Managed funds suit long-term investors
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Tuesday, 19 March, 2002 - 21:00
MANAGED funds are particularly useful for individuals wanting to progressively build up their share investment over time.
This includes investors who employ a dollar cost averaging strategy.
The minimum investment in most managed funds is between $1,000 and $2,000.
Investors can then commence a savings plan, where they invest an extra $100 to $200 each month.
Investing such small amounts directly in shares is simply not feasible, nor would it be cost effective given the minimum brokerage charges that apply.
This approach would suit people who have paid off their mortgage and suddenly have the ability to start investing in new assets.
Instead of putting the money into a bank and earning a low rate of interest, they can put the money into a managed fund with scope for capital growth and tax-effective income.
Investors who have already built up a large pool of savings may also choose to invest in the share market on a bit-by-bit basis, using a dollar cost averaging strategy.
This involves putting an agreed amount each month or quarter into the chosen investment.
If prices fall, the investor will be able to acquire more units in the managed fund. If prices rise, they will acquire less.
This strategy acknowledges that trying to choose the ideal time to enter the market is fraught with difficulty.
This includes investors who employ a dollar cost averaging strategy.
The minimum investment in most managed funds is between $1,000 and $2,000.
Investors can then commence a savings plan, where they invest an extra $100 to $200 each month.
Investing such small amounts directly in shares is simply not feasible, nor would it be cost effective given the minimum brokerage charges that apply.
This approach would suit people who have paid off their mortgage and suddenly have the ability to start investing in new assets.
Instead of putting the money into a bank and earning a low rate of interest, they can put the money into a managed fund with scope for capital growth and tax-effective income.
Investors who have already built up a large pool of savings may also choose to invest in the share market on a bit-by-bit basis, using a dollar cost averaging strategy.
This involves putting an agreed amount each month or quarter into the chosen investment.
If prices fall, the investor will be able to acquire more units in the managed fund. If prices rise, they will acquire less.
This strategy acknowledges that trying to choose the ideal time to enter the market is fraught with difficulty.