How to buy Investment Funds
Investment funds are a popular choice for those seeking a balance between security and profitability. You don’t need to be an expert to get started in this field. The most important thing is to understand what they are, how they work, and the role they can play in your financial strategy. Whether to supplement savings, prepare for retirement or optimise your capital, funds offer versatile options.
This article explains how to buy investment funds, the advantages, the risks and what you should consider before starting.
Investment Funds: What They Are and Their Advantages
An investment fund pools the capital of several investors, including yours, to be managed by experienced professionals. These managers select assets such as shares, bonds, cash, commodities or real estate, following a predefined strategy. Instead of deciding alone where to invest, you delegate this task to specialists who monitor the market.
When you invest in a fund, you become the holder of a fraction of its assets, gaining access to opportunities that might be difficult or impossible individually. A major advantage is diversification: your money is spread across various assets, reducing the impact of fluctuations or poor performance in a single sector or company.
Funds are practical and accessible, even with small amounts, and there are options for all profiles: conservative, moderate, growth and aggressive. However, they also carry risks. As they invest in assets subject to market fluctuations, the value of your unit can vary. There are no return guarantees, especially in the short term. Some funds have minimum holding periods, limiting liquidity.
Types of Investment Funds: Which One Makes Sense for You?
There are various types of funds, each with distinct strategies and compositions. Get to know the main ones:
Global Equity Funds
Do you want to invest in the world’s biggest companies, such as those in the US, Europe or Asia, without having to choose each stock individually? Global equity funds do that for you. They are ideal if you believe in the growth of large international companies and can handle short-term market swings.
The goal is to grow your investment in the long term, investing in companies from various regions of the world. Some funds follow an active strategy (choosing stocks manually), others are passive and replicate indices like the MSCI World.
These funds have high risk, so they make more sense if you plan to invest for more than 5 years and can tolerate temporary fluctuations. Despite the volatility, historically they offer higher returns than bond or mixed funds.
The big advantage? Global diversification. You reduce dependence on a single economy and benefit from the growth of several regions.
Still, global crises can affect all markets and, therefore, these funds require patience and a long-term view.
They are usually liquid, allowing subscription and redemption at any time, but the ideal is to keep the investment for several years to avoid momentary losses.
Mixed Funds (Multi-Asset)
Do you want a balanced investment without having to choose between shares and bonds? Mixed funds combine both (and sometimes other assets), creating a diversified portfolio with controlled risk.
They work as an "all-in-one” solution: they expose you to various asset classes and balance growth with stability. They can be a great entry point for those who want to start investing in a practical way with professional risk management.
Bond Funds
If you prefer something more stable, bond funds may be your choice. They invest in debt securities from governments or companies and aim to generate regular income with less volatility than equity funds.
There are several types:
• Sovereign: invest in public debt, with lower risk;
• Corporate: invest in financially sound companies, offering moderate returns;
• High Yield: invest in higher-risk companies, but offer higher interest rates;
• Emerging Markets: focus on growing countries, with more risk and return potential;
• Inflation-Linked: protect your investment against rising prices.
Bond funds are usually more suitable for horizons of 2 to 5 years, offering stability and regular income. They are a good defensive base in a diversified portfolio.
Emerging Markets Funds
Do you want to invest where growth is happening now? Emerging markets funds invest in countries like Brazil, India, Indonesia or Mexico, economies with strong growth and appreciation potential.
They can invest in shares, bonds or both. The goal is to take advantage of the dynamism of these markets, but you need to be prepared for greater risk and volatility.
These funds make sense if you have a long investment horizon (more than 5 years) and high risk tolerance. In return, you can benefit from higher returns and participate in the growth of regions with huge potential, such as Asia or Latin America.
Geographical diversification helps reduce the risk of depending only on developed markets, but remember: global crises also affect emerging markets.
They are liquid funds, but in periods of abnormal turbulence they may take longer to process redemptions.
How to Choose (and Buy) an Investment Fund
Choosing and buying an investment fund is about understanding what makes sense for you, your goals and your financial profile. Here’s how:
1. Start with what you want to achieve
Investing only makes sense if you know why. Are you planning something short-term or thinking further ahead? Building a reserve? Preparing for retirement? These questions help define two crucial things: the risk you are willing to take and the time you can leave the money invested.
If you have time and patience, you can explore investment funds with more growth potential, even if they fluctuate more. If you prefer something more stable or know you might need the money at any time, there are more conservative solutions. The ideal fund always depends on you, not on what is "yielding the most” right now.
2. Understand exactly where you’re putting your money
Not all funds invest the same way. Some focus on shares, others on bonds, there are those that mix everything, those linked to the real estate sector and even those that follow indices.
It’s important to understand what the fund invests in, because this influences the behaviour of your money over time. And we’re not just talking about return. There are also differences in liquidity and risks. Instead of looking only at profitability, try to understand what is behind each strategy.
