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UITF for beginners

rommel2014 · 18 · 6637

rommel2014

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on: Jan 26, 2014, 06:34 PM
Hi all

I am a total beginner and seriously planning on investing in UITF (Probably with BDO Equity) . So far i am doing my home work and learning as much as i could with it. I do have some questions that hopefully some body might be able to answer for me.

(1)given that i am a total beginner would you suggest a equity over other type of uitf? I am aware of the high risk factor and high ROi of this type compared with  the rest(balance, Bond, Money market) , But as i check on line with the per quarter or yearly report it shows BDO equity list among the top that yields, thats why i am thinking of betting my initial 10K on them

(2)I am aware of the online site in the bank that monitors the daily change of NAPvu, If i am aware of the current direction of the value and if i see it going down is there any way i can control my investment to avoid lose? like can i ask the bank not to use my investment for a time being or is like watching my money get lose, like watching your basketball team losing on tv and you cant do any thing about it

(3)If for example from initial 10k i gain for a few days/months then my money on the bank increase. Will the next back investment be a 100% of your total money in them? how about if they lose the next month will that be like losing the money you already gain? Like from 10K gain to 15,000 then back to 10K again on a lose?

My apologies if this questions is too naive

Hoping for a informative response

Thank you
Rommel

« Last Edit: Jan 26, 2014, 06:39 PM by rommel2014 »


mxherr5

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Reply #1 on: Jan 27, 2014, 03:45 AM

1.) I suggest investing based on your risk appetite
and time frame of your goal.

2.) and 3.) Its more like buying barrels of oil hoping
to sell to make a profit then seeing that the price
of oil go down.

You can choose not to sell and hope that the price
eventually goes back up.

With that said, any "gain" is a paper gain because
even if the price goes up and you don't sell then
the "gain" is just on paper. Same for paper loss


freefront

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Reply #2 on: Jan 27, 2014, 04:54 AM

(1)given that i am a total beginner would you suggest a equity over other type of uitf? I am aware of the high risk factor and high ROi of this type compared with  the rest(balance, Bond, Money market) , But as i check on line with the per quarter or yearly report it shows BDO equity list among the top that yields, thats why i am thinking of betting my initial 10K on them

> How old are you? Do you have a separate emergency fund?

Quote
(2)I am aware of the online site in the bank that monitors the daily change of NAPvu, If i am aware of the current direction of the value and if i see it going down is there any way i can control my investment to avoid lose? like can i ask the bank not to use my investment for a time being or is like watching my money get lose, like watching your basketball team losing on tv and you cant do any thing about it

>PD: I don't do UITF.

First assumption: you hold a COP( or whatever you call the cert. for every 10K placement), you have to present that paper over to the bank every time you redeem. Because "redeem" is what you do whether you are taking out your money, or you are transferring to another fund, or cutting your losses, or cashing in your gains. Another certificate will be written up for the transferred money  (Am i right, mx?)

Again, if you do know the direction of the market and you want to limit your losses ( I think most risk appetite tests say you shouldn't be in the UITF business if you can't tolerate any loss) to say - 6 to 8%, and currently you are at a -5% loss already. And you do know the equity market is still headed down. You go to redeem. If that fund is a nest egg intended exclusively for UITF, you either park it in your savings account or put it in a bond fund. When indicators say the market now is headed up, you again have to do the procedure in reverse< that is cutting your losses. It is not like a basketball game. You do have a say in the outcome of your loss/gain. Aabalahin mo nga lang talaga.

Second assumption: walang online facility to do the fund transfers.

Third assumption: when computing for your loss/gain, do you have the upper hand when you have to tally in management fees, taxes, pamasahe at presyo ng oras mo ( ->>sa parehong loss or gain. Baka naman nag-out ka at -3% loss, tapos nag-reverse na agad. Idagdag mo yung bagong charges, pamasahe at oras mo, yung -3% na loss naging 5% losses na agad. Eh di sana hindi ka na lang kumilos)

^ Do the opposite of the above if you want to cash in your gains, before the stock market proceeds to go into correction.

Quote

(3)If for example from initial 10k i gain for a few days/months then my money on the bank increase. Will the next back investment be a 100% of your total money in them? how about if they lose the next month will that be like losing the money you already gain? Like from 10K gain to 15,000 then back to 10K again on a lose?

