Mutual Funds anyone?
Sharing a previous post by a good friend Edmond Lao. For those wanting to know more about
Mutual funds have been one of the better alternatives to just saving money in the bank. Gone are the days when time deposits were as high as 22% per annum. Nowadays, banks are good only for safekeeping your hard-earned money. Growing your money through the bank to reach your goals is next to impossible.
Investing in mutual funds does not guarantee a return. Past performance can be a gauge but can never guarantee future return. Past performance will allow us to see how well the fund managers made our money grow.
Investing requires one to align it to his goals, risk profile and the timeline to his goals. He has to carefully determine the future value he needs so that he can project how much to invest regularly.
Catch me in my live training events! (quick plug)
The heart of why I do this seminars is I want to build a generation of Filipinos with the right foundation in stock investing. I want to bring smart investing to every Filipino around the world! If you would like to know more on how you could time the market checkout the trainings below.
1. Time constraints.
There are people who are too busy with their work that they do not have the time to study how the other instruments can work for them. Without knowledge and expertise, a lack of conviction can be seen in their investments and it can be prone to investing mistakaes. It would be better for them to have a professional manage their money so they can focus on their daily routine. Leaving it to an expert is a form of leverage where the investors use other people’s effort to grow their money.
Unless the growth of money is higher than inflation, it is definite that the investor will need more money to buy the same item that he needs. He needs to work harder and longer just to be able to earn more. By investing at a higher return, he needs less effort to make more as it is his money that will be working to make more.
3. Economy of scale.
An ordinary investor who wishes to invest in instruments such as bonds may not have that much money to get in. He will lose the opportunity as he only has a small purchasing power. By joining a mutual fund, he is joined to a big pool of funds that is exposed to an investment instrument previously inaccessible to him. This is similar to the saying “united we stand, divided we fall”.
When one invests in a mutual fund, he is already a business owner. A lot of people dream of having their business. Unknown to them, for only Php 1,000, they become part owner of a mutual fund (which is a corporation). They become business owners where board of directors, fund managers, and staff work for them and make their money grow. This is the same as a traditional business owner who has people working to make money for him. Imagine, investors are stockholders and they receive annual reports from the mutual fund company.
5. Economic growth.
Not all may know this. As we invest in mutual funds, we help companies grow via bonds and IPOs. Companies need money to expand and they either use bonds or stocks to generate the needed funds. In effect, mutual funds indirectly help companies expand and create jobs and also help government get revenues via tax. Specially in equities, the more we invest, the less we depend on foreign investment to keep continue on its bullish trend.
Wouldn’t it be great to invest in mutual funds? The more we invest, the more we benefit as individuals and as a country.