“Where can I invest my money in the Philippines?” is an often-asked question that leads to many answers. While options are plentiful, the most important question to ask yourself first is: “What do I want to get out of my investment?” This way, you can better map out an investment plan that matches your goals, needs and preferences.
Each investment decision involves risk, but by knowing your choices and the ways to maximize them, you can lower risks while boosting returns.
Importance of investing
At a very young age, we’ve been taught that saving is the way to gain financial stability. Investment is also a way to achieve this, which is why it goes hand in hand with saving. Saving gives you the means to invest while investing fast-tracks your financial goals by achieving the following:
- Building wealth
Through investments, you can boost your wealth through assets that appreciate over time. Investments in stocks, bonds, and non-financial resources like real estate can yield profits far more than the interest you earn in bank deposit interest.
- Managing inflation
Inflation gradually diminishes your money’s purchasing power. If you leave all your funds in a savings account with minimal interest, it may not keep up with inflation. Try making investments with a track record of surpassing inflation. This way, you can preserve and even increase the value of your money in the long run.
- Reaching financial targets
By making smart investments, you can achieve financial goals like education funds, business ventures, retirement savings, and homeownership faster.
- Passive income
Some investment types offer a regular source of income. Extra earnings from stock dividends and real estate rentals boost your main income and financial security.
10 types of investment you can try
Before making a move, read up on investing for beginners to learn how to invest. Know the different types of investors based on their objectives, risk tolerance and level of involvement. Young investors can typically afford to build riskier portfolios because they have more time to earn and recover from market fluctuations. Meanwhile, those nearing retirement are advised to be conservative since they are more susceptible to market shifts, especially those who rely on their investments to meet living expenses. To help you make an informed choice, we give you a list of the most popular investments:
- Bonds
Bond investments entail buying debt instruments issued by entities. When you invest in bonds, you’re basically lending funds to the issuer. In return, you receive periodic interest payments, and the principal amount is repaid upon maturity. Consider investing in a mix of short-term and long-term bonds to balance risk and returns.
Risk type: Lower-risk than stocks because bonds provide a fixed revenue stream. Government bonds, in particular, offer a high level of security since they’re backed by the government.
Chinabank offers Fixed Income Investments issued by the Philippine government and top corporations.
- Time deposit
Here, you deposit a certain amount for a fixed duration, called the maturity period. Within this duration, you cannot withdraw your funds without incurring a penalty, which is usually giving up earned interest. Longer deposit durations typically lead to higher interest rates.
Risk type: Low-risk because of guaranteed yields, principal protection, and PDIC insurance.
Chinabank offers peso term deposits and foreign currency term deposits.
- Unit investment trust funds (UITFs)
Regulated by the Bangko Sentral ng Pilipinas (BSP), UITFs are investment bundles managed by banks and trust corporations. By purchasing “units,” you participate in a portfolio of diversified assets like stocks, bonds, and other securities. An experienced fund manager makes investment decisions on your behalf to ensure you meet your goals.
Risk type: Low-risk to high-risk, depending on the investment types UITFs include. Fund managers are trained to invest your money across various assets to maximize growth while maintaining a certain level of stability.
With an investment of P5,000 or USD500, you can gain access to Chinabank’s UITFs, which are managed by professional fund managers dedicated to achieving your financial goals.
- Stocks
Investing in stocks means acquiring shares in publicly traded companies. This makes you a shareholder, entitling you to partial ownership of the company’s assets and a portion of its profits, called dividends. Stocks potentially offer capital appreciation as the share value may increase over time.
Risk type: High-risk because stock markets are unpredictable and dependent on market conditions, company performance, economic factors and geopolitical events. However, along with their risks is their potential for higher returns than other investment types.
Visit ChinaBankSec online for your stock brokerage needs. It provides access to initial public offerings and the latest news and insights on the stock market.
- Real estate investment trusts (REIT)
You can also dabble in REITs, wherein your money is invested in income-producing real estate properties, such as commercial buildings, residential complexes, or shopping centers. Its model is based on mutual funds and you can earn dividends from the investment. REITs are a terrific way to enjoy some passive income.
Risk type: Low-risk, but is heavily influenced by interest rate fluctuations and real estate market conditions and may not be as liquid as stocks.
- Mutual funds
Like UITFs, mutual funds are a pooled investment for diversified portfolios. If UITFs are offered by banks and regulated by the BSP, mutual funds are handled by investment companies and are regulated by the Securities and Exchange Commission (SEC).
Risk type: Low-risk to high-risk, depending on the investment types they include.
- Exchange-traded funds (ETFs)
ETFs are like baskets of securities that trade on stock exchanges. They work like individual stocks, except that when you purchase stock, you own a share of the company while an ETF entails you own a part of a pool of investments comprising a variety of assets. ETFs are diverse, low-cost, and flexible; you or your preferred brokerage can buy or sell them throughout the trading day at market prices.
Risk type: Generally medium-risk compared to investing in individual stocks because their diversification helps lower risk.
- Foreign exchange (Forex)
With this investment, you purchase and sell currencies to earn profit from exchange rate shifts. Forex trading happens 24/7 and globally, allowing investors to speculate on a currency’s value against another at any time.
Risk type: High-risk because of market volatility. Exchange rates fluctuate based on economic factors, investor confidence, and global events.
- Real estate
This investment involves buying, owning, managing, leasing or selling properties like residential homes, commercial buildings, and land. Real estate investors earn through rent, property appreciation, or buying and selling.
Risk type: Medium to low-risk compared to stocks and other investments because the real estate market tends to be more stable. It can also provide steady income through rental fees.
- Business
Starting or acquiring a business is considered an investment. Continuous business investment aims to grow the company and its value, ultimately generating profit from the initial capital.
Risk type: Moderate to high-risk depending on the industry, market climate, business model, and management techniques. Risks involved are market competition, operational challenges, and business uncertainty.
How to start investing
Here are some tips to get you started on your investment journey.
Build an emergency fund
Investments require savings. To ensure you have enough for your regular and unforeseen spending, build an emergency fund equivalent to about three to six months of your daily expenses. Once you’ve done this, you can allot the rest of your funds for investments.
Gauge your risk tolerance
Make decisions you’re comfortable with. If you’re a conservative investor, low-risk instruments such as bonds and time deposits may suit your needs. Are you willing to jump into the world of high-risk, high-return investments? Then, individual stocks and real estate may be more to your taste.
Set well-defined goals
Clear goals give focus and direction to your investment decision. Because the market has ups and downs, motivation helps you stay committed to your investment plans. Your goals can also guide you in crafting a strategy that matches your financial targets and risk appetite. When you measure your progress against your goals, you can better assess if you’re on the right track.
Do your research
Knowing what’s out there helps you make better decisions. Continuous learning lets you recognize opportunities, manage risks, and adapt to market trends. With enough knowledge, you’re more likely to avoid financial losses while gaining confidence in making choices. With investing, it’s best to start small and never stop learning.
Seek expert advