Money market fund is too conservative, and it is not worth to put any savings into it for the long term. Even for the short term, 5 to 10 years, a bond fund would give better returns.
Money market funds, in my view, is for a very short time, and normally it is used to park the money temporary while deciding which equity or bond fund to have. It is also used when trimming profits from several equity funds, thus consolidating the units into one money market fund temporary before further switching to another equity or bond fund.
And in a matured portfolio of funds (which you don't have since you are just starting), a portion of the money or investment can be put into a money market fund to reduce the risk.
Please note that risk is the chances of losing money; and how much risk you can take means how much you can afford to lose.
On the other hand, since you are in for the long term, the chances of losing money in an equity fund is almost reduced to zero. Which left only one factor to predict: how much is the gains that can be expected to have in the long term.
Though what happened in the past, is already in the past and might not be true in the future, but past records and returns of the fund can give an indication of how it would behave in the future. And in general, the smaller capitalized companies listed in the stock exchange will have higher growth than the larger companies.
So, normally I would checked the 10-20 years track record and returns of the funds; but there are not many funds older than 10 years, and their track record might not be good.
So, here's my recommended list of equity funds - short listed based on my own "personal" preferences.
1. Public South-East Asia Select Fund.
2. Public Asia Ittikal Fund.
3. Public Islamic Asia Leaders Equity Fund.
4. Public Strategic Smallcap Fund, or Public Islamic Treasures Growth Fund. (These are the only 2 small cap funds available in PM. Of the 2, I prefer PSSCF.)
So select one of the above, and regularly invest every month in the next 30 years till retirement.
Thank you very much for the details explanation and analysis! This info is exactly useful to have a better understanding why investor would park their in money market fund.
And thanks for sharing about the DCA. I am looking forward to DCA method of investing into the few fund you recommended.
Jun 25 2015, 05:05 PM
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don't you think it is better to ask him?
Anyway back to the question, what do you guys think about this PMMF? What kind of fund is suitable for me at this stage of age?
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