Money Management – A Guide to Managing Funds

Rates and Fees verified correct on October 23rd, 2016

Guide to managing funds

Most people are keen to take steps to improve their financial futures and many of us try to do this through the careful investments that we make. However, the world of investments is huge and varied. Whilst there are certain investments that you may be able to make and manage on your own there are many others that may be out of your reach if you are looking to go it alone. On top of all this, some people find making and managing investments easy – it is second nature to those with the aptitude and experience necessary. However, others like the thought of being able to get involved with various investments but do not have the confidence, know how, or ability to monitor and manage their investments.

This is where managed funds can prove invaluable. With managed funds, investors can benefit in many ways – this is a great way to make a greater number of investment opportunities accessible to a wider number of potential investors. Not only can you benefit from increased investment diversity with managed funds but you also get to benefit from the invaluable advice and expertise of professionals within the field, which is especially beneficial to those who are new to investing or who lack the confidence to go it alone.

With managed funds you are able to pool your cash with other investors, which means that you can collectively make an investment in an asset or assets that you might otherwise have been unable to invest in. This is because your funding, if you were to go it alone, would limit what you could invest in but the strengthened funding that comes from pooling funds opens up many new and exciting investment opportunities for you and for others investors.

With managed funds you also have the added, valuable benefit of having professional investment fund managers on hand to manage the investments on your behalf, which is perfect for those who do not feel confident about managing their own investments or those who do not have the time or inclinations to get involved with the management side of investing.

Different types of managed funds

Before you invest in any sort of asset you need to think about what you want to invest in and why. With managed funds there are many different variations to choose from. For example, some managed funds may focus on a particular asset class such as property whereas other managed funds may offer investment in a variety of assets, which could include property, cash, shares and bonds.

No matter which type of managed fund you choose to invest in, the principle is the same. You purchase units, which are of equal value in the fund. Like other types of investment the value of the units that you buy can either increase or fall based on whether the value of the assets owned by the fund rise or fall.

It is also important to remember that assets owned by the fund may be sold on and profits that are generated by these sales along with income generated from the assets are passed on the unit holders by way of distributions. These distributions are similar to receiving share dividends.

The key benefits of managed funds

For those who are interested in investing and hoping to reap financial rewards for the future, managed funds can prove hugely beneficial in a number of ways. Investing in assets can be a daunting prospect if you are not familiar with investments or you lack confidence, so for some people managed funds can really open up the playing field and present a myriad of new opportunities. Some of the key benefits of considering managed funds for your investments include:

  • Diversification: If you are limited in terms of how much money you have to invest, going it alone means that you will also be limited in what you invest in, with the chances being that you will only be able to invest in one company, thus putting all of your eggs into one basket. If the company you invest in does well, that's great. If it doesn't then things are going to look very bleak in terms of your investment. When you invest that same limited amount of money in managed funds, you will be pooling it with the funds of other investors, which means that you can spread your investment across a range of companies and assets, which decreases the risk of losses and means that you are not at the mercy of just one company or asset class
  • Expert assistance: Dealing with investments can be difficult and daunting for many people, particularly those who are inexperienced in the world of investing and those who lack confidence. When you opt for managed funds you will have access to the advice and assistance of expert fund managers, who will have an excellent knowledge of the markets and who deal with investments on a day to day basis. These are the people who not only have the knowledge and expertise that can prove invaluable to investors but also have the time to dedicate to managing investment funds
  • Saving time: For some people, lack of experience or confidence is the main issue when it comes to getting involved in investments. For other people, it is all about lack of time. With managed funds you won't have to dedicate huge amounts of time to managing your investments because you will have experts on hand to do it for you
  • Do more with your money: In the current financial climate, you may not have a huge amount of cash to invest but you might still be interested in trying to make your money work harder for you. Using managed funds means that you can still invest even relatively small amounts of money in a range of assets rather than having to just settle for one asset due to lack of finances

Are managed funds for you?

Putting money into investments is a big step for most people, particularly these days. We live in a climate where we are all eager to make the most of our money and we all strive to get the best out of our investments, which is why you need to put a lot of thought into what sort of investment opportunity is going to be best suited to your needs. When it comes to managed funds, you need to determine whether this is the right route for you and you can make a more informed decision by asking yourself some key questions with regards to investing your money. This included looking at factors such as the following:

  • Whether you can afford to buy a variety of individual stocks based on your financial situation and funding
  • Whether you actually have spare time available to monitor an investment portfolio if you decide to go it alone
  • Whether you have the expertise and knowledge needed to invest alone or you have access to the necessary resources and information
  • How easily you are able to make decisions with regards to investments
  • Whether you are comfortable with someone else making investment decisions on your behalf
  • If you are happy to pay fees to an investment manager
  • Whether you have confidence in the knowledge and skills of a manager
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