7/6/2014 Mutual funds: Can you trust them?

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Mutual funds: Can you trust them?
Is investing in mutual funds right for you? Here's what you need to know
Krista Garcia
Published 1:20 PM, Jul 06, 2014
Updated 1:49 PM, Jul 06, 2014

MANILA, Philippines Everyone wants to gain financial freedom. But is having savings enough?
Today, Filipinos are starting to learn to invest, too. (READ: The silent thief
(mailto:http://www.rappler.com/brandrap/sun-life-financial/60723-inflation-silent-thief))
Why? Historically, investments such as stocks and bonds have outperformed banks in terms of
interest rates. It means that those who started investing 10 or 20 years ago now have much higher
earnings compared to those who simply kept their money in bank deposit accounts.
But the truth is that investing is not magic money. Its a full-time effort. Making trades or observing
market movements requires rigid financial education. Not all Filipinos have the time or tenacity to
watch the money markets everyday. If youre not careful, you can lose all your hard-earned money in
one sweep.
BRIGHTER LIFE

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ALWAYS RUNNING OUT? Investing in mutual funds can help your money grow substantially over time.
This is where products like mutual funds (MFs) come in. By entrusting your money to professional
fund managers, you pool your money with other investors, creating a bigger capital that can be
invested in different channels. The fund managers then put your money in the market and make it
earn for you.
However, entrusting your money to fund managers isnt an excuse not to do your homework. You still
need to figure out your tolerance for risk and have a working knowledge of how MFs earn. Here are
a few things before you get started:
Whats in it for me and for them?
An investor earns income from MFs through asset appreciation, interest and dividends.
When a fund performs well the value of the fund grows such that when an investor sells his/her shares
in the said fund, he earns a profit.
Many Filipinos are already investing without knowing it. Pag-IBIG Fund a mandatory benefit for
employees is actually a type of mutual fund. The fund guarantees the refund of member's total
accumulated savings, which consists of the member's accumulated contributions, the employer
counterpart contributions, if any, and the dividend earnings credited to the member's account upon
membership maturity, disability, or retirement.
In a typical mutual fund, the refund of investment is not guaranteed. Over time, however, the interest
or share price can even exceed the investors capital amount. For example, a capital of P50,000
invested this year can already be worth millions in 20-30 years, basing on the past performance of
funds in the Philippines.
7/6/2014 Mutual funds: Can you trust them?
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Some types of mutual funds come linked with wealth protection products, such as life insurance.
These do not guarantee return of capital, but they can protect a portion of an investors wealth from
certain types of emergencies, like death or disability.
Its still a smaller pool, but not for long.
Mutual fund products in the Philippines are few but growing. According to Bloomberg.com
(http://bloomberg.com/), there are 150+ mutual fund products registered in the country. In North
America, there are over 10,000.
There are various types of mutual funds available in the Philippines such as:
1. Fixed-income funds (bonds)
2. Equity funds (stocks)
3. Balanced Funds (combination of stocks and bonds)
4. Money market funds
In choosing which type of MF to invest in, one must consider several factors.
First, you choose a mutual fund based on the integrity and track record of its fund manager, your risk
profile, and your time horizon. Kidding aside, you might think of it as entering a relationship: you have
to know what your type is, what your own personality is, and whether or not you can commit long-
term.
You have to read news about the funds leaders and how they are regarded in the industry. Dont fall
for scam funds that promise a very specific amount in X years. The most reliable fund managers
should take care of your wealth without over-promising anything.
You should also choose a fund that is aligned with your risk profile. If you are conservative and dont
think you can leave your money invested long enough, you should probably not go for equity funds as
these tend to be more volatile. You may want to consider a bond fund instead. But if you want to
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maximize your earning potential and dont mind short term fluctuations in exchange for higher returns
and are willing to leave your investment for 5-10 years, an equity fund may be best suited for you.
Start now. But look further into the horizon.
Its not when to invest; its how long. Time is an investors most important asset. Even if you
choose not to spend your money, its being eaten up by inflation the natural swell in prices of goods
that decreases your moneys value over time.
A simple savings account will not protect your money from inflation. With mutual funds, returns may
be volatile in the short-term, but theyre almost always higher than the inflation rate over the long term.
The longer an investor holds his/her money in a fund, the greater its potential to earn. Thats why
investing in mutual funds is a good way to prepare for retirement or long-term dreams.
Aside from being thrifty and observant, patience is another virtue of those who are financially fit.
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To know how Sun Life can help you be financially fit, visit www.brighterlife.com.ph
(http://www.brighterlife.com.ph/)
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If you started with Mutual Fund through ATRKE Equity about four years ago when price was just 2.6 to 2.8 pesos per
share, you would be enjoying this days with 4.10/share. Imagine investing a million pesos worth before and selling it
today. Whew, no banks can equal that even with their time deposits.
hahahahahha in short this is brought to you by sunlife mutual fund..o diva bongga
What's wrong with that?
You expected it, anyway, didn't you? Besides, there's a small gray box labeled FROM OUR SPONSOR. Hard to
miss that. :)
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