Money-Savvy: 3 Reasons to Invest in Mutual Funds

Stock Market GraphFrom putting money in the bank to purchasing bonds to acquiring shares in real estate, there are different ways to invest, but none is growing faster in popularity in the Philippines than mutual funds.

While the introduction of mutual funds to the Filipino public took quite a while to get rolling, it is a popular investment vehicle in North America, Europe, and other more developed countries. Mutual funds pool money from institutional and individual investors to form a massive asset base. The assets are then invested in a diversified portfolio of securities.

There are different ways you can invest in mutual funds; you can purchase bond, money market, balanced, or direct equity funds.

Mutual funds are an ideal investment vehicle for those who want to grow money over time. You can use them for your child’s future education, as a savings medium for retirement, or for building up a long-term cash fund. Such funds are also a great investment option for both big and small companies, as they help increase yields and enhance a business’ level of diversification.

Here are some reasons you should invest in mutual funds:

Low Capital Requirement

Direct investments, such as treasury bills and commercial paper, usually require substantial capital. The minimum investment amounts may range from PHP100, 000 to PHP1million depending on the investment house or bank you’re dealing with. Mutual funds, on the other hand, require a minimum initial investment of only PHP5, 000 and a minimum additional investment of PHP1, 000.

Professional Management

Investing in mutual funds—whether bonds, money market, balanced, or stock or equity fund—gives you access to the services of full-time professional managers. Managers analyze different investment products available in the market and choose those that will give the best possible returns to the fund and its investors.

Portfolio Diversification

Mutual funds are invested in different securities. By investing in one, you achieve instant portfolio diversification. Diversification is one of the most important principles in investing. By allocating your investments among various vehicles, you reduce risk and maximize the returns that you can get.

Investing in mutual funds provides you with a bright, stable, and better future.