If you are new in investing, you’ll probably encounter these types of investment instruments: UITF or Unit Investment Trust Fund, MF or Mutual Funds, and VUL or Variable Universal Life Insurance. They are what we call part of the “pooled funds” that are invested together in the stock market.
In short, if you are still learning how to invest, and you still cannot invest on your own, you are probably better of investing in pooled funds than investing on your own without knowing what to do. As they say:
“Investing in the stock market without the knowledge on “how” is like being on a tour in Africa without a map, looking around and asking other tourists that are lost as yourself.”
How are they similar?
Basically, it all works the same. Investor funds are pooled together, professionally managed by a management team of the investment company or trust company for the UITF and are invested in securities (bonds, stocks), which then generates returns and are given back to the investors.
Then how do they differ?
What are the securities where these funds invest?
We call them, Asset Classes, which are a group of individual securities or investments that have a common financial form like common stocks, bonds, real estate, and others.
They usually perform in a similar fashion distinct from other asset classes.
These are the major asset classes:
- Cash and Money Market Instruments
- Fixed Income (Corporate/Government Securities)
- Real Estate
- Alternative Assets
Let me expound on this on my next article.
Watch out for that. Need to know more and can’t wait? Contact me here.
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