1. Diversification (risk distribution)
By buying shares in a fund, you invest in many different assets at once — stocks, bonds, sectors, regions. This reduces the risk of loss if a company or country performs poorly.
2. Professional management
The fund is managed by experienced portfolio managers who monitor the market, analyze and make decisions for you.
3. Accessibility
You can start with small amounts (even from 50-100 BGN/month) and still participate in global markets.
4. Liquidity
Most funds allow for quick withdrawals or sales of shares – often within a few days.
5. Transparency
Funds publish daily prices and monthly statements, so you always know where your investment is.
6. Automaticity
You can make regular monthly contributions (investing on autopilot), which builds discipline and smooths out market fluctuations (the so-called “price averaging“).
7. Access to international markets
You can invest all over the world – USA, Europe, Asia, without opening accounts abroad.
8. Tax advantages (depending on the country)
In Bulgaria, profits from mutual funds and ETFs traded on regulated markets are exempt from capital gains tax for individuals.
9. Good long-term profitability
Historically, well-managed funds (especially index funds) outperform inflation and bring solid profitability in the long term (7-10% per year for stocks).
10. Psychological peace of mind
You don't have to monitor the market daily. You have the feeling that “your money is working“, even while you sleep — with minimal stress.
⚠ 2 Cons of investing in funds
1. Management fees
Each fund has an annual fee (usually between 0.3% and 2%), which is automatically deducted and reduces the net return.
➡ Solution: choose funds with low fees (e.g. index or ETFs).
2. Risk of market declines
There is no guaranteed return — the price of shares can fall during market corrections or crises.
➡ Solution: think long-term (5+ years) and do not invest money that you will need soon.