Understanding Level 2 of Investment:Mutual Fund

Why Invest in Mutual Funds?

A mutual fund is an investment company that pools the savings of individuals and institutional investors who share a common financial goal. These investors buy shares of the mutual fund and become shareholders of the fund they chose. The mutual fund has specific investment objectives and strategies. Investors buy and sell shares of the fund based on the prevailing Net Asset Value Per Share (NAVPS)

Mutual Fund Managers are restricted to put all their investment fund in one security or in a single corporate.

 There are three types of Mutual Funds:

1. Bond Fund - Invested on Government Securities
2. Equity Fund or Stock Fund - Corporate Stocks
3. Balanced Fund - Invested on Stock and Gov't. Securities

ADVANTAGES

»» PROFESSIONAL MANAGEMENT Investors avail of the active professional fund management from full time investment experts. They are backed up by research teams focusing on seizing market opportunities. »» LIQUIDITY Mutual fund shares are redeemable shares. The fund readily buys back shares to be redeemed based on the current NAVPS. Moreover, fund’s portfolio consists of liquid assets mostly marketable securities. »» TAX FREE Earnings from mutual funds are excluded from items classified as taxable income. This is a provision of the Comprehensive Tax Reform Package (CTRP) of 1998. »» DIVERSIFICATION The pooled fund enables it to spread it in various securities resulting to greater propensity to earn more and spreads the risks across the different securities. »» SAFETY The industry is highly regulated by the Securities and Exchange Commission (SEC). Moreover, securities are kept with a custodian bank separate from the management company. The shareholder records are with the transfer agent. An external auditor oversees financial issues.

 »» BEAT INFLATION
Inflation is the  is a rise in the general level of prices of goods and services in an economy over a period of time.^[1] When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy. 

  »» CAN START SMALL
Can start for an initial minimum investment of Php 5,000.00 (some mutual fund companies Php10,000.00).
And a minimum of Php 1,000.00 or you additional investment.

 »» CONVENIENCE
 Investors can easily view the mutual fund performance thru internet by multiplying their total number of shares bought to the current (NAVPS) Net Asset Value Per Share.

 »»FOR LONG TERM FUTURE GOALS
 For Retirement, Healthcare, Kid's Education, Dream House, Vacation and Business Expansion.

Investing in Mutual fund should be tied up with our future goals.

Investing in Mutual is just like eating a piece of cake.You just let the chef (fund manager) who has the knowledge to bake just for you...

Here's What You're Going To Do If You're Interested to Learn More About Financial Solutions.

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