“I want to start investing for the future, but I don’t know where to begin.”
For such investment beginners, mutual funds are the most popular choice.
This article explains everything from how mutual funds work, why they’re recommended for beginners, to how to manage risk—all in plain language, avoiding jargon.
1. How Do Investment Trusts Work?
Simply put, an investment trust is a product where money collected from investors is pooled into one large fund. Professional fund managers then invest and manage this money in stocks, bonds, and other assets.
- Investors: Pool funds starting from small amounts.
- Sales Companies (Banks/Securities Firms): Sell products as the point of contact.
- Asset Management Companies (Investment Managers): Decide where to invest.
- Trust Banks (Trustees): Safely store and manage the funds.
Profits generated through management are returned to investors based on their investment amount.
2. Four Advantages of Investment Trusts
Why do many beginners start with investment trusts?
There are four major reasons:
① Start with small amounts (from ¥100)
Typically, stock investing requires tens of thousands to hundreds of thousands of yen. With mutual funds, you can buy shares starting from ¥100 using online brokerages.
② Leave management to the professionals
Analyzing which company stocks to buy or how to assess global trends is challenging for individuals. Mutual funds let experts select and manage holdings on your behalf.
③ Risk reduction through diversification
As the saying goes, “Don’t put all your eggs in one basket.” Investing in just one company means suffering major losses if it goes bankrupt.
Mutual funds are diversified across dozens to hundreds of stocks from the start, mitigating risk.
④ Excellent Compatibility with the New NISA (Cumulative Investment)
The cumulative investment portion of the government-recommended tax-free “New NISA” system specifically targets investment trusts that meet strict criteria.
You can grow your wealth wisely while enjoying tax benefits.
3. Three Key Disadvantages and Risks to Know
As with any investment, risks (price fluctuations) are inherent.
It’s crucial to fully understand these before starting.
- No principal guarantee
Unlike bank deposits, the value may fall below the invested amount (principal loss) depending on investment performance. - Costs (fees) apply
Fees such as “trust management fees” incurred during the investment period will be charged. - Real-time trading is not possible
Trading occurs at the “net asset value” determined once per day, so it is not possible to buy or sell at every minute and second like stocks.
4. How Beginners Can Choose Without Making Mistakes
Here are key points to consider when you’re unsure which mutual fund to choose from the countless options available.
| Checklist | Recommendations for Beginners |
| Operating Style | Index-linked funds (low fees) that track the overall market |
| Investment target | Global stocks and U.S. stocks that allow you to diversify risk |
| Trust fee | Low-cost options with an annual rate of 0.2% or less |
| distribution | For efficient growth, choose “No Dividends (Reinvestment Type)” |
Summary: Start with a small amount and take that first step
Mutual funds are a powerful tool for steadily building wealth by investing small amounts over time, spread globally.
Why not start by actually experiencing price movements in your own account, even if it’s just 1,000 yen per month?