>From 10K to 15K in a few months, that gain would be lost if the stock market goes down. So don't forget to set a target income ( or a target price NAVpu. Hey  :D, it is like stock picking/trade planning  :D Come play stocks with us when you're done with practice UITF   :hihi: ).

This is what happens if you just left your funds in there to ride the ups and downs.

Original 10K becomes 15K in 6 months, down to 13K in two weeks time, then will still go down to 8K. Will recover slowly to 9,000, then 9,500, then 9,700 and so on. If you just went to the bank when your balance was 15K! Eh di 15K na yung next tranche of investment mo.

Maski daw sa mga long term investors, they select a time to rebalance their portfolio. Talo ka pa rin kung nung December 2013 ka nag rebalance VS July 2013. The sanest thing you can do is add more on the dips daw.



rommel2014

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Reply #3 on: Jan 27, 2014, 11:26 AM
Hi @mxherr5,
 thank you for the reply, but pleas correct me if i am wrong. The buying and selling only applies on if your are directly working on stocks like full time. because as i research online UTIF/Mutual funds gives the investors the benefit of letting the pro do the buy/selling/trading while you just invest. If my understanding is wrong then how am i as a UITF investor(Me) manage the selling of my "oil"  ?

Hi freefront,
I am 27 right now(if only i learned about this type of investment after graduation mas ok sana napuntahan ng mga sweldo ko hehe). i dont have any emergency funds in fact i am just starting to learn about all this type of investment. would you recommend that i create one aswell?

If i understand correctly in my equity funds i can keep on contributing/redeem a part of my investment as long as i retain a 10K (so that the bank keeps on rolling - 10k kc ang minimum sa BDO equity para gumalaw ang pera) ? If pwede pla ganun anu yung ruling for 3years+(long term) if investment for equity eh maya maya pwede pla galawin?

one more thing maganda bang meron ako equity plus another uitf together in a single bank ex: equity + bonds , tapus pwede ko i transfer between this two yung funds ko?

By the way base on your experience if from initial 10K then every month I'll contribute at-least 2-5K. for 3 years nasa magkano kaya aabutin ko nun?.. kahit rough figures lang 

sana meron tutorial available  sa internet on how to play(MAnage risk) uitf like youtube.

thank you for all your response,

Rommel


 



« Last Edit: Jan 27, 2014, 11:42 AM by rommel2014 »


kimerran

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Reply #4 on: Jan 27, 2014, 11:40 AM


By the way base on your experience if from initial 10K then every month I'll contribute at-least 2-5K. for 3 years nasa magkano kaya aabutin ko nun?.. kahit rough figures lang 

sana meron tutorial available  sa internet on how to play uitf like youtube.

thank you for all your response,

Rommel


dahil halos pareho lang ang UITF sa Mutual Funds, you can check this one
http://moneygizmo.net/growth-of-money-in-mutual-fund-investments/

note: wala pong guarantee na ganyan ang magiging performance ng investment mo.


katkatmachine

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Reply #5 on: Jan 27, 2014, 12:30 PM

Hi freefront,
I am 27 right now(if only i learned about this type of investment after graduation mas ok sana napuntahan ng mga sweldo ko hehe). i dont have any emergency funds in fact i am just starting to learn about all this type of investment. would you recommend that i create one aswell?


i am not madam epep pero pa-epal.  :hihi:

if you don't have an emergency fund yet then i suggest you build one first. importante ang emergency fund. dapat at least 6 months worth ng salary mo.

bakit? kasi for example you invested all your money in the UITF tapos may emergency na nangyari, you really need the money kaso ang market ay down, baka mapilitan kang i-redeem ang shares mo at a loss.

kung may emergency fund ka then hindi mo magagalaw ang shares mo sa uitf di ba?

