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Learning MUTUAL FUNDS…Best Investment Vehicle!

February 9, 2010

   

 

Learning MUTUAL FUNDS…best investment vehicle

 

INVEST WITH PROFESSIONAL MANAGEMENT… Utilize a concept of investment that provides professional money management… an investment concept called mutual funds.

Mutual funds are among the most popular & versatile financial planning vehicles in the United States.

·   More than 80% of Americans own mutual funds.

There are more than 7,300 mutual funds today with a total net asset of more than $7 trillion.

Mutual funds industry in the Philippines is still very small:

·   Very few Filipinos own mutual funds.

There are only about 30 mutual funds (as 2008) with net asset of about P150 billion ($3.5 billion).

 

 

 

A mutual fund is an investment company that combines money from individuals & invests in a diversified portfolio of securities. Each investor is a shareholder who buys shares of the fund. Each share represents a proportion of ownership in the fund’s assets.

Because hundreds of its shareholders have chosen to pool their money in a given mutual fund, the fund can easily diversify its investments among the stocks and bonds of many companies.

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MUTUAL FUNDS ARE USUALLY CLASSIFIED INTO:

1. BOND FUND - funds that invest in government securities.

2. STOCKS/EQUITY - funds that invest in a variety of stocks & equities. Aggressive in capital growth –deals with equity investments that are generally blue chips or growth stocks listed & traded on the Philippine Stock Exchange.

3. BALANCED - combines profitability of equity investments & the stability of fixed-income instruments.

 

MUTUAL FUNDS PROVIDE THE FOLLOWING BENEFITS:

1. PROFESSIONAL MANAGEMENT

·   Probably the most important advantage is professional management, normally available only to the wealthy.

·   Mutual funds take the stress away from small investors who want to invest in the financial markets. This is because the mutual funds are handled by competent professional fund managers who choose the right investment for them. Investing directly in the stock market is risky.

·   The sales charge (entry fee) you’ll pay when you first invest is a small price for the security of having professionals actively & constantly monitoring the stocks & make the investment decisions (based on extensive knowledge & research of market conditions & financial performances).    

2. ACCESSIBLE & AFFORDABLE… Easy to buy. Offer wide variety of services to meet shareholders’ need — variety of investment minimums allowing participation at affordable amount.

3. LIQUIDITY… Your money is always available. No need to find a buyer. The fund is always ready to buy back its shares from you. Mutual fund shares can be redeemed and collected within 7 days at the prevailing Net Asset Value per Share (NAVPS).

4. NET OF TAX … Harness the power of tax advantages!

5. DIVERSIFICATION… To help reduce the risks inherent in any investment, a mutual fund carefully selects a diversified portfolio. A diversified investment portfolio that contains a number of different types of investments tends to have a lower level of risk than a portfolio with more similar types of investments.

6. ASSET ALLOCATION… The process of developing a diversified portfolio by mixing different asset classes –such as stocks, bonds, & cash equivalents –in varying proportions to help reduce risk & maximize potential return.

7. MONEY COST AVERAGING… Money cost averaging advocates the investment of a constant money amount, regardless of the price of the investment. Over a period of time, this generally results in a lower purchase price per investment than if the total purchase was made at one time.

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INVESTMENT CONCEPTS:

 

MUTUAL FUND PLANNING. Mutual funds, as with other investments, are affected by changes in economic trends & cycles. The value of investments may rise or fall as the stock & bond markets fluctuate. Understanding certain investment concepts & tactics can help you lessen risk & maximize opportunity.

INFLATION. Inflation is an increase in the volume of money & credit relative to available goods & services, resulting in a continuing rise in the general price level. Overtime, inflation reduces the value & purchasing power of money.

RISK VERSUS REWARD. Generally, the greater the amount of risk assumed by the investor, the greater the potential rewards. Before you make any investment decisions, you should know your risk tolerance. Factors such as age, income & years until retirement, should be considered before making any investment decision.

MARKET FLUCTUATIONS. Upswings or downturns in market activity impact the value of investment instruments or accounts. As a result, investments may be worth more or less than their original cost when ultimately redeemed.

COMPOUNDING. Compounding takes place when the returns (such as interest, dividends, & capital gains) on investments start earning returns of their own. 

TRANSPARENCY. Mutual funds are highly regulated (& closely monitored) by the Securities & Exchange Commission under the Investment Company Act & its implementing rules.

 

For other inquiries about Mutual Fund Investment:

please call or txt Jay Galang 0919.3279960; 0916.6961434; 0932.3288682; 02.5681601 or email: jaygalang@gmail.com

 

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Wealth Academy Program

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