Why should you try entering the world of mutual fund investing? 4 things you need to understand before getting started

Your money needs to work to increase its value

Leaving your money in a savings account with almost no interest is practically causing your money to depreciate. As long as the inflation rate is at 1-2% per year, your money is losing purchasing power every day.

(Mutual Fund) is an option that makes investing accessible and systematic for many people, regardless of how much money you have or if you’re a beginner.

Initially, a mutual fund is when professional fund managers (who must be certified by the Securities and Exchange Commission) pool money from many small investors and seek ways to increase that money through investments in various assets.

When the fund earns returns from investments, it is then distributed back to each investor proportionally to their contribution.

Advantages of investing through mutual funds: Why you shouldn’t invest alone?

1. Diversification is easier

Imagine: if you have 10,000 baht, you can only invest in one stock or 1-2 bonds. The risk is concentrated.

But if 1,000 people pool together 10 million baht, the fund manager can invest in 50 stocks, 20 bonds, and many other assets. The risk is spread out.

2. You get expert opinions

Fund managers undergo rigorous training and competition. They analyze the market daily, track real-time economic data. What takes 8 hours a day for an ordinary person, they do for you.

3. Funds are under strict regulation

Your fund account isn’t isolated. It is periodically audited by the Securities and Exchange Commission. Reporting must be transparent and consistent. This protects you from fraud.

What types of funds are there? Which one is suitable for you?

Choosing the right fund is half of your investment success.

Based on risk level: Calm or Hot-headed?

Closed-End Fund (Closed-End Fund) - Locked until maturity

This type is sold only once at the start. After that, you must hold your units until the project ends. During that time, you cannot sell your units back like an open-end fund.

Advantages: The fund can invest long-term and stably. No need to keep cash waiting for withdrawals.

Disadvantages: High liquidity risk. If you need money before maturity, you’ll have to find a buyer elsewhere, risking the price.

Open-End Fund (Open-End Fund) - Available for immediate use

This type can be bought and sold at any time. Need cash unexpectedly? Sell your units and get the money the same day.

Advantages: High liquidity. You can sell whenever you want.

Disadvantages: Because of continuous trading, the fund must keep a large amount of cash for withdrawals, making long-term investment more difficult.

Based on investment policy: How much return do you want?

1. Money Market Fund (Money Market Fund) - Lowest risk

Invests in deposits and short-term debt instruments. Returns are modest but stable. Suitable for those who cannot tolerate losses or are currently holding cash.

2. Fixed Income Fund (Fixed Income Fund) - Low to moderate risk

Invests in government bonds, corporate bonds, bills. Offers better returns than money markets but remains stable.

3. Mixed Fund (Mixed Fund) - Moderate risk

Combines bonds and stocks (equities), with stocks not exceeding 80%. Suitable for beginners seeking good profit opportunities without taking too much risk.

4. Flexible Fund (Flexible Fund) - Moderate to high risk

Fund managers can adjust the stock proportion from 0% to 100% based on market outlook. Increase stocks when the market is good, reduce when uncertain. Ideal for those who don’t have time to manage their portfolio.

5. Equity Fund (Equity Fund) - High risk

Invests over 80% in stocks. High returns in good markets but decline when markets are poor. Suitable for long-term investors (5 years or more).

6. Sector Fund (Sector Fund) - High risk

Focuses on stocks within a specific sector, such as banking, telecommunications, transportation. Returns are volatile. Suitable for those who forecast growth in that industry.

7. Alternative Investment Fund (Alternative Investment Fund) - Very high risk

Invests in gold, oil, agricultural commodities. Prices fluctuate sharply. Suitable for investors with high risk tolerance.

4 steps before opening an account: Prepare yourself

Step 1: Know yourself - What is your risk tolerance?

This is the most important question. Ask yourself: if your investment portfolio drops 10%, 20%, 30%, can you still sleep peacefully?

All fund management companies (fund management companies) have KYC questionnaires to assess this. Don’t cheat yourself—answer honestly.

Step 2: Observe the economic environment

If the economy is good, the stock market is bullish. Investing in stocks is timely. But if the economy looks poor, caution is advised, and focus on bonds instead.

Step 3: Read the fund’s prospectus carefully

Yes, it will be long and boring, but all critical information is here—investment policy, fees, withdrawal conditions, track record. It reveals the true nature of the fund you’re about to be persuaded to invest in.

Step 4: Review past performance, but don’t get attached

Look at 1-year, 3-year, 5-year results. Past good performance doesn’t guarantee future success, but it shows how solid and stable the fund is, and how it performs during market downturns.

NAV: What fraction are you?

After purchasing units, the next question is: “Is my money now increasing or decreasing?”

The answer lies in NAV (Net Asset Value), which is calculated from:

• The total value of assets held by the fund (closing price of the day)
• Minus liabilities and expenses owed

If NAV now is higher than your purchase price = profit If NAV now is lower than your purchase price = loss

But this profit or loss isn’t “real” until you sell your units, called Capital Gain.

Additionally, some funds also pay dividends (Dividend)—money paid periodically by the fund without selling units.

Total return = Capital Gain + Dividends = your total earnings.

Starting is actually not difficult

No one is an investment expert from day one. Everyone starts from zero.

But the most aggressive thing is to let your money sit idle and miss opportunities. As long as tools like mutual funds exist to help beginners invest more easily, there’s no good reason to let your money just sit idle while big institutions make their money work 24/7.

Investing through mutual funds is not complicated at all. Just start, and let time and the fund managers’ work speak for you.