1. Tatra Asset Management
  2. /
  3. FAQ
  4. /
  5. What to prepare for when investing?

Investor behavior

What should I do with my investment if its value declines?

After market downturns, their growth usually comes. This will bring your investment back to at least its original value in a while. The magnitude of a possible decline and the length of time to return to the previous higher level may vary and depends on the type of mutual fund in which you are investing. When investing, it is important that the investor does not panic in the event of adverse developments and adhere to the investment solution, if it was appropriately chosen with regard to its expected return, risk profile and investment horizon.

Why should I adhere to the recommended minimum investment horizon?

Mutual fund investment strategies are set to deliver the expected higher returns over a specified investment horizon. In all likelihood, under standard market and economic conditions, this will happen. The failure to achieve the expected return when the minimum investment horizon is reached may be due to the exceptionally unfavorable economic situation and the associated decline in the prices of the securities in which the fund invests.

What if my investment is at a loss after reaching the recommended minimum investment horizon?

If your investment has not delivered the expected result even after the minimum investment horizon has been met, the reason is probably the unfavorable economic situation and the resulting decline in the prices of the securities in which the fund invests. In that case, if you do not necessarily need this money to cover your expenses, extend your investment horizon. You will do so in order to achieve your investment goal.

Why have stock markets always returned to higher levels after the fall in stock prices than they did before the fall?

The share price is determined by the supply and demand for it on the stock market. The current share price is thus a reflection of how much investors are willing to pay for a company's share and, on the other hand, how much other investors are willing to sell the share. The price of a share that investors agree on depends on the information that investors have. In the short term, as a rule, good information about the management of a given company and of the economy, causes a rise in stock prices. On the contrary, unfavorable information causes it to decline. As the economic cycle includes both positive and negative periods, the share price naturally changes depending on it.

In the long run, however, the share price is affected by how the company is able to assert itself on the market. As entrepreneurs strive to constantly improve their business and be the best in their field, investing in company shares, despite short-term fluctuations, brings the most interesting return of all investment assets in the long run.

As a share represents a share in the company's assets, you can only lose your investment in a share if the company fails and goes bankrupt. The management of the company's management is responsible for selecting the right shares for the fund's investment.

What should I do if I have chosen the wrong risk profile and invested in a fund with higher fluctuations than I am willing to accept?

In this case, it is appropriate to re-evaluate your investment strategy and choose a mutual fund with a lower expected return, but also with a lower possible continuous decline. In the event that the value of your investment has currently dropped significantly, we do not recommend shifting your investment to risk-free banking products, such as term deposits. It would take a long time to make your money back. You are more likely to be able to make money back in mutual funds faster.

Why should I invest in funds even if I have not achieved the expected return in the past (I didn't earn)?

If you want the postponement of the money you earn to have a real meaning in the future, you must find a place where they can be valued in the best possible way, at least above the level of inflation. This is where the financial markets are. Keep in mind that the failure of one investment does not automatically mean the failure of each of your investments.

If your investment was not successful, you have probably experienced one of the significant downturns that are occurring in the financial market from time to time. Since you have invested in the past, you probably wanted to achieve an interesting return. Where did this assumption of higher yield come from? It is based on past developments in financial markets. You can see on it that you can make money on investing.

Overall, you are now better prepared to invest than you have in the past, because you know that financial markets can grow, but also fall. You can choose the right investment procedure and also a more suitable mutual fund for you. Use your experience to take care of your money.

Can I lose the entire amount invested in the fund?

Thanks to the distribution of investments in a large number of securities, Mutual FundsTB represent an investment that does not pose a risk that the client will redeem the entire amount invested. Losing the entire amount invested would mean that all private companies and all the states in which the fund invests in securities would have to go bankrupt.

Investing in Mutual FundsTB is not an "all or nothing" investment. Their purpose is to professionally manage investors' assets in order to achieve the expected interesting return within a specified investment horizon.

www.tatrabanka.sk | Dialog: *1100 | Tatra banka a.s.