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.
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.