1. Selection. You can select from thousands of funds to suit your needs and you can get information on them easily. Most credit unions have information, and your local library is a goldmine? The Internet…
2. You Can Start Small. Most mutual funds will let you start with less than RM1000, and if you set it up for automatic deposits, some helps in saving of RM100 monthly I’ve spent more than that in a restaurant! There is NO reason not to consider this!
3. Simplicity. You deposit 10% of your income every month. Just pay yourself first, then pay the mortgage, then pay everyone else.
4. Professional management. I don’t always have time to research, select, and monitor individual stocks. So, I pay a professional a small fee to do it for me. A good fund manager will make you rich!
5. Compound interest. Depending on what index you pick, the Malaysian stock market showing good improvement and growing for the past 10 years. The market fluxuates (volatile) but the beauty of this is, you don’t care! Over 10, 20, or 30 years, the system works every time!
6. Dollar-cost-averaging. The details are complicated, but by investing every single month, whether the market is up or down, you get a tremendous boost from the mathematics. Your average cost will always be less than the average price you paid! And that is money in your pocket!
7. Diversification. A broad-based growth fund typically invests in dozens of companies in different industries, sometimes even in different countries around the world. If one stock goes down, hopefully dozens of others will go up. There is excellent protection and sound risk management built-in to these funds.
8. Specialization. If you prefer, and if you do the research, there are funds that invest in only a very small number of companies. If you can accept the additional risk, you can invest in one particular industry, or one country, or in companies of a certain size or that are environmentally responsible. This specialization offers the potential for even greater profits, but it can also bring greater potential risk. Study before you invest!
9. Fund Families. Most mutual funds are offered by management companies that sponsor several different funds, with different objectives. They make it easy to move your money between funds, so as your goals change, you can adjust your investments with a quick phone call, or on the Internet.
10. Momentum. Once you get started, your enthusiasm builds. Once you have money in the market, you’ll track it, manage it, and in all probability, your desire to save will increase. If you’ve had difficulty saving in the past; START! Those monthly statements will be positive reminders to do even more. Yes, you should invest in tax-sheltered retirement plans first, and yes, there are other investment possibilities. And yes, there is some risk, because the market can go down. But to retire wealthy, pick a great, long-term growth fund, invest regularly, and let the system work for you!
The key, as always is: GET STARTED!
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