We understand that inflation is the silent killer that erodes the value of our money.
But how can we beat it?
Several financial vehicles are actually available to the discerning investor. The wide spectrum of savings and investment instruments reflects their risk and return relationship. On one end, we have the low risk or guaranteed return instruments offering small returns on our investments. Sometimes so small, it barely copes with inflation. On the opposite extreme, we have high risk instruments like stock market equities that are quite risky but that can potentially give high returns.
Between these two polar extremes can be found a variety of mutual funds.
What are Mutual Funds?
Mutual Funds are professionally managed instruments that pool investors’ resources together in order to buy into instruments at lower costs. As such, they give more affordable access to otherwise expensive instruments. They are diversified as they combine low risk-low return and high risk-high return instruments to suit different investor needs. Furthermore, they are liquid and may be increased or withdrawn at any time in order to allow more flexibility in investing.
Beat Inflation with Mutual Funds
If you don’t have the time to jump into the high risk-high return stock market, or the resources to invest in government securities, you can start off by exploring mutual fund options such as the Sun Life Prosperity Balanced Fund or the Bond Fund. While the Bond Fund is designed to preserve capital and generate regular income, the Balanced Fund combines the stability of the low risk instruments with some equities to provide a boost on capital appreciation.
Assuming an investment of P1 Million, the table below (Fig. 1) shows how typical deposit accounts and these two Sun Life Prosperity Funds fare against inflation over the last 5 years.
There are mutual funds that cater to varying risk-and-return preferences and investment objectives. Feel free to choose from any of them. In doing so, always remember to consider inflation and the instruments’ ability to beat it.
If you want more information on these investment options, speak to a mutual fund representative.Sun Life Mutual Fund representatives can be reached at 849-9888 / 1-800-10-sunlife or visit www.sunlife.com.ph.
