LEVEL 2 INVESTING: MUTUAL FUNDS

After we start our Kaiser Level 1 investing and if there is still excess funds left from our savings, that’s the only time that we can invest in mutual funds.


Note: You can read about Kaiser Level 1 investing: //goo.gl/qV2akk


What is a Mutual Fund?


A mutual fund is an investment vehicle that pools together the funds of various investors – both individuals and corporations.


The pool of funds is managed by a professional fund manager who uses the funds to create a diversified investment portfolio consisting of various investment instruments such as stocks and bonds.


Mutual fund investors are considered part owners or shareholders of the fund. Shareholders are entitled to a proportionate share in investment income and risk exposure.


Advantages of Mutual Fund Investing
Professional Management
Potentially Higher Returns
Diversification
Liquidity
Safety


Types of Mutual Funds:
Equity funds (stocks) – funds are invested in stocks. This represent the largest category of mutual funds. Generally, the investment objective of this class of funds is long-term capital growth with some income.
Fixed-income funds (bonds) – funds are invested primarily in government and corporate debt. While fund holdings may appreciate in value, the purpose of this fund is to provide current income on a steady basis. Conservative investors and retirees are often investors of this fund.

Money market funds - funds are invested in short-term debt instruments, mostly Treasury bills. A safe place to invest your money. You won’t get great returns, but you won’t have to worry about losing your principal. A typical return is twice the amount you would earn in a regular checking/savings account and a little less than the average Certificate of Deposit (CD).
Balanced fund – funds are invested in a combination of fixed income and equities. The objective of these funds is to provide a balanced mixture of safety, income and capital appreciation. The strategy of balanced funds is to invest in a combination of fixed income and equities. A typical balanced fund might have a weighting of 60% equity and 40% fixed income.


Mutual Funds in the Philippines


According to the Philippine Investment Fund Association (PIFA), as of September 2010, there are 43 mutual funds in the country. The oldest being Philequity Fund Inc (PEFI) established in 1993.


The top performing Philippine Mutual Funds for the last 5 years according to PIFA (as of February 26, 2014) are as follow:


Being a member of the International Marketing Group (IMG), I am currently invested in Philequity Fund, Inc. Having invested in a mutual fund that is the top 1 performer in the last 5 years only proves that IMG is partnered with the best companies in the Philippines.


Other mutual funds partnered with IMG are shown below with their performance as of February 26, 2014:








Take note that before investing in Level 2: Mutual Funds, make sure you address your Level 1: Kaiser Healthcare first.


What if you suddenly get sick or lose your job? Surely, you will have to withdraw your investment in no time because you don’t have Level 1 to support you.



Indeed, mutual funds have higher returns but don’t be blindsided by such returns. Always think that the higher the return, also the higher risks involved. Mutual fund investment is for the long-term.


Our journey to financial freedom has a process to follow. Let’s start from level 1 up. There are no short cuts.


Keep on learning! God bless us all! :)






If you are interested in investing in mutual funds, feel free to send me a message at gladys.img.trulyrichmakers@gmail.com


For more information about mutual funds, please visit references below:


http://trulyrichmakersenewsletter.blogspot.com.au/2013/03/why-is-mutual-fund-investing-level-2.html


http://www.philequity.net/index.php


http://www.pifa.com.ph/factsfignavps.asp


http://www.investopedia.com/