What is Mutual Fund?

What is a Mutual Fund?Posted on November 14, 2012  MF Phils.net

Have you ever thought of investing in the stock market? Perhaps investing in currency and real estate? How about gold and precious metals? But like most of us, employees, we do not have the time, resources and knowledge on how to invest in these things.. This is where mutual funds come in…

A mutual fund is a pool of money, from small investors such as yourself and I. Hence called a fund. This fund, will be managed by able financial managers and invests it in whatever instrument they see fit, to make you profit. You do not have to worry whether you made the right or wrong investment decision. Let the manager do and worry about all those things for you. All you have to do is let them handle your money.

Benefits of Mutual Funds

Mutual funds have many benefits.

#1 – Tax

Profits from mutual funds are tax exempt. Mainly because the managers are already taxed when they invest your money. So as to prevent double tax, the mutual fund profits that you receive are “net” which means, you get all the profit. Tax free!

#2 – Saves Time

If you have tried to manage a rental property, you will have a lot of headaches managing the tenants. On a stock market recession, you might lose sleep. In investing in mutual funds, all the stress are passed on to the managers. Since they are good at what they do, you can rest assured that they will do anything to make a profit for you. And I’m sure they have a good night sleep even on bear markets.

#3 – Saves Energy

If you invest in mutual funds today, you’ll realize that transactions are very easy. You can deposit or withdraw more money into your portfolio by a click of a button. Most mutual funds now are done online.

#4 – Vast Array of Products to Choose From

Mutual funds are like glorified candy shop. They have different flavors for different walks of life. Equity funds for the risk takers and bond funds for the secure elder. There are different kinds of mutual funds that you can pick and choose to your preference.

#5 – Affordable Investment

You can get started in investing in mutual funds for as low as P5,000. The good thing about affordable investment is that, ordinary people can start investing early and continuously because of low investment required.

How do you profit from Mutual Funds?

When you invest in mutual fund, you’ll be given a particular amount of sharescorresponding to the amount of money you invested. These shares have prices. You earn money if your share increase in value. And you lock in your profits if you sell your shares.