Advantages of Getting one Type of Mutual Fund

Below are some of what I think the advantages of getting just one type good mutual fund.

1. Your investment capital especially if yet small will not be diluted or divided, meaning, if the NAVPS of the mutual fund you subscribe in increases, your gain will be much more higher but of course the risk is that, if the NAVPS goes down the more also is your loss. That's why its imperative to study first the fund that you intend to invest in so that, you can confidently choose what type of mutual fund will fit your goal and risk appetite. 

2. You don't need to "mamangka sa dalawa o tatlong ilog" which means in this case if you were to endorse or recommend mutual fund to your friends or someone you know, you probably will not endorse or recommend many different type of mutual funds other than the one you subscribe in. And, since you have done your homework before investing on the fund, you can sensible explain to your friend why its worth it to invest on the fund where you invest in. Should they too invest on that fund and focus on it, not only that they will not divide their capital investment, they will also help increase the asset of the fund thus, increase also the value of the NAVPS and of course if the NAVPS increases, your share value will also increase. So go ahead, encourage others to invest on the fund you invest in. Take note the NAVPS formula of a mutual fund is ((Asset-Liabilities)÷Outstanding Share). 

3. Based on how I understand mutual fund, if you get more than one but the same type of mutual fund, in a sense you are not really diversifying. Like say for instance, if you subscribe to an equity funds at company "A" and equity fund also at company "B" and the same with company "C". If the equity market goes down, likely all of those mutual funds you subscribe in will also go down since they all invest in equity. Mutual funds no matter how many you subscribe in are all attached or is dependent on the equity market. Another is that, aside I guess from their investment strategy and fund managers, one of the reason why perhaps the same type of mutual fund is better than the other one is simply because, that mutual fund had already build a good performance reputation hence, more popular and therefore, many are interested to invest increasing the asset value more compare to the other mutual fund resulting to increase in NAVPS and, finally increase also on the share value.

4. If you invest in more than one MF and if you are working abroad and don't have the bank accounts on all the mutual funds you subscribe in, you will have to spend extra more on the remittance fee so as to add fund separately because to my knowledge, every mutual funds have different account number. To some, they may find this not convenient at all.

For myself I do subscribed to one mutual fund and also invest directly to stock market..

The Importance of Emergency Fund

Why do we need to understand the importance of EMERGENCY FUND before proceeding to investment?

Perhaps, one of the reason is to avoid touching our investment intended for long term. 

Consider this, let's assume we manage to make our cash flow positive and able to manage our debt but then decided to jump right away to long investing without really understanding the importance of EMERGENCY FUND. And, let's assume that at this time, we decided and make it a goal to retire with sufficient savings to cover for our own expenses at the age of 65. 

During the 12 years of working and investing we were satisfied with our investments earning. Assuming that our investment from PHP100,000 at an average of 12% compound interest ballooned to 400,000. However, about this time an unexpected emergency happen, perhaps we lost our job or one of family or ourselves got sick. 

Where do you think is obvious choice to fund our emergency? Say, we only needed PHP300,000 to settle our emergency and decided to get that from our investment earning. We didn't lose, right? Since we still manage to retain our capital. 

Yes, indeed our capital will be retained at that point in time but, our biggest lose will be the 12 years of letting our money compound for itself. At that point in time, we just LOSE 12 YEARS towards our retirement age goal.

Another obvious importance of emergency fund is that it will serve as our buffer fund whenever we encounter an unexpected circumstance in life such as temporal lose of Job or minor medical needs that requires immediate liquidation of cash. This is why it is advise to just place this fund in a savings account for easy liquidation, we just need around 3-6 months of our expenses to be place in a savings account for our buffer fund. Now, for major emergencies this fund may not be enough especially like hospitalisation need or expenses, we certainly don't want to top up this fund using credit to settle such emergencies. It would be wise therefore for us to get a medical insurance, this will back up our emergency fund or, perhaps our emergency fund will not be touch as usually, if we know how to pick a medical insurance properly, it would be enough to cover such emergencies. Once the 3-6 months worth of expenses has been save in a savings account, the rest should be diversified to other investment vehicle like say mutual fund, property, insurance, stocks and business.