Nowadays, saving money is no longer just about depositing it in a bank. There are now various forms of saving available, with many options to choose from, especially in mutual funds, which offer a better return than traditional bank deposits. So, what does investing in mutual funds look like? Today, Rabbit Finance will introduce you to all 7 types of mutual funds.

What is a Mutual Fund?

A mutual fund is a tool used to pool funds from multiple investors. Each person contributes a small amount, which is combined into a larger sum, managed by an investment expert known as a fund manager from a mutual fund management company. The mutual fund is then registered as a legal entity, and the pooled money is invested according to the policies outlined in the prospectus.

Who is a Mutual Fund Suitable For?

Mutual Fund

1. Individuals with limited investment budgets who want to achieve returns greater than bank deposits.

2. Investors without investment experience since some funds are similar to bank deposits, making them easier to access and understand.

3. People lacking experience and knowledge in investing.

4. Those without time to study or follow information for making investment decisions.

5. Salaried individuals looking to save money for retirement or future planning.

6. Those who do not have time to follow the stock market or keep up with national and international economic situations or interest rates.

Where to Buy Mutual Funds and How to Earn Returns

Mutual Fund

Most mutual fund management companies are managed by banks that produce mutual funds. Therefore, those looking to purchase mutual funds can find them at almost every bank or through brokers and distributors.

Mutual funds typically have an initial offering, known as an IPO (Initial Public Offering), where the starting price or value of the investment unit is set at 10 baht. Once the mutual fund management company invests the pooled money according to the investment policy and generates returns, the value of the investment units may increase or decrease from the initial value, depending on the management's ability to generate investment returns, which are then distributed to unit holders based on the number of units they own.

7 Types of Funds to Choose Based on Your Lifestyle

Mutual Fund

1. Money Market Fund

Also known as a principal-protected fund, it has very low risk and is similar to fixed deposits but offers higher returns. It is suitable for investors looking to park their money or take a break from other investments. This type of fund focuses on investing in government bonds with a maturity of no more than 1 year, providing returns of 1 – 2% per year, which is higher than savings accounts.

2. Bond Fund

With low risk, it is suitable for those who want to invest while ensuring the safety of their principal and receiving some returns. It focuses on investing in a mix of corporate bonds and government bonds, with returns ranging from 2 – 5% per year.

3. Mixed Fund

This fund has moderate risk and is suitable for investors who can tolerate some risk and want returns that outpace inflation. It focuses on investing in both bonds and stocks. During bullish market periods, it will invest more in stocks, while in bearish periods, it will increase the proportion of bonds. This type of fund typically offers returns of 5 – 10% per year.

4. Equity Fund

Also known as a stock fund, it carries high risk and is suitable for investors who can accept high volatility in the stock market. This type of fund can provide returns of up to 15 – 17% per year.

5. Foreign Fund

Also known as FIF, this fund pools investments to invest in foreign mutual funds, including bond and stock funds, whether in the United States, Japan, China, Europe, Asia, South America, or diversifying investments globally within a single fund. Returns typically range from 5 – 15% per year.

6. Commodity Fund

This fund focuses on investing in derivatives such as gold or crude oil, with prices fluctuating according to global markets. It is suitable for investors who can accept high risk to diversify their portfolios. This type of fund offers returns of 5 – 15% per year.

7. RMF – LTF Funds

These funds are established to promote long-term savings and can be used for tax deductions. The LTF must be held for 7 calendar years, while the RMF must be held until the age of 55 to be sold. If sold before the specified time, a tax penalty will apply.

However, no matter how much we desire high returns, risks will always follow. Therefore, before investing in any form, it is essential to study the details thoroughly, as the warning states: "Investing involves risks; investors should study the information before making investment decisions."

Information from The Association of Mutual Fund Management Companies, rabbitfinance.com