeping in mind the appetite of the investors.

Another important advantage of investing in mutual funds is that the entry level is lower and cheaper compared to investing directly in the capital market. Mutual funds offer an interesting edge to investors. This involves buying a mix of investments from different industries and different types to reduce the risk to the investor’s assets.

This article looks at various factors that an investor should consider while investing in mutual funds.

Identify your investment goals

In any investment endeavor, an investor needs to understand the growth or value of their investment goals. This can be as simple as setting your investment goals, but some may be for retirement funds, wedding savings, emergency fund requirements, or medical expenses, but are not limited to that. It is worth noting that these objectives help guide what kind of investment plan or category to enter, they all have different levels of risk.

Risk level

There are various risks associated with mutual funds and the investor should know their appetite to know which funds to consider. Understanding your risk appetite will guide your choice of funds to invest in. For example, SFS Fixed Income Fund offers investors an opportunity to invest in high yielding fixed income assets, which is a perfect option for investors with a low risk appetite.

Time horizon

While it is important to set investment goals and understand the level of risk, it is equally important to consider the time horizon, which is consistent with the objectives or goals that were originally stated. For example, long-term goals allow investors to focus on growth funds rather than value funds, which have shorter time horizons and higher risks.

Track record

It is important to consider the history of the fund and the fund managers. Basically, certificates are one of the factors that investors consider when evaluating the performance of their fund managers. This includes taking into account their fund’s performance success rate, investment patterns, and more.

The history of fund managers often reflects what investors expect from managers. This assessment may include an assessment of the fund’s product, assets under management (AUM), experience and net asset value (NAV) of the fund manager’s asset management company.

Cost ratio

This section is often underrated but it is very important as a small difference in the expense ratio can greatly affect the growth of an individual’s wealth. Note that all funds come with some costs and fees, as mutual funds are managed by professionals who analyze, make timely investments and exit stocks and bonds to generate good returns on behalf of the fund’s owners.

Comfort and convenience

In the developing world of technology, ease of use is one of the most important factors that investors should consider before choosing any investment plan or fund manager. With mobile apps growing rapidly, it is important for investors to be able to buy any mutual fund from the comfort of their home, which SFS Fund Mobile App offers to its many customers.

Elodianya is the CEO of SFS Capital Nigeria.


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