An investment fund is an instrument of saving up for a society with legal aimed at financial gain. Investments are made through an operator or manager who manages the operations in exchange for a commission established. There are different types of investment funds among which are: debt, equity, mixed, high-growth stock, among others. In times of economic crisis, many investors tend to prefer more secure financial instruments that involve less potential loss of funds investing in fixed income start out as one of the most popular alternatives. These funds are volatile investments in poorly performing assets such as debt for private or public property.

There are several types of funds from fixed income investment, but the most important classification includes: Investment funds in short-term debt: When the investment is not more than 2 years. One of its main characteristics is that they generally adapt quickly to market conditions. Funds investing in long-term debt: The duration of the investment exceeds 2 years. The return on equity debt depends on two main factors: changes in interest rates in the market and the average maturity of the securities that make up the portfolio of the Fund.

When the interest rate rises, the profitability of the fund tends to decline. Thus, the longer one is kept in fixed income fund, there is a greater probability of change in interest rate. Investment funds have to evaluate your portfolio every day, the market price. For this reason, the most conservative investment spectrum are the fixed income funds in the short term. Ie investment funds involving the least risk, those are considered more stable fixed income funds with a shorter term.

Choosing the best fund Because there is a wide range of investment funds in fixed income, it should take into consideration several factors before investing our money in any of them. We must observe the following: Historical performance: A good way to choose is to report on past returns. So we know the history of the fund and try to predict their behavior and profitability. The stability of an historic talks about the administrative capacity of the manager. Timing: Because, as we have seen, the variation in interest rates is uncertain and unpredictable, it should carefully review the period that suits our needs. Management fees: It is very important information on the commissions charged by each manager before accepting any contract. We must look at how much we should pay certain fees in relation to the profit gain for the investment. A good strategy is to consult the websites of some operators to compare the fees required by each.

The commissions charged by investment companies are regulated by the Securities Market Act, the Investment Company Act provisions of the National Banking and Securities Commission. These laws stipulate that the maximum rate of subscription or redemption is 5% of total investment and the deposit of 0.40%. The management of the savings may involve an expenditure of up to 1% of total assets or 10% of the proceeds. In the case of deposits, the maximum commission is 0.15%. (January 2008). What we should avoid investing in funds? Finally, list some of the most common mistakes that we should not commit to invest our money in funds: Do not make decisions fast. We must be careful not to automatically choose the fund that offers the greatest return, but first do a risk analysis of such investment. We must never invest in a fund without understanding how it works, what we offer and what their deadlines.

We must not be influenced by what others do. We must find an investment fund that meets our specific needs. One of the most common mistakes is not to seek professional advice. It is important to consult expert opinion. Managers must always offer this kind of help. Our recommendation is that we must be careful to hire the services of companies of dubious origin that are not regulated by the National Banking and Securities. The information, facts and figures mentioned in this article are for information, which can not be considered official, as proposed or professional advice.