Patience is Money

In contrary to what most people would suggest that this is the best time to invest in mutual funds because the NAVPS is going down, obviously, the facts say other things. The chart below shows that PHISIX continues to sink and today it was worse than most people could think. PHISIX dropped by 105.06 points or -2.73% to 3,738.31. PHISIX is projected to drop down to as low as 3,600 before it bounces back and 138.31 points is still a long way to go. If PHISIX will drop approximately 140 points, that is a significant drop in mutual funds NAVPS.

Though mutual fund companies invest in other securities such as bonds, a large chunk of their portfolio belongs to the stock market (maybe even more than FOREX). Mutual fund companies invest/trade millions in a particular stock and by millions I mean tens or even hundreds of millions. So if the market goes down, a large part of the mutual funds' portfolio goes down as well, thus it makes some perfect sense as to why the NAVPS goes down with the PHISIX.

Apparently, this is a situation where "time" is not your ally in investing but rather "timing". Why timing? Here's an illustration about time vs timing:

Person A and person B both have P50,000 to invest. Person A thinks that the earlier he invests, the greater his gains is going to be so he didn't care about the market status and went on to invest on a mutual fund company for a NAVPS worth P5 per share. Person B on the other hand thinks that both time and timing are essential thus he studied the market behavior and waited patiently for his entry. Person B knows that PHISIX is sinking and all technical analysis, fundamentals, and sentiments aren't looking good so he kept his hard earned money at hand and timed his opportunity. A month later, PHISIX showed some signs of life and Person B invested on the same mutual fund as Person A did but for NAVPS that is now worth P4.50.

So who got more? Person A invested P50,000 at P5 per share and got 10,000 shares, person B who timed his entry invested the same amount but at P4.50 per share and got 11,111 shares. Assuming that the NAVPS went up to P10 per share after 10 years and both never added any amount to their investments, Person A will get P100,000 or doubled his money. Person B on the other hand gets P111,110 after 10 years.

Why did investing without timing work against Person A? Because during the time that the market went down his investments never grew and in fact it lost some of it's value. Of course optimism and conventional knowledge will tell that it will recover and grow in time but in comparison to Person B, Person A got lesser shares for the same amount (you want more shares at cheaper price don't you?). Realize what difference timing could make?

Be a little patient. You don't have to be an expert in reading/interpreting/analyzing charts or know each and every news there is. A little diligence and effort is more than enough. Give the market some of your time, effort, and attention and it will become your friend. It will significantly increase your odds.