Why someone would want to invest in mutual funds if he plans to invest in the long run? Why not invest directly into stocks? After all, some people would say investing in mutual funds is like investing in stocks indirectly.
Yes, you can actually directly invest in stocks, but the question is do you have enough information to invest in stocks? You see, sometimes, if you plan to play in big league you have to play first in amateur leagues. Just like professional basketball players who went to amateur leagues first before being discovered and went into playing professional basketball.
Mutual funds in the Philippines and stocks are like the amateur and professional leagues. If you are new to investing and you don’t know how to select stocks that will give you best returns, it’s a good thing to learn first with mutual funds. Mutual funds money managers will diversify your investment you don’t have to worry picking the stocks yourselves while you are studying how these professionals pick their winning stocks. Another good thing about investing first in mutual funds is that you will lessen your risk of losing your money since it will be managed by professionals.
When your are done studying and feel like you can move on to professional league, you can start investing in stocks, and of course playing in professional games does not have to be smooth at first. You will be playing with the big guys, but the best thing is you don’t consider yourselves as opponents. You all consider yourselves as players trying to pick the winning stocks. In some cases these big guys in the league of stock investing might even lend you a helping hand and share their techniques and experiences in stock investing.
Principles mentioned above are not different with mutual funds in the Philippines. Make mutual funds as your practice game and then move on to professional league such as investing in Philippine stock market.