I’m also holding on to my mutual funds I even plan to add more. This is where the importance of emergency fund comes in - to avoid untimely withdrawal of funds.
But I have to admit, I used my emergency fund as down payment for a property we bought just before the financial crisis broke out. Waaaaahhhhh…

Will answering the question relieve us of financial worries? Isn’t an investor’s profits per share equal to NAV at redemption minus NAV during purchase? Once this subtraction results to zero or negative, then we don’t have to wait for a zero NAV to start losing money. The question takes the focus away from what is essential measure of investment success or failure.

correct, it will never go zero…
BUT, It can go negative

with respect to your NAVPS purchase price

Hi Salve,

Regarding bond funds she mentioned, is she pertaining to corporate bonds? How about TBs/RTBs, ROPs, can these instruments be affected as well?

I have not invested with bond funds yet. I am just curious since I have read the bond investment allocations of a certain mutual fund company and it is a mixture of government bonds and SDAs.

cheers!

onyok

Three years ago, I was convinced to invest in Mutual Funds after I was advised that it was a sounder investment rather than parking my money on savings deposit in the bank. In retrospect, we have a small family business that went belly-up few years back, hence the stigma of failing in business has carved a deep resentment to engage in any business or entrepreneurial endeavor again. As the years go by, I saw my money invested in the mutual funds increase in value. Daily, I observed the NAVS growing like a germinating seed that slowly sprouted from the ground. The following year I diversified my portfolio by buying mutual fund shares from another company.

However, the recent financial storm that hit the world market suddenly woke me from my beautiful dreams. I watch with horror how my shares have lost their glitter as it rhythmically slide down with the fall of Wall Street. I was tempted to back-off in surrender and to run to the bank to redeem whatever was left of my money. But, thank God that I was able to hold my ground and continued to believe that this financial turmoil will come to past. Lately, I was able to smile again as the NAVS of my mutual funds started to recover, beaming a radiant glow that tomorrow will be a bright day again.

I am not so sure if I have seen the worst of my investment in mutual funds, but I have high hopes that I am in the correct direction, best exemplified by the article as above. On the next opportunity, I will never hesitate to take similar risk once again.

Historical data show that despite the recession in the past, 9/11, etc., stocks value eventually improves. This is in fact the best time to buy shares. I just did using my 13th month. But that’s because my investment is also part of my long-term plan. Likewise, I get high when my mutual fund declares stock dividends as the more shares I have, the more additional stock dividends I got…

Hi! Salvi,

John Bogle writes,

“The most recent episode witnessed the culmination of an era in which our business corporations and our financial institutions, working in tacit harmony, corrupted the traditional nature of capitalism, shattering both confidence in the markets and the accumulated wealth of countless American families. Something went profoundly wrong, fundamentally and pervasively, in corporate America.”

“At the root of the problem, in the broadest sense, was a societal change aptly described by these words from the teacher Joseph Campbell: “In medieval times, as you approached the city, your eye was taken by the Cathedral. Today, it’s the towers of commerce. It’s business, business, business.” We had become what Campbell called a “bottom-line society.” But our society came to measure the wrong bottom line: form over substance, prestige over virtue, money over achievement, charisma over character, the ephemeral over the enduring, even mammon over God.” -Jack Bogle, founder of Vanguard, The Battle for the Soul of Capitalism

For your readers who don’t know yet who is Mr. John Bogle, he is the champion of index investing. He puts his money where his mouth is. Most of his money are invested in Standard & Poor 500 index fund, with average return of eleven percent (11%) from 1988 to 2008.

I encourage your readers to learn more about index fund. EAFE (Europe, Australia and the Far East) is an example of international index fund. The writer’s chunk of retirement money is presently invested in S&P 500. I personally believe that now is the best time to dollar cost average on the S&P or well manage mutual fund. They say “if you wait for the Robbins, the spring might be over.”

So start now, don’t procrastinate. But please always read Smart Money, your reference for sound and hopefully profitable investing.

I understand the concern of your readers about their investment in mutual going zero Net Asset Value (NAV).

Frankly, putting money in mutual funds which invest in equity is plain BORING & somewhat naive. You do not become a true blooded investor if you do not make an effort to do it yourself & learn the ropes.

Personally, I find it rewarding to invest in stocks directly - buying those which are trading below their book value but with sufficient margin of safety.

As a trigger for me, it is a buy if the stock is among the PSEi listed heavyweights and trading less than 50% of its book value, good cash flow, and has less than 50% of its assets in debt.

With the financial tsunami depressing the stock prices of most companies, there are a lot of bargains out there. You just need to make an effort to study the market - read the daily news & investment books.

I still however invest, in mutual funds but only those which dabbles in Fixed Income - i use it as a hedge to my stock portfolio.

Bottomline, If you are going to invest in equities, do it yourself. You will learn investing & risk taking in its purest form - that is more important than $$.

Email me: Mike12076@gmail.com
http://parttimeinvestor.blogspot.com

Mabuhay ang Pilipinas!

I beg to differ on the statement ” If a company folds up, it will still be required by law to pay its shareholders,”. When you invest in stocks of a company, there is no guarantee if your investment will either make money or not. When Lehman Brothers folded, the shares were all wiped-out. Shareholders lost all their money. Even creditors fall in line may or not get their money back. A bankruptcy judge decides the fate of all the failed company’s assets.

I don’t really think it will ever drop to zero. Researching historical charts will show you that the market always bounces back up given time.

I agree with Mike. Just want to add something regarding equities historical characteristic curves, if you analyze the ups and downs yeah? investing in blue chips only, you will notice that it is symmetrical. This means that buying on a bear market will be the same as buying on a bull market given a period of 2-3 yrs time. The objective here is to catch that bottom line and buy more at this stage. But then again nobody knows exactly when it will happen or is it happenning now? Then you can shout out “HOW COULD I MISS IT!!!!!”

The thing is mutual fund is not recommended for an individual reaching retirement. Am I right?

Cheers,

onyok

For anybody who is interested to share and discuss their knowledge, please send me an e-mail at rickmakati@yahoo.com.

I’m willing to share what I know on the local stock market and mutual funds.

Hello Onyok,

Mutual funds are really nor recommended for people who are nearing their retirement age because they may not have the luxury of time when when there is a downtrend like what we are experiencing right now. They will be forced to sell their investments at a lost.

Hi Mike,

That’s why I got 2 MFs in-trust-for my two kids. This way you’ll be investing for long-term goal such as education for your kids. And I am positive that it will go up again given a period of time using cost-averaging, then you stop buying when the bull sees the red light.

Emilio, Rex Mendoza was talking about mutual fund companies in that statement, not publicly-listed companies. Hope this helps, regards.

Grass Eater, you’re one of those who go against the herd. Let us know how it turns out!

hi nina! how’s that emergency fund rebuilding going on? you can do it, girl!

some avoid buying shares when they have a hunch of not yielding good returns when the market is low otherwise they say, they might catch a falling knife. in my case, i did the risk 2 years ago and now my money kept on growing each year. it took guts to gain tough glory.