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This time we talk about one of investment’s option. MUTUAL FUND
What is Mutual Fund?

Here is simple preview about mutual fund. When i was studying in primary school, my parents gave me 1 USD per day. At that time, with one dollar I could buy a pack of Fried rice which could make us feel full or a pack of Cracker which have more valuable taste.

Everyday i have a same dilemma  until i could find a person which be my daily  partner. We put together our daily money and buy a fried rice and cracker and we share our food and eat together. So we could full enough and have another cracker’s valuable taste.
This solution was smoothly until we fight because another important things which we called it beautiful girl. After this argue, i have this problem again. Dilemma to choose between fried rice or Cracker.

Mutual fund, if we simplified it not really different between my solution to put together my money with my friend’s money. If i investing my money in USA stocks, if i take directly investment in 30 biggest company in US (ex. Citibank, GE), i would need a lot of fund to make it happen. If i just buy one lot for each of this companies, could you imagine how much will it cost?

Of course what i describe is a big investment and above our average investor. To be solution for average investor who have less budget to do investment, there is a Mutual fund.

Basically, a lot of low budget investor collect their fund together to be manage by Investment Manager. Then this manager cost us Management fee for their fee. Although Mutual fund’s target is a low budget investor. But recently, Mutual fund become solution for a richman who never want disturbing by their  investment portfolio

Mutual fund itself categorized based on their instrument. there are based on stock’s mutual fund, based on Obligation, and based on Money market, etc. With kind of mutual fund, what kind of mutual fund should we choose it? It must be matched with our profile. Because everyone’s requirement is totally different. There are some consideration for us before choose what kind of mutual fund we want to buy. for example When we will use our investment? how much our tolerate? For someone who would use their money in short time period of course totally not match with based on stock’s mutual fund. After we have choose what kind of mutual fund, now it’s time to choose companies which offers us mutual fund. To answer this problem, we must learn this sentence.

A lot of people would considering company’s performance recently, then their investment manager’s recently reputation, then measure their risk, and then last consideration is their fee. but for intelligent investor they would choose their mutual fund with reverse sightseeing.

Please remember, that a fund manager with higher fee doesn’t mean automatically give us higher return.

Don’t be greedy, Between Investment and speculation, they are totally different

There is a time when we really sad because we was trapped with our wrong “Investment”. It’s only because we never learn about what the real meaning of investment. Based on Benjamin Graham (Warren Buffet’s lecture) Opinion, What is investment??
“an operation which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative“.

Based on Benjamin’s explanation, there 3 important element for starting our investment.

1. Do some Analitycal Research

What does it mean?? It means we must do some research before starting our investment. not just from opinion. Make you understand about your investment before you execute your project.

2. Try to protect our capital.

Our first capital is like a tree in our park or garden. If someone steal their fruit, next time there would be a chance to still get a their fruit. If someone cut their branch, although it’s disturbing our organization, but we still have our capital and our capital still have a talent for growth. But how about if suddenly our tree crushing down??
Need to be warned, all kind of investment must be have a risk, even we buy US Treasury bonds, it still has a risks. If there is investment without a risk, just leave it. Because it’s only a fake investment who want to eat our money.

3. We must try to get Reasonable Profit not “Incredible profit”

One of the main rule which we never forget, no matter what kind of investment or speculation is just about “return proportionate to risk”. Higher profit, higher risk. In the reality there isn’t High profit low risk investment. If there is a person come and offering you a high profit low risk investment, why he/she didn’t do it using theirself??

Our main problem, there are many people didn’t know about this concept, they think that they are investor, but in the other hand they just speculator, or worst case, they are scam’s victim.

In this case, not all speculation were bad. Like Benjamin Graham said to us :

“Just as there is intelligent investing, there’s also intelligent speculation. But there are many ways in which speculation may be unintelligent. Of these, the foremost are : (1) speculating when you think you are investing; (2) speculating seriously instead of as a pastime, when you lack the proper knowledge and skill for it”; and (3) risking more money in speculation than you can afford to lose”

It just simple article about investing. have a nice investing.