Sunday, April 6, 2014

UITF vs. Mutual Funds, Revisited

A few years back I wrote a post comparing UITFs and Mutual Funds here.

I think it's time to update that comparison.
Here's a summary of the changes from the last article:
  • UITF subsequent investment amount can be as low as P1000
  • some UITFs now allow partial redemption
  • Mutual fund website URL has changed
Verdict is still the same: UITFs win.  The combination of low fees, short holding periods, and now the ability to invest and redeem partial amounts make UITFs a clear winner over mutual funds.
Still, don't count mutual funds out of your diversification strategy.

Here's the complete comparison.  Asterisks denote items that have been updated:

1. Government Regulatory Agency:

UITFs - Bangko Sentral ng Pilipinas
Mutual Funds - Securities and Exchange Commission
Winner: tie

2. Issuing Companies:

UITFs - Banks
Mutual Funds - Insurance companies, investment companies
Winner: tie

3. Fund Types:

Both offer the essentially the same fund types: money market, bond, balanced, equity.
Winner: tie

4. Risk:

Since both have the same types of investments the risks are the same.
Winner: tie

5. Minimum Investment Amount:

UITFs - as low as P10,000
Mutual Funds - as low as P5,000
Winner: Mutual Funds

6. Subsequent Investment Amount*:

UITFs - as low as P1,000
Mutual Funds - as low as P1,000
Winner: tie

7. Front-end Sales Load:

UITFs - None
Mutual Funds - As low as 0%
Winner: UITFs

8. Holding Period:

UITFs - As low as 0 days
Mutual Funds - As low as 0 days if front-end load is charged
Winner: UITFs

9. Back-end Sales Load:

UITFs - None, if redemption is made after the holding period
Mutual Funds - As low as 0%, if redemption is made after the holding period
Winner: tie

10. Partial Redemption*:

UITFs - Allowed
Mutual Funds - Allowed
Winner: tie

11. Management Fee:

UITFs - As low as 0.25%
Mutual Funds - As low as 1%
Winner: UITFs

12. Website*:

UITFs - uitf.com.ph - has a lot of information
Mutual Funds - pifa.com.ph - not much information aside from NAVPS performance
Winner: UITFs

Saturday, March 29, 2014

Rewards Programs

A rewards program can be a good way to save money.  You can even think of it as making a bit of extra money.
I'm enrolled in the rewards program of a certain bank.  Spending at certain establishments earns me points at the rate of 1 point for every P400 spent.  I can then spend those points with 1 point being equivalent to P1.
Now, getting P1 back for every P400 spent doesn't save siginificant amounts, but every little bit counts.  Also, there are other ways I earn points.  The bank awards a certain number of points monthly, depending on the account balance.  For money (such as emergency funds) that needs to be put in low-risk vehicles a savings account with a rewards program might be a good choice.
Another way I earn points is through bill payments.  I find this is a particularly nice way to earn points since
  1. I'm going to pay the bills anyway, points or no points.
  2. Points are awarded at a higher rate than for other payments.
You might be wondering if the rewards program is worth it.  In my case, it is.  Having the rewards card hasn't really changed my buying patterns: I buy the same stuff as I would without it.  So what's changed?  Well, now, because I can buy stuff with points, I essentially get stuff for free.  In the past couple of years most of the light bulb replacements (3 or 4 LED-types) I've bought have been paid for with points.  Not awesome but pretty satisfying.
There are of course, things to look out for when participating in a rewards program.  These will make the difference between saving/earning and losing money on the program.
  1. Check the fees.  If fees eat up most (or more!) of the points rebates, that's a losing proposition.
  2. Check prices in participating establishments.  Switching stores just to earn points doesn't make sense if the new store has higher prices.  Same argument for switching to a store that isn't conveniently located.
  3. Don't fall into the trap of spending more just to get points.
Hope this helps.

Thursday, March 13, 2014

New investment: BPI Short Term Fund

New post, hooray!

After a couple of years I was finally able to invest again.  This time I decided to try BPIs UITF offerings.  I needed a fund where I could park money relatively safely.  I say relatively since it isn't a bank deposit and therefore isn't insured by the PDIC.

I chose the BPI Short Term Fund.  According to the description
It is suitable for investors with a moderately conservative risk profile and those with short-term liquidity requirements.
which I interpret to mean "it's good for money you can't afford to lose (money you might need in the near future)".  It also means the gains are going to be made very slowly.  Some people would say that the combination of BPIs conservatism and a conservative fund means that it's going to be very very slow.  That's okay though, this fund is for building slowly.  I plan on investing in more aggressive funds in the near future (I hope).

What I like about this fund:
  1. Low initial participation: P10,000
  2. Low additional participation: P1,000
  3. No minimum holding period
  4. Low fee: 0.5% per annum

Saturday, July 14, 2012

Mutual Fund Investment Update, July 2012

Wow, first blog post this year! I hope I still have readers left. A little recap: I started investing in mutual funds mid-2010. My plan was to invest P1000 each month. Unfortunately, I haven't been able to do that.
I'm pretty happy with the results so far, but keep in mind these are just paper gains. I hope I can re-start investing P1000 a month soon, but I'll probably choose a UITF this time. Check out that discussion: UITFs vs. Mutual Funds

Total Amount Invested:

P13000

Number of shares owned:

5772

NAVPS:

P3.1966

Total Value of Shares Owned:

P18,450.7752

Total time since initial investment:

Approximately twenty-five months

 

 



June 2011 update

Tuesday, October 18, 2011

Pleasant Squidoo Surprise

First blog post in two months. Things have gotten a little boring lately. I don't have extra funds to invest, and mutual fund prices have been stuck in a holding pattern. One thing that is not boring is my Squidoo income. I started at a new job recently and have not been able to blog or update my Squidoo stuff. So it was a very pleasant surprise to receive $4.80 and $17.63 last month and this month, respectively. That brings my total to over $90 this year. Two months left in the year, I hope I can break $100. That's just not a huge amount but it's like finding a little money every month that you didn't expect.

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