As the global financial market continues to experience a downturn, would you think if it is a good time to invest while the market is volatile?
Based on my interview with Nishit Majmudar, president of Pru Life U.K., a time when there are financial uncertainties is always a good time to invest. Although human reason might tell us to hold on to our money, investing at a time when the market is down allows one to take advantage of low buying rates in the stock market.
Majmudar continued on to say that when people invest their resources, it must be for the long term. Otherwise, money invested in the short term will only bring back lower returns.
Besides, people can look forward to an upturn. It is just a wait and see situation right now as nobody really knows when actual market recovery can begin.
Another investment option that can be considered is by participating in a money market fund. Josefina Sulit, executive vice president of the Metropolitan Bank and Trust Company (Metrobank), said the money market fund is ideal for people who want “to minimize the risk on their capital while meeting their short term liquidity needs.”
So what does the money market fund do? It is like pooling the money of many investors into one big fund and in doing so, this allows investors access to experienced fund managers who will constantly monitor and balance investment risks through diversification and other strategies.
Fund managers can also get better pricing on the purchase and sale of securities and this option is usually not available to individual clients with smaller funds.
The money market fund is also considered a conservative investment since portfolios are put up in assets like government bonds and bank time deposits. These portfolios are easily converted to cash should there be a need for it.
But of course, Sulit continued on to advise that the money market fund, like all investment funds available, is a good option should one remain within the recommended investment scope. (Deejhay Magallon)
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