If i understand correctly in my equity funds i can keep on contributing/redeem a part of my investment as long as i retain a 10K (so that the bank keeps on rolling - 10k kc ang minimum sa BDO equity para gumalaw ang pera) ? If pwede pla ganun anu yung ruling for 3years+(long term) if investment for equity eh maya maya pwede pla galawin?

pagnag-uitf/mf ka kasi ang alam ko dapat long term ang time horizon mo (example 3-10 years). mas kikita ka pagganun. kung maya't-maya gusto mo galawin ang money mo then i suggest magtrade ka na lang ng stocks. hehe. pag uitf/mf (assuming equity or balanced uitf/mf) kasi long term talaga yan. as in looooooong term. hahaha.  :D


mokongboy

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Reply #6 on: Jan 27, 2014, 12:58 PM
if you don't have an emergency fund yet then i suggest you build one first. importante ang emergency fund. dapat at least 6 months worth ng salary mo expenses mo.

@rommel2014, since nag aaral kp... don't do anything muna with your monay. What is important is capital preservation while your learning.


katkatmachine

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Reply #7 on: Jan 27, 2014, 01:08 PM
@rommel2014, since nag aaral kp... don't do anything muna with your monay. What is important is capital preservation while your learning.

for some reason, natawa ako sa monay mo mokongboy.  :hihi:


mokongboy

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Reply #8 on: Jan 27, 2014, 01:17 PM
for some reason, natawa ako sa monay mo mokongboy.  :hihi:

@katkatmachine, alin sa dalawa ang mas may chance na bading? Ung guy na maskulado, ribbed, ganda ng cuts OR ung guy na nag iisa ang MONAY?

Para hindi OT, @rommel2014, if your planning to go long term (3 years or more) now is not the time to go for BLUE CHIPS risk-reward is not in your favor.
« Last Edit: Jan 27, 2014, 01:19 PM by mokongboy »


jmces

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Reply #9 on: Jan 27, 2014, 01:18 PM
if you are looking into equity uitf, you might also want to look at directly investing in common stocks. it is just the same thing minus the fee you pay the "PROS", if these pros really know how to make large sums of money, how come until this day  only a few made billions? have you watched the wolf of wallstreet? the broker's primary objective is to put their client's money from their pocket into their own pocket. and if you study closely, each mutual fund/uitf is biased to their parent company. sample BPI funds have more ayala linekd stocks, fami/mbt funds have more gtcap linked stocks. take your time to study, keep saving money until you are ready. while it is true that time is one of your great assets, but timing is also a critical factor in investing. whether you buy a very good stock that can be kept for a long time, when you buy it at a wrong time, the result is not that good.


ikaela

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Reply #10 on: Jan 27, 2014, 01:32 PM
(1) Invest in the fund that matches your risk appetite.

(2) No, you can't do that. In investing in a UITF, you are essentially handing your money over to the fund managers for them to do with it as they please. If you're not comfortable with seeing your money lose even a small percentage, stick to more conservative funds.

(3) Part 1: If you mean your next investment by "next back investment", then, no, your next investment can be as little as the minimum additional invesment (typically P1,000 to P5,000), or as much as you want. Part 2: Yes, you lost money, but that is only on paper. It won't be a real loss, unless you do sell your shares at a lower price than you bought them.

(4) Buying/selling: these are just terms. In UITFs, "buying" is the same as investing in the fund. "Selling" means redeeming your shares of the fund. It's not strictly used in the stock market.

(5) In BDO UITFs: You can start with as little as P1,000 per contribution. This 1,000 is already invested. When your contributions reach P10,000, that's when you are given a certificate. The NAVPU reflected on that certificate will be the average of the NAVPUs of all your previous P1,000 contributions.

Redemption of shares is per certificate, so that means you can't do partial redemption -- you have the redeem the entire certificate that you got when you reached P10,000. So it isn't true na maya't maya pwede mo galawin yung funds mo.

(6) Yung "ruling" na 3 years: Because equities fluctuate so much, it's best if you hold it over a longer period of time. It's actually 5-10 years. Statistically and historically (well, so far, anyway), wala ka na lugi if you invest in equities for a minimum of 5 years.

(7) Having more than one fund in a single bank: I suppose you can do this. If you see equities tanking, you can ask the bank to transfer your money to the bond/fixed income fund. But better ask the bank first if they allow transfers, what the minimum transfer amount is, if the transfers have charges, and how many you can do in a year.

