Fund Investment Guide: How to Achieve Wealth Growth Through Fund Investing?

Looking to increase income through financial management but lacking time and professional knowledge? Don’t worry, fund investment might be your answer. As the top choice for office workers and busy investors, fund investment stands out with features such as low risk, low threshold, and professional management. This article will take you in-depth into the full picture of fund investment—from basic concepts, operation mechanisms, cost calculations, to practical allocation strategies—making it easy for you to get started with fund investing.

What is Fund Investment?

The Core Essence of Fund Investment

A fund refers to a securities investment fund, which is issued by banks or brokerages through the sale of fund shares, pooling investors’ funds to be managed collectively by professional fund managers, with a fund custodian responsible for fund supervision. Simply put, it is a collective investment method where “investors put in money, experts manage wealth,” characterized by risk sharing and profit sharing.

Compared to other financial products, the advantage of fund investment lies in reducing the difficulty and threshold for individual investors. You don’t need to have professional market analysis skills; just choose the appropriate fund product, and leave the rest to a professional team.

Five Major Categories of Funds

Depending on the investment target, fund investment can be divided into five types: money market funds, bond funds, stock funds, index funds, and hybrid funds. Each type has its specific risk-return characteristics, suitable for different investor needs.

How Does Fund Investment Profit? Deep Dive into the Operation Mechanism

To make money through fund investment, you must first understand its internal logic. This process involves four links: capital flow, fund classification selection, portfolio construction, and finally, subscription execution.

Link One: Capital Flow—Where Does Your Money Go?

Fund operation involves three main participants: investors (fund share holders), fund managers (fund management companies), and institutions like banks (fund custodians).

The capital flow process is as follows: investors first transfer funds into the fund account, the fund manager develops an investment plan based on the fund’s strategy, then the fund custodian invests these funds into various financial products in the money or capital markets. Each party performs its duties, forming a closed-loop management system. This professional division of labor ensures the safety and efficiency of fund investment.

Link Two: Detailed Explanation of the Five Fund Types

Money Market Funds

Primarily invest in short-term fixed income products such as government bonds, commercial paper, and certificates of deposit. These funds have the lowest risk, excellent liquidity, suitable for risk-averse investors and those with high liquidity needs. The downside is lower long-term yields, making them more suitable for managing short-term idle funds.

Bond Funds

Mainly invest in fixed income financial instruments like government bonds, treasury bonds, and corporate bonds, earning returns through bond interest income. The risk varies significantly among bond funds—those investing in government bonds tend to have lower risk, while corporate bond funds are relatively riskier. Suitable for conservative investors seeking stable income.

Stock Funds

Invest primarily in common stocks and preferred stocks. Although riskier, their return potential is higher. Stock funds are long-term growth investments, involving systematic risk, unsystematic risk, and management risk, requiring investors to have a certain risk tolerance.

Index Funds

Track a specific market index, with fund managers purchasing all or part of the index’s constituent stocks to replicate the index’s performance. Common ETFs belong to this category. These funds have excellent liquidity and usually lower fees.

Hybrid Funds

Invest in a mix of stocks, bonds, and other assets, with moderate risk levels. Their risk and return are between bond funds and stock funds, especially suitable for conservative investors seeking diversification.

Comparison Table of Fund Types

Compared to stocks, futures, and other financial products, all types of funds tend to have milder risks and returns. The biggest advantage of fund investment is its lower risk and investment threshold—generally, you can start investing with just 3000 yuan. Plus, the investment cycle is usually longer, making fund investment especially suitable for long-term investors.

Link Three: Building an Investment Portfolio—Don’t Put All Eggs in One Basket

To reduce risk and stabilize returns, establishing a scientific investment portfolio is crucial. Investors should first assess their financial situation and risk tolerance, then reasonably allocate different types of funds according to their risk preference, combining short-term and long-term, high and low yield investments.

Below is a recommended fund allocation scheme based on risk preference:

Link Four: Fund Investment Subscription Process

The subscription process generally includes the following steps: choose a purchasing channel (bank, brokerage, or fund company website) → open a fund account → select fund products → confirm subscription amount → complete payment → wait for confirmation. Most platforms support online subscription, making the process simple and quick.

Cost and Fees of Fund Investment

From subscription to redemption, multiple costs are incurred during the entire process of fund investment. Understanding these costs is vital for evaluating the actual returns of your investment.

Common Types of Fund Investment Fees

Subscription Fee

Most funds charge a certain percentage of the subscription amount at the time of purchase. Bond funds typically charge around 1.5%, stock funds about 3%. Many channels offer discounts, so investors can compare options.

Redemption Fee and Trust Management Fee

In Taiwan, most funds do not charge a redemption fee. However, investors purchasing through banks may face a trust management fee upon redemption, which falls under “special money trust” and exists only in bank channels.

Management Fee

The fee charged by the fund company for managing assets, usually between 1% and 2.5% annually. Different fund types have different fee rates. ETF funds tend to have lower management fees.

Custodian Fee

A fee charged by banks or third-party institutions for fund custody, approximately 0.2% per year. Since fund companies do not handle fund custody themselves, this fee is collected by the custodian institution.

Quick Reference Table of Fund Fees

Why Choose Fund Investment? Summary of Core Advantages

Compared to traditional savings and other investment methods, fund investment has clear advantages:

Asset Diversification and Risk Spread

Fund investment pools capital from many investors to invest in stocks, bonds, commodities, and other assets, achieving true risk diversification. The risk of individual investments is greatly reduced, which is the core competitive edge of fund investment.

Professional Management Team

Fund investments are managed by professional teams with deep market knowledge and research capabilities. Their expertise helps investors make wiser decisions and pursue optimal returns.

High Liquidity and Easy Realization

Fund investments generally support buying and selling at any time, with strong liquidity. Investors can quickly realize their funds when needed, without time restrictions.

Low Entry Threshold and Small Investments

The entry threshold for fund investment is much lower than stocks, futures, and other products. Most funds allow purchasing shares with a small amount of money, making it especially suitable for small investors and beginners.

Fund investment is a balanced path to wealth appreciation, combining professional management with risk controllability. Whether you are a novice or a seasoned investor, a well-allocated fund portfolio can support your long-term financial goals.