July 1, 2022
If you are a minimum wage earner, it’s important to understand how mutual fund investments work and what kinds of benefits they can offer. Mutual fund investments offer several advantages that can help you save on your minimum wage salary.
One benefit is that mutual fund investments are tax-efficient. This means that you won’t have to pay any taxes on the income generated by the funds, which can be quite beneficial when your salary is small. Additionally, mutual fund investments typically have low turnover rates, which means that the returns they generate are more stable than those of other investment options like stocks or real estate.
Another advantage is that mutual fund investments often come with diversification benefits. This means that even if one sector or asset class experiences problems, the rest of your portfolio will still be relatively safe. Finally, minimum wage earners typically don’t have enough money saved up to cover long-term expenses like retirement or children’s college tuition, so mutual fund investments can provide an extra layer of protection for them.
From living paycheck to paycheck to having plenty of savings to have a better and brighter future! Read more to learn how you can start turning your life around.
The minimum wage in the Philippines, which was set at Php 537 per day in 2019, has not been increased either. The Philippine minimum daily wage is anticipated to increase from its current level of Php 490 to Php 537 between 2022 and 2023. Unfortunately, despite the pandemic, the minimum hourly wage in the Philippines did not increase at that time and instead remained the same.
There is no such thing as a minimum wage or hourly rate in the Philippines. From one job to the next, from one industry to the next, and from one location to the next, the Philippines’ bare minimum wage varies.
There are other types of vocations accessible in the Philippines besides those paying a daily wage. In truth, several types of employment don’t necessarily allow for an 8-hour workday. Domestic helpers or a live-in housekeeper who cannot be relied upon to provide a certain number of hours are examples of this. A private school instructor and an elementary school teacher must also accomplish this outside of class time by taking notes or reviewing answer papers.
If you’re looking to save money on your minimum wage salary, one way to do that is to invest in mutual funds. Mutual funds are a great way to gain access to a variety of different investments without having to worry about the complexity or timing of those investments.
Mutual funds are designed specifically for people who want to save money and grow their wealth over time. They typically offer high investment returns and low fees, which means that you’ll be able to make more money while still saving on your minimum wage salary.
Plus, since mutual funds are regulated by the government, you can be sure that your money is safe and will be able to grow over time. This makes them a great choice for anyone looking to increase their savings quickly and easily.
Investors receive a variety of advantages from mutual funds that are unmatched by other investing tools. The benefits include the following:
One of the main draws of mutual funds is that they give their investors, especially the smaller ones, access to full-time professional managers whose job is to research the various investment options on the market and choose those that will provide the fund and its shareholders with the highest possible returns.
Direct investments typically demand a sizable amount of funding. Depending on the bank or investment firm you are dealing with, the minimum investment amounts for Treasury Bills and commercial paper, for instance, range from Php 100,000 to Php 1,000,000. This is also true for stocks, as an investor may be able to purchase one “lot” (shares are sold on board lots of 10 to 1 million shares depending on the price at which these shares are traded) for as little as Php 1,000 to Php 5,000.
In the contrary, most Philippine mutual funds only need a minimum initial investment of Php5,000.00 and a minimum additional investment of Php1,000.00.
Diversification is a crucial investment idea that calls for owning a variety of assets to lower the risks involved with investing in single stocks. Due to the mutual fund’s typically wide range of investments in securities, people who invest in them immediately diversify their portfolios. The asset management company you choose to invest in should have the knowledge and expertise to diversify your investment portfolio.
The capacity to quickly turn investments into cash is known as liquidity. For some investment products, an investor must locate a buyer to sell their investment. Investors can redeem their investments anytime, hassle free. Even though the legislation stipulates that redemption proceeds must be paid within seven (7) banking days of the date of the redemption request, most funds are able to pay the redemption proceeds in a single day. As a result, mutual funds are viewed as particularly liquid assets.
A mutual fund can benefit from some economies of scale because it is managed as a single portfolio. For instance, it might demand a greater interest rate on fixed-income assets or reduced stock brokerage costs thanks to the millions it manages. However, since very few private investors can match the knowledge and expertise of full-time professional fund managers, the investment adviser is still the one who makes a difference between investing directly and investing in mutual funds.
In the Philippines, mutual funds can be bought directly from the fund manager or an asset management company, through a broker, financial advisor, bank, or insurance agent, via mail, phone, and increasingly online. A wide range of other services is also provided by funds, such as monthly or quarterly account statements, tax information, and 24-hour access to funds and account information by phone and computer.
People who struggle to make ends meet might believe that no amount of financial education can enable them to save money or even reach their savings goals. If you don’t have the resources to save in the first place, it could seem hard to plan or achieve your goals. Although a low salary may make it more challenging to reach your financial goals, you shouldn’t give up. Even people at the minimum payments can gradually save money. Take a look at the following steps to get you started:
Create a budget to keep your spending under control. Determine the essentials and non-essentials by classifying spending based on priority. This makes it simpler to allocate finances effectively so that there will be enough for the priorities that matter most. It will be simpler to regulate spending and find expenses that may be forgone in favor of necessities if you create a realistic budget.
For instance, moving to the least expensive location that is close to the workplace should be considered if housing and transportation expenditures are among the highest expenses. Costs for housing and transportation could be decreased in this way. If food spending for every month holds a large portion of your expenditures, you can plan your daily meals ahead to see how else you can save up.
Low income is a challenge for saving, but it is not insurmountable. There are chances to increase your income through mutual fund investing. With just a minimal amount of initial investment and additional investment thereafter, you can get started by investing in a bond fund or a dollar fund. There are plenty of mutual fund investment options available and you can start anytime. By taking a risk-level assessment, you can be sure of how you can invest while keeping your assets safe.
As the minimum wage in the Philippines increases, it’s important for people who are earning that wage to find ways to save money. One way to do this is by investing in mutual funds.
Mutual funds are a great way to invest your money because they offer a diversified portfolio of stocks and bonds, which is perfect for people who don’t have much experience with investing. They also provide liquidity, which means that you can easily sell your shares if you want to move on to a different investment strategy.
Plus, mutual funds typically have low maintenance fees, so you won’t have to worry about spending too much on fees each month. In addition, they’re usually very easy to use and navigate, so you’ll be able to understand everything without having any financial knowledge.
So if you’re looking for an affordable way to save money while also getting exposure to a wide range of investments, mutual funds may be the right option for you.
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