How much does an equity fund yield?

Have you ever stopped to wonder how much a stock fund yields and how this type of investment works?

Equity funds are a great opportunity for small investors, who can access the stock market in a dynamic, practical and accessible way.

It is an investment model recommended for those who are looking for high profitability and who do not have enough time to follow the financial market.

In this article, we will show you a guide with all the information you need to know everything about the performance of equity funds. Keep reading!

For which investor profile are equity funds recommended?

Equity funds are recommended for those with a more daring profile, that is, investors who accept taking more risks in exchange for good profitability.

But if you are a conservative or moderate investor and want to diversify your portfolio, a good equity fund can also be a good alternative for you.

Furthermore, as we have already mentioned, this investment option is also recommended for those who do not have much time to follow the stock market, as you will have the assistance of a professional manager – who will do this work for you.

It will also be necessary to define your financial objectives and the investment term, as this investment has liquidity terms – the period between the redemption request and the moment in which the funds will be transferred to you.

What is the profitability of an equity fund?

There is no way to tell how much a equity fund, because profitability cannot be predicted with such accuracy.

We are talking about an investment in variable income, which is far from being predictable like fixed income.

Variable income investments follow the financial market, which is unpredictable.

Your manager will monitor the fund's performance. And what he or she can do (just like you) is analyze how much your investment has yielded over a given period.

To help you understand better, we’ll give you an example.

Imagine that you invested R$2,000 in a stock fund and received a return of R$121,000 per year. It has a management fee of R$21,000 per year and the income tax on the investment is R$151,000 per year.

Main: R$ 2,000.00

Promised profitability: 12% aa (R$ 240.00)

Income Tax: 15% aa

Administration fee: 2% aa

See the calculation:

2000*0.12. = R$ 240.00 gross profitability.

The IR discount only occurs ON the profitability value. Therefore:

240*0.15= R$ 36.00

Now, let's look at the administration fee, which affects the principal amount and the promised profitability: R$ 2,240.00

2.240*0.02 = R$ 44.80.

To calculate net income, we need to discount income tax and administration fees.

Net income = R$ 2159.20.

How to invest in equity funds?

The first step is to know where to buy.

The process is carried out through a fund company or through traditional stockbrokers.

Before making your choice, you need to take some factors into account, such as commissions and costs involved (such as the administration fee).

It is also necessary to evaluate all available options.

Furthermore, it is important to check the minimum investment and whether the term, commissions and fees involved are in line with your financial objectives.

Your investor profile, as we have already mentioned, is also extremely important. After all, there are risks involved and, therefore, you need to find a balance between how much you are willing to earn and the risks that are part of the process.

How to choose the most suitable equity fund for you?

An equity fund can be classified in several ways. In other words, there are several investment options.

For this reason, it is common to have doubts about choosing the best option. However, that is not how it works.

After all, for those who are entering this market, it is natural that you want to study the best ways to invest your money.

But choosing an equity fund should go far beyond its performance.

Remember that when it comes to variable income, high profitability in the past is not the same thing as financial return in the future.

Of course, if the fund in question has a good track record and is constantly analyzed by a good manager, it is likely that it will continue to deliver good results for the investor.

However, before investing your money, it is very important that you take into account your investor profile.

What are the risks involved in equity funds?

Now that you know that there is no way to tell how much a stock fund will yield, it is easier to understand how this investment works.

But it's also important to be aware of the risks involved.

All investments have risks. Fixed-income investments are safer and more stable. However, the returns are also usually lower.

Variable income securities promise greater gains. However, the risks also increase.

The first risk that must be taken into consideration is market risk. It is related to the volatility of the financial market and the variation in the value of assets.

For this reason, it is very important that you diversify your investment portfolio. In other words, don’t just rely on one type of investment.

Therefore, we recommend that your asset portfolio be made up of fixed income and variable income investments. This way, you can minimize risks.

Another important risk that must be considered is that of deviations on the part of the issuer.

To prevent this from happening and you from incurring losses, choose equity funds issued by consolidated companies that have credibility in the market.

Conclusion

The equity fund is a portfolio of variable income activities.

Typically, those who choose this type of investment aim to ensure that profitability exceeds the market's financial indicators.

And if you have a more daring investor profile, equity funds are excellent options for you, especially in the long term.