What is Mutual Fund?

A mutual Fund is a collective investment which are coming from different investors and the money they collected will be invested to different investment like stock, bond, short term money markets and securities. There are many agencies or companies who offer this kind of investment.
Massachusetts Investors Trust was the first company to offer Mutual Fund on March 21, 1924. This investment is registered in SEC or Security Exchange Commission. This investment was affected greatly by the stock market crashed in 1929. After the tragedy the Mutual Fund blossom again and right now is one of the famous investment around.

Here are some advantages of Mutual Fund:

The mutual fund is more secured than stocks because it is invested in different companies, so the risk is distributed and diversified. It should be diversified product too like real estate, insurance and etc. not just different companies.
You can invest a small amount not like stocks which you need a thousand to invest only in one company.
This investment is managed by a couple of manager who are expert in this field.
You can add your investment any time and can get it or withdraw it any time.
Higher yield than time deposit and current account.
No withholding tax compared to time deposit and current account in the bank.
Here are some disadvantages of Mutual Fund:

No guarantee for profit in fact you will have a chance to lost your money though lesser than the stock.
The profit is lesser than the stock market.
You can't get your money at once like in the bank but you have to wait a day or two.
You have to pay a charge for your investment like exit charge or when you buy a mutual fund
My personal experienced with this kind of investment is great. I invested a P10,000.00 and now for almost three years, the amount double. I can add if I want but I am outside the Philippines so maybe when I come home. The NAV or net asset value per share is fluctuating but you need to have patience in this kind of investment. One of the companies who offer this kind of investment is Philam Fund. I am not promoting this company by the way. I just used them as an example. There are other companies too like Sun Life Insurance.

My suggestion is to elimate the loser and take the top ten gainers or you don't need to get the highest earner but avoid the loser as what Warren Buffet advice who is number two billionaire in the world after Bill Gates. Buffet is into Stock market by the way if you don't know him.

Investing your money through mutual fund is like leaving your money to the expert but again you need to familiarize this investment. If you are working abroad this is the best way to invest than having a small groceries and transfortation business, somebody will benefits from them and you wake up one day, your hard earn money is gone. Next time I will post an entry about lumber which is a sure money and I will explain why it is best for us OFW.

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