How to Buy Mutual Funds in South Africa
What is called mutual funds?
A mutual fund is a professionally managed investment programme, typically operated by an asset management firm that pools money from numerous investors and invests it in stocks, bonds, or other assets.
How does mutual funds work?
In order to “mutually” purchase stocks, bonds, and other investments, mutual funds aggregate and collect money from a number of individuals. Professional money managers who are in charge of the funds choose which securities, such as stocks, to buy and when to sell them. All of the investments in the fund and any revenue they produce are available to the investors.
What are the types of mutual funds?
1. Money Market Funds.
2. Fixed Income Funds.
3. Equity Funds.
4. Balanced Funds.
5. Index Funds.
6. Specialty Funds.
What are the benefits of a mutual fund?
1. Advanced Portfolio Management
2. Dividend Reinvestment
3. Risk Reduction (Safety)
4. Higher Return on Investment (RoI)
5. Tax Benefits
What are the drawbacks of a mutual fund?
1. Hidden fees
2. Lack of liquidity
3. High sales charges
4. Poor trade execution
5. High capital gains tax
Can I purchase mutual fund online?
You can invest directly in a mutual fund online at the following websites in South Africa:
1. Old Mutual
2. Allan Gray
3. Satrix
How to buy mutual funds in South Africa?
1. Go to www.allangray.co.za.
2. Click on “Invest now” at the top right corner of the page.
3. Choose an account type to match your objectives.
4. Choose your unit trust(s).
5. Fill in your personal details as well as bank details.
6. Check and submit document.
Mutual funds are considered liquid assets and shares can be sold at any time.
