₦airaland Forum

What is the difference between mutual funds, fixed deposit and shares please?

egojeny1:
Mutual Funds anyday anytime

I want to ask a question.

What is mutual funds?

What is shares?

What is fixed deposit?

iamonpointa:
For those asking how much the man who is getting 100k on his fixed deposit invested, it must be around N9m (if it's at the typical 15% interest). It's pretty simple to calculate. He gets 15% of his investment every year, and 10% of that will be deducted as tax.

For example, on 10m fixed for a year at 15%, the total interest will be 1.5m. 10% will be deducted as tax on the 1.5m, so 1.350m. Divide 1.350m by 12 (months) to get the monthly return. N112,500


I have a friend who fixed 100m, and he gets 1.120m monthly on his investment. It's not a lot of money (at least for someone who has a spare 100m to invest), but it will surely cover a lot of bills. This country has systematically impoverished all of us.

For those who think he should be doing business with the money, he already has a business that is doing well—that was how he made the money in the first place.
Besides, the business environment in this country is volatile. If you come across some big money, it will be better for you to put it into fixed deposit than go into a business you aren't 100% familiar with. You will lose the money, your energy, and your sanity.

My friend gets 13.5m (net) on his investment every year, without having to do anything. If he used that money to build a house, there's nowhere in this country where he will get 13.5m (net) as annual rent—on a house of 100m. That is not including the stress, time, and energy that will go into building/acquiring the house, getting tenants and getting them to pay promptly, and maintaining the property (which might take a lot of the money).
The common counter is that the house will appreciate in value. It won't, it will depreciate. ONLY the land will appreciate. And if I truly believe that a land will appreciate, I would rather buy the land (say for about 30% of the capital) and find a way to secure it (because owning a land can sometimes be a headache), then invest the 70% in fixed deposit.
NB: fixed deposit is nowhere near the best investment you can do, but until you find a low-risk investment you are certain will make you better returns, you will be better off with fixed deposit.

Even though the example I gave up there is about owning a rentable property, I believe a lot of other investments in this country are worse. Most people just work/invest without doing the maths.

If you're stuck in Nigeria, you can't afford to be financially illiterate.
Always seek out information on how to best handle your money—no matter how small the amount is. Otherwise, you'll be running on a financial treadmill—where things will remain the same no matter how hard you work.

Okay its from the bank one usually goes to apply for mutual funds?

Juliearth:
Interest rates aside, mutual fund is the best investment platform, in my opinion. The catch however, is that you have to invest a substantial amount of money to enjoy its benefits. For instance, with a savings of about 10 million naira, you are assured of a monthly returns of 150-170k (sometimes even more). Smart people build up their investments to a substantial level and live off the monthly returns. Personally, my monthly income all goes to my mutual account and I live by the returns. It literally feels like eating your cake and having it.


Need I also add that for treasury bills, the government takes a certain percentage of your total investment unlike mutual funds (not totally sure though). As of today, stanbic is the best platform to invest in.

What do you mean by dis statement in this context pls?

And what is fixed deposit?

What is mutual funds?

What is shares?

Juliearth:
Fixed Deposit is only better for people who lack financial discipline.

Love800:
What do you mean by dis statement in this context pls?

And what is fixed deposit?

What is mutual funds?

What is shares?

I actually meant to say treasury bills, but the mechanism is same thesame anyways. I am not a financial adviser and I can see that you're an amateur to these things (no pun intended). You could do some research on your own to get wider clarity on these concepts.

Love800:
Okay its from the bank one usually goes to apply for mutual funds?

I'm not sure all banks offer this service. I'm only sure of stanbic IBTC, but the good thing is that when signing up to the service, you can send money from your bank account to your mutual fund account.

nedekid:
Nope, you have your regular funds but your savings you put in fx deposit. Eg you have 1b, it gives you 160-200m yearly doing nothing. No county in the world pays such returns, infact my guys abroad bring their money to fx here in naija. In Uk, US I doubt you can get 3%.
Naija de pay 10-20%.

