Your Questions About Investing In Mutual Funds

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Chris asks…

I am 21yr old software engineer earning Rs22,000 pm.I want to start investing in mutual funds.?

I have few questions regarding this.
1.Which one should I opt between Equity and Debt mutual funds?
2.Should I go for short-term investments or long-term investments?
3.MIPs or SIPs?

financi4 answers:

Answer to your question is as follows:

1.Which one should I opt between Equity and Debt mutual funds?

Investment in equity or debt is considered this way
Investment in Equity = 100 – your current age
so as you said your current age is 21 so investment in equity will be 100-21= 79% in Equity and 21% in debt.

2.Should I go for short-term investments or long-term investments?
It completely depend on you the kind of responsibilities you have in your life, considering no financial responsibilities at present in your life can think of going for long term investment

3.MIPs or SIPs?

MIP mainly are products which invest 80% in debt and 20% in Equity.
Considering your age it is not advisable to invest in MIP

SIP means systematic investment plan

…it is a method of investing a fixed sum, at a regular interval, in a mutual fund.
It is very similar to monthly saving schemes like a recurring monthly deposit / post office deposit

Advantages of Systematic Investment Planning

Encourages Regular Investments (just like recurring deposit

A Convenient way to invest regularly
Lower initial investment without cutting into regular expense
Long term perspective
Rupee Cost Averaging Benefit to counter volatility – it brings down
the average cost of your Investments
No timing the market!!!
Meet investment objective with investment needs

Donald asks…

I need to open roth ira account and will be investing in mutual funds. Firsttrade or scottrade?

After doing a lot of research I have narrowed down to firsttrade or scottrade. Which one would you suggest? Mostly I will be investing in mutual funds (Vanguard funds), sometimes stocks.
I don’t want to open with Vanguard because then I have to only buy their funds in future. They also have min requirements and other fees.

financi4 answers:

Scottrade has a pretty decent reputation and their mutual fund trading fees are among the lowest I have seen. Firsttrade is a new one to me. I have never heard of them. My IRA accounts are with TD Ameritrade, and they have proved reliable. Their fees are higher than Scottrade however.

Here is a thought. You can have as many IRA accounts with as many different mutual fund companies and stock brokers as you desire. The only stipulation is that you can not contribute more than $4000 a year. You can even move them from place to place although the broker you are moving from will likely charge you a fee for the move.

Joseph asks…

How do I start investing in Mutual funds in the Philippines?

Thank you very much for the answers!
They are very helpful!

financi4 answers:

Go to the website

Investment Company Association of the
Philippines’ website

then select the top three performers based
on the 2007 year to date growth.

You might also want to invest in a variable universal life ( a product of Philamlife ). In a 12 month period ( June 2006 to June 2007 ), a 70+ percent growth in investment was recorded. If you need more info on this product, send me an e-mail.

Steven asks…

How does investing in real estate compares to investing in mutual funds?

I have $2,600 of monthly disposable income. I could buy a multifamily every year for a few years with a 10% down or I could put all of it in my 401k at work. What should I do? I don’t mind being a landlord and the work it entails as long as the returns are higher and worth the effort. Also, how much should I expect for a multifamily to appreciate if I keep it for 30 years.

financi4 answers:

If you’re close to retirement age (within 10-12 years), play it safe and go 401K. If you have time to get into real estate, go with the multifamily. Thirty years ago, home values were about a quarter of where they right now. So a $300K multifamily should be worth at least 1 million by 2038. Also, investing in property gives you the flexibility to take out equity later to leverage more properties. In a 401K, your money’s tied up, held in place from the fear of early penalties…

William asks…

What institution should a person begin investing in mutual funds?

Should it be with a brokerage, fund company or bank?

financi4 answers:

You don’t need a brokerage account unless you’re going to buy individual securities (stocks, ETFs, bonds, etc.). If you want to invest in mutual funds, go direct with a good no-load fund company (Vanguard, T. Rowe Price, Dodge & Cox, etc.). A bank is NOT the place to go.

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