High Can Be Higher: My Mutual Funds Investments
~ Saturday, September 7, 2024 Blog Post ~
It’s September and 2024 is fast drawing to a close. I always like speaking optimistically about my life and, as always, I can remark that I am much better personally and financially this year than in the previous year.
For 2025, my financial plan remains the same: To save, invest, and reinvest my hard-earned funds more. I agree, my high saving and investing rates can be higher. Additionally, the more funds I stash for my retirement can be made much more. I always ensure that there is a strong rise in my savings and investing rates. It has always been “save, save, save” and “invest, invest, invest” for myself.
My biggest expenses for this year are my Seoul, South Korea and Tokyo, Japan tours. Moreover, food and dining out constitute a huge chunk of my weekly expenses. I don’t have any regrets or ill feelings about these outlays. After all, I have made it clear that the purpose of my funds is for my sound health and personal enjoyment today and in the future.
To wit, I will merely carry on with my existing personal financial plan, which is to save, invest, and reinvest more. However, my investor profile is slightly changing. When I was younger, I was seeking liquidity. I wanted safe and quick access to my money. Hence, I opened savings accounts in several banks. In college, I had two savings accounts in two banks close to my university. With my savings deposits, I took very low risks which consequently led me to getting low returns.
For investors like myself, it is common knowledge that the higher the risk I take, the higher the returns I get. At this stage, I’m more engaged in the following mutual funds in further diversifying my investment portfolio:
1) BOND FUNDS
I don’t consider myself an ultra-conservative investor anymore. When I was younger, that was my investor profile. I wasn’t prepared and despised the idea of losing money. I was quite fearful and paranoid that I would lose my hard-earned investment funds to geopolitical, economic, and market risks. After all, I was industrious as an ant and meticulously saved my hard-earned paychecks.
Thus, I didn’t take a chance much in terms of saving and investing money. I took minimal to zero risks. Furthermore, I didn’t like the idea that I wouldn’t be able to access my funds with the long duration investing involves, and I understood that reality made investing a riskier venture. I desired to earn the maximum possible returns with the minimum or lowest possible risk.
Nonetheless, at this point, I consider myself somewhere between a moderately aggressive and moderately risk-averse investor. I like pouring my investment funds into bonds, fixed-income instruments, and other debt instruments. Examples of them are Treasury bills, which are the safest investment instruments, and the unsecured, short-term commercial papers which are debt instruments corporations issue.
With my investment in a fixed income fund, I get more stable returns at lower risks as I seek a steady income, similar to what I enjoyed when I was still an ultra-conservative investor. From liquidity, safety, and quick access, my investment objectives are now capital preservation and income generation. I have the option to invest in long-term and short-term bonds with less than or over one-year tenors or maturity.
2) BALANCED FUNDS
I understand some mutual funds outperform their benchmarks. Being somewhere between a moderately risk-lover and moderately risk-averse investor, I also engage in balanced funds. This mutual fund type offers me regular income and a little bit of financial growth. The best mutual fund companies usually charge high management fees. I consider looking at the expense ratio when investing since lower investment management fees can lead to higher net returns over time.
3) GLOBAL MULTI-ASSET FEEDER FUND
As a mutual funds investor, I enjoy consistent monthly income payouts which are in cash deposited directly to my bank account. Similar to the bond and balanced funds, the global multi-asset feeder fund enables me to achieve my investment portfolio’s income and capital growth objectives. It provides me with regular income streams and generates long-term capital growth. Moreover, the global multi-asset feeder fund lets me relish potential principal growth from global markets or equities and global bonds or fixed income.
Mutual funds are just some of the investment instruments in my diversified investment portfolio. I like them because they are best suited for my long-term investment targets. My fund manager enlightened me that every time the inflation rate goes down, bond funds do really, really well.
The reason behind this scenario is that when the inflation rate drops, this situation allows central banks to cut interest rates, which subsequently lets bond yields plummet and bond prices rise. The bond prices of the bond funds then perform very, very well in capital appreciation. My fund manager also relayed that, historically, every time interest and inflation rates go down, that is a boon for bond funds or a bond fund rally transpires.
The raison d’être for my financial plans
I want to make myself clear. Thus, I may repeat many of my statements from my previous posts here in my blog. I want to be financially secure and keep my comfortable lifestyle for the rest of my life. Therefore, investing and reinvesting dividends and capital gains are keys to achieving my desires since with compounding returns, these financial activities can significantly increase my wealth over time.
