Trust Funds or Time deopsits

Last night I asked my dad for his opinion about time deposits and trust funds. His response was to do my research about these subjects before I place my savings in a trust fund. Maybe he was just concerned that I might lose my hard earned savings. I have been doing my research about trust funds for almost a year now and I have come to a conclusion that investing my savings on a trust fund is better than putting it in a time deposit.

There were many factors that i took into consideration before I made my decisions. I asked myself a lot of questions and weighed things before finally deciding. I made an assessment of my current situation. Although I am currently in a relationship, I don't have any obligations and dependents. I am currently working for a company which is offering me a good salary. I don't have any debts. I asked myself how long am I willing to invest my savings. What is my risk appetite and how much will I invest.

Time Deposits

Time deposits are perfect for people who have low tolerance for risk. Time deposits are insured by the PDIC up to Php500,000. Interest rates are low for ordinary time deposits. In order to receive higher interest rates, your time deposit will be locked in for at least 5 year. Capital in time deposits are more secure compared to trust funds at the expense of lower returns

Unit Investment Trust Funds

The three basic trust funds in the Philippines are Equity Funds, Bond Funds and Money Market Funds. (Balance funds are a mixture of any of the three mentioned above). These funds have different levels of risk and return. Equity funds offer the largest average returns and are also the most volatile type of fund. Equity funds are funds invested mostly in stocks. Equity funds are risky if have a short investment horizon. Equity funds perform well in the long run.

After carefully deliberating between trust funds and time deposits, I decided to invest my savings in trust fund. My investment is a mixture of bonds and equity funds. I am not really concerned about the volatility of the market since my investment horizon is more than 10 years. I use Cost Averaging to minimize my risk in equity investment.. Visit my post Equity Investment Strategies - Cost Averaging to know more Cost Averaging.