Investment Options

Saving money is just part of your financial journey. You cannot beat inflation by simply saving money but you can beat it by investing. Investing is really essential in reaching your financial goals.

But first, here are some friendly reminders. Before you invest in anything always remember that:

1. Risk comes from not knowing what you’re doing.
2. Your investing success is measured by how you put a financial plan and discipline in place.
3. An investment in knowledge pays the best interest.

Now, here are some of your investment options:

1.  Pooled Funds: Mutual Funds, Unit Investment Trust Funds (UITF), Exchange Traded Funds (ETF)
  • Low investment costs
  • Can invest through investment companies directly, online brokers, or banks
  • Managed by professional fund managers
  • Better potential returns than deposit products
  • No withholding tax due to investors
  • Online brokers: COL Financial, First Metro Securities

Pooled Funds eBook (to be uploaded on August 31, 2019)

2. Stocks
  • Easiest way to take advantage of a growing economy
  • Can invest through the ease of online brokers
  • One of the best performing assets
  • You can be a shareholder of the company you invest in
  • You can earn through dividends and price appreciation
  • Beware in choosing companies to invest in
  • Online brokers: COL Financial, First Metro Securities

New to Investing?, Basic TermsBeginners’ Guide

3. Bonds: Government, Corporate
  • Being issued by the Philippine government and SEC-registered companies
  • Banks are the selling agents; specific banks per offer
  • Tenor, rate, and minimum investment depend per offer
  • Interest payment depend on the schedule or maturity
  • Earnings subject to 20% withholding tax
Invest in Pooled Funds, Bonds, and Stocks through GCash Mobile App:
Invest Money
4. Real Estate
  • Can be used as an asset diversification
  • Good option as a hedge to inflation
  • Can generate a steady flow of rental income (or you may just flip it or buy and sell)
  • Location of the property as an investment plays a critical role
  • Do your homework and prepare an investment plan

Guide to Real Estate Investing, Ways to Earn in Real Estate

5. Cooperatives
  • Be critical on choosing a cooperative and choose only from those with high performance standards in financials and compliance
  • Make sure the cooperative is registered in Cooperative Development Authority
  • Dividend rate or interest depends per cooperative
  • Tax-exempt earnings
  • Usually membership is required
  • Investments are not insured
6. Long Term Negotiable Certificate of Deposits
  • Banks are the issuers and selling agents
  • Tenor, rate, and minimum investment depend per offer
  • Tax-exempt earnings if held for at least 5 years (must be in the name of individual investor)
  • Interest is higher compared to other traditional deposit products
  • PDIC-insured investment up to P500,000.00
7. Modified Pag-Ibig 2
  • Pag-Ibig 1 member
  • Voluntary
  • 5-Year Placements
  • P500.00 minimum per month
  • Sovereign guaranteed (payment is guaranteed by the government)

MP2 FAQs, MP2 Brochure

8. SSS Flexifund
  • Must be OFW and SSS member
  • Voluntary
  • Pension top-up
  • P200.00 minimum per month
  • Sovereign guaranteed

SSS Flexifund Brochure

9. Own Business
  • Earning potential depends on your ideas, skills and management
  • Capital requirement depends on how much you are willing to invest

Small Business Ideas, Guide on Starting Small Business, 21 Steps on How to Start

10. Alternative Investments: Paintings, Gold, Venture Capital, etc.
  • Some are complicated / less efficient market
  • Can be emotionally and/or intellectually satisfying 
  • Return varies widely on market supply and demand

So, there! You cannot just work to make money because you can indeed make your money work for you too. You can invest in many instruments. In fact, if you are just getting started investing, diversification or investing in various instruments can help you reduce investment risk.

You will find more investment options out there other than the mentioned above. But don’t forget to do due diligence beforehand and don’t get into any investment out of mere excitement — that is one way to avoid scams.

The most important thing is you study and understand very well what you are getting into. At the end of the day, you are the one who’s responsible for every decision you make — no one else.

To #FinanciallyLiteratePH

Disclaimer: This article is provided for information purposes only and should not be interpreted as investment advice. Under no circumstances does this information represent a recommendation to buy or sell any of the mentioned above.

Financial Fitness Tips

By Joanne Guidoccio, eHow

To become financially fit, learn how to live within your means and create a realistic budget that allows you to save, invest and enjoy your money. —Lois Vitt

Create a Budget

A budget can help you pay your bills on time, cover emergencies and reach financial goals. Start by paying attention to where your money is going. For one month, carry a small notebook and keep track of all expenditures and money withdrawals. This includes every check you write and every card you swipe. At the end of the month, go through each item in your notebook. Highlight the essentials–mortgage, rent, utilities, car loan, insurance–and take a close look at the remaining items. Try to identify your “latte factor” –those expendable items you buy on a regular basis that add very little to the quality of your life. It could be a latte, cappuccino, DVD, chocolate bar or shoes. Calculate the annual cost of the latte factor. For example, if you buy a $4 coffee each day of the work week, the annual cost will be over $1000. Decide which expendable items can be removed and create a simple spending plan that will allow you to save money and still enjoy your life. Consider using money management software to make the budgeting process an easier one.

Start Saving Money

You will be more likely to save money if you make it a priority. Set a goal–car, house, college, dream vacation, retirement–and calculate the cost. Create a reasonable time line and decide how much money you will save per week or month. At the beginning of each week or month, pay yourself first. You can ask your bank to make this easier for you by automatically transferring funds from your checking account to your savings, money market or mutual fund account. If the money from the latte factor does not cover this amount, change a few more spending habits. Use cash and ask for discounts on large-ticket items and services. Raise your deductibles and lower your insurance bills. When buying consumables, such as food toiletries and cleaning supplies, consider generic brands. Get creative and substitute imagination for money.

Get a Financial Education

Increase your knowledge of current financial issues. Read the business section of your daily newspaper, take evening courses at your local high school or college and attend seminars sponsored by banks and other financial institutions. Most important of all, ask questions and check the details of all purchases. Start reading the small print on those contracts and agreements. When selecting a bank, pay close attention to the services and additional fees. They are generally small–from a few cents to several dollars–but can add up quickly. Get to know your banker and meet with him at least once a year to review your accounts. If you decide to hire a financial adviser, ask friends or colleagues for recommendations.

Read also: Steps to Financial Security