Why Mutual Funds

To achieve long-term financial goals, your money must work harder than ever for you during this high inflation era.

Like many investors today, you may try to put a little money aside each week using a traditional savings account offered by a bank or fixed deposit account. While any savings account program is commendable, it may not be enough to meet your financial needs due to the effects of high inflation nowadays. As the price of goods and services climbs, the Ringgit's buying power sinks.
This means that the progress you've made toward saving to build your financial nest egg may likely be diminished by the rising cost of living. Mutual funds, with their professional money management, convenience, and low investment minimums, can be an important tool in helping you meet your long-term financial goals by providing you with the potential to achieve higher rates of return than in a bank account.

Mutual funds provide you with a cost-effective alternative to direct purchases of stocks or bonds – you don't need to be wealthy to invest in them; the minimum investment is RM1,000.00.

Mutual funds offer you a number of benefits including:
1. Diversification
2. Professional Management
3. Liquidity
4. Flexibility
5. Convenience
6. Low cost, high quality investment
7. Opportunity to invest in different regions (such as high grow countries), financial options.

The reason Mutual Funds are so popular is because they decrease the risk and increase the probability of enjoying high returns.


Table on the left clearly shown the return of mutual fund with average of 10% with compounded interest, the investor who investor a total of $111,000 for 10 years, will gain a return of $886,617. As compared with the normal bank saving in FD with 4% interest rate, the return after 25 years with the same amount of investment is only $258,367. A big different of $628k, which type of saving you prefer? In actual fact, some of the funds could perform up to 50% per year, however, the performance of a fund is affected by the stock market condition. Nevertheless, a long term investor is always the winner, as we all know the market is alway in upward trend for long term.

Disclaimer

The contents of this blog is the opinion of the author about mutual funds. It does not constitute any offer, recommendation or solicitation to any person to enter into any transaction or investment strategy. Investors are advised to read and understand the prospectus of the fund before invest. Any investments in mutual funds and securities are inherently subject to market risks and the risk of loss. The NAV of the scheme can go up or down depending on various factors. Any past performance records or reports published in this blog is not indicative of future performance.The author is not responsible or liable for any loss resulting from invest in mutual funds.