by: Edmund Yao Lao, RFP
Mutual fund has been one of the better alternatives to just saving money in the bank. Gone were 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 fund
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.
Why are mutual funds preferred over other
instruments?
1. Time constraint. 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, they will
definitely fail miserably. It is 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.
2. Inflation. 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 or stocks 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 fund
that exposed to the instrument previously inaccessible to him when he was
alone. This is similar to the saying “united we stand, divided we fall”.
4. Business. 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 5000, they become part owner of a
mutual fund (which is a corporation). They become business owners where board
of directors, fund managers, and staffs 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. The only difference is that while his money grows he
does not get pestered by BIR inspectors. Imagine, investors are stockholders
and they receive annual repost 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.
Need more guide on how you may start to invest in Mutual Funds?
Add up Edmund Y. Lao, RFP on his facebook: https://www.facebook.com/moneylaa
Need more guide on how you may start to invest in Mutual Funds?
Add up Edmund Y. Lao, RFP on his facebook: https://www.facebook.com/moneylaa
Αναζητώντας για πιθανές επιλογές επενδύσεων με μεγαλύτερη διασπορά και μικρότερο αρχικό κεαφάλαιο σε σχέση με τις μετοχές, παρατήρησα ότι η Eurobank προσφέρει ένα μεγάλο εύρος αμοιβαίων κεφαλαίων για κάθε προφίλ επενδυτή και κάτω από την διαχείρηση διακεκριμένων διεθνών οίκων.
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ReplyDeleteGood blog... Mutual funds are a good option for small investors. You could have many advantages and benefits by investing in mutual funds.
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