If you are investing through mutual funds following my recommendations, all your funds should now be positive by now. Because all US markets have all broken through their resistance a few days ago. They are now posed for the bullish run next week unless Trump makes another shocking tweet within these few days.
If your funds are still negative, you probably need to evaluate the reason why it is so. “Hope” is the last thing you should cling on when your funds selected are not doing well. When the market has its next downturn, your fund will drop even further. That’s the scariest thing we want to see. Your heart condition must be strong, and your age permits you to wait for it to come back up again.
If you are investing through buying stock or owning share directly in Malaysia KLSE market, you would probably not agree with me. This is especially true when you have started investing at the beginning of this year. Because the KLSE index has become lower comparatively. Your share prices are most probably still struggling in red.
Mutual Fund vs Stocks
However, I still have good news to share with you. Even KLSE is still down and lower, a mutual fund that I recommended for the Malaysia market, that is, the CIMB Small Cap fund has also turned positive in my portfolio lately. But my stock or share portfolio constructed around April this year is still in the red. This is the reason why it is important to invest through the mutual fund rather than owning share directly.
One of my group members once told me that he has decided to invest directly in the stock market instead of the mutual fund because he is still young and can take more risks. While I affirmed his courage to do so, but at the same time, I encouraged him to do both and compare results at the end of the day.
This is what I did in the past and discovered that it is much easier to earn profit through mutual funds than buying shares. Though I do not discount there are people out there who have benefited a lot from owning shares. But I believe they belong to the few 5-9% of all share market participants. I have also benefitted from owning share as well, but I do not place too much confidence and trust into it now.
My capital allocated in owning the share is insignificantly small as compared to the mutual fund in Fundsupermart. My mutual fund capital is almost three times larger than share capital. Experience has proven to me than though owning shares can gain profit faster and significantly higher. But those profits can also be evaporated faster and larger at the same time if we do not have the right conditions, i.e. heart attitude and skill. I believe the time investing through owning shares will come when the global market recovers from the bottom after a major recession.
It will be relatively easier to earn profit in a bull market trending than a market-topping just like the current season. My personal view has both been verified by a friend who has successfully gained a large profit from stock investment. He is now owning shops and houses from share profit earned in the past. He is now still active in owning some shares, but he said, it is not that easy as compared to the bullish run-up in earlier years. Even my ex-stock market remisier reluctantly advised me to involve less with the stock market at this market peaking time. The reason is, though you might gain profit, overall, it is not that easy to keep profiting for the long term!
Mutual Fund Advantages
Reason investing through the mutual fund can still earn a profit during this market-topping time is because there is a variety of investment choices in mutual fund selection. For example, while equity funds are not favorable, bond funds will be there to earn consistent profit for us.
There are also opposite funds to equity for us to choose during this unfavorable time. For example, gold-related funds are top-performing fund choices right now. These bonds and gold-related funds are the future stars even when the market enters the global recession.
For short, investing through the mutual fund can be in season and out of the season. Through bull market and bear markets, mutual funds, though the profit return is smaller, are still the best choice for all time. And it is easier to maneuver through thick and thin.
But when you invest, you must invest by yourself, and also invest in an unconventional way ~ using the DIY method.
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The view and opinion expressed are personal views of the author and are subject to change based on market and other conditions. This write up does not constitute sole advice for an investment decision. Investors are advised to do further reading and research to conclude individual decisions.