Understanding Mutual Funds for Filipinos

There are a lot of definitions for mutual funds, anybody can just google it. But let’s try to make it very simple.

It is a company wherein they pool money from people called investors and invest this big amount of money to different or diversified investments.

Depending on the nature of the mutual fund company, their investment portfolio normally includes stocks or shares of big companies and bonds or fixed income assets including government bonds.

To make it simple, in the Philippine scenario, companies like SM, Ayala, San Miguel Corporation, etc. are some of the many big companies that 15 - 20 years from now will still be standing and doing business. What if you are given a chance to invest your money in these companies, then your money will grow together with their businesses. That is what mutual fund companies do. You become an investor or part-owner of such companies.

Too good to be true?  Fortunately, it is true.

One of the mutual fund companies in the Philippines, First Metro Asset Management Inc. or F.A.M.I. (of Metrobank Group) is performing really good. If you invested January of 2012 then for today, March 23, 2012, your money could have already grown by ~16% that is saying if you have invested 100,000 then you could have gained 16,000 without doing anything, making money work for you.

Still too much to take in? Relax.

You can check the performances of all the mutual fund companies in the Philippines and see which ones are performing really good. Philippine Investment Funds Association

Of course, there are risks involved when you do investments, esp. if you don’t know what you are getting into. It is just like driving a car, it is very risky if you don’t know anything about driving, same is true with investments.

They say Filipinos are very hard-working. You can see them almost anywhere around the world, working. They work so hard for money but don’t know that money can work for them just having known the right information. Filipinos should therefore take advantage of this opportunity, be financially educated and share this to fellow Filipinos.