Tag Archives: Equity funds

Is it Safe to Invest in Mutual Fund?

02 Tuesday Sep 2014

Posted by in Personal Financing

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Mutual funds

Picture Credit : murraycoulterandassociates.com

The title of this post is a common question I encountered when I am conducting seminars and group study about Financial Literacy.

So is it really safe to invest in mutual fund? My answer depends on your definition of safe.

First of all there is No Risk Free Investment. Different type of Investment has its own associated risk. It only depends on how much risk you can take to define it as safe.

Mutual fund is managed by a fund manager, who are trained to manage pooled money. So with decision making with regards to fund allocation I can say that mutual fund is safe. Mutual Fund is also govern by SEC and have pass with different government strict rules before it could operate and received new funding from investor.

In addition, the money is being held by its associated banks and the money and not by the Fund Manager. Fund Managers only manage the transactions.

Money value of the funds depends on the daily NAVPS of a certain fund. There are days that the NAVPS is low and there are days that NAVPS is high. If the current NAVPS is lower than your purchased cost per unit then you are losing, but if the current NAVPS is higher than your purchased cost per unit then you are gaining. Of course purchased cost per unit includes fees ad other charges of the mutual fund company.

There are different types of Mutual Fund to choose from, they Equity Funds, Balance Fund, Fixed Income Funds (Bonds) and Money Market Funds. There are other type of funds but those mentioned are the common types of Mutual Funds.

Equity Funds has the highest risk while the Money Market Funds has the lowest risk. But you should also understand that the higher the risk of an investment the higher also the potential gain of it.

Before investing in Mutual fund you should asses your goals/objective. If the length of time is short then it is not recommended for you to proceed with risky investment. But if the length of time is long then an investor could go to a riskier investment. (ie. Saving for your 1 year old son college expenses)

I hope this simple post gives you an idea to answer the question mentioned in the title, “Is it Safe to Invest in Mutual Fund?”

Learn first before investing. Happy Investing.

I also believe in the saying, “If your fail to Plan then You Plan to Fail”.

PSEi Closes at 5,971.05, So What is Your Plan?

24 Monday Jun 2013

Posted by in Stock Market

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Investors have mixed reactions on what was happening on the market nowadays, The PSEi broke the 6,000 level today which closes at 5,971.05 with -3.41% decline from t’s close on Friday. Many believes that the next support will be at 5,800. Questions like “Should I cut Lost?”, Should I transfer my position?, should I close down my computer?, Should I sell “Company x” stock or not? , This are just common questions you can see in any forum about investment.

The market was down for almost 1 month and it all started last May 22 upon Ben Bernanke announcement for possible tapering of the QE.

As an investor we need to have goals and plan in every investment that we make. We need to understand that stock market is not meant to be for short term. In time like this if you buy stocks, you could get more stock with same value of your money last month. Peso Cost Averaging is a great methodology in investing.

Nobody knows when the market will rebounce, there might be some technicians that are telling things but nobody knows what investors will be thinking tomorrow or on the next few days or even months.

If you think that you cannot handle your lost, then make a cut lost. If you are for long term, then the market correction that we are experiencing today would not mean anything 10 years from now.

The best thing to do in time like this is to increase our cash flow so that we can have something to invest. Diversified your asset so you will not be much affected by the volatility of the market.

Bear in mind that we gain from stocks not only from price appreciation but also from dividends.

Here some reminders before joining stock market or equity funds:

  • Equity Funds and Stock Market is not for Short Term but it is for Long Term
  • You need to be insured prior to Investing
  • You need to have Emergency Fund before investing
  • You need to be bad debt free before investing
  • Money invested in stocks and equity should not be withdrawn within 5 years of your investment.
  • Do Peso Cost Averaging
  • Equity and Stocks is a High Risk Investment but with a probability of High Gain

My YTD was reduced to +3.82%, but at least I am still on the gain side for this year.

