Categories
How to & Advice Latest Posts

Which Equity Mutual Fund Is For You?

First things first, what is an equity mutual fund? An equity fund, also known as stock funds, is a mutual fund that invests principally in stocks. The fund manager tries to offer great returns by spreading the investment across companies from different sectors or with varying market capitalizations.

Typically, equity funds are known to generate better returns than term deposits or debt-based funds but there is still a considerable amount of risk associated with these funds since their performance depends on various market conditions. Without further ado, here are the different types of equity mutual funds.

INVESTMENT STRATEGY-BASED CATEGORIZATION

Sectoral Fund

Also known as a theme fund, sector funds follow a specific investment theme like an international theme or local theme. Some themes might also invest in a particular sector of the market like technology or pharmaceutical. It is important to note that these funds carry a higher risk since they focus on a specific sector or theme.

Contra Equity Fund

As the name suggests, contra equity funds follow a contrarian or nonconformist strategy of investing. These equity funds analyze the market to find under-performing stocks and purchase them at low prices. This would be under the assumption that these stocks will recover in the long term.

MARKET CAPITALIZATION-BASED CATEGORIZATION

Large-Cap Fund

Typically, the large-cap fund invests a minimum of 80% of the investment in equity shares of the top 100 countries according to market capitalization. This strategy is considered to be more stable than the mid-cap and small-cap focused funds.

Mid-Cap Fund

Mid-cap funds invest around 65% of the total assets in equity shares of the top 101 to 250 companies according to market capitalization. These schemes tend to offer better returns than the large-cap strategy but tend to also become more volatile.

Small-Cap Fund

Considered the most volatile out of the three, the small-cap fund invests about 65% of the asset in equity shares of companies ranking 251 and below according to market capitalization. If done right, small-cap funds tend to offer the most returns compared to large-cap and mid-cap funds.

Multi-Cap Fund

Multi-cap funds usually invest in a mix of equity shares from large-cap, mid-cap, and small-cap companies in varying proportions. With this type of fund, the fund manager keeps rebalancing the portfolio to match the market and economic conditions as well as the investment objective of the scheme.

INVESTMENT STYLE-BASED CATEGORIZATION

Active Fund

These schemes are actively managed by the fund managers who handpick the stocks that they want to invest in.

Passive Fund

Passive funds usually track a market index which determines the list of stock that the scheme will invest in. Unlike active funds, this strategy does not require the fund manager to have an active role in the selection of the stocks.

Now, the choice is yours, Ka-Investa. Do you want to get into Mutual Funds? If yes, which one would you like to explore on?

Categories
How to & Advice Latest Posts

Top Long-Term Investments

“It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.” — Robert Kiyosaki

Long-term investments refer to saving for an extended period of time. The range for long-term investments can be at least 10 years or more. The goal of long-term investments is mainly for big-picture costs such as retirement or for the future generation.

Often, long-term investors will use the buy and hold strategy where selected investments are purchased but not significantly changed for up to several years or more. Here are some great options for long-term investments.

MUTUAL FUNDS

With so many different types of mutual funds, the ideal mutual fund of long-term investors is stock mutual funds. Stock mutual funds, especially growth stock funds and aggressive growth stock funds, are suitable because they have historically achieved higher average rates of return than other investing and saving vehicles. Many long-term investors also like to invest in index funds for their low cost and their tendency to average good returns over long periods.

REAL ESTATE

All over the world, real estate is considered one of the safest sectors to invest in. The greatest appeal of real estate is that it doesn’t require any special skills. If you look at it from a statistics standpoint, the population is growing while the supply of land stays the same. Because of that, the demand will continue to grow meaning the returns from real estate will also continue to yield great returns in the long term.

INSURANCE

Like mutual funds, there are many great options of insurance both in short term and the long term. Life insurance is the most common type because it provides a measure of security for your loved ones. When deciding whether life insurance is a good investment, it’s important to understand that the variations of insurance plans generally fall into two categories, permanent, and term.

Because term life is designed to cover you for a set term, they are typically less expensive than permanent life insurance premiums. Because term life is designed to cover you for a set term, they are typically less expensive and more flexible than permanent life insurance.

