Choose a mutual fund based on cost and flexibility

Choose a mutual fund based on cost and flexibility

When we buy mutual funds, we must also pay attention to the costs that may arise when we are going to buy and resell them. It's true, the price on the NAV of mutual funds is net, which means we don't have to worry about the costs incurred as a result of transactions in the mutual fund, but 3 definite costs that will be affected by mutual fund transactions are subscription fees, redemption fees, and switching. fees.

In another chapter I have discussed the 2 fees that arise, in this section I want to discuss the switching fees that can arise and also become our consideration for being able to buy a mutual fund.

Switching fee is the cost of switching from a mutual fund product and being transferred to another mutual fund. Suppose I have Mutual Fund A which I bought for 1 year, then I want to transfer the funds to Mutual Fund B, so I don't need to first sell Mutual Fund A and buy Mutual Fund B. Because if we sell and then buy, we will be hit twice costs, namely selling costs and buying costs. So we use the switching method, and we will be charged a switching fee which is only affected once.

However, in general, switching can only be done if products A and B are managed by only one investment manager. For example, we can only transfer our purchases from Schroder Dana Prestasi Plus to Schroder Dana Istimewa where both products are managed by PT Schroder Investment Management. Therefore, knowing these 3 costs from the first time we want to buy a mutual fund will be very good so that we can carry out various strategies such as:

1 Buying stock mutual funds and then after a period of time when we get a return of a certain value, we secure the return profit by transferring it to a mutual fund that has a lower risk, for example mixed mutual funds or fixed income mutual funds.

2 Buying stock mutual funds and then after a period of time when we get a return of a certain value, the initial value of our investment in stock mutual funds is transferred to a lower-risk mutual fund while still allocating the return to stock mutual funds.

And of course there are many more switching strategies that we can apply depending on our perception of accepting risks and benefits. Remember! First the risk, then the profit.