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Monday, September 27, 2010

First Investing Ventures




Though it's not about a month of immersing myself into this investing business through reading and guidance from various sources (Ed, Investor Juan, Peter Lynch, Alvin TabaƱag, Larry Gamboa, Colayco, Investopedia, etc.) I have now started to take action to the tune of Mutual Funds and Stocks.

Why Mutual Funds?

I've only read (not done with it yet) Lynch's Beating the street and though he was not discouraging his readers too much, one would notice that he is saddened by too many people engaging themselves in Mutual Funds  than in stocks themselves. If you ask me my impression with MFs are a good investment (with it's risk factors of course), though when I talk about it to friends, I get straight to the point, telling them, 'it's for you who are lazy enough not to do homework'. So why would I even bother? Here are my reasons:

1. The fund is a mix (what I got anyway) of government securities and stocks. I know I can't afford a decent RTB that would give a reasonable return so here's my way of going to that type.

2. The fund is managed by a guy and his analysts that have way more experience than I have. I am so engrossed in getting myself involved in stocks but I have to be realistic here. I have limited resources and means of studying companies. It's imminent that I might stumble upon stocks that would give me nothing but misery. Atleast while I'm trying stocks on my own out I get some investment that really is going somewhere. 

3. This is my 20% of my investing ratio plan (80 high, 20 low). Of course I have a plan. Though it doesn't fall to the category of low risk, for the sake of my investment plan, I'd classify it there while I can't get a decent fixed income government security bond.

4. The power of many. Colayco said something about pooling resources to get a much more fruitful result. It doesn't need a high IQ to derive that by investing with somebody else, you not only make it possible for the fund to grow more (so it can be invested to more vehicles) but it also spreads out the risk. Simply put, we share each other's load.


But why stocks?

For one, you are your own boss. You can invest how much you want on a company you feel and researched that is really promising. You also enjoy the less stress environment of stock picking without people shunning you or getting you out of your fund when you suck. Not only that, you can put money in places no one ever looked at but you realized is a good bagger.


Why not Government Securities?

Come on. We all know how much we would earn in government bonds. And the only way you can get the most out of it is when you have a hefty sum to lend the government in the first place. For instance, there was this couple who put in 200k on RTBs and it's return was 2000+ every quarter for a short period of time. Maybe if you have a 100mil it will make all the difference but since it's obvious that I don't have that amount yet, let's just stick to high yield high risk.

So today (well let's just all imagine that it was September 2010) marks the start of my first baby steps to financial freedom. Maybe in the future I'd have the guts and money to do real estate. But as of now, let us all stick with what we can all enjoy without ever leaving the house. Owwww I can't wait to know how it will be next year!


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