An ANC episode hosted by Salve Duplito, a Residential Financial Adviser from ANC was asked to give her opinion on a viewer who is asking about mutual funds. The viewer is receiving P100,000 next year and plans to invest in UITF or Mutual Funds, he added that someone already talked to him and said that if he invest P15,000.00, after 3 years it will grow to P45,000.
The viewer was given big warning signal since Mutual funds or Unified Investment Trust Fund do not give guaranteed returns. There is no way anybody can truthfully tell that the P15,000 investment will become P45,000 in three years. Even if figures were shown of historical returns that more money has grown in mutual funds in the past years.
That is not a proof that someone will get the same returns in the next years. Something funny happens when prospective investors are shown impressive charts regarding historical data on returns.. since a very good investment solicitor will always say that "past returns do not guarantee future returns." However, in the prospective investor's mind is that, he is missing something if hes not getting as good return when he invest his money in a time deposit compared to putting it to Mutual fund or UITFs. Mutual funds and UITFs cannot guarantee returns and the reason is that its underlying assets or simply put the investments, the money was used to buy are traded in the financial market and thus, fluctuate in value based on sentiments, economic data, company performance,among others.
The viewer was given big warning signal since Mutual funds or Unified Investment Trust Fund do not give guaranteed returns. There is no way anybody can truthfully tell that the P15,000 investment will become P45,000 in three years. Even if figures were shown of historical returns that more money has grown in mutual funds in the past years.
That is not a proof that someone will get the same returns in the next years. Something funny happens when prospective investors are shown impressive charts regarding historical data on returns.. since a very good investment solicitor will always say that "past returns do not guarantee future returns." However, in the prospective investor's mind is that, he is missing something if hes not getting as good return when he invest his money in a time deposit compared to putting it to Mutual fund or UITFs. Mutual funds and UITFs cannot guarantee returns and the reason is that its underlying assets or simply put the investments, the money was used to buy are traded in the financial market and thus, fluctuate in value based on sentiments, economic data, company performance,among others.
This is the truth about Mutual funds and UITFs:
- Nobody in the world can predict sentiments
- Nobody can predict weather
- Nobody can predict geopolitical concerns
Now, where can it be best to invest your money?
1. A legitimate Company
2. A company with proven track record in terms of efficiency, customer service and management style
3. A company that does not charge more than 1% of your total investments
Acknowledgement:
Content Credit: ANC/Salve Duplito
Content Credit: ANC/Salve Duplito
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