Investments and Compounding Interest: Do they really work?

Today, I would like to tackle on one of the topics that keeps people skeptic from investing in mutual funds, VUL’s, stocks, UITF’s and the like. Here are some of the major question that runs in the minds of most investors.

          Is it safe?

          Will I make money?

          Is it possible to make that amount of money?

In today’s post, I will try to answer the third question most people have about investments.. “Is it possible to earn that amount of money?” To be honest with you, I am skeptic of investments myself until I came across this fund fact sheet of one of the leading investment company in the country. To be transparent, I will name some company as well as show you their performance to give credibility in this post.

The company I was talking about is Philequity Management Inc. So what’s in this company that made me believe in the power of investments and compounding. Allow me share with you what I found out. Philequity Management Inc. was established way back in 1993 as a mutual fund company. As I have discussed in my previous post. A mutual fund is an investment that pools money of investors with the same objective and have that fund managed by a professional fund manager. 

Philequity is one of the pioneers of a mutual fund investment in the country. So here is the catch. Philequity started a fund back in 1993 which they called “Philequity fund Inc.”. This fund is basically invested in Phillippine equities and just like most other funds that started, Philequity fund started with a NAVPS(Net Asset Value per share) of P1.00. 

Ok, so now you may be wondering, what’s the catch there? Here is it. Do you know that after 18 years, this fund that started at P1/share is now valued at P20/share. WOW.. isn’t that amazing. That gives us an 18% compounded rate of return per annum. That means that your P1 invested in that fund way back in 1993 is now valued at P20 or your P50,000 in 1993 is now at…. P1,000,000. 

Now, did you see the power in investing coupled with compounded interest? I know that this post quite amazed you. Even I was amazed the first time I heard of it. Well if you do, then better expect more of these kinds of topics in my next blog post.