Due to the unforeseen events brought about by the COVID-19 pandemic, more and more Filipinos are now realizing the importance of saving money. Since the only constant thing in life is change, many have experienced financial and professional challenges such as unemployment and salary cuts most especially during the early months of the global health crisis.
This is why itβs best for Filipinos to get encouraged about the value of saving their money and also learn to invest as early as they can. Before knowing the best ways to start investing today, itβs a smart move for you to get acquainted with the basics first.
Investment Basics You Need to Learn
How does investing differ from saving?
Saving means putting away your money for later use in a safe place, such as in a bank account. On the other hand, investing involves taking risks and buying assets that will ideally increase in value and provide you with more money than you initially put in over the long term.
What is investment risk tolerance? What are its different types?
Investment risk tolerance is the amount of risk you are willing to take in your investments. Being a smart investor requires you to know your investment risk tolerance before putting your money into any investment product or plan. Further, it can also guide you in preparing for short- and long-term decisions youβll make along the way.
Here are the 3 most common types of investment risk tolerance:
- Conservative – This describes investors who are willing to accept little to no volatility in their investments. This means that they can take small profits as long as theyβre assured of capital preservation.
- Moderate – On the other hand, moderate investors are those willing to take some losses. Meaning, the balance between risks and long-term returns is whatβs most important for them.
- Aggressive – Such investors understand the complexities of the investment market. That said, theyβre willing to invest in highly volatile assets that can potentially provide high returns.
Take your time and assess yourself to see what type of an investor you are. Considering these basic details wonβt just guide you throughout your investing journey. In the long run, itβll be less challenging for you to deal with certain jargon and make wiser decisions as well. Besides, how will you be able to choose the most fitting investment option for you if you donβt know how much risk you can take?
That said, are you ready to know the ways on how you can invest today? We got you! Read on to learn more about the options you can consider.
How to Invest Money Wisely Through These Simple Options
1. Pag-IBIG MP2
Being one of the most common government-mandated benefits for employees, the Pag-IBIG Fund also belongs to Filipino adultsβ most common types of investments. This government agency offers plenty of benefits to its members. One of which is that investing in their Modified Pag-IBIG II Program (also known as MP2) is affordable. Further, earnings from this investment scheme are tax-free and guaranteed by the Philippine government.
How much do you need to start your investment? You can begin investing for as low as Php 500!
2. Mutual Funds
Investing in mutual funds involves pooling funds from various investors and then investing them in different assets such as stocks and bonds. In the Philippines, mutual funds are managed by insurance and brokerage companies and regulated by the Securities and Exchange Commission or SEC.
How much do you need to start your investment? For as low as Php 5,000, you can start investing in mutual funds!
3. UITFs
Unit investment trust funds or UITFs are similar to how mutual funds work. The only differences lie in what handles and regulates them.
As mentioned above, mutual funds in the Philippines are managed by insurance and brokerage companies. On the other hand, UITFs are handled by banks. With these, the Securities and Exchange Commission (SEC) regulates companies that offer mutual funds while the Bangko Sentral ng Pilipinas (BSP) regulates banks that offer UITFs.
How much do you need to start your investment? You need Php 5,000 to Php 10,000 to be able to start investing in UITFs!
4. VUL Insurance Plan
Combining life insurance and investment into one product, a variable universal life insurance (VUL) plan is ideal for first-time investors. This is because professional fund managers will handle their money, like in mutual funds. Also, considering VULs is one of the top ways to start investing, most especially if you donβt have a life insurance policy yet. Think of it as hitting two birds with one stone.
How much do you need to start your investment? Depending on your age, health condition, and financial capacity, you may need at least Php 1,500 to Php 3,000 to start your own VUL plan!
5. Stocks
Considered to be one of the riskiest yet most profitable types of investments, stocks are a good option for beginners who are comfortable parting with their money for at least five years or so.
If youβre eyeing to invest in stocks, make sure you know when is the best time to buy. Because investing in stocks makes you a part-owner of a company, you are entitled to a portion of the companyβs value and income. This is mainly how you earn your profit.
How much do you need to start your investment? If you can invest at least Php 5,000, you can consider this option!
What do you think about these ways to start investing? After assessing your investment risk tolerance, make sure you choose the best ones for you to start your investing journey. Weigh the pros and cons of each option, and ask your financial advisor for guidance, too.
To conclude, investing is just one way you can start learning how to grow your money instead of shopping for things you donβt really need. After all, investing your money is a key part of how personal financial planning can help boost your career plans as well.
Find this guide helpful? Browse through more of Bossjobβs personal growth blog archives and let us be with you in your journey!
