EIP vs Mutual Funds

[lorenzoleo]

Go for both. Both have their own pros and cons.

EIP (Investing in Stocks)

Pros: You're in control of your investments. Ikaw ang mopili sa stocks nga imong paliton as well as the quantity of shares. Mas flexible sad because you have all the data to back it up (coming from news, financial reports, income statements, company status).

Cons: Riskier than mutual funds. Dili pud guaranteed nga nindot ang forecast sa company mosaka iyang value. It requires market sentiment. Maski unsa kanindot ang company kung walay market sentiment, either hinay kaayo na or moubos na. Take Cebu Pacific for example recently. And lastly, since you'll be doing the investing yourself, you need to have a sufficient knowledge and stay updated about the market status. You need effort and time for this

Mutual Funds

Pros: Convenience. Pwede ra nimo pasagdan imong kwarta because a professional fund manager will do the investing for you. It is also invested in stocks but mas diversified because fund managers also invest in bonds and other assets. As far as the risk is concerned, lesser ang risk sa mutual funds compared sa stocks.

Cons: Probably lesser growth than stocks. Sa stocks, there were some companies that grew to something like 2000% in just 2 years. So far, walay mutual fund companies ang nakabuhat ana. PhilEquity grew by 2000% pero it took 15 years. Naa puy impact ang diversification because bonds normally perform lesser than stocks so affected ang mutual funds.

IMO, go for both. Mas diversified imong mga investments then nindot pud kaayo ang potential of growth. Mas moubos pud imong risk ana.

Yes, mao jud. Maayo ning duha kay sa i time deposit ra ang kwarta kay natulog ra jud imu money ug wala jud ni grow kung Time Deposit. Kuyaw pa jud mag "Bank Holiday" lang ug kalit, then PDIC dili pud diha2x dayon makuha ang claims. hehehe!

For me the safest vehicle to let your money grow is to circulate it into financial markets, letting money roll and roll.
Even if you let all your money keep inside your house, actually it is more riskier than investing in stocks and MF because of inflation and our discipline in handling money. T_T!

[gtboy]

Thank you all for your posts.

I have a concern on CitisecOnline's EIP (not referring to CitisecOnline's regular trading account). I heard that you cannot buy stocks on demand - it has to be scheduled. Can someone explain this please?

By the way, wouldn't diversification be better achieved through mutual funds rather than individual stocks?

[Metz]

Thank you all for your posts.

I have a concern on CitisecOnline's EIP (not referring to CitisecOnline's regular trading account). I heard that you cannot buy stocks on demand - it has to be scheduled. Can someone explain this please?

By the way, wouldn't diversification be better achieved through mutual funds rather than individual stocks?

mutual funds will auto diversify for you.
sa stocks ikaw na bahala mag diversify.

[makie]

By the way, wouldn't diversification be better achieved through mutual funds rather than individual stocks?

Mas diversified sa mutual funds but the downside kay probably much lesser imong gains. Take note that fund managers are also investing in bonds and other financial tools and these give lesser returns than stocks.

Sa stocks, downside kay mas dako ang risk then kinahanglan pud ka ug dako2 nga amount para well diversified imong portfolio. If taas2 imong risk tolerance, you could go for stocks.

If gamay2 ra imong investment, di kaayo nimo makita ang difference but in the long run (through compounding), dako gyud kaayo ug difference ang stocks ug MFs.

[jeshcel]

Mas diversified sa mutual funds but the downside kay probably much lesser imong gains. Take note that fund managers are also investing in bonds and other financial tools and these give lesser returns than stocks.

Sa stocks, downside kay mas dako ang risk then kinahanglan pud ka ug dako2 nga amount para well diversified imong portfolio. If taas2 imong risk tolerance, you could go for stocks.

If gamay2 ra imong investment, di kaayo nimo makita ang difference but in the long run (through compounding), dako gyud kaayo ug difference ang stocks ug MFs.

which is which? i mean which is better if you are going to take for the long term....stocks or mutual funds?

[makie]

which is which? i mean which is better if you are going to take for the long term....stocks or mutual funds?

Considering that gains man gyud ang apas sa mga investments, ideally, stocks. Mas dako ang returns sa stocks compared to mutual funds.

But if conservative investor ka, you could go for mutual funds. Pwede ra nimo pasagdan then you can focus on other things.

Take note that both has their own pros and cons. Just try to look at kung asa ka mas comfortable.

Para diversified gyud kaayo, why not go for both?

[benjiqui]

Mas diversified sa mutual funds but the downside kay probably much lesser imong gains. Take note that fund managers are also investing in bonds and other financial tools and these give lesser returns than stocks.