(8) Play around with this compounding interest calculator with regular monthly deposits to get the figure you want: http://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php

(9) Regarding emergency fund: yes, build an EF. You can start with one month's worth of expenses. Slowly build this up to at least three to six months' worth while investing. Some will say you have to have an emergency fund first BEFORE investing, but it depends on your lifestyle, and if emergencies really do have the tendency to show up in your life or not.


mxherr5

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Reply #11 on: Jan 27, 2014, 03:48 PM
Hi @mxherr5,
 thank you for the reply, but pleas correct me if i am wrong. The buying and selling only applies on if your are directly working on stocks like full time. because as i research online UTIF/Mutual funds gives the investors the benefit of letting the pro do the buy/selling/trading while you just invest. If my understanding is wrong then how am i as a UITF investor(Me) manage the selling of my "oil"  ?

Yes, they do manage the fund's assets as a whole.
How they do would impact the NAV(i.e. price).

You have some limited control by being able to choose
when to buy into a mutual fund/UITF or sell out.

Note that I do not condone marketing timing in mutual funds/UITFs
but just trying to explain :D


rommel2014

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Reply #12 on: Jan 27, 2014, 09:47 PM
Hello all,

Thanks sa mga info sa inyo lahat, dami nag reply medyo napa research muna ko sa mga new jargon words(IT kc ako ang layo ng mundo ko sa inyo hehe)

So anyway, i got the point with Emergency Funds, in fact i a come up with a plan, pleas guide me if this is okey.

(a)Invest on a Money Market - low risk, short period of 6months would benefit my by introducing me to  UITF with less risk while i am building my Emergency funds. then from there i'll decide if i'll proceed with other type of UITF, by then meron n ako actual experience with UITF

(b)Peso cost Average (PCA) - because of the reply by

if you are looking into equity uitf, you might also want to look at directly investing in common stocks. it is just the same thing minus the fee you pay the "PROS", if these pros really know how to make large sums of money, how come until this day  only a few made billions? have you watched the wolf of wallstreet? the broker's primary objective is to put their client's money from their pocket into their own pocket. and if you study closely, each mutual fund/uitf is biased to their parent company. sample BPI funds have more ayala linekd stocks, fami/mbt funds have more gtcap linked stocks. take your time to study, keep saving money until you are ready. while it is true that time is one of your great assets, but timing is also a critical factor in investing. whether you buy a very good stock that can be kept for a long time, when you buy it at a wrong time, the result is not that good.

this is a investment directly buying stocks but i remember PCA is said to be a investment type that is "user friendly" for beginners.

Any thoughts about this one regarding how it yield compare to UITF(market,bond,balance,equity). i tried to do a internet search about UITF vs PCA  pero wala ako makita good info eh. and/or any other comparison between the two

Thank you again
Rommel
« Last Edit: Jan 27, 2014, 09:54 PM by rommel2014 »


rommel2014

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Reply #13 on: Jan 27, 2014, 09:52 PM
by the way can any body confirm this:

sa BDO money market requires minimum of P100,000.00 minimum investment. pero sa Union Bank money market no minimum investment??

https://unionbankph.com/index.php?option=com_content&view=article&id=979&Itemid=73

https://www.bdo.com.ph/personal/trust-and-investments/unit-investment-trust-funds/bdo-peso-money-market-fund

Bat ganun? tama ba paka intindi ko? i got savings account on both banks kc

Thanks
Rommel
« Last Edit: Jan 27, 2014, 09:55 PM by rommel2014 »


mxherr5

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Reply #14 on: Jan 28, 2014, 06:04 AM
^

a.) Sounds like a plan sir but when you invest in an equity fund just
remember its a whole different roller coaster ride.
You'd see the total value of your investment go up and down unlike
a money market fund

b.) No sir, Peso Cost Averaging is just a way of investing or deploying your money.

Let's say you have 100k

If you invest it all at once that's called lump sum investment

If you invest say 10k per month regularly then that's called
cost averaging.

There's another method which studies say would give you
better returns(irr) called value averaging but its a whole
lot more complicated to implement.

You can apply lumpsum investing, peso cost averaging
and value averaging in buying stocks,uitf or mutual funds.

c.) Apparently there is no minimum but its probably
offset by the fact that there's a 100 peso fee for every withdrawal
ouch!

I'd suggest going with BPI's Short Term Fund
10k minimum, 1k subsequent
Investing and redeeming is as easy as pie with
BPI's online platform.


 


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