STOCKS

The main reason to buy and hold stocks over the long term is that long-term investments almost always outperform the market when investors time their investments correctly. It isn’t unusual for stocks to drop 10% or 20% over a shorter period of time but riding out temporary market downswings is considered a sign of a good investor.

It is important to note that stocks rise and fall every day so knowledge of the companies you invest in would be key to looking at high returns. Compared to other investments like real estate, trading in stocks is still considered a risky game and requires a significant number of skills to be learned to truly master stock trading.

Categories
How to & Advice Latest Posts

Is Your Insurance Policy Right For You? (Part 2)

Although we can’t predict the future, we can protect ourselves if something unexpected were to happen. Insurance is meant to safeguard us from fortuitous events financially. Here are some insurance options you’ll want to look into and purchase.

Life Insurance

This is considered the most common type of insurance where you pay premiums to receive protection in case you pass away. The greatest benefits of life insurance include the ability to cover your funeral expenses as well as provide for your beneficiaries. Within life insurance, there are multiple types of policies to choose from. The two basic types are traditional whole life and term life. Traditional whole life is used as an income tool and an insurance investment. Term life insurance, on the other hand, is a policy that covers you for a set amount of time.

Health Insurance

Health insurance typically pays or helps pay for medical, surgical, and sometimes even dental expenses. This can cover you and your immediate family to be able to pay less on check-ups or in case someone gets hospitalized. The Philippine government actually has universal health coverage, PhilHealth, that Filipinos are entitled to.

Educational Insurance

As the name suggests, this type of insurance can cover education fees. With the inflation of tuition fees, educational insurance lets you save money in advance. The money you put in will be invested by your policyholder and can be cashed out for tuition payments, school allowances, and other educational expenses. Educational insurance can be started as early as possible to get the best prices.

Vehicle Insurance

When buying a car, motorcycle, or any type of vehicle, it’s important to also buy insurance that will cover that investment. This insurance can offer reassurance in case you get into an accident, your vehicle gets stolen, vandalized, or damaged by a natural disaster. There are two types of vehicle insurance you’ll need to consider. Compulsory Third Party Liability (CTPL), the most basic and least expensive car insurance in the Philippines, is not only government-mandated but also covers the interest of the third party in the event of an accident. Comprehensive Car Insurance (Compre) is not mandatory but is highly recommended because this protects you, your cars, and your passengers.

Property Insurance

Property insurance is a broad term for a series of policies needed for property protection coverage. Within property insurance includes policies like renters insurance, flood insurance, and earthquake insurance. This is needed for cases such as fire, floods, earthquakes, and theft. This type of insurance gives you coverage of your house and the furniture inside.

Travel Insurance

Got the travel bug lately? Well, before you book the ticket or board the plane, don’t forget that there’s insurance for that too. Travel insurance gives you traveling protection locally and abroad. In case you lose your luggage, have a delay in your flight, and run into accidents while traveling, this insurance will come in handy.

Categories
How to & Advice Latest Posts

Busy for Trading? This is the key!

“Saka na ko mag-iinvest, kapag ‘di na busy.”

Isa sa pinakamalaking dahilan kung bakit ang komplikado at overwhelming ng pag-iinvest ay dahil napakarami nating options. From stocks and bonds, to real estate or money markets — madalas natin marinig ang mga ito; pero mahirap pumili kung ano ang makakapag-guarantee sa atin ng good returns. Plus, madami sa atin ay busy sa work, kaya hindi tayo makahanap ng oras para mag-aral ng mga ito.

Pero ka-Investa, what if we tell you: pwede ka na mag-invest nang hindi naglalaan ng napakalaking oras at effort through mutual funds? 

“Pero paano ba ako magsisimula?” “Mutual funds? Ano ba yan?”

Essentially, mag-aambag ka lang, kikita ka na. No joke.

Nagwowork kasi ang mutual funds sa pamamagitan ng pagtitipon tipon ng pera ng mga investors. Ang funds na natipon ay siyang i-iinvest sa mga assets tulad ng stocks, bonds, money market, at iba pa. 

“Ha, so paano ko mahahawakan ang pera ko?”

