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For almost a year now, I have been investing in the Philippine stock market directly. This means that I have a stockbroker who acts as a middleman, and I choose which companies to buy and when to sell them based on the recommendations of my mentors in the Truly Rich Club. The Truly Rich Club is a membership site founded by Bo Sanchez, a Catholic lay preacher, which aims in helping people achieve financial and spiritual abundance at the same time.
I've chosen the direct method because I've always thought that investing in the stock market indirectly, which is through mutual funds, was not a practical thing to do.
But a couple of months ago, when I became a licensed financial advisor, I learned about the features and benefits of mutual funds, and my thinking has changed. True enough, learning has its advantage.
Let me share with you my misconceptions about mutual funds and the truth behind each myth.
MYTH #1 When you invest through mutual funds, the company will take a part of what your money earned through charges every now and then.
FACT
There are mutual fund plans that will only charge you initially, around 7% of your investment. Then the rest will be invested. When you make a withdrawal, you will no longer be charged.
MYTH #2 Investing directly is more convenient than investing through a mutual fund.
FACT
If you have the time to read and study about investing in the stock market, you may opt to do it directly. And yes, it is convenient because it can be done online. But with our busy schedule, even though you may want to do it, you may not have the time. I have talked to a number of my friends who want to invest, teaching them how to do it directly, but sadly no one actually did it. They were just too busy. Some invested through a mutual fund instead. They just give their money to a reliable insurance company, and the company's fund manager does all the work. Now, for most people, that is convenience.
MYTH #3 Part of my investment goes to paying the fund manager every now and then when I can do his work when I invest directly
FACT
Again, there is only an initial charge for the fund manager to do his work. And it is a decent amount. Besides, when you invest directly, you are also being charged every time you buy and sell stocks.
CHOOSE WHICH PATH TO TAKE
Investing directly and indirectly has its pros and cons. Choose which works for you. As for me, I plan to do both. Currently, I invest directly through the country's leading online stockbroker. You can start doing this with as little as Php5,000 plus the discipline to continuously do it no matter what the situation of the stock market is.Next month, I will start investing through mutual funds. With my preferred insurance company, which is the largest in the country today, I can do this with as little as Php10,000 per year.
With capital requirements like this, anyone who has a steady income can invest. I encourage you to start TODAY.
LAST NOTE
This I also realized, that what makes mutual funds better than investing directly is the Insurance Coverage. If something happens to me and the family knows that I have a mutual fund, the insurance company gives my beneficiaries 125% or 500% of my investment, depending on the plan I chose. They can even get the benefit amount IN FULL, no tax! Now that is peace of mind.I hope this article was of help to you. if you have any queries, please post them on the COMMENTS below.
