Peso Korner

Peso Korner

Tuesday, October 14, 2014

5 Best Places to Invest Your Savings in the Philippines


money matters

P5,000 that's the minimum amount you'll need to start investing in mutual funds and P10,000 minimum amount to start investing in UITF (Unit Investment Trust Funds). So contrary to what most of us believe, investing is not only for the rich!

For this post, let me share places where you can invest you savings and help it grow:

1) Banks - we are not only talking about deposit accounts here, Bank also offers  a great selection of investment products. Here’s to summarise some of the deposit and investment products they are offering:
    • Savings Account  - It earns a minimal interest but your money is safe and secured by PDIC (Philippine Deposit Insurance Corporation). This is ideal for your emergency fund. Earning potential: 0.25% per annum which unfortunately, is not even enough to cover for inflation.
    • Time Deposits  or Certificate of Deposits  - has an agreed term and interest rate of return. You won’t be able to use your funds for an agreed period of time. Some banks are offering this for a minimum holding period of 1 month. The average interest rate is 1.125% per annum and insured by PDIC.
    • UITF (Unit Investment Trust Funds) -  is an investment product. This is similar to Mutual Funds which is being offered by licensed agents ( I will post similarities and differences separately).  UITFs in layman’s terms are a way for us ordinary people to be able to invest in complex investment like bonds, money market placements and stocks by letting the bank experts manage the funds. You can enjoy a potentially higher return here by investing a minimum of P10,000 by selecting a product that complements  your tolerable investment risk and investment objective.  Please take note however that UITFs are not a deposit product, therefore not insured by the PDIC.


2) Stocks - is basically buying “shares” or ownership in a corporation and you don’t need millions here, with just your P5,000 you can start investing in stocks. Just to explain further, so if you buy shares for example of Jollibee Foods Corp. then you will be a part owner of the said company, cool right?  In return for your investment, you will occasionally earn by way of dividends as a share of the company’s profit. The value of the shares may also appreciate, so you will earn an income too when you sell your shares at above the price when you bought them. You can invest in stocks directly via physical or online brokers, or indirectly through pooled funds like Mutual Funds or Bank’s UITFs. Investment in stocks is considered high risk since there is no assurance regarding the future financial performance of any company, but the earning potential here is also high. Just make sure to do your homework and study each company well before you put your money in. You should always be updated with stock market news too. If you don’t have the time and competency to do this well, then I will suggest for you to use the services of the experts, just invest in stocks through a licensed physical agent, or thru Mutual Funds or Bank’s UITFs. (Please check my Investment in Stocks post soon.) 


3) Mutual Funds - This is similar to Bank’s UITF in so many ways. They are both pooled funds and offers low to high risk investment products (from bonds, money market placements to stocks). Mutual Funds however is being offered by licensed Agents and being regulated by the SEC. You will buy here “shares” in the investment company. Lowest minimum investment at the moment is being offered by FAMI at P5,000.  Just to name a few licensed agents: Philequity, ALFM, ATRKE, Cocolife, FAMI, PAMI, Sun Life, Grepalife, MAA, Philam, Prudential Life, etc. (Please check my post about Mutual Funds soon). Each company is offering a great selection of investment packages, you have to check their websites and prospectus of each fund, study past performance (though it is not indicative of future performance), and do your homework to learn which investment portfolio best suits your investment objectives.

4) Real Estate - This is a common investment for us Pinoys. Land appreciates in value but of course it depends on the location and condition of the property. We have to make sure that it is flood free even years ahead! Land can generate revenue through rentals and when you finally decide to sell them. But you also have to consider the cost involved like real estate tax, maintenance fee and an agent's fee once you have decided to sell it.

5) Business- being an entrepreneur is the riskiest investment option but the earning potential is limitless. The investment involved in here is not only money / capital, it will also require your time, expertise, competence, guts and passion. For those who are not so confident to start their own business, you may consider franchising. Franchisors already have a system in place which will train the franchisee in gaining management experience.  Then for your next business venture, you will be ready to start everything on you own. 

quote about investment risks

All of these options have their advantages and disadvantages. The technique here is to diversify your investment to spread out your risk exposure. As the saying goes, "Don't put all your eggs in one basket."  So, are you ready to invest? Study all your options and good luck! 



9 comments:

  1. I have invested in everything above except for real estate. I just don't know how to start with it. Any references or tips to go about this kind of business?

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    1. real estate is basically buy and sell. You buy now, let it appreciate then sell. Or you can have it for lease or build a house or apartment units and rent it out. Hope that helps. Thanks for dropping by! ;)

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  2. So far I have invested in a savings account. My brother and I are interested in starting a business and stocks are something I have been hearing from my former college block mates. :)

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    1. Actually starting a business is the best way to earn more. That's a great start for you, ituloy-tuloy mo lang then invest in stocks on the side later on. ;)

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  3. This is one of those things I still need to learn more about. I'm not financially savy.

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  4. I am familiar with banks and their various products, which includes mutual funds. Stocks are more my wife's forte, so I trust her with that.

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    1. Great partnership! You are so lucky coz for me, I'm doing all the savings for us but whenever I want to buy a land or something quite expensive of course I have to consult him first and I let him make the final decision. ;)

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  5. I think once you learn the dynamic of stocks, it would be a really good investment with high returns.

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  6. Stocks is definitely important! Though.. not everyone actually realized that.

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