MUTUAL FUND INVESTING

What is Mutual Fund?

Mutual Fund is a pooled funds from different investors. It is allocated to purchase variety of investments like corporate and government bonds, blue chips company in stock market with specific strategy and goal.

How Mutual Fund Works?

All funds pooled from different investors regardless of the amount as long as within the minimum required, the Mutual Fund Company with the approval of shareholders majority will appoint fund managers who are expert on this field that will help grow our investment by investing it to various securities in different industry

Income will be then earned from capital appreciation, cash and stock dividends, and interests from bonds.

As an investor, you will own shares in proportion to your investment. You will receive earnings based on your proportionate share as well.

The Securities and Exchange Commission (SEC) regulates mutual funds companies in the Philippines. In terms of regulation. Mutual Fund is considered to be better because they are subject to full disclosure and issuance of reports.

TYPES OF MUTUAL FUNDS

MONEY MARKET FUND

Considered as the most conservative type of mutual fund. Higher compare to savings interest but might not beat inflation. It has the lowest risk but also has the lowest return compared to the other types of mutual funds. Return range to .5% - 1% p.a, though this is not guaranteed.

BOND FUND

Funds are invested in fixed-income securities such as government and corporate bonds. Ideal for low-risk investors like senior citizen who want to earn higher than time deposits and inflation rate. Return range to 4% - 6% p.a, though this is not guaranteed.

BALANCE FUND

Funds are invested in a mix of shares of stocks and bonds (typically 60% stocks and 40% bonds). Ideal for moderate-risk investors who want to earn a bit higher profits than bond funds. Return range to 12% - 15% p.a, though this is not guaranteed.

STOCK OR EQUITY FUND

Funds are invested in shares of stocks listed in the Philippine Stock Exchange. Ideal for high-risk or aggressive investors with experience in stock market investing who want to maximize their profits. Return range to 16% - 18% p.a, though this is not guaranteed.

What are the Advantages of Mutual Funds?

A.) Professional Management - There is a dedicated professional manager who provides investment expertise in researching, selecting , monitoring the performance of the securities purchased.

B.) Diversification - When you diversify, you lower the risk because you do not put all your eggs in one basket. The money will be spread among different stocks, bonds and other assets.

C.) Liquidity - You can get in or out quite easily. It means you can easily invest in mutual funds and can easily withdraw it. Maximum redemption is seven (7) days , but normally you can get it earlier.

D.) Low Investment minimums - You can open mutual fund portfolio with five thousand pesos (P 5,000) as initial and minimum of one thousand pesos (P1,000) as additional investment. But now some mutual fund company offer one thousand pesos (P1,000) as initial and minimum five hundred pesos (P500) as additional investment. Yes that's right, that's how affordable and flexible it is.

E. ) Tax Exempt - Whatever income or gain that we get its tax exempt.

F.) Safety - it is highly regulated by the Securities and Exchange Commission (SEC). Regular reporting is required to comply with SEC, bank custodian is separate with the managing company and audited by independent auditors annually.

What is the Advantage of an IMG Member when it comes to Investing in Mutual Funds?

As we both CPA in profession, we know how important of investing into our lives and in such we focus into it. After attending a FREE Financial Literacy seminar at IMG Wealth Academy, our mindset changed and the concept of building your Solid Financial foundation was introduce to us. There realization that we need to build the right way to have financial security such as get healthcare, have a protection with life insurance, zero out debt, set-up emergency fund and of course building and accumulating investments. It takes time to get all of these and one thing for sure with determination and discipline, slowly but surely we can achieve financial success especially when surrounded by IMG people who are savers and investors.

All IMG members enjoy a life time zero-sales load with their mutual fund investing. Meaning every time we invest we are not charge by sales load/transaction fees unlike other investors who is non-IMG members wherein they are being charged with 1%-3.5% sales load for every transaction. Thanks to IMG-Rampver Financials partnership.

This sales load is huge specially if you will be investing regularly. Let's say you are investing 8,000 per month (96,000 annually) for 20 years with 2.50% fee, the total amount that you will save will be Php 48,000 which is huge compared to the one-time membership fee of Php 5,500 Not only that, since you are not charged with any sales load fee, that also means you're buying more shares which is the key in investing. On top of the zero-sales load benefits, there are a ton of other benefits available to you. ( Click here to see all the IMG benefits ).