How To Invest in Mutual Funds for Beginners
Most people think they need a lot of money to start investing. Nowadays, for as low as Php 5000, you can start on your investing journey with mutual funds. In today’s post we will share everything you need to know about investing in mutual funds for beginners. Let’s begin.
The money accumulated in a mutual fund is managed by professionals who decide on behalf of the shareholders on investment strategy. These professionals are called Fund Managers who choose investments that best match the fund’s objectives.
The Fund Managers’ investment decisions are based on extensive knowledge and research of market conditions and the financial performance of individual companies and specific securities.
Now, you can take advantage of the expertise of fund managers as they work to maximize the growth of the fund.
When you invest in a mutual fund, you are typically investing in a variety of stocks and securities that best suit your risk-appetite and life goals. Having a diversified portfolio helps reduce risk by offsetting losses from safe securities with gains in others.
Mutual Funds provide an economical way for average investors to obtain the same kind of professional money management and diversification of investments that is available to large institutions and wealthy investors.
Liquidity is the ability to readily convert investments into cash. Mutual Funds are considered very liquid investments. You can withdraw your invested money at any point with only minimal fees should you redeem before the holding period.
Mutual Funds are highly regulated by the Securities and Exchange Commission (SEC) under the Investment Company Act and its implementing rules and guidelines.
Mutual Funds must calculate the price of their shares every business day. The price you pay is the NAVPS or Net Asset Value per Share, a figure that changes every day. It represents the market value of the investment assets the mutual fund company owns.
Mutual Fund shareholders are considered part owners of funds and are therefore entitled to vote during the funds’ Annual Shareholders Meeting (ASM).
Because a mutual fund is managed as simple as a single portfolio, it is able to take advantage of certain economies of scale. For instance, with its millions or billions under management, it can negotiate for lower stock brokerage fees or command higher interest rates on fixed-income investments.
All earnings of the fund are not taxed pursuant to the regulations set forth by Republic Act 8424.
1. Find out which mutual fund you want to invest in. Read this guide to know how.
2. Read your chosen fund’s prospectus.
3. Completely fill out the Account Opening Form (AOF).
Note: For Joint Accounts, every investor/applicant must accomplish a copy of the Customer Data Sheet.
4. Attach a photocopy of the following documents:
Secretary’s Certificate/Board Resolution on the authorized signatories;
One (1) valid ID of each authorized signatory;
SEC Certificate of Registration
Articles of Incorporation and By-Laws (Corporation Sole for Religious Institutions);
Latest Audited Financial Statement;
Latest General Information Sheet (Cooperative Annual Performance Report or CAPR for Cooperatives)
5. Submit all originally signed documents to any of the following channels:
We use third-party cookies in order to personalize your site experience