Are you a Long Term Investor? Or a Trader?

03 Monday Jun 2013

Posted by in Stock Market

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psei

Seeing the decline of the Philippine Stock market price? Are you one of those who are afraid losing money? Or you are already thinking of going out from stock market? Well check out my post below.

All Equity Funds (Funds with high percentage invested in the stock market) in Mutual Funds are also affected by the sell-off which started from last week.

In stock market we have two types of players, first is Traders and the next is long term investor.

So Who are Traders?

Traders or commonly known as “Tsupiteros” are those stock market players who highly depends on Technical Analysis, rumors, tips and other things that really affect the market price. They sell if they think the price is high and they will buy if they think the price is really low and they could gain from it. Being traders is riskier compared to long term investors who are doing cost averaging.

So Who are Long Term Investor?

They are investors who believes on the company that they bought, they believed that they can act as a partner of the company and they have a strong belief in the valuation of the company. They also believed that when the market is down, they should buy more shares because it will be higher on the next bounce of the market. They are also doing Peso Cost averaging, in which they buy shares whatever is the market status. When the market is down, they can have more shares and when the market is high then it will be fewer position provided same value of money is being placed in a constant basis.

The Philippine Stock Market

The Philippine Stock market is one of oldest stock exchanges in Southeast Asia, having been in continuous operation since its inception in 1927.

The main index for PSE is the PSE Composite Index or PSEi, which is composed of thirty (30) listed companies. The selection of companies in the PSEi is based on a specific set of criteria. There are also six additional sector-based indices according to Wikipedia.

Based in market history, PSEi proves that stock market is a good investment for Long Term. That is also the reason why younger generation is highly recommended to enter stock market, since whenever there is correction or market crash, there are still room for recovery.(But of course market history should not be the sole basis of your investment. It is just an information)

Market Status (June 3, 2013)

Just for my record today, a report from BPI Asset Management Market Watcher.

The local equities market lost ground on persistent profit-taking due to valuation concerns.  The PSEi lost 258.57 points to close at 6,763.38. All sectoral indices closed in the negative territory led by property (-4.96%), financials (-3.80%) and mining and oil (-3.72%). Market breadth was negative with 138 declines outnumbering 33 advances with 33 stocks unchanged. Total value turnover was at Php16.58 billion. Foreign investors were net sellers at Php3.27 billion.

Happy Investing… Just for the record my YTD falls to +18.23% at least I am still positive.

 

PH Stock Index All Time High at 7,313.46 breaches 7,300 for first time in history

14 Tuesday May 2013

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PH Stock Index All Time High at 7,313.46 breaches 7,300 for first time in history

Once again PSEi set a record of an all-time high at 7,313.460 a day after the election. It only means that investors have trust on the recently concluded election. In addition a new intra-day high was likewise hit at 7,349.95. It is 30th record breakout for the year and the 91st under the Aquino administration.

This sign is really good for investors because they could see gains from their investment. People who are not yet investing will not really feel the effect of the economy.

I believe that it’s high time for people to go to Investment. If you don’t know how to read graphs, and if you do not understand how the stock market works, I believe that is now high time to learn about this things. If you want to start you can go to banks or Mutual Fund Company and ask about equity funds.

Equity funds performance depends on the stock market movement. Just make sure that you know the risk that you will face in going to stock market.

Investing in stock market could give you a really high profit but likewise it could also give you a very high lost. The higher the Risk the Higher the possible gain and the lower the Risk the lower possible gains.

Your investing appetite will determine the type of investment that you will push through.

If you invest in equity funds, you will not bother about fundamental analysis and technical analysis of a certain stocks. But likewise you will not also have any part in decision making about which stocks to pick or to sell.

The beauty in stock market is that you control your investment but if you do not know this things better go to equity funds then learn about stock market.

Happy investing and I hope that many OFW will start investing and not just waster their money in gadgets and useless wants.