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A monthly blog where we explain financial products, SIMPLE.
By: King San Jose- Santos, R.F.P, M.I.F.C Philippines
In building wealth, it is important we understand each fund that will compliment our financial goals along with the risk attached to investment vehicle.
As we enter the new era where everything is connected, volatility in the market is so high that you need to have a quick decision in a matter of seconds. As a Certified Registered Financial Planner, For clients who doesn't have any experience in investing or busy with their businesses, I strongly recommend to invest in funds rather than invest alone. There may be some charges you have to pay however, if you will consider the stress, reports and research you need to read and some data providers you need to pay, the amount you pay to set up the fund is worth it.
Now the we are in situation of uncertainty, there is one famous fund we know that helps you park your money while you wait for the volatility to calm down, it is called a Money Market fund.
What is a Money Market?
In Summary : A fund that focuses mostly in highly liquid near term instruments. The fund focuses mostly in a short term holding period- more or less around 13 months. Cash, cash equivalents and near term government treasuries.
The rewards investing in money market fund.
Due to the safety factor of this fund, the fund appreciation is very conservative.
Money Market fund is used to park mostly your fund.
If you are planning to invest it for long term, it may not be wise to invest in this fund as it underperforms mostly below inflation rate.
Inflation risk.
Money market fund is located on the lowest spectrum, thus offers almost no risk however,
due to inflation, your earnings may be lower.
In summary,
Pro's
Better performance than bank
Highly Liquid
Con's
Low to no capital appreciation
Sensitive to interest rate and government monetary policy
It is important you know when , where and how to use your a fund. It is wise to consult first with your Certified Financial Planners before investing so you may understand how it may compliment your portfolio.
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During tough times, there are opportunities that you may consider especially if you are planning for your future.
You have the opportunity to invest in money market fund, fixed income fund and other funds by just using the switching feature of the fund.
Our Verdict? SJ&P Financial Planner Highly Approves.
And there's more!
Other benefit such as 5x of your regular premium with your minimum guaranteed death benefits with coverage until 99 years old.
Still confused?
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