Here’s another series of questions about Mutual Fund Investing sent by a recent website visitor. He confessed to be a newbie when it comes to investing in general and mutual fund in particular. But as you can see in the succeeding paragraphs, he raises some very smart questions.
I think anyone who wants to explore mutual funds as investment vehicle should pose such intelligent questions.
Please read very carefully at his question and my answers to gather some insights into the world of personal investing.
1. What specific establishments (here in Philippines) should I go to set up an account?
When you invest in a mutual fund, you are actually buying shares in the company – mutual funds are corporations.
Mutual Fund Shares are available for purchase from companies known as Distribution Agents, Brokerages or directly from the Asset Management Firm. You may want to go there directly at their office.
But the problem is they don’t have a lot of offices all over the Philippines, especially in the provinces. And if you are based abroad like most OFWs are, it’s very inconvenient to do it.
Luckily in this age where Internet Access is everywhere, everything can be done online already. There is no need for you to do the leg work and actually knock at the door of a particular business establishment during office hours.
This is true with this true when you invest with First Metro Asset Management Incorporated (FAMI). You can do it online. Here’s the simple process on how to do it with FAMI:
- You read the prospectus of a particular Mutual Fund.
- You download an Account Opening Form.
- You send it via email to a FAMI Investment Representative (like me, for example) together with the other document requirements like Valid IDs, Signature Specimen, etc.
- The Representative reviews the forms and documents. If everything is okay forwards your documents to FAMI so they can encode your account details and generate your FAMI Account Number.
- Once you have the FAMI Account Number, you can go to any Metrobank Branch to place your initial Investment, which is only P 5,000. Alternatively, you can also do it online via MetrobankDirect if you have an ATM Account enrolled with the system.
That’s very convenient and safe… You don’t even have to give your money to a person.
Tip : Pure online investing with FAMI is possible. I personally teach all my clients on how to do it. They learn how to subscribe, redeem and monitor their mutual investments anytime, anywhere. Plus, they also learn other techniques on how to properly use Mutual Funds to achieve their financial goals like setting up a future Retirement Fund or College Funds for their kids.
FAMI’s Accredited Mutual Fund Representative can assist you on how to do the whole process. At PeraTree.com, this is exactly what we can doing so we can help a lot of Filipinos who are based abroad or even in the provinces.
Important Note: The Securities and Exchange Commission (SEC) also accredits professionals – officially referred to as Certified Investment Solicitors (CIS) — to assist their clients in buying and educating investors when making mutual fund investment decisions. In other countries, these professionals are called Mutual Fund Advisors. Asset Management Companies, such as FAMI, usually have CIS who act as their Representative and help distribute mutual fund shares to the investing public.
And whether you are buying directly from the distribution company or with the help of a Mutual Fund Advisor, you get the same share price that is prevailing for that day.
2. You mentioned about FAMI, is there any place here in Cebu where I can set up an account?
Luckily, I am a Mutual Fund Representative of FAMI, the First Metro Asset Management Incorporated. The company has three offices in key cities of the Philippines namely: Makati, Cebu and Davao. Their specific addresses can be found from the contact page of the FAMI Website.
3. Where can I monitor the status of my investment?
Mutual Funds are mandated by the Laws of the Philippines to disclose their Share Price at the end of each business day… usually that’s 5:00PM. That way, it is very easy to monitor and keep track of the value of your investment.
There are many ways to monitor your investments:
- Through the Asset Management company’s website. I can’t forgive an investment company that can’t afford to have a decent website.
- Through independent websites that publish the NAVPS values of your Mutual Fund. Examples: Bloomberg, PIFA.
- Through the reports they send out to you periodically… most often quarterly.
- In business newspapers.
- Through your Investor’s Portal if your Mutual Fund Company has it.
FAMI investors may have access to its investors portal if they register for such service. Please ask for an assistance from your Mutual Fund Representative on how to go about it.
For my own clients, I personally coach them on how to go this very efficiently. I give them the updated, step-by-step instructions so they can monitor their investment easily.
