Investing in Mutual Funds Made Easy

What is a Mutual Fund?  
    
A Mutual Fund is a company that pulls together money from people and companies and invests it in stocks, bonds or other similar assets.

Any investor in a mutual fund earns from the increase in price of a specific fund through appreciation and from the dividends declared by the company where the pool of fund is invested.

Why Invest in a Mutual Fund?

One main reason for investing in a mutual fund is to preserve your capital.  As posted in my article, my very first investment, inflation eats up our savings.  Our savings declines in purchasing power over time.  Another reason for investing is for long-term goals like retirement fund, education fund, vacation, dream house, etc.

The main argument for this is that generally, if we maintain our investing for long period of time (i.e. 3 years, 5 years, 10 years , etc.), it will potentially generate increase in value because companies where our funds are invested will similarly increase in value.  This concept also holds true in value investing for stocks of blue-chip companies.  But, income from investments in mutual funds may also be possible in short-term basis.  As I mentioned in my previous post, I earned 40%+ in a mutual equity fund due to investment timing.  You will learn this as soon as you start investing.  Remember, in investing, whether it's buying properties or investment products, you earn from the time you buy not when you sell.

What are the Advantages of Mutual Funds?

• It is managed by investment professionals
• Money are invested in several companies which manages risks of losing capital
• You have the ability to be able to pull-out your funds in case of emergency
• There is a strong potential for high returns or income
• It is easy to start and easy to maintain

So, How Much Does an Investment Cost?

There are companies offering as low as Php 5,000.00 initial investment and minimum additional investments (at your choice of frequency) of only Php 1,000.00.  In my favorite bank, it's Php 10,000.00 initial investment and Php 1,000.00 minimum per additional investment.

Anyone can do it even students.  Let's illustrate, assuming you're a student with an allowance of Php 100 per day.  For 20 days, assuming you can save Php 50.00, savings per month is Php 1,000.00.  Wait until 5 months and your good to go to make your first step towards investing.  That would be one of the best decisions you'll ever make.  First, you'll be able to control your fear of losing money.  Second, you will be able to potentially have more.  And last but not the least, the potential to start and grow your dream business.

Financial freedom is achievable for everyone who has the information and who makes the necessary action.