How to invest on Index Fund in the Philippines as a beginner in 2023
Filipinos should invest on Index Funds to build wealth for future even as a beginner…
Investing your extra money, will surely provide an additional wealth for your future, if you have the right information on what type of investment to invest in.
One of the investments to invest in, is thru investing on Equity Index Funds or Index Funds. Index Funds are type of mutual funds that invested on equities or stocks or shares that follow or tracks the Philippines Stock Exchange Index or PSEi.
As I mention on my other post on this blog, there are different types of mutual funds available in the Philippines to invest in. One of it, is the Equity Index Funds or Index Funds.
Since, the Philippines has only one stock exchange, the Philippine Stock Exchange, then the Index funds only track or follow this. While others like United States of America have couple like, New York Stock Exchange, the NASDAQ, DOW JONES.
The Philippine Stock Exchange Index, compose only of the 30 of the biggest publicly traded companies in the country. But the total companies available in PSE is about 273 companies. This number is small compare other Stock Exchanges of other countries.
Index fund is suited for passive type of investors, because it does not need to be manage actively, especially about stock picking.
Index Fund Provider in Philippines
- PhilEquity Asset Management Inc.
- ATRAM Trust Corp
- Sun Life Asset Management
- First Metro Asset Management Inc ( by Metro Bank Group)
- ALFM Mutual Funds (BPI Investment Management Inc)
- Manulife Investment Management
- PHILAM Life
Yearly Returns on Investing at Index Funds
Since, this mutual fund that follows or mimic the Philippine Stock Exchange Index, then the annual return for Index Fund, could be around 8%-11%. But it will always depend on how the stock market performs on that particular year.
On the other hand, if the Philippine Stock Exchange Index, performs poorly, then your Index fund will also perform poorly on that year.
But unlike, Equity Funds where they could be higher returns than Index Funds, which could be 12%-20% per year, but with more risk on it.
Risk on Investing in Index Funds
All investments have a risk on it, a mutual fund like Index funds have also a risk on it. As a Filipino investor, you should first understand and identify what risk is in the Index Fund.
By conducting some research about risk on investing in Index Fund, you will have an idea on what to do if certain things are not going according to your plan.
Index Funds is not risky as the Equity Funds, since they are just mimicking the Philippine Stock Index, you should also that returns are not guarantee every year.
Terms of Investing in Index Funds
Investing on Index Fund, should be at least on minimum of 10 years. With this period, the risk on losing your capital, is being now eliminated.
With this number of years, your investment will become to be a substantial amount. As the returns, will be compounded annually.
If you don’t have this term, then you should invest on a different type of mutual funds. With Index Fund, time is your friend here, the longer you invest in the more your capital grow.
Ways to Invest in Index Funds in Philippines
- Direct Investing to Fund Provider
You will just need to visit any Index Fund provider in their office, and fill-up some forms. Then if your approved, you will just need to deposit your capital to your account. Just follow their instructions on how to deposit capital to fund your account.
By the way, bring some government issued ID’s, if not then some valid documents, because they will need it in your account opening.
- Invest via Broker
You will just need a brokerage account on this, but for me, I’ve the chosen the COL Financial. I’ve open a via there online application, which just takes me some couple of minutes. Some government ID’s also is needed. It takes me some 3 days before they actually approved my application.
Your will be sent with 8-digit numbers, which you will be using in depositing your initial capital. Which, my first deposit is 2,000 php via GCASH. It takes 1 day before your deposited amount will reflect on your account.
Then, you will just need to choose the Index fund you want to invest in. There is couple available for investing.
Just conduct some research on what mutual fund provider you will be investing in, just check out their yearly performance and since inception.
When buying the chosen Index Fund, just set how much you will spending, because the broker will be determining, how many shares of Index fund you allocated capital will have, base on the Net Asset Value Per Share (NAVPS).
Then, just continue invest on consistent basis, whether weekly, monthly or annually. With this, your capital will grow quickly along with the returns.
FINAL THOUGHTS
If you want to build wealth for your future, then invest on Index Funds. Just start now, don’t wait for a right time because the right time in investing is yesterday. But, assess yourself first whether you are for a long-term investing or just some couple of years in investing, because Index Fund might not for you.
I’m not a Financial Advisor, but investing on Index Fund, will be one of the best decision you will be making now, and your future self will thanking your present for doing it.
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