4. Can I withdraw (if in case of emergency/whatever financial necessity may arise) my investment at any time?
The nice thing about Mutual Funds is that your investments are very liquid and can be converted to cash quite easily.
There is a right way and the wrong way to invest in a Mutual Fund, though. And having a financial plan keeps you from doing the wrong decisions with your investment money.
5. Where can I possibly withdraw my investment?
Most mutual funds in the Philippines would issue a check in the name of the investor once he / she decides to pull out from the investment.
With FAMI, you may choose to deposit your redeemed investment directly to your Metrobank ATM Account. That’s quick and convenient.
Tip: There is again the right and the wrong way of withdraw money from a mutual fund. Make sure you know what you are doing.
6. Is there any maintaining balance/share for a MF account?
None. Nothing. Nada.
This is something that is very different from a Savings Account in the bank which most people are familiar with. In a bank deposit account, you are required to maintain a minimum amount for your money to start earning interest or before the monthly penalty kicks in. Most banks will also charge you for account dormancy… meaning, if there is no deposit or withdrawal transaction for a particular period of time.
7. I am interested to learn about the 3 mutual funds that FAMI offers.
There are seven mutual funds under the management of First Metro Asset Management or FAMI. For this website, I only focus on three, namely:
- Save and Learn Equity Fund, Inc.
- Save and Learn Fixed Income Fund, Inc.
- Save and Learn Balanced Fund, Inc.
I will be writing more about those but you can get a short description by reading the Mutual Fund Services Page of this website.
8. Please correct me: If I would like to extend my investment, I will acquire another MF share.
I don’t know what you mean exactly by “extend my investment”. But you can buy more shares from the same mutual fund that you have already invested in. You may also place a new invest in a different Mutual Fund if you decide.
With FAMI, this is all easy to do once you get access to your investor’s portal. Believe me, if you know how to use the Internet and you know how to deposit money in a bank, you can invest in a Mutual Fund. FAMI’s Investor Portal makes the whole process a snap.
9. Can you cite me some idea (approximation) if for example I invest like 5,000 today, how much would it be in a year time? I understand the price is subject to fluctuation, but if you have any approximation value, that would be great. (Yes — another silly question: sorry :))
JP Morgan was once asked about his outlook for the Stock Market. His reply: “It will fluctuate.”
A mutual fund is composed of several assets… Bonds from different companies, stocks from blue chip corporations, debt instruments from the government, etc.
Mutual Funds are designed that way. This investment approach is known as diversification. That is also a built-in safety feature of mutual funds.
Given the fact that it consists of several stocks, bonds or money market instruments, it’s difficult to tell with precision how the entire fund will perform at the end of a one-year period. It’s like running several businesses… you can’t predict exactly how much you are going to profit (or loose money) at the end of the year.
Your best guide will be the fund’s historical performance. Many experts have suggested to look at how a particular fund has performed over the last 5 years. What is its average annualized return for the last 5 years? That gives you an idea into the future.
But then it’s not a crystal ball. As they say in the disclaimer: “Past performance is not a guarantee of future returns.”
Tip: Never treat your mutual fund investment with a gambler’s attitude. You can never double your money in a year’s time with Mutual Funds. If that happens, you’re lucky.
10. Would it be possible to have like 2 or more MF accounts? If for example I want to invest on this MF company, another one would be in another MF company and so on.
Yes, that is perfectly legal. It’s like having different savings account in the bank. You can open a Savings Account and a Checking Account in Metrobank. Or, you can have same type of accounts in other banks.
Some people I know are really nuts… they have 5 or more savings and time deposit accounts deposited in different banks BDO, BPI, PNB, Landbank, etc. That’s a horrible idea of diversification.
When you decide to invest with FAMI, with me as your fund representative, I will show you how to do it properly, in a calculated manner and not just do it randomly.
Investment Tip: You got to have a Financial Goal and Plan place.
Post Your Own Questions
Do you have some questions about Mutual Funds?
Or would you like to know more about getting started investing with First Metro Save and Learn Family of Mutual Fund?
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