The Two Frugals

Inspired by Miriam Quiambao's Jars

The Kind of Mutual Fund I Chose

There are several kinds of mutual funds but I won’t be tackling them here one by one. As I try to understand this new world I decided to get in, I would like us both to learn more about the best kind of mutual fund that will help us get started without risking a lot. For me, it’s Balanced Fund (others call it Hybrid or best of both worlds).

As mentioned in my previous post, entitled “What is Mutual Fund?“, I started my investment in Mutual Funds particularly Balanced Fund three years ago. But I had changed of plans which made me to stop adding more funds to my investment. My money with its income is still there of course but as some experts say, it could have been much bigger if I was able to fill it in regularly. The NAVPS at that time is just 2.6781. Now it’s 3.6127.

So what is a “Balanced Fund?” According to Sun Life’s website (my Fund Manager for this investment),

“Just as its name implies, the Prosperity Balanced Fund is the middle of Bonds and Equities — a mix of fixed income and larger growth-potential investments. Balanced Fund is traditionally the instrument used by investors who want to build wealth over time while seeking other investment avenues. Balanced funds are channels for diversification, too, as it provides the best of both worlds of mutual funds.

The Balanced Fund is for you if:

– You are ready to invest and currently looking at a mid-term investing horizon
– You are willing to take the risk but you are not ready to go all the way. The ‘Bond’ part of the Balanced Fund helps cushion the risks, should the stock market be fluctuating unfavorably.

I chose Balanced Fund because I’m not a risky person, at least for now. =)

Aside from the two factors stated above by Sun Life, here are 5 things that you should ask your self before investing to a Mutual Fund?
1. What is the goal of the fund?
2. What is the risk and how much you can take?
3. How is the fund performing?
4. How much is the initial investment and the fund manager fee?
5. Who manages the fund?

I was once told that in Mutual Funds, you can invest and forget. It will grow overtime especially if you choose to leave for a long period of time and fill it in regularly. The longer the term it stays, the higher the percentage that it will grow. However, if you want to monitor the flow of your investment, one thing you should look at is the ever changing Net Asset Value Per Share (NAVPS). Let’s learn more about NAVPS in another topic.

If you want to get started, all you need is a Php 5,000 initial investment. It’s just a sum of the 34 cups of Starbucks that you are willing to let go. Time is our friend when it comes to investing. Today, I’m so excited to fill in my investment again. When are you going to start?

About the Author

I'm a travel blogger and currently working from home as an SEO Consultant. I'm have so much passion about discovering things and writing those things in my blogs. I'm open to new learning especially if it's about saving money and how it will work for me.

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