Good question, ka-Investa! Ito actually ang rason bakit swak ang mutual funds sa mga busy na tao — ang pera sa mutual funds ay hinahandle ng professional fund managers. Sila ang bahala sa pagpapalago, at ginagawa nila ito sa pamamagitan ng pag-iinvest sa iba’t ibang nasabing securities. 

Ngayon, ang tanong mo siguro: “paano ba ako kikita?”

Kapag tumataas ang value ng mga securities ng mutual funds, dito ka ngayon kikita. Sa madaling salita, kapag may mutual fund account ka, nagiging part-owner ka ng mga investment securities ng mutual funds. Kaya’t kapag kumita ang mga securities na ito, ikaw din ay kumikita.

Ngunit shempre, gaya ng ibang investments, may risk din ang mutual funds dahil nag-flufluctuate ang value ng investments.

At shempre, kailangan alam pa rin natin kung ano ba talaga ang goals ng investment natin. 

“Long-term o short-term investment ba ito?” ”Kailangan ko ba ang pera, if in case may emergency?” Ilan ito sa mga tanong na kailangan mo sagutin bago ka mag-invest. 

Lagi natin tatadaan na walang 100% sure return, ngunit malaki ang possibility na kumita tayo kung alam natin ang objectives natin, at pinaplano natin ito.

Pero at the end of the day, ang maganda sa mutual funds ay pwede ka mag-diversify, at kapag bumaba ang value ng isang stock, maliit lamang ang epekto nito dahil diversified ang portfolio. Kaya in the long-run, pwedeng masabi na sustainable ang mutual funds.

Ka-Investa, kung may oras tayo mag-scroll sa social media, then dapat kaya din natin mag-laan ng oras sa pag-iinvest. Kailangan lang natin alamin kung saan tayo magsisimula.

Kung nagustuhan mo ang article na ito, don’t worry kasi marami pa kaming i-rerelease tungkol sa mutual funds and investing. Mananatili kaming andito, hangga’t matulungan namin ang lahat ng Pilipino sa kanilang investment journey.

Categories
How to & Advice Latest Posts

Is Your Insurance Policy Right For You?

In the Philippines, insurance could be synonymous to VUL. But did you know that this kind of insurance could not be fit for your needs? There are many other types of insurance policies that you could choose from and that could better serve your needs and your capability to pay.

Before you invest your hard-earned money into insurance, take note of these different types of insurance policies so you could really maximize their benefits.

Term Life Insurance

Term Life Insurance requires the policyholder to pay premiums and guarantees payments to his/her beneficiaries if the policyholder dies during a specified term. The specified term is offered at a range to best fit the policyholder. There are level term policies that cover 10 to 30 years and a yearly renewable term policy that can be renewed every year as the premiums change.

Term life premiums are based on a person’s age, health, and life expectancy. In most cases, there will be a required medical exam to determine these factors. This policy promises death benefits but features no saving components. Because a benefit is only offered in a specified term and provides no saving components, term life insurances are usually the least costly life insurance available. 

Whole Life Insurance

Also known as the “traditional” life insurance, whole life insurance provides permanent death benefit coverage for the policyholder. Besides the death benefit coverage, whole life insurance also contains a savings component where the initial cash value can accumulate.

This savings component can be invested and is accessible to the policyholder to withdraw or borrow when needed. Over time, the interest earned on the policy will often provide a positive return to investors growing their money larger than the total amount of premiums paid.

Universal Life Insurance

Just like whole life insurance, universal life insurance is a type of permanent life insurance with an investment savings element and low premiums. This insurance option provides more flexibility than whole life insurance since policyholders can adjust their premiums and death benefits. Universal life insurance premiums consist of two components, the cost of insurance amount (COI) and a saving component also known as cash value.

As the name suggests, the cost of the insurance amount is the minimum amount of premium payment to keep the policy alive including the charges for mortality, policy administration, and other expenses. This will vary based on the policyholder’s age, insurability, and the insured risk amount. Excess premiums will be accumulated within the cash value portion. Over time, the cost of insurance will increase but if sufficient, the cash value can cover the increased costs.

Variable Life Insurance

Variable life insurance is an insurance policy where the payout amounts are determined by the performance of the underlying securities in the policy. Like in the market, variable policies will return more when the market is up and less if the market is down. Because of this, the variable life insurance policy is considered much more volatile than other life insurance policies and is only ideal for those who are willing to take on that additional risk.

