Mutual Funds

Now, I'm not a professional investor (yet) nor a successful one (yet). But I know some things about it (at least theoretically) that may help you in your dilemma. I always compare investing to a card game. Part luck, part diskarte. But again, you are fortunate as you have one of the aces of the game-which is TIME.

You are young, and because of that you can attempt to make risks. Because even if you lose money-which is unavoidable (but as much as possible must be prevented)-you can still earn it through your job, other ventures or still through investments-because any investment, in time, will profit.

Again we know that in investment, no pain no gain, and that the riskier the investment, the higher the return. Now, stocks, stock mutual funds (aka, equities), balanced fund (mixed equitiy and bond), bond and money market differ in risk and yield, the first one carrying the greatest risk and profit, and the last one, much like putting your money into time deposit.

For a young investor like you, financial growth is the name of the game. Because again, you can gamble to be aggressive, most financial gurus would agree that stocks and stock mutual fund (aka equity) are the ones more appropriate. However between buying individual stocks or stock mutual fund, the latter is better as playing stocks requires experience. Stock mutual fund, on the other hand, is handled by a fund manager, who pools money from different individuals , then use that into buying different stocks. In effect, this is much safer because it is handled by an experienced person.

Compared to bonds and money market, stock mutual fund will give you a higher yield as this is stock investment. In fact, in terms of revenue and capital preservation, it can even be better than buying individual stocks. Because in a stock mutual fund, there is already diversification (the money is into a variety of stock products that give different yields)-one which you may not be able to do with just your money to invest. The risk of losing money is lesser as lost of one stock may be offset by the gain of another.

So, take your pick.

Why Savers are Losers Literally?

Jan 16, 2009


Well, there’s always a goal for starting a thread. I’m sure, learning is one of them. So let’s always be nice. Hehehe.

Given the title though and the many reactions here, it makes me wonder, is this just to promote some products, say BDOs UITFS, create a controversy, call all PMTers to a “get-together” or to simply define the terms. Which by the way, are pretty much being achieved, here, most singlehandedly by the one who started it, kinda impressive i may say, and no offense, hehehe.

Except for the logic and the definition of terms.

To be honest, like many others probably here, i find the title a little bit offensive, really. Hehehe. Not because I am a LOSER (yes, I am pretty much convinced that I’m not) but because I am a SAVER too, and an investor, but with the present economic crunch, more of the former and not YET a GAINER. But ironically, right now, I am LOSING my money NOT in SAVING, but rather in INVESTING. So if you come to think of it, though I know what the thread is trying to get across (that saving can’t beat inflation), the LOGIC behind the statement (that savers are losers) FALTERS (because losing is also possible ininvesting). If I have to agree on it, it has to be figuratively and not literally. Hehehe.

There are only 2 sets of terms here that need defining. Saving vs Investing, Losing vs Gaining. With saving and investing , though 2 different concepts, are both IMPORTANT means in amassing wealth. You need both to achieve your financial goal.

Saving by definition is putting your money in savings accounts, TDs, or money markets for the protection and preservation of money from loss, which gains interest but not enough to beat inflation in the long term.

Investing on the other hand, is committing your money in risky vehicles such as stocks and mutual funds, which may lose in the short term but gain in the long term due to an overall upward pattern.

We INVEST to cover our future needs. We SAVE to address our short-term necessities, at the same time PROTECTING your investment capital given that your money in the bank is always intact and accessible for emergencies, unlike your investments.

As you can see, sir FutureGizmo is right, there is no debate here. Because we realize in the end, it’s not really saving or investing that will make you a loser or a gainer, but rather its your decisions, and money management that will make you one, LITERALLY.