There are many ways in this life to achieving your investment goals and living out your dreams. In other words, different strategies can be employed to getting desired results. It all depends on the characteristic of the individual involved and some other things that we need not bore ourselves with right now. I have however discovered that setting up a personal investment fund is one good way.
Most investors might already be operating one or more personal investment fund(s) knowingly or not. This piece I hope, would however give you a clearer picture.
Simply put, a personal investment fund is a pool of money (capital), set aside to be invested in selected securities (stocks) based on achieving a particular goal over a period of time. Just like mutual funds, the kind of stocks purchased depends on the purpose of the investment and the time frame within which to achieve the goal. That is to say, the key factors to consider here are time, purpose and risk appetite.
This is just similar to what mutual fund managers do. They pool funds together for the purpose of managing an investment and investing on the behalf of others. The fund is usually given a name which defines the kind of stocks bought and its exposure to risk as well as the kind of returns expected. The profit from the investment is then spread over the total number of units of shares allotted to subscribers.
How to start the fund.
When starting your personal investment fund, always have a purpose in mind. What exactly are you out to achieve which has prompted your desire to run this fund. What is the ultimate goal of the fund? Once that has been defined, you then go on to set aside funds to commence the fund. Depending on the end result you are expecting, set aside some funds to begin with. Investment is all about growth so it is expected that the money will grow with time if properly managed. You might have the lump sum at hand, or you might need to save up the start up amount over a period of time before commencement.
Once the money is ready, you can then proceed to open an exclusive stock account where the money would be invested and monitored. The fund is different from your other investment activities, so do not put the money in the same stock account you have existing. Once this has been done, you can go ahead to purchase stocks you have singled out based on research and valid information.
Characteristics of the fund manager
Unlike the mutual funds where a third party decides what to buy, you are the fund manager in this case. This therefore means that you are responsible for the decisions made concerning the fund. The following traits would come in handy.
1. Intelligent: you need to be intelligent when selecting stocks. There’s no need selecting a long term stock to fund a medium term goal. You need to think through every action and its consequences before taking action. Seek advice when need be but the decision is always yours to make.
2. Disciplined: there’s a high possibility that things would not go how you expect them. You however need to be disciplined to follow investment principles regardless of whatever happens. following principles is what guarantees results
3. Patient: just because a stock activity did not go according to how you expected does not mean you offload. You need patience when managing your fund. As long as you have followed principles, things would be okay.
As you have seen, setting up a personal investment fund is interesting, fun and simple. You can have as many as possible but I advise you start with one and succeed at it so you will be motivated to move higher.
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