Investing can often feel like navigating a labyrinth. Between the jargon, the risks, and the sheer number of companies to invest in around the world, it’s no wonder many people stick to the simplicity of a savings account. However, this time-old conservative approach might mean missing out on meaningful financial growth over the long term. Investment Funds can offer a gateway to potentially higher returns over the long term with the benefit of professional management and diversification. Let’s explore why having an investment fund is not only a sound financial decision but also an exciting opportunity to watch your money grow.
All your eggs in one basket?
One of the fundamental principles of investing is diversification. An investment fund pools money from various investors into a fund. The fund is professionally managed, investing in a diversified set of securities. Each fund will have a specific investment objective and that will determine the mix of assets the fund invests in – e.g. this could be shares, bonds or other assets. This spread reduces risk because even if one investment performs poorly, others might do well, balancing the overall performance of the fund. It’s like enjoying a buffet instead of sticking to one dish; the variety ensures you’re more likely to find something that satisfies your palate and minimises the chance of leaving the table hungry.
Professional Management – Leave it to the experts
Navigating the share market can be daunting, especially if you lack the time or expertise. Investment funds are managed by professionals who dedicate their careers to understanding market trends, analysing data, and making informed decisions. These experts aim to optimise returns and manage risks, allowing you to benefit from their experience and knowledge. It’s like hiring a skilled chef to cook your meals instead of fumbling around on YouTube for a recipe and ultimately risking a culinary disaster.
Accessibility – A doorway for all Investors
Gone are the days when investing was reserved only for wealthy people. Investment funds have made it easier for everyday people to enter the market with relatively little money. You can start investing with small sums, spreading your risk without needing a large upfront investment. Think of it as joining a gym where you can use top-tier equipment and benefit from professional trainers without the need to build your own home gym.
Compounding Returns – The magic of growth over time
One of the most compelling reasons to invest in an investment fund is the power of compounding returns. By reinvesting the earnings of the fund’s investments, your fund can earn returns on the returns provided by the underlying investments, creating a snowball effect that grows your money over time. Albert Einstein described this as the eighth wonder of the world (he died in 1955 so he was onto something way back then). Compounding returns can turn comparatively modest amounts into substantial sums given enough time. Think of planting a tree and watching it fruit year after year, with each season producing more fruit than the last.
Flexibility at your fingertips
Unlike KiwiSaver, Investment Funds offer more flexibility, meaning you can withdraw your money with relative ease. This flexibility allows you to access your money if your circumstances change. Just remember, each fund has a minimum recommended timeframe to give it enough time to achieve its objective – so you don’t want to withdraw before then if you can avoid it.
Educational Experiences – Learning by doing
Investing in an investment fund is not just about growing your money; it’s also an educational journey. Milford has a pretty cool app so you can see on the daily what your fund is doing, how it is performing, what it is invested in, reports and insights. Over time, you will become more knowledgeable about markets, investment strategies, and economic factors that influence returns. This ongoing learning can empower you to make more informed financial decisions in other areas of your life. Think of it as enrolling in a financial masterclass where you can earn while you learn.
A step toward financial freedom
Finally, investing in an Investment Fund is a strategic move that can pave the way for financial growth, stability, and freedom. By leveraging diversification, professional management, accessibility, compounding returns, and educational opportunities, you can turn your money into a powerful tool for achieving your financial goals. So, why settle for the slow lane when you can accelerate your wealth-building journey with an investment fund? Make the move, improve your chat at the next pool party this summer and get into Investment Funds alongside your KiwiSaver account, it’s set to trend more than TikTok skincare, fitness journeys and DIY cleaning hacks, so get on it.
Open an Investment Fund online today with Milford with just $1,000 to start
https://milfordasset.com/what-we-offer/investment-funds
Disclaimer: This article is intended to provide you with general information only. It does not take into account your objectives, financial situation or needs. Milford Funds Limited is the issuer of the Milford KiwiSaver Plan and Milford Investment Funds. Please read the relevant Milford Product Disclosure Statement at milfordasset.com. Before investing you may wish to seek financial advice. For more information about Milford’s financial advice services, visit milfordasset.com/getting-advice. Financial Advice Disclosure Statements for all Milford Financial Advisers are available on request free of charge. Past performance is not a reliable indicator of future performance.