Which one of these would you like to explore on? Do you think getting an insurance would be beneficial to you at all? Comment down your thoughts, Ka-Investa!

Categories
How to & Advice Latest Posts

Why You Need to Diversify Your Portfolio Now

Ever heard of the term diversification? A common phrase heard in the financial world is “diversify your portfolio”. Many have heard it and the next phrase would come up, “is it important?” It’s actually key for most financial successes. So, let us explain why.

Diversification is the practice of spreading your investments around so that your exposure to one type of asset is limited. Essentially, if you have your money all-around, you’ll be able to cushion yourself for riskier investments with safer ones. By diversifying your portfolio, your risk and reward in your investment portfolio would be more balanced.

It reduces risk and is designed to help reduce the volatility of your portfolio over time. Most investment professionals agree that diversification is the most important component of reaching long-range investment goals while also minimizing risk.

Balancing a diversified portfolio may be complicated and expensive but there are many options to widen your diversification without having a difficult time. These options are specially designed for beginners or for people who would like to be more hands-off with their portfolio.

A great example would be found in mutual funds. There are so many choices to mutual funds to fit your preferences, goals, and needs. By investing in mutual funds like real estate funds, sector funds, and commodity-focused funds, you will instantly have a diversified portfolio.

Because market risk is generally unavoidable, diversification is a great way to soften the blow. In practical terms, diversification is holding investments that will react differently to the same market or economic event. Being able to invest in different assets reduces the consequences of a wrong forecast. This is very important in investing because markets can be volatile and unpredictable.

With this practice, you’ll be able to spread your risk across different types of investments, the goal being to increase your odds of investment success.

Categories
How to & Advice Latest Posts

How You Can Handle the Volatility of the Market

 Have you ever tried riding in Vikings, Star Friskbee, or Surf Dance in Star City? Well, that’s the overall summary of how you will feel while investing and trading in the stock market.

The enjoyment, the fear, the euphoria, or the panic all of these emotions make you go crazy or insane after you experienced the volatility of the market. As you can see, the stock market is filled with emotions of the trader and investors. You will see that there is a sudden spike of volume of demand or sudden drop of price in the market due to a pile of sellers.

If you are weak or fragile and not yet ready to take volatility in the market, I guess you should go invest in other investment instruments. Because the stock market is not a get rich scheme due its volatility. 

The stock market talks about managing your emotions and how you will approach the market on your own bias. If you are afraid to see losses or red stuff in your portfolio, then why not go for conservative investment instruments such as: time deposit or money market.

I guess, there you won’t have any heart attack since there is a low volatility of the market. Hence, if you’re ready to take the parachute and jump from the airplane or ride the massive rollercoaster volatility of the market, why not try to trade or invest in the stock market. Just educate yourself more about the foundation of how the market works, analysis on how to understand the market well on your accord, and managing your emotions through up and down volatility of the market.

How will I approach the market?

First, before you trade or invest in the stock market you must first educate yourself on how this system works. Second, if you already know the basic concept of the stock market then you should go examine yourself if you are a trader or investor.

If you are a trader, meaning, you are willing to participate on the market fluctuation through day to day basis or even hourly basis depending on your strategy that will suit you. Having said that if you’re an investor, meaning you will invest your capital through the long-term horizon of the market and avoiding the short-term fluctuations of the market.

Third, if you already distinguish what type of trader or investor you are then create your own strategy and system on how you will approach the stock market. For traders, technical analysis will be your guide in analyzing the market. While for investors, fundamental analysis will be the guide in analyzing the market for the long-term horizon. 

Last, ready yourself for the volatility of the market because the stock market is not just a type of investment for the sake of investing. It is a type of investment where there are strong and brave investors and traders that are investing and trading in the market. 

Now that you know the core concept on how the market works, I am telling you once again. Are you really ready to take this road to your financial freedom? As quoted by Robert Kiyosaki “Financial Freedom is available to those who learn about it and work for it.” Get yourself up and start working!

Subscribe to our Newsletter

Join our mailing list for investing tips and stock market advice
to help you reach your first million.

You have Successfully Subscribed!