How does a crowdfunding work?

Before we start, what does crowdfunding mean? In Spanish, crowdfunding means fundraising, which works under a collective financing network through donations towards a certain project. 

How does a crowdfunding work?

As we mentioned, crowdfunding works with a group of investors who put their money to cover the expenses of very varied projects such as: musical launches, political campaigns, creation of new technologies, among others.

In short, a person looks for sources of financing to fulfill a personal project, and, upon completion, must give rewards to all those who supported in its creation stage.

Usually everything is done online. Crowdfunding platforms work under these processes:

  • The person who created the project must put in the necessary amount and why they are needing it. As well as what are the rewards that investors will have.
  • The investment community begins to value the project.
  • A collection date is set for all investors.
  • When this date closes, it will be evaluated how much was raised for the project. 

 

4. Mutual Funds

This term is always heard in commercials and other bank promotions. But what are mutual funds? They are financial instruments that bring together contributions from different investments, whether individuals or companies, whose common objective is to achieve profitability within a specified period.

To understand how mutual funds work, we must be clear that all the money collected is managed by an administrator specialized in managing investments, which will be in charge of adding financial values ​​such as: shares, mortgage bills, state bonds, among others.

What are the requirements for mutual funds? Although there are no minimum amounts to enter a mutual fund, the bank you are investing in can establish a monetary fence. So it is important that you compare the requirements of all financial institutions before starting this investment. 

Within the types of mutual funds, we can find:

  • Fixed Income Funds 
  • Equity Funds
  • Mixed Income Funds 
  • Guaranteed investment funds
  • Monetary funds
  • Absolute return funds
  • Global funds

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