Mutual Funds/UITFs vs VULs

I was browsing thru the Personal Finance section of Inquirer when I came across an interesting article about Mutual Funds, Unit Investment Trust Funds (UITF), and Variable Universal Life Insurances (VUL). The article basically defined each investment vehicle and discussed their the pros and cons.

Mutual Funds and UITFs Defined
A mutual fund collectively pools money from individual and corporate investors. These funds are managed by a professional fund manager who invests the collected money in financial securities such as stocks, bonds, or money market instruments. The value of a share of the mutual fund, called the Net Asset Value (NAV), is calculated daily based on the fund’s total value divided by the total number of outstanding shares. Find out more about mutual funds at Pinoy Money Talk.

UITFs are basically the same as mutual funds. The only difference is UITFs are managed by trust departments of banks , while mutual funds are managed by investment houses.

VUL Defined
Unit-linked insurance (also called variable universal life insurance) offers the security of insurance protection via term coverage, together with the opportunity to participate in potentially unlimited growth via mutual fund investments.

Pros & Cons

In a nutshell, Mutual Funds/UITFs offer unlimited potential growth for one’s savings. VULs on the other hand offer both protection against various contingencies and competitive returns. Both are sound alternatives to take advantage of in the constant fight against uncertainties, inflation, and catastrophic events.

As for me, I have both. Mutual Funds and VULs, that is. But I have not been able to religiously add additional investments to my mutual funds. On the other hand, I make quarterly payments to the VUL I have invested in. I am on the second year of a ten-year savings program. If only the process of buying shares in my mutual fund investments were more convenient, I surely would have invested more into it. But I still plan to do so for cost averaging. My only mistake was I invested too soon when I should have started building my emergency fund first. But it’s never too late. Not even for the young once.