There is no such thing as safe investment. All forms of investment comes with a risk. In mutual funds, they offer various funds you can invest in. These funds varies in terms of investment portfolio and the the risk level it contain.
Before choosing the right mutual funds for you, ask yourself you goal for investment. Is it for capital preservation? Is it for your retirement? Is it for your education expenses? How long can you invest your money?
By answering these questions, it may help you decide how much risk you can take. For example, if you are at 50’s and you want to invest in mutual fund, you might choose the one that have less risk. At this age, capital preservation with small growth is your main goal.
However, ask a person on his 20’s and they might invest for their retirement in their 40’s or 50’s. At this stage, their risk appetite is quite high and their primary goal is to make their money grow in several years. They still have their job and monthly salary to support them in whatever things that may happen in the market.
Last month, a blog reader ask me if she can still invest in mutual fund given her age of 59 and plans to retire at age 65. I replied yes, but advise here to choose the funds with the least risk for her. Given that the average life span in the Philippines is actually around 70’s. She still have time to invest a potion of her money.
Let’s take a look at the funds offered by FAMI to give you more idea what I am talking about. As of June, 2009, FAMI manages four mutual funds: Save and Learn Equity Fund (SALEF), Save and Learn Fixed Income Fund (SALFIF), Save and Learn Balance Fund (SALBF) and Save and Learn Money Market Fund (SALMF).
SAVE & LEARN EQUITY FUND (SALEF) – This is an actively managed portfolio of selected stocks with strong balance sheets and attractive valuations. Its goal is to provide growth through long-term capital appreciation. It is an ideal investment for investors seeking high growth with high risk.
SAVE & LEARN FIXED INCOME FUND (SALFIF) – A mutual fund invested in a well-managed portfolio of selected high grade fixed income generating instruments, such as bonds, commercial papers, and other money market instruments. Its goal is to provide as high a level of income as is consistent with preservation of capital and liquity. This is best suited for those who desire low to moderate income growth with low risk.
SAVE & LEARN BALANCED FUND (SALBF) – A mutual fund invested in a mix of fixed-income securities and stocks. Its goal is to provide total return consisting of as high a level of current income as is consistent with preservation of capital, liquidity and long-term capital appreciation. It is ideal for those who desire moderate growth and willing to assume moderate-to- high risk.
SAVE & LEARN MONEY MARKET FUND (SALMF) – A mutual fund classified as low risk. Its goal isto provide good return through current income by investing in fixed income instruments and securities with short term investment period such as government securities, time deposits, short-term deposit agreements, among others.
Other mutual funds companies also offers various funds with different risk level. Though their fund name is different than FAMI, their prospectus and investment portfolio concept is still the same.
In every investment, the higher the risk, the higher the returns. Though you choose the least return with less risk, at least you beat the inflation and make your money preserve its value overtime.
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