When I first stepped my foot on the ground of UAE way back two years ago, I pondered on the financial edge that I will have in terms of income as an expat compared to what I have back in my home country.  I once dreamed of becoming a millionaire.  Unfortunately, during that time I do not know how.  After reading various financial materials and attending financial trainings with International Marketing Group (IMG) here in UAE, I found out that it is essential to learn how investment works in order to build wealth.

At first, I was quite reluctant to push through because I am thinking that investment is only for the rich and you need to have a big amount of money in order to start one.  On the other hand, with right financial knowledge the opposite is true.  As a minimum initial investment of Php 5,000 and subsequent of Php 1,000, I started my own investment portfolio with mutual funds.

So here lies the question, how to become a millionaire through mutual funds?  I learned that in order to be wealthy, self-discipline is the success ingredient.  When we disciplined ourselves to invest monthly even with small amount, little by little we are building wealth.  It is the habit of saving that makes the difference.  I also soon discovered the advantages of mutual funds.

1.  Professional Fund Management

Many people do not have the luxury of time to look into the trends of the stock market and investment facilities.  Some do not have the patience to get into the details because of the demand in our day job.  Our money in mutual funds is handled by a fund manager.  He invests and manages our money according to the investment portfolio that we chose and monitors its progress full-time.

2.  Diversification

Investments in mutual funds are allocated to different strong companies in the list of the stock market as well as other investment facilities.  It is diversified, so the risk of losing all our money because a certain company went bankrupt will be alleviated.  In essence, a balance in allocation of our investment is achieved because of this.

3.  Liquidity

The investments can be easily redeemed whenever you need it.  No need to find a buyer of your shares in order to sell it.  You can easily get your investment within 7 working days upon completion of investment redemption requirements.

4.  Safety

Mutual fund companies are highly regulated by the Securities and Exchange Commission.  They are also subject to internal audit to ensure that investments are appropriately managed.

Through mutual funds, the principle of money cost averaging is also a main factor in order to be a successful investor and become a millionaire.  Regular monthly investment of small amount in a long period of time will fight the ups and downs or what they call the volatility and fluctuations of the stock market.

When we invest regularly regardless of the amount of the net asset value per share (NAVPS), the average of our money in a long period of time will get an increasing result.  I will share a specific example of money cost averaging in the near future.

With the right financial knowledge and having the drive to make it into action will help us reach our dreams to become a millionaire.  Mutual Funds are one of many investment schemes available right now.  We just need to know and learn what are the principles behind it and we can start our journey to financial freedom.  As Brian Tracy says it, “If you want to earn more, you need to learn more.”

What is your action plan in order to build wealth?  Share your thoughts and meet us in the comments.

Do you find this article helpful?  Subscribe to our free newsletter and we will update you right in your Inbox.

PS. We are conducting free financial literacy training and financial coaching everyday in UAE and in the Philippines.  To find out more you can check it here.

Photo Credit:  Topnews.in