Stocks vs Mutual Funds vs VUL vs UITFS

**Sebastian Bach** · June 8th, 2016 11:25 AM

Hello

Need advice from the experts, which of these 4 will be the best place where I could allocate part of my funds that will be redeemed in exactly 5 years from now? In terms of cheap admin fees and easier to pull out. I will allocate a portion of my emergency funds + add monthly increments then pull them out after 5 years.

Currently I am invested in blue chip stocks and high dividend equity UITF from BPI where I am planning to let it sit there for 15-20 years and no plans of pulling them out anytime soon. I have no experience in selling my stocks or redeeming funds from these so I have no idea which are cheaper in terms of managements/admin fees. This will be a separate pool for just 5 years.

Thank you for those who could help.

**Walter** · June 8th, 2016 11:52 AM

Subscribing ...

**1D4LV** · June 8th, 2016 12:00 PM

personal experience ko ito, but with Sunlife, i had the best yields for 5 years. Pulling out is 48 hours.
Good thing here is that if you put in your investments with any life insurance company (e.g. Manulife, SUnlife, PruUK, Insular), may life insurance factor ka pa. However, as far as i know, si Sunlife lang ata ang may MF placements lang na pwedeng walang life insurance factor.

banks sa UITF also give good yields, yun nga lang, madaming chechebureche. daming documentations dahil sa AMLA. i did that once with BDO, gave the same yields as Sunlife, pero daming tanong and documentations. Pulled it out and nilagay ko yung laman sa Insular Life.

suggestion ko. shop around. talk to financial planners. mas maganda kung personal mo silang makakausap.

0.02.

**Sebastian Bach** · June 8th, 2016 12:54 PM

Originally Posted by 1D4LV

personal experience ko ito, but with Sunlife, i had the best yields for 5 years. Pulling out is 48 hours.
Good thing here is that if you put in your investments with any life insurance company (e.g. Manulife, SUnlife, PruUK, Insular), may life insurance factor ka pa. However, as far as i know, si Sunlife lang ata ang may MF placements lang na pwedeng walang life insurance factor.

banks sa UITF also give good yields, yun nga lang, madaming chechebureche. daming documentations dahil sa AMLA. i did that once with BDO, gave the same yields as Sunlife, pero daming tanong and documentations. Pulled it out and nilagay ko yung laman sa Insular Life.

suggestion ko. shop around. talk to financial planners. mas maganda kung personal mo silang makakausap.

0.02.

Alright, thanks sir. How's the management fees compared with the 2? Minimal difference lang ba?

**1D4LV** · June 8th, 2016 01:34 PM

Originally Posted by Sebastian Bach

Alright, thanks sir. How's the management fees compared with the 2? Minimal difference lang ba?

if you park your money there for 5 years, management fees are free.
minimal, if below 5 years. i think wala pang 1% per annum.

**badkuk** · June 8th, 2016 02:22 PM

The thing about mutual funds/UITFs, you have to sell them before you actually make money. e.g.

- you buy into a mutual fund/UITS today, NAV at 100 pesos
- you check it after 1 month, NAV rises to 150 pesos = *paper gain* of 50 pesos
- you redeem it after 2 months, NAV drops back to 100 pesos = you gain nothing, plus you have to pay the fees.

The good question here is when to sell. e.g. if you already have a paper gain of 10% on your equity fund, do you sell now? What if the PSEi goes up to 7800-7900 tomorrow?

imho, mutual funds/UITFs, except maybe money market funds do need to be managed...it' not like time deposit where you just wait for the interest to accumulate.

i used to have an investment in BDO's $ Money market fund. afaik it invests the money in deposit instruments, t-bills, etc. -- super safe, super liquid. Based on previous performance over the years the NAV steadily goes up, but you gain on average around 1.++%.

