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Many people want to invest but they don’t know where to start. If you’ve ever wondered about growing your money and never got around to figuring out how, don’t fret. Here are five investments you might want to consider including in your financial portfolio.
Investing doesn’t really have to be convoluted or complicated. It’s all about having some money saved up, knowing what your financial goals are (as short term as a car purchase in the next two years or as long term as money for retirement), and knowing the right investment plan that will get you there.
Below are five common investment products that can help you achieve your financial goals. Don’t you think it’s time to bust your money out and begin investing?
Just how exactly does the stock market work? Say you like Jollibee. You’re a frequent customer, everyone you know eats there, it’s very popular, especially these days with their hugot ads, and you think it’s a stable company. You may want to use your money owning a portion of Jollibee by buying a portion of the company. That portion is a share. The price of a share differs on a day-to-day basis so if you decide to spend your PhP10,000 on Jollibee shares priced at PhP100 per share, you get 100 shares. If by tomorrow, Jollibee releases yet again another hugot ad and people decide to eat at Jollibee in droves, the market value of Jollibee shares could go up to PhP120. Sell your 100 shares, which you bought for only PhP100 per share and sell it for PhP120 instead. You get a profit of PhP2,000, easy breezy. Of course, this is a very simplistic explanation as market forces can drive stock prices up and down and you may need to follow it closely for quite some time before getting the hang of it.
Where or how to invest: Open an online stock trading account (COL Financial and Philstocks are a couple of the more popular sites). Also, many companies offer stock options to their employees, so if you’re working for one, do check that out.
Level of risk: Mid-to-high depending on your personal strategy
Minimum amount of investment: PhP5,000
People often confuse stocks with bonds and they can be quite similar in that you use your money to invest in a company, but there’s a difference in terms of risks involved and the amount of money you can earn. Let’s use the same Jollibee example. Say you have PhP10,000 pesos to invest and you put it in Jollibee bonds for five years at an interest rate of 10% until maturity. You are guaranteed to be paid PhP11,000 by the end of the term. It’s fixed unlike the more volatile stocks, and you can pretty much plan ahead, figure out what you can do with your money in a given number of years. You just need to make sure you’re buying bonds from reputable companies who are not likely to go bankrupt in the next five years or so, and even then, the SEC or the Securities and Exchange Commission will make sure you get paid.
Where or how to invest: Trust Department at your bank
Level of risk: Low
Minimum amount of investment: Depends on the bank but could go as low as PhP50,000
In the Philippines, you can either get a T-bond, which is just like a corporate bond, but this time you’re lending money to the government, or T-bills, which are like just like T-bonds, but are more short term. T-bonds generally mature beyond a year, while T-bills mature in 91 days, 182 days, or 364 days. Whatever it is, you’re sure your money earns more than when you save it in the bank. Again, it all boils down to financial planning, how soon do you want your money to earn for you, and by how much? Usual trade-offs apply—you invest longer, your money yields greater return. Investing in government securities is considered low risk because the government will pay. It is also less likely to go bankrupt, guaranteeing a pay out.
Minimum amount of investment: PhP5,000
A mutual fund is money pooled from different people—you and many other people like you who couldn’t be bothered to study bonds and the stock market—and invested in different investment products, depending on your preference.
Where or how to invest: Trust Department at your bank, Fund companies
Level of risk: Mid
Insurance with Investments
Most insurance companies offer life insurance products with investment component, allowing people to be protected and, at the same time, earn from investments. FWD Life Philippines (www.fwd.com.ph), for instance, have products that you can avail of for as low as PhP1,500 per month. Most people choose this investment product because they are basically hitting two birds with one investment—protection and financial growth.
Where or how to invest: Contact an insurance provider like FWD Life Philippines
Minimum amount of investment: Depends on your age and financial strategy