3. Find out who is managing your investment
More than the numbers, it matters who is behind them. A good management team makes the difference. Look for investment funds managed by entities with experience, good reputation and clear communication. Transparency and consistency are worth a lot, especially when markets fluctuate.
4. Ensure the fund gives you flexibility
Not all funds offer the same redemption ease, and this is not always a flaw — often it is a natural consequence of the type of assets they invest in. Funds that invest in less liquid instruments, such as private market bonds, real estate or structured credit, may impose longer redemption periods to ensure responsible asset management. This lower liquidity reflects the profile of the assets and, in certain cases, allows capturing the so-called illiquidity premium, i.e., compensation in the form of higher potential returns. The important thing is that the fund’s liquidity is aligned with your investment horizon: if you need quick access to capital, choose products with daily liquidity; if you can immobilise the investment for longer, you can benefit from funds with less liquid assets and more stable returns.
5. Analyse the indicators before investing
There are important data that help you assess whether an investment fund is solid, consistent and suitable for what you are looking for:
• Historical returns: See the fund’s evolution over the last 3 and 5 years. It doesn’t mean it will repeat the results, but it shows how it reacted in different market contexts;
• Portfolio composition: Find out what assets the fund invests in and with what weight. Do you have tech companies? Public debt? European real estate? This composition will tell you if you are, in fact, diversifying;
• Risk (volatility): A more volatile fund rises and falls with greater intensity. It can give more return, but also more scares. Volatility helps you understand if you are comfortable with the expected behaviour;
• Fees: A more expensive fund may be justified if well managed, but it’s worth comparing;
• Rating: Some independent entities, such as Morningstar, assign ratings to funds based on consistency and risk/return ratio.
6. Choose where you will invest
To start, you need an account with a financial institution that offers investment funds. It can be a bank, an online broker or a specialised platform, such as the GoBulling Investor Trading Platform from Banco Carregosa. Simple, practical and with a modern touch, the platform was created to make every transaction easier. With a lightweight design, it is the right choice for investors seeking an intuitiveand reliable experience, without compromising quality. You can try our DEMO version of the platform here.
7. Subscribe calmly
After choosing the investment fund, simply start the subscription process. It is often possible to do it online, quickly. Define the amount you want to apply, carefully read the informative documents (such as the DFI) and confirm that you are comfortable with the conditions. This step is simple, but it’s best not to rush it.
8. Top up your investment
Do you already have an investment fund in your portfolio and are satisfied with it? Then it may make sense to top up.
A good sign is when the fund maintains consistent performance, even in less favourable market phases, or when you are investing in phases (with regular contributions). You can also take advantage of any market corrections to buy cheaper.
In practice, topping up is simple: just access your account at the financial institution, choose the fund and make a new subscription. Some platforms even allow programming automatic monthly top-ups, which helps you invest with discipline.
9. Evaluate when to sell your position
There are times when selling an investment fund may make sense. For example:
• If your goals have changed (you have already reached the target or need the money);
• If the fund has changed strategy or is no longer aligned with you;
• If performance is consistently poor and not justified by short-term factors.
Before selling, check if there are fees or grace periods that may penalise redemption. If you decide to proceed, the sale is usually done online, but the money may take a few business days to reach the account, depending on the fund and the entity.
Selling just because the fund fell in a week may not be a good idea. Try to distinguish between normal fluctuations and signs that something structural has changed.
10. Monitor and adjust if necessary
Investing is not something you do once and leave settled. Your profile may change, markets too. That’s why it makes sense to keep track of the fund’s evolution. You don’t need to be constantly changing position, but you shouldn’t forget it completely either. Check the following:
• Evolution of the unit value (or NAV): Indicates how much each fund unit is now worth. You can compare with your entry value and see if it is growing;
• Cumulative return: Most platforms show the percentage of gain (or loss) since you invested;
• Behaviour relative to the market: Check if the fund tracks (or diverges) too much from comparable indices;
• Changes in composition: Changes in portfolio assets may indicate a new strategy. It’s important to know if this still aligns with your goals;
• Manager reports: Many funds publish quarterly reports with comments from the management team. They can help you understand the decisions and current context.
If you see that the investment fund no longer makes sense for you, it is preferable to adjust than to keep something just because "it’s already done”.
11. Avoid the most common mistakes
Two mistakes that repeat a lot: investing in a fund because it had good recent performance (without understanding why) and forgetting liquidity. Another? Putting everything in a single fund, without diversifying.
Remember: Investing well is not making a brilliant move, it is making good decisions consistently.
Buy Investment Funds with Banco Carregosa
If you are thinking of taking your first steps in the world of investment funds, start with time, information and the right support. At NextGen Carregosa, we speak your language and help you invest simply, with options that adapt to your profile and your goals. No pressure, no complications. Just good decisions, made by you.
Explore the NextGen solutions and start building your path in the world of investments.