Sa stocks, downside kay mas dako ang risk then kinahanglan pud ka ug dako2 nga amount para well diversified imong portfolio. If taas2 imong risk tolerance, you could go for stocks.

If gamay2 ra imong investment, di kaayo nimo makita ang difference but in the long run (through compounding), dako gyud kaayo ug difference ang stocks ug MFs.

.... what do you mean "much lesser imong gains " gains depends on who
you are asking.... is 10% gain per year not enough for you considering
that you are a moderate investor in MF, more diversified and is nearing
retirement age ? Age does matter too ! for the younger ones, maybe
you can handle both MF and pick stocks, in case of a downturn, then
you have plenty of time to recoup and realign your goals and projections.

for those who are close to retirement age, I would be more cautious and
more conservative to protect my investments....I would be happy with
maybe between 8 to 10 % gain per year... again it all depends on each
individuals risk tolerance...... just my 2 cents.

[rescyth]

By the way, wouldn't diversification be better achieved through mutual funds rather than individual stocks?

Depende ra jd sa capital nimu bay. If you have a large capital to build your own portfolio then you can diversify properly. But with limited funds, it's much better if you go with MF.

[makie]

@benjiqui:

"Much lesser gains" means that your gains in mutual funds are generally lesser than those in stocks. So far, I have yet to see a mutual fund company's NAVPS go up by at least 100% in a year. Several companies listed in the PSE was able to do that, even just in months. Figures don't lie.

Age? It doesn't only apply in mutual funds but in stocks as well. Time is universal in investments.

is 10% gain per year not enough for you considering
that you are a moderate investor in MF,

This is a very subjective question and would vary from person to person but I will answer you with math.

Assuming you invested P100,000 and redeem it after 10 years (without any addition in between). Your average rate of return in mutual funds is 10% annually while in stocks is 50% (and yes, both are conservative numbers provided that you're really taking investing in stocks seriously and not just putting money hoping that it will just grow anyway).

After 10 years in mutual funds, you gained P159,374
After 10 years in stocks, you gained P5,666,504

What if you consistently added P100,000 every year for 10 years (same rate of returns)?

After 10 years in mutual funds, the future value of your investment is P2,012,490.95
After 10 years in stocks, the future value of your investment is P22,766,015.63

I'm not saying that the mortality rate in stocks is that good because majority of the investing and trading population in the stock market loses but if you'll just do your homework well and be good in analyzing and looking for good stocks, your chances will increase significantly. After all, you are investing, not speculating. Great gains doesn't come easy. Which would you prefer anyway, P2M or P22M after 10 years? Also take note that the value of P2M 10 years from now might not be the same as P2M today, it might decrease due to inflation.

Sure mutual funds does way higher than 10% annually but also take note that 50% in stocks is also just a conservative amount, it can do way higher than that.

10% is good but if you can find something higher, why not go for it?

[benjiqui]

@benjiqui:

"Much lesser gains" means that your gains in mutual funds are generally lesser than those in stocks. So far, I have yet to see a mutual fund company's NAVPS go up by at least 100% in a year. Several companies listed in the PSE was able to do that, even just in months. Figures don't lie.

Age? It doesn't only apply in mutual funds but in stocks as well. Time is universal in investments.


This is a very subjective question and would vary from person to person but I will answer you with math.

Assuming you invested P100,000 and redeem it after 10 years (without any addition in between). Your average rate of return in mutual funds is 10% annually while in stocks is 50% (and yes, both are conservative numbers provided that you're really taking investing in stocks seriously and not just putting money hoping that it will just grow anyway).

After 10 years in mutual funds, you gained P159,374
After 10 years in stocks, you gained P5,666,504

What if you consistently added P100,000 every year for 10 years (same rate of returns)?

After 10 years in mutual funds, the future value of your investment is P2,012,490.95
After 10 years in stocks, the future value of your investment is P22,766,015.63

I'm not saying that the mortality rate in stocks is that good because majority of the investing and trading population in the stock market loses but if you'll just do your homework well and be good in analyzing and looking for good stocks, your chances will increase significantly. After all, you are investing, not speculating. Great gains doesn't come easy. Which would you prefer anyway, P2M or P22M after 10 years? Also take note that the value of P2M 10 years from now might not be the same as P2M today, it might decrease due to inflation.

Sure mutual funds does way higher than 10% annually but also take note that 50% in stocks is also just a conservative amount, it can do way higher than that.

10% is good but if you can find something higher, why not go for it?

..... yes "figures don't lie " because you are basing your mathematical figures on past performances be it MF or stocks.... a word of caution...
always remember that past performances does not guarantee future results.....there are numerous variables that influence the stock market
wether local or international.... nobody can predict the upswing or downswing... we only know it when it happens.....sometimes we react
but a little too late.....most of the times... better said than done ! just my 2 cents