Mutual Fund Basics

Just what is a mutual fund? I think, for most of Filipinos, this kind of investment is a mystery. In fact I have never heard of this term in my entire school life. What I do know is saving in the bank and physical investments such as putting up a sari-sari (convenience) store or selling barbeque on the streets. Stocks or funds were terms uncommon to me during those days.

DEFINITION
According to wikipedia, a mutual fund is a professionally-managed type of collective investment scheme that pools money from many investors to buy securities (stocks, bonds, short-term money market instruments, and/or other securities). A mutual fund has a fund manager that trades (buys and sells) the fund's investments in accordance with the fund's investment objective.

In layman’s term, it is a kind of fund wherein groups of people share their money in order to buy a stock, bond or other investment securities. The pooled money is then managed by a fund manager, which is basically a person “employed” by the investors, to buy and sell stocks and investments.

WHY INVEST IN MUTUAL FUND?
Doing business or investing into something entails risk. This is also the case for mutual fund.
Unlike with other investments, the risk with mutual fund is minimal. Why? Because you have a fund manager, who is professionally trained who does the analysis on the market trend for you.
It is the duty of the fund manager to invest your resources on the right investment basket and since a fund manager is professionally trained and has better insights of the market than you are then you are sure that your money will not be waylaid. If you personally handles tha buying, selling of stocks there might be a possibility that you may lose money because aside from you do not have the proper knowledge and insights on the market trend you also are not entirely focused in managing your investment. You might be working in a company for 8 long hours (as in my case) or you are running your own business. With mutual fund you can “leave” your money in the hands of your fund manager and he will do the “growing” in your stead.


WHERE TO INVEST?
Well, there are lots of companies out there that can help you invest in mutual fund.
Personally, I have invested in First Metro Asset Management Inc.. PhilEquity is also a good company as well. There are lots of vehicle out there....search the net or you can email me for more details.