Skip to main content

Investing in stocks through mutual funds

Imagine being the owner of PLDT, BPI, Globe, SM, ABS-CBN and other top corporations. Well you need not imagine anymore because it is possible to own a small part in these corporations by buying their shares of stock. As owner, you will also receive part of their earnings and as the company grows, the value of your shares also increases. However, for simple investors like me, I would not recommend buying their stocks directly. You will not be able to diversify your investments because of limited capital. If you have 5000 pesos, you could buy shares of a single company but should the value of that company's stock decrease, your investment will also decrease. I would prefer buying shares of a mutual fund company that invests in Philippine stocks. For the same 5000 pesos, you will then indirectly own shares of more than 30 corporations offering instant diversification, thus protecting your investment. Another advantage with using mutual funds is the availability of professional managers who have the time and knowledge in choosing the best stocks to purchase. Lastly, it is not subject to the 20% witholding tax unlike bank deposits. A list of these funds are available from the Investment Company Association of the Philippines website: www.icap.com.ph

Among the 9 listed equity mutual fund companies, I would recommend the following:
1. Sun Life Prosperity Philippine Equity Fund
2. Philequity Fund Inc.
3. Philam Strategic Growth Fund

These mutual fund companies have been around for a long time, have delivered reasonable returns, have great customer service (with regards to service, I can only vouch for Sun Life since I do not yet own shares of the other two) and have low investment requirements.

Make sure you have studied the funds' prospectus carefully before placing your hard earned money with them. I first started with mutual funds when I was 21. The agent was really amazed because I was the youngest he had so far and the one with the smallest investment. I learned later on that their average investment was 200,000 pesos per investor. Anyway, I still received great service from him and the same returns as the other investors. I do plan to invest with the other 2 funds I recommended once I have saved enough.

Start now with 10% rule in saving and place it in a mutual fund. I hope more Filipinos will discover mutual funds as a vehicle to invest in the stock market. You do not need to be very rich to avail of this type of investment.

Comments

Popular posts from this blog

do not invest in Philippine pre-selling condos

I would rather shoot myself in the head than invest in pre-selling condos in the Philippines. My brother and I were interested on getting a condo unit not really as an investment but as a vacation home. However, when I read a contract to sell from one of the Philippines' top developers, I was shocked at how skewed it is on the developer's favor. There is very little protection, if any, on the buyer's side. I think you would have to be either really stupid or overly trusting to sign one of those contracts. The first issue I had was that they require the full post dated checks even before providing the contract to sell. What the hell? They should give the CTS when the buyer has paid 10% downpayment. Next, if they failed to deliver the unit as scheduled, there is no compensation to the buyer. They can practically construct the condo as slow as they can. Then they are also free to alter the floorplan as they please. So if you expect 10 units per floor, you might be surprised t…

a financial mistake most business owners make

What could offer the biggest potential returns of your investment? A profitable business. It can turn P1000 into millions but it can also turn into 000. Putting some money into a business is a must for any investor. Aside from the possibility of raking in profits, having a business actually helps you understand investments better. To quote Warren Buffett, "I am a better investor because I am a businessman and a better businessman because I am an investor". When it comes to learning about finance, running a business is the best teacher. We also need to apply investing principles in our business and what I would like to emphasize is the concept of diversification. A financial mistake most business owners make is the lack of diversification. This is especially true to small business owners. Let us illustrate with the typical lechon manok business. A young entrepreneur decides to start a lechon manok stall. He has great tasting chicken, has good location and people buy it. Needl…

from little things, big things grow

Most of us know this is true with investing but it takes discipline and a lot of patience to see this through. From little things, big things grow.  As investors, we need to realize that small amounts do matter and nothing should go to waste. We see pocket change, but the real value of those coins is many times over if it were invested and given time to grow.Yes, a few coins would not buy you much now but if invested well, it can grow to such that it can actually buy more in the future than what it can today. So if you see a coin, pick it up. It may only buy a piece of candy now but if invested well, it could pay for a decent meal 30 years later. Happy investing!