Mutual funds are a good option for beginners to start investing.
In these, the money of different investors is pooled together and invested in various assets, which are then handled by a professional fund manager. That means you don't have to do all the research and monitoring before deciding what should be done with the different securities.
If mutual funds interest you, these are the steps you should take before getting them.
Step 1: Assess your goal and risk profile
Why are you investing? How much risk can you stand in return for potentially higher returns? your answers to these questions will help you determine which type of mutual fund you should consider. You can take an Investment Personality Test to gauge your risk appetite and see which funds are suitable for you.
Mutual funds are generally classified into 5 types (Money Market, Bond or Fixed Income, Balanced, Equity, and Index), according to the assets where the funds are being invested in. Making sure that the asset characteristics match your situation is always a good idea.
Step 2: Do your research
Look for legitimate companies that offer mutual funds, and check out the available funds .
Mutual funds are regulated by the Philippine Securities and Exchange Commission (SEC), and are covered by R.A. 2629, also known as the “Investment Company Act of the Philippines.” They can only be sold by a Certified Investment Solicitor, someone with a license given by the SEC.
Aside from the fund composition, take a look at the performance. This reflects how well the fund is managed, and it can give you an idea of what its future could be like. However, note that the past performance of the fund doesn’t guarantee its future performance.
Step 3: Reach out
If you've found a fund that you're interested want to invest in, get in touch through the customer service channels. That way, you'll be able to speak to a company representative who can answer any questions that you may have.
This will be a good opportunity to compare the services of different companies, so don't be afraid to shop around.
Step 4: Make your decision
With all the information that you'll have at this point, you'll be able to make a decision that satisfies you. While risk is always part of investing, remember that managed funds like mutual funds and Unit Investment Trust Funds (UITFs) can make things easier by leaving the decisions to the experts.
