Equity Funds (Stock Market Funds)

The stock market is one of the most profitable investment vehicles available. Unfortunately, most people are wary of the stock market because the value of stocks fluctuate everyday with daily trading, and when the stock market crashes the value of their money may fall.

One thing prospective investors should understand is that the stock market is a long term investment.

Stocks are the most profitable investments over a long period. In any given twenty year period that includes even recessions the stock market outperforms all investment vehicles, even the real estate market.

For novices, the best way to take advantage of the stock market is to invest in Equity Funds. An initial amount of P5,000.00 to P10,000.00 can start an Equity Fund investment.

Equity Funds are Mutual Funds, companies that pool money together and invest in stocks with the purpose of making the most profit for the company and its investors.

Making Equity Funds Work
1. What are you saving for?
Being a long term investment, Equity Funds are best used to beef up funds for future needs like retirement fund, college education, retirement health care.

2. Diversify. Don’t put your eggs in one basket.
Make sure the future does not surprise you. One never knows what the future holds, and one can only predict ones future needs. A good mix for future needs is a guaranteed plan (like an education plan) matched with equity funds.

3. Hitching a ride.
Savings accounts are snails, bond investments are cars, and stocks are jet planes. Investing in equity funds is like hitching a ride on jet plane. You don’t have to be the pilot to enjoy the benefits.

4. How much to invest in Equity Funds?
Invest money that you can forget. If you start an investment of P10,000.00 and add P1,000.00 every month for 5 years, you would have over P500,000.00 in the fund after 20 years at an average return of 14% per year. Not bad for P58,000.00 you set aside for five years and forgot about.


Choose the best Equity Fund that suits your personality. Some equity funds are more aggressive than others. Ask your fund agent the equity fund’s investment philosophy and what type of stocks or companies their equity fund is invested in.

Although equity funds buy and sell shares on a daily basis, they stick to a certain mix that mirrors their philosophy. Some funds would invest more in Real Estate and Telecom shares, while others would invest less in these type of stocks and bulk up on mining and BPOs.

There is a philosophy in each investment strategy. Make sure you understand the company’s investment philosophy and that you are comfortable with it.