What is a mutual fund?
A mutual fund is an investment company that pools money from different investors and invest the money in various securities depending on the investment objective of the fund. For as little as Php5000 one can get access to these investments. It is professionally managed by fund managers who would do the research and trading, monitoring these investments for you to ensure that they can maximize your earning potentials.
Types of Mutual Funds?
- Money market funds – These are invested in short term (one year or less) debt instruments.
- Bond funds – These are invested in long term debt instruments of the Philippine government or corporations
- Balanced funds – These are combination of debt instruments and shares of stocks of Philippine companies
- Equity funds – These are invested primarily in shares of stocks of Philippine companies
How do you start your investment?
Before investing in a mutual fund, consult a licensed mutual fund representative or for us IMG Financial advisors and we will assist you in your financial planning. It is not that you invest the money right away but we want to see what are your financial goals, risk appetite and investment horizon.
For any type of investment, there is usually a risk return trade off, usually the higher the risk the higher the return.
The money market fund would have the lowest return, it has the lowest risk. The highest return will be the equity fund.
How do you earn from mutual fund investing?
In mutual funds it is also like investing in the stocks, because the NAV (net asset value) fluctuates every day. It can go up or down. Therefore in investing, you should think long-term and give your money time to grow and appreciate. Even it is volatile over the long term the volatility smoothens out and you could expect a better return. For equity fund it is advisable to keep it at least five years.
The management fees of mutual funds vary between mutual fund companies. You might want to check the prospectus of the Fund you are interested in investing to determine the Fund’s management fess. Here in IMG as an IMG member in partnership with Rampver Financials we got the privileged to have a zero load for life 🙂 That is why for example when you bought a share that costs Php1.00 and you invest Php5000 because of the zero load charge you now have a 5,000 shares.
You can always send me a message if you have any question.