The investment fund is a form of investment when a commercial bank collects money from citizens and handles it as a uniform and jointly manageable fund.
The investment fund is a means which allows investors to invest their savings -in a simple and cost-efficient way, with the diversification of risks- on the stock market or in case of property funds, on the property market.
The fund is actually a kind of property in the investors’ possession which is handled by the fund-manager. The investment fund issues so-called investment notes so the individual investor’s share of the above mentioned property is embodied by the investment notes. The value of the investment notes directly depends on the change of the investments’ value in possession of the investment fund.
The main forms of investment funds in Hungary are as follows:
- bond investment trust
- equity fund
- money market fund
- real property fund
- mixed fund
Incomes deriving from different investment funds and stocks are used by the Hungarian National Bank to pay the country’s national debt. Investment funds are regarded as a most safe investment form the repayment of which is guaranteed by the State.
Értékpapír típusú megtakarítási formák
Stocks (also known as securities) embody somebody’s right on a property. Equities and investment certificate shares give their holders the right to participate in a company’s capital (and indirectly in the control of its management). Bonds and cheques are securities that represent some form of claim.
On the basis of disposition over stocks they can be:
- payable to bearer (without the holder’s name)
- registered (with the holder’s name on it)
- order instruments (e.g. bill of exchange which can be endorsed)
The yield of a stock can be:
- non-interest bearing
- with fixed interest (straight bonds)
- variable yield investment (equities)
On the basis of expiration:
- short term stocks (within 1 year)
- medium and long-term stocks (more than 1 year)
- undated securities (without expiration)
The so-called compensation vouchers are non-classical, typically Hungarian securities.
There is a wide variety of saving possibilities in Hungary. The saving-forms to choose from may largely depend on the kind of bank you turn to. Though they are the most secure forms of investment, so-called savings books and deposit books offer relatively low interests. Long-term deposits fare better with the gain depending on the period of time. Current accounts may be opened in every commercial bank and current account services allow holders to pay and withdraw money, settle public utility bills, order direct debits, use cheque and card service, place deposits and use overdraft credit.