Is it because you’re scared that your money will be exposed to investment risks?
Then again, didn’t you know that not investing also exposes your money to investment risk? Inflation reduces the power of your peso!
Would you want a bank product that guarantees you’ll lose your money?
Or an investment product that potentially increases your money’s value over the long-term?
2. That’s not all. Your money in the bank is subject to diversification risk also.
Your money needs to be in cash, stocks, and bonds.
Why?
Not all investment types can make money at the same time!
If your cash is losing money, your investment may be making money at the same time. It can also happen otherwise.
Don’t just put all your money in cash (time deposit): if your cash loses money, you lose all your money’s value.
Put some of your money in stocks and bonds also. This way, you can have an investment to help you gain money to offset your loss and give you much to gain.
BONDS: Lend your money
Your money will be borrowed by the Philippine government.
In return, the Philippines government will issue you a bond that contains the rate that they promise to pay you back with, the date that they’ll return your money and the duration that your investment will be with them.
This investment is “virtually” risk-free because if the government can’t pay you back, they’ll either print more money or raise the taxes so they can pay you.
As we said, the lower the risk, the lower the potential return, so here expect around 5%-7% annual rates of return.
* You can also lend your money to credible companies here in the Philippines. Same concept, but it’s called corporate bonds.
STOCKS/EQUITIES: Use your money to co-own a company
Your money will buy shares of ownership of credible companies here in the Philippines. Some examples of credible corporations are PLDT, Jollibee Corporation, SM, and Ayala Land Inc, among others.
In return, these companies will make you a co-owner of their business.
If their business grows and makes profits, your money grows and gains profits, too. Otherwise, the same will happen to you.
This investment is considered “risky” if you invest in poor companies, if you don’t know which company to buy/sell, and if you withdraw your investment in too early. Otherwise, it’s the perfect investment type for long-term growth.
Amazing companies in the Philippines take years to grow. So, the same concept applies with your money’s growth as well.
Directly
– You’ll make the investment decisions all on your own. Some of my friends want to research and study the market on their own, so they do this. Here, you need enough time, patience, knowledge and expertise. Know what you’re doing. Or else, you may just lose more money if you’re not careful enough.
Examples: direct stocks investing, direct bonds investing
Indirectly
– You’ll get a professional fund manager who will handle your investments for you. Here, you won’t stress too much because your money will be in the hands of experts. Just focus on honing your craft. Progress in your work. And earn more income so you can invest more!
Examples: mutual fund investing, VUL (life insurance + investment) investing, UITFs
What if the returns are good:
– but the charges are significantly high?
– but the customer service is low?
– but the fund performance is not consistent?
– but the investment company is not stable enough?
At the end of the day, all companies invest in the same investment market!
There are so many investment choices today, my friend.
You only need to choose and act on your choice – now.
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Knowledge without action is useless. 🙁
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Want to get started managing your money/budgeting/investing? Contact me, your trusted financial advisor, through the following:
Email: liannemarthamlaroya@gmail.com
Twitter: @MsLianneLaroya
Mobile: 0916 737 8741
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