Mutual funds for one is a very interesting model that I’ll
be joining very soon. I firmly believe that when it comes to passive
investments, it is always best to diversify. This is exactly what I’m trying to
do in this early stage of my life - that is is to try every investment option
and eventually figure out, through a means of evaluation, what’s the most
effective of them all. By then, I’ll focus on the strategies that are most
effective for me.
An American colleague called the very logical method above
as the “shotgun effect.” I think it’s effective. Furthermore, at this stage of
my life, it seems like I got nothing to lose. It’s not like I have people
relying on me already, the thing I just worry about perhaps only include phone
bills, food, gasoline, and other stuff (socially related stuff and anything in
between). I guess to put it simply, this stage of life as an optimal period to
try everything especially as it relates to long-haul investments. So yeah, (I
do apologize for the long chitchat) let’s get on with my basic understanding of
MF.
What is Mutual Funds?
From what I understand, mutual funds is where you put up
money to professional stock or security trader, who in turn do the trade for
you for a little and at most on a standardized fee. This works best for people
who are not really into trusting themselves in picking up companies as what you
do on active stocks. You just have to put up the money with someone who’s
capable of making the decision for you and hope everything goes well, which is
hopefully that they make the right decisions, and by then you could get a raise
of your money after a length of time.
However, the option of Mutual Funds also works best for
people like me aiming to diversify investments. In addition, it pays to have an
option that gives people a “worry less” setting (that, if you trust your MF
company’s performance enough).
Don’t get me wrong. Mutual Funds is not a fast money
scheme. It’s also a long-term investment unless you place a bulk amount of money,
I’m talking about millions of pesos, which could give you high gains right
away. But if you don’t have that sum, then you could just, you know, drop money
once a month or whenever you can, and enhance your portfolio as time goes on.
You reap what you sow perhaps after 10 years or 15 years, well that depends on
you already. Mainly, that’s how I think I’m going to do it.
Of course, there are a lot of MF companies/association out
there. I’ve heard about PAMI and PhilEquity and other MF companies. I’ll be
checking them out, and I’ll certainly post something about them once I get to
join them, which includes my experience and probably some tips and how to’s.
Risk Profiles
As to any investments, there are risks involved. Although a
lot of people say that mutual funds are safer than manual trades in the stock market, I don’t entirely agree with that. They also have risk profiles. It
means you could settle for an aggressive, moderate or safe approach (not all
companies use the same terms). Also, I heard that you could transfer from one
risk profile to another to make the most possible gains. I heard this is very
possible for PAMI and they allow you up to four changes free of charge in a
span of a year. I’ll certainly get you more details as I join them and move
along.
Basically, aggressive approach gives you the highest gains
but probably the highest loss as well, while safe approach gives you the least
gains while having the lesser risk of losing. You have the freedom to choose
which profile to take, and also the ability to check the companies the traders
invest in, including progress reports, statistics and so on.
That’s all about this topic for now. As usual, I’m hoping
for the best. It’s funny. While writing this, I recall a conversation with a
friend. We were saying that we all prepare for the future but what if the
future becomes a bitch (sorry for the term) and you know, become unpredictable
and ruin everything that we’ve done so far. Well, it’s not our hold anymore --
it’s a fact that the future is uncertain. I think the process of all these
investing and managing our money is not about what you get in the end. I came
to realize that the process is what really counts. The lessons are the ones lasting, the ones that stay with you - just some random thoughts. Thanks for reading.
