the Stage of Independence (part 3 of 3)
Mutual Funds, Stocks, Bonds, UITFs, VULs, Time Deposits.... we'll talk all about the different kinds of investments in this video!
Video Duration: 24:14
Mutual Funds, UITF's and VULs are all "pooled-type" of investments wherein the money is managed by a professional called a "Fund Manager".
And depending on the Mutual Fund, UITF or VUL you get, the funds are invested in different asset classes.
- Equity funds invest in the stock market. The investing horizon is more than 10 years.
- Balanced funds invest in both bonds and the stock market. The investing horizon for this should be 6-9 years.
- Bond funds invest in bonds (duh). The investing horizon for this is 3-5 years.
- Fixed Income funds invest in short-term deposits. The investing horizon here is 1-2 years.
When it comes to choosing where to invest, it should NOT be based on your risk appetite. Rather it should be based on what your financial goals are. The longer your investing horizon is, the more risk you can take on, and the more returns your money will earn.