First of all, I meant to say treasury bills, but fixed deposit can also apply. Secondly, you're taking my statement out of context. What I meant to say is simple: if you're sure that you can have your money saved up without being tempted to "pinch" a little from it, then you can invest in mutual funds. However, if you're not sure about taking from your investment, it's best to use treasury bills because, depending on the lock duration, you won't be able to take from your investment until it has mature.

t33why:
If I may ask, what's led you to come to this conclusion?

Lower risks, good financial track records over the years... I am not an expert, hence I stand to be corrected.

I appreciate.

Juliearth:
I actually meant to say treasury bills, but the mechanism is same thesame anyways. I am not a financial adviser and I can see that you're an amateur to these things (no pun intended). You could do some research on your own to get wider clarity on these concepts.

Thanks so much.

Juliearth:
I'm not sure all banks offer this service. I'm only sure of stanbic IBTC, but the good thing is that when signing up to the service, you can send money from your bank account to your mutual fund account.

Juliearth:
Lower risks, food financial track records over the years... I am not an expert, hence I stand to be corrected.

Not wrong but not entirely correct either. MMF by definition should not have a varying degree of risk across fund managers.

Several other factors might make one manger more attractive than the other but not the nature or risk profile of the funds itself

t33why:
Not wrong but not entirely correct either. MMF by definition should not have a varying degree of risk across fund managers.

Several other factors might make one manger more attractive than the other but not the nature or risk profile of the funds itself

I meant *good* up there and not *food*... Maybe I was hungry whilst typing.

Do you care to expatiate with practical examples?

Yes. I support you 100%. The rich become so rich because they invest in the mutual funds heavily while the average rich become average rich or financially broke because they invest little, expecting great dividends on their little investment. Thanks for commenting here.

Oh, I see. I am sorry, but I am not a financial advisor. I just want to learn about it. Thanks for correcting me. I just invested and still invest while I learn how it works. Saving and investing are what I do.

You teach me and I will teach you in exchange. No one is perfect. Thanks

No. I don't accept that point. Fixed deposit is only for those who tolerate for 2 to 3 years and those who want to use it for their purpose. It is for those want to lose money. And it is for those who grow their money. It is called financial discipline..

Sphinx419:
For how much capital boss ?

So you dey tell me to lock my 7.5m for 9ja bank and in return I get 100k every long 30dayss oo not even 2wks. Man abeg go collect your money.. start baron business and get that 7.5m in a week. That kind investment na nonsense 100k every 30days. I frown to such

pls what do you mean by baron business share us update boss man

Love800:
What is the difference between mutual funds, fixed deposit and shares please?

Fixed deposits are like lending your money to a bank for a safe, guaranteed reward; shares are buying a piece of one company to grow with its success (or fall with its failure); and mutual funds are like chipping in with a group to buy a basket of different investments managed for you.
N.b currently fixed deposit returns are higher compared to mutual funds

@Jammythebless @Sphinx419 @all

Good night, bosses. I am a Distribusiness (OP).

Many of you begged me to explain what is baron business after Sphinx419 said "start a baron business and get that 7.5m in a week" instead of locking 7.5m for 100k monthly.

I have done full research and written an explanation for us.

What is baron business?

It is not a drug baron. It means you become the main supplier of diesel, cement, rice, POS in your area. You become the baron of that product.

I explained 5 baron businesses from 100k to 7.5m capital, including the diesel baron that Sphinx419 meant, and how a POS baron can give you 270k monthly from 300k capital (better than fixed deposit).

I also explained why 7.5m in a week is an exaggeration - a real baron gives you 1m monthly, not 7.5m in a week.

I am not selling anything. Just sharing as a car wash operator at Dugbe saving 334 naira daily.

Full guide here:

https://shorturl.at/CLBRA

Thank you to Sphinx419 for the idea and to Jammythebless for asking. I credited you inside the blog.

- Oluwamuyiwa (Distribusiness)