I shared about mutual
fund on my Feb's post, it might be a 'don't know-how' or 'don't know what' if
you don't have any idea what is all about investment. To give you an idea, here
are some of the lessons I learned that I want to share for you to understand
what is mutual fund.
Let us first define what
is investing. Simply the act of making money without working. Note: Investing
is different from Trading.
One of the safest ways
of investing is thru mutual fund.
•
It is where your money
will be invested into different sources such as real state, forex, stocks and
bonds together with other mutual funds of investors.
•
The money is handled by
a professional financial manager.
•
The good thing is that
you can start slow and with little money. Initial amount: P5000
•
Is it safe? Yes, it is
good and safe investment
Why
mutual fund? Why not bank?
Let
me share you the story about Ann, Nicole and Mae. Ann, Nicole and Mae are sisters.
Gary, their father gave them a test, that is, to increase the 100,000 in 36
years.
Ann
thought of saving in the bank, anyway, it has an interest of 1%, it will still grow
in 36 years. While Nicole thought of putting in a Time Deposit. (Refer below link
for the interest rates for different bank in the Philippines.) The interest varies
from bank to bank but on my example I put an average of 4%, Nicole’s earning of
course is higher than Ann. Now, its Mae’s turn, Mae did not save in the bank or
in Time Deposit. What she did first is to search via Internet some tips of
saving and how to make her money grow. After that, she attended seminars on
Investment. She read books about savings and investments. She asks for mentors
and financial experts who can help her. Then, she learned that one of the
safest ways to invest is through mutual fund. Please note this is for long
investment. I place a note above that trading is different
from investing, to give you a very simple difference of the two, trading is
that you buy your share today, then sell it tomorrow when you want. But
investing is saving in a long period of time. This is what we call the concept
of compound interest. So to demonstrate
the earnings of the three sisters, here it is:
Table
of Earning per Interest Rate
|
ANN (1%)
|
NICOLE (4%)
|
MAE (12%)
|
|
|
29 years old
|
P100,000
|
P100,000
|
P100,000
|
|
AFTER 36
YEARS
|
|||
|
65 years old
|
P200,000
|
P400,000
|
P6.4M
|
Now
you have an idea what I am I talking about.
Want
more tips? I learn this in IMG (International Marketing Group) when I attended
Finance 101
We
call this Pay Yourself First
By
paying yourself first, you have to make sure to save before your expenses.
SALARY
– SAVINGS = EXPENSES
This
might have a 0 negative equivalent because your expenses might be higher than
your salary.
SALARY
– EXPENSES = SAVINGS
Some
FACTS for you to ponder:
•
Some facts: Do you know why banks has this tall, nice and
expensive buildings? Because the money that you save in the bank invested in
mutual fund.
•
Do you that in the Phils, less than 1% of Filipinos invest in
mutual fund and 99% of them put their savings in the bank. But in America, 70%
invest in mutual fund while 30% save in banks.
Why not by-pass the bank? Why don’t
you invest your money where the bank invests their money?
Interest
rates for different bank in the Philippines Link
The Concept
Of Compounding
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