It is obvious that investors have a hard time deciding which fund is the right one for them. In addition to the assessment of one's own risk tolerance, the age of the investor plays an important role.

Equity funds offer the highest returns

As an investor, you can achieve the highest returns with equity funds. However, the risk of undesirable price fluctuations is relatively high. However, it is equally clear that this risk decreases with increasing investment horizon. A short-term investment in equity funds is therefore only recommended if one is aware of the risks as an experienced investor. Bond, money market and real estate funds are more suitable for short-term investments.

Investors who invest for the long term and do not want to be intensively involved with stock and capital markets should avoid theme or sector funds. This is because it is relatively unlikely that a particular theme will boom for years.

Age-related fund investments

Equity funds usually require a longer period of time to make up for possible losses in value. As a young person, the investor still has enough time. However, with increasing age it becomes advisable to reduce the share of equity funds.

Nevertheless, when selecting funds, it is advisable not to rely exclusively on equity funds, regardless of age. The sensible share of equity funds in a portfolio is often determined by a simple rule: 100 - age = share of equities/ equity funds in the total portfolio.

If you need your capital back in the short term in order to fulfil a wish, you should reduce the share of equity funds even further when selecting funds.
Personal mentality is decisive

If you attach great importance to the security of your investment, you should include no or only a few equity funds in your portfolio in https://exnesslatam.com/trading-de-energias/ area. A suitable solution of an appropriate fund selection would possibly be a money market fund with low fluctuations and limited return expectations.

Bond or mixed funds are the first choice if the investor is prepared to tolerate moderate fluctuations. It is particularly important here to distribute one's capital among different values and markets and to strive for broad diversification. In doing so, one can already expect average returns.

Investors who are willing to take risks and are yield-oriented and who are not upset by even relatively high price fluctuations can invest the majority of their assets in equity funds.

Thinking ahead is better 

For investors, the choice of the right fund category is even more important than the selection of individual funds, because it has been proven by numerous studies that the correct allocation of the total assets is responsible for 90% of the investment success.