**jut703** · June 9th, 2016 01:29 PM

Originally Posted by Sebastian Bach

Hello

Need advice from the experts, which of these 4 will be the best place where I could allocate part of my funds that will be redeemed in exactly 5 years from now? In terms of cheap admin fees and easier to pull out. I will allocate a portion of my emergency funds + add monthly increments then pull them out after 5 years.

Currently I am invested in blue chip stocks and high dividend equity UITF from BPI where I am planning to let it sit there for 15-20 years and no plans of pulling them out anytime soon. I have no experience in selling my stocks or redeeming funds from these so I have no idea which are cheaper in terms of managements/admin fees. This will be a separate pool for just 5 years.

Thank you for those who could help.

Having invested in all of your options, I would say that the most liquid would be UITFs and stocks. UITFs are far easier to manage - just invest monthly and let compounding and the economy do its magic.

For stocks, you have the flexibility to buy and sell different stocks at different times. However, depending on how much money you'll put in regularly, you might not be able to diversify as broadly as with UITF. For example, you invest 10k a month, and want to buy PLDT shares. At 2k per share and a minimum of 5 shares, you consume your entire 10k budget on one stock. Then next month you buy some other stocks to balance out your portfolio, so in effect, you don't really get to maximize cost-averaging because you're buying different stocks at different times with potentially different market trends.

I could go on, but bottomline:
- Minimal effort, decent returns: index UITF
- Significantly more effort, marginally better returns (or worse, if you suck): stock market

UITFs also have lower management fees than VULs. 1.5% is standard, unlike with VULs where they're not as transparent with their management fees, and you're really not earning until the 10th year or so. Also, the returns of my VUL (invested in equity) aren't up to par with the index.

As Benjamin Graham says - index funds are the best tool for the average joe to reap the benefits of a growing economy without having to pour in too much effort.

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**Sebastian Bach** · June 9th, 2016 04:11 PM

Originally Posted by jut703

Having invested in all of your options, I would say that the most liquid would be UITFs and stocks. UITFs are far easier to manage - just invest monthly and let compounding and the economy do its magic.

For stocks, you have the flexibility to buy and sell different stocks at different times. However, depending on how much money you'll put in regularly, you might not be able to diversify as broadly as with UITF. For example, you invest 10k a month, and want to buy PLDT shares. At 2k per share and a minimum of 5 shares, you consume your entire 10k budget on one stock. Then next month you buy some other stocks to balance out your portfolio, so in effect, you don't really get to maximize cost-averaging because you're buying different stocks at different times with potentially different market trends.

I could go on, but bottomline:
- Minimal effort, decent returns: index UITF
- Significantly more effort, marginally better returns (or worse, if you suck): stock market

UITFs also have lower management fees than VULs. 1.5% is standard, unlike with VULs where they're not as transparent with their management fees, and you're really not earning until the 10th year or so. Also, the returns of my VUL (invested in equity) aren't up to par with the index.

As Benjamin Graham says - index funds are the best tool for the average joe to reap the benefits of a growing economy without having to pour in too much effort.

Sent from my iPhone using Tapatalk

Thank you sir.

**NightRock** · June 9th, 2016 05:53 PM

I just buy Stocks.. and I manage dami ng online trading ngayon. Start ka lang ng 50K and buy few stocks in diff company

**jut703** · June 9th, 2016 08:42 PM

Originally Posted by NightRock

I just buy Stocks.. and I manage dami ng online trading ngayon. Start ka lang ng 50K and buy few stocks in diff company

I also manage my stocks online (COL), but UITFs are still much, much simpler.

Just open the app, transfer money to your UITF, then done. Repeat next month. Redeem money when needed. Takes less than a minute.

For stocks, I watch out for buy below prices and target prices. I also have to constantly compute the number of stocks of each company I buy to have a balanced portfolio, while taking into consideration my budget constraints vis a vis the minimum board lots of each company. It takes more time, maybe an hour a month, plus the effort I spend researching about what companies to buy.

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