How to choose funds and stocks?

Selecting funds and stocks can be a daunting task, especially for those new to investments. With numerous options in the financial market, it's essential to thoroughly grasp the characteristics of each before making informed decisions. In this article, we will explore key aspects to consider when choosing funds and stocks.

Before you start, it is important to know what your investor profile is. There are three types: conservative, moderate and bold. The conservative is the one who prefers low-risk investments, such as savings and fixed income funds. The moderate, on the other hand, opts for a little more risk and usually invests in multimarket funds and stocks. Finally, the bold is the one who seeks high-risk investments.

When choosing a fund or a stock, it is important to analyze its past performance. Although past performance does not guarantee future results, it provides insights into potential returns based on historical data.

Funds and stocks incur fees that can directly impact the investment's profitability. For funds, it is crucial to examine the management fee, charged for overseeing the fund, and the performance fee, applied when the fund surpasses a specific benchmark index. As for stocks, be mindful of brokerage fees and taxes, which may vary depending on the chosen broker.

Each fund and stock has a different investment strategy. It is important to understand this strategy well before investing, to know if it is aligned with your goals and investor profile. For example, a stock fund that invests in technology companies may be riskier, but it may also offer a higher return.

Finally, it is important to diversify your investments in funds and stocks. This means investing in different types of funds and stocks, from different sectors and geographical regions. This way, you reduce the risk of losses and increase the chances of getting a positive return in the long-term.

Follow these tips to make the right decisions when investing. Always remember to seek information from reliable sources and consult an investment professional if you have any questions. At Millennium, we have a dedicated team ready to help you, whatever your questions may be.