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Choose the Funds that Satisfies Your Risk Appetite

Choose the Funds that Satisfies Your Risk Appetite

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.

navps-fami-salef

fami-salef-portfolio

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.

fami-salfif-navps

fami-salfif-portfolio

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.

fami-salbf-navps

fami-salbf-portfolio

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.

money-market-fund

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.

P.S. A year ago, I do not know anything about investment. Then I joined Truly Rich Club by Bo Sanchez. It was the best decision I ever made in my life. Brother Bo is a spiritual preacher and at the same time, financial literacy advocate whose purpose is to help people become rich in order to serve the LORD with the money that they have. He guided me along the way, explaining how I can manage my money and make it work hard for me. Now I’m investing in stocks and mutual funds and have a clear path for my future. Soon I’ll open UITF account as well. All are made possible by his guidance and teachings on every steps to become an investor. Being OFW isn’t forever, this is my EXIT PLAN. It’s amazing how his teachings change my life. I’m inviting you to join the club too, JOIN TRULY RICH CLUB. If you have any question, feel free to leave your comment below. CLICK HERE TO JOIN

About Richard Macalintal

Hi my name is Richard. I am a Registered Financial Services Consultant in Singapore. If you have any queries or you need help on your insurance policies and investment linked products, feel free to message me :-) We can have a cup of coffee while I do financial review and give advice with regards to your finances :-) Contact me thru email rlmacalintal(at)yahoo.com or SMS me +65 82235186. Disclosure: I am a Financial Consultant of AIA. The statements or opinions expressed on this site are my own and do not necessarily represent those of AIA.

3 comments

  1. i have invested in mutual funds lately (FAMI). can this be monitored online?

  2. Very informative! And I agree people should really think of their risk appetite first. With the bull market we have, a lot of people want to jump straight into stocks. It’s not bad if their financially and emotionally prepared. But sometimes they’re just looking at the big potential gains. When a correction happens, like recently, they might get scared and pull out when in fact it’s a good opportunity to buy more – if you’re really suited for a high-risk investment.

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