January 14, 2022
There are plenty of ways to position yourself towards a financially secure future. A career in corporate or business can surely help in building riches but there are several other ways to improve your financial assets.
Investing in stocks, bonds, or mutual funds is a form of a long-term money-earning vehicle where you can put your investable assets for returns and provide you with financial stability in the future. To put it simply, put money now and earn profits later.
It may sound daunting at first but as you get to learn more about mutual funds investing in the Philippines, you will surely get a hang of it. In this article, we will provide you with basic investing knowledge including the types of investment, how to get started, and how you can earn from putting your assets in investment vehicles.
A mutual fund is an investment vehicle that collects, pools, and invests investors’ money in stock market-linked financial instruments such as stocks and bonds or other assets. The combined holdings of this fund, which include stocks and bonds, are then known as its portfolio.
The next question that usually comes after what mutual fund investment means is who does everything from allocation of assets to assessment of capital gain production? A fund manager, he/she is a professional and a specialist from your chosen asset management firm and is the one that manages mutual funds for investors.
These fund managers provide professional services that cover a combination of duties of loyalty and care.
Finally, mutual fund work starts when the investors’ money is pooled, traded, assessed, and reinvested for greater asset return.
Now that you have the gist of how mutual funds work and who you would be working with to enhance your investable assets, learning about the types of mutual fund investments in the Philippines can help in decision-making.
You can choose to invest in single or multiple combined types of mutual funds depending on your risk appetite and how the fund managers suggest the stock market to be.
Commonly known as hybrid funds, balanced funds are a mix of bonds, stocks, and other securities. As the term implies, its goal is to generate profit from the combination of various mutual fund types and is typically composed of 60% stocks and 40% bonds.
Risk Profiling: Low to Moderate Risk Appetite
Time Horizon: Medium to Long Term
This is the most common type of investment offered to beginners who want to protect their assets against inflation and are not ready to take more risks. Another good example of bond fund investing is government bonds like Treasury Bonds and Municipal Bonds which present a great option for investors seeking to build out the low-risk portion of a portfolio.
Finally, a bond fund investing with trusted asset management companies in the Philippines requires a relatively small amount to get started.
Risk Profiling: Low to Moderate Risk Appetite
Time Horizon: Short to Long Term
If you are looking into investing your assets in stocks, then equity funds should help you with your financial goals. In this fund, your assets are invested in the shares of different companies, whether targeted to a specific sector or distributed among high yield performing companies.
Risk Profiling: High-Risk Appetite
Time Horizon: Long Term
Money market funds, as the term implies, invest in high-quality yet short-term instruments like cash and cash-equivalent securities – including also certificates of deposit or CDs, treasuries, repurchase agreements, and bankers’ acceptances.
This type of mutual fund is also the best option for beginners but because it carries lower risks, the returns can be considerably small as well.
Risk Profiling: Lower Risk Appetite
Time Horizon: Short Term
In this section, we will be tackling the 3 major ways you can earn from mutual fund investing in the Philippines.
One of the best ways to earn in Mutual fund investing is through compound interest. To put it simply, the more money you invest and the longer you let it sit there, the more compound interest you’ll earn.
Net Asset Value, commonly known as NAV, represents a fund’s per unit market value. One thing to take note of when it comes to NAV is that if the market value of the fund’s portfolio rises, so does the value per share increase.
In a nutshell, the higher the NAV, the higher the investments’ value is.
At this point, when you have all the basic knowledge you need and might be ready to start investing, you must also put great consideration into the pros and cons of mutual fund investing in the Philippines.
For mutual fund investing, having the right asset management with the support of professional and skilled fund managers, you will not have to be actively involved in generating returns for your assets.
There is diversification when investing in mutual funds. Your money is invested in a variety of assets that help reduce the risk of losing your investment.
If you are worried about your security, then you can trust that mutual fund companies in the Philippines are regulated by the SEC or Security Exchange Commission.
Typically, during business days, you may have peace of mind that mutual funds are highly liquid investments meaning you can buy and sell your shares almost immediately.
Investing in mutual funds like United Fund, Fixed Income Fund, and Dollar Fund Builder requires a minimum initial investment of as low as 1,000 pesos. This makes investing in mutual funds in the Philippines more affordable and accessible to beginners.
As an investor, your priority is to reduce losses and, of course, generate as much return as your invested assets can. You can rely on professional and expert fund managers to do the work for you. These managers make investment strategies and decisions on your behalf all while practicing their duties of loyalty and care.
For every service comes fees. Since asset management companies are being regulated by the SEC, you can trust that no hidden fees will come your way. Moreover, they are disclosed before investment.
These fees, depending on the asset management company, can either be fees for fund management or sales load fees charged to an investor when buying or redeeming shares.
Just like with fees, anything that involves money invested comes with potential risks. While you can’t totally alleviate risks, you can minimize them. And of course, by taking a risk profiling form, you will be able to tell whether you are ready for a high-risk investment or not.
Whatever your financial goal may be, there is a mutual fund that fits your needs. Once you have the basic knowledge, the next step is to speak or consult with an investment specialist.
Get started today! Always remember that taking small steps can position you to get closer to reaching your financial goals.
Your Next Steps:
Take a Risk Profiling to learn which type of investment fits you best!
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