At first, I thought I will never learn about things related to money and finance. I thought that I should leave those who studied business courses learn this. But in just a month, I have learned a lot.
One is about Mutual Funds.
A Mutual Fund Investment is one type of investment vehicle where funds are pooled and invested in different kinds of investments such as bonds, stocks, special savings accounts, treasury bills, etc. There are different types of Mutual Funds depending on your risk appetite. There are money market, bond, balanced and equity mutual funds. The main difference of these is the type of investments they are put into.
How will you earn from a Mutual Fund Investment?
If you are already investing in stocks, it is almost the same. In this kind of investment, you will have to buy "shares". The price of the share will depend on the current Net Asset Value Per Share (NAVPS). If you are investing in Mutual Funds in the Philippines, you can find NAVPS and historical values in this site.
Just like stocks investment, you can compute the value of your investment by using the formula below:
Current value = Number of Shares x NAVPS
Since a Mutual Fund is an investment, there is always risk. There will be times when the value of your fund will be going up or down. One strategy investors use is Cost Averaging. No matter what the value of NAVPS, you will buy on a regular period - monthly, quarterly, semi-annual, annual.
Just remember that Mutual Fund investments just like any other investment gains more for long-terms as compared to short-term investments. What's not-so-good about this kind of investment is the sales charges. You have to pay either the front-end or back-end load.
A certain percent will be deducted before buying shares. This is often the choice if you plan to invest for 1 year to less than 5 years.
Nothing will be deducted upon buying shares but charges will be deducted when you will be selling your shares. But, as long as you keep your investment for at least 5 years, there will be no more charges.
ON A PERSONAL NOTE: I have invested on Sun Life Philippine Equity Funds and plan to do cost averaging every month setting aside a part of my monthly salary. Their on-line facility is good. I can view my current shares and value. Hoping to invest for at least 5 years. Happy investing!