I learned from Dave Ramsey that money and finances are 20 percent head knowledge and 80 percent behavior. This well-known personal finance guru affirmed that money is behavioral — everything about our finances is anchored on our behaviors. I gathered from Mr. Ramsey that our attitudes and behaviors dictate our success in finances. This reality is the reason why markets and investments go up and down. Money’s behavioral nature is also why it is easy for people to earn and save at times and at other times it’s otherwise, and why people may profit or lose in their investments.
Since I’m single and opted not to be a parent, I’m obviously saving and investing my hard-earned money for myself. Yes, I’m keeping away funds for my present and future life. I have no problem when it comes to disciplined saving and investing. I make regular contributions to my investment and deposit accounts regardless of the market conditions. I typically put in or shell out a small amount of money in tranches or lump sums. Additionally, I save and invest daily, monthly, weekly, quarterly, and in various amounts. Securing my financial present and future is a lifestyle and hobby for myself.
With my consistent behavior when it comes to my finances, which is diligently setting aside massive amounts of my financial assets, I am confident I will be financially secure and able to maintain my comfortable lifestyle for the rest of my life. Surely, I will also enjoy myself later on not only in the present.
It pays to think long-term and focus on my objectives: MY EXCELLENT HEALTH AND WEALTH. I will always stay invested. At this stage, I am no longer fearful to invest, unlike when I was younger. Markets rise and fall, and there will always be volatility, regardless of the economy’s condition.
Nevertheless, I will continue to accumulate and invest properly. I learned from my investment advisor that I need to adjust my saving and investing strategies over time for there is no perfect formula or plan in attaining my goals.
I don’t consider myself old at all. I forget about my age, height, and weight as these are limitations I don’t want to worry about or allow to hinder my smooth-sailing life. Hence, I always use my time as a great leverage in investing. The longer time I have, the better it is for myself, as this scarce resource can smoothen the investment risks.
I also learned from investment experts that it is highly recommended to combine high-risk and low-risk assets and highly liquid and low-liquid assets to achieve a fully diversified investment portfolio and perform asset allocation effectively. Diversification is important as overconcentration or pouring all of one’s investment funds into merely one type of asset class like a mutual fund is hazardous. Global exposure is also important to weather the investment challenges relating to markets, economy, and geopolitics.
Since I invested early in my life, I will continue to do it patiently, wisely, and regularly. Investing is similar to planting a tree. I need to wait years before I enjoy my investments’ “fruits.” Furthermore, investing is not a 100-meter dash but a marathon.
Being I’m an investor, I can already make my money work for me — or “money at work” — and gradually become less and less of “a woman at work.” I aim for higher savings and investment returns to become financially able during my retirement which is still many, many years from today. Retirement is certainly something I need to prepare and plan for because I will be too old, too tired, or too sick to earn a living in the future.
Before I end this post, I asked Mr. Ramon Luis Osmeña, a former ultra-high-net-worth relationship manager, my query: When is the best time to enjoy some of our investments and hard-earned money? For example, I’m in my early 40s, single, and relatively financially secure. I don’t think we should set aside most of our hard-earned money for the future. We should also enjoy it in the present time. What are your insights?
He said he loved my question and advised me:
1. If you do have various financial goals under your growth objective, if you have achieved some of those goals, it will be a good time to reap the benefits of your investments.
2. Let’s say you have a global equity fund, and it’s already up 40 percent or 30 percent because we’ve seen that, trust me. Sometimes it’s a good idea to take some profits out already because you don’t want to be too greedy naman, ‘di ba? And you could enjoy that.
3. One of my favorite investments is fixed income. Personally, I have a lot of laddered corporate bonds and preferred shares that give me a regular stream of fixed income in terms of coupon payments and dividends from preferred shares. And I enjoy that on a regular basis. So, I hope that answers your question.
I will continue to stay invested for capital preservation, regular income, and faster financial growth to achieve my long-term goals of forever financial security and a comfortable life for myself. I will continue to engage in financial “animals” by investing and becoming knowledgeable about them.
These investment vehicles are stocks with performances depending on the economy, company, or market. Indeed, with stocks investing, everything plays with the relative situation, with investors earning and not at a loss when stocks are doing well. I will also continue to be invested in bonds or IOUs; real estate investment trusts or REITs; and income payout mutual funds, which are pooled and managed assets and can be short-term or long-term in terms of tenors.
A variable universal life or VUL insurance, which combines investments and insurance, and zero-risk Treasuries, which are the safest, are also perfect for my investment portfolio for they further its diversified nature. With these assorted investment components, potential returns will be higher for myself. Therefore, I am certain I will have more than enough rewards, yields, or returns for myself in the future. That will be more than enough for me to be smiling.
