Mutual Fund

Should you invest in Mutual Funds?

The first time I heard about mutual funds was during the Think Rich seminar of Bo Sanchez in Dubai in 2008. I got excited when I learned that if I invest, my money will grow as much as 12% interest. Not bad considering that a time deposit of 1K to less than 10K for 364 days in BPI (http://info.bpiexpressonline.com/bpiprod/produpd.nsf/Deposit+Rates/TimeDepositRates2) will yield a meager 2.25% interest per annum with 20% government tax.

But what is Mutual Fund? A quick search in wikipedia reveals that a mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests it in stocks, bonds, short-term money market instruments, and/or other securities. The mutual fund will have a fund manager that trades the pooled money on a regular basis. The net proceeds or losses are then typically distributed to the investors annually.

So when I went home for a vacation I went to a PAMI office (Philippine Asset Management, Inc.) a subsidiary of Philamlife, to entrust my hard earned savings of P 40,000.00. I put P 20,000 in GSIS Mutual fund at about P 360.00 at that time and 20,000 in Philippine Strategic Growth Fund at NAV of about P 2.50.

Stepping out of the door, I had a feeling of pride within me. I became an investor of sort for the first time. At last my money will grow faster than time deposit.

Well, not really a good timing for me! After few days, NAV started to slide far away into the oblivion. And a few more months my PSGF NAV hit a depressing P 216.00. As of this writing my PSGF NAV is P 325.00.

I think before investing you must know how much risk you can tolerate, whether it is for long term or short term goal. Don’t forget to research a good fund manager which is very important. You can start for as low as P 5,000.00 investment and minimum additional investment P 1,000.

For more information on Philam funds visit http://www.philamfunds.com.ph//. For comprehensive list of mutual funds and fund managers visit http://www.icap.com.ph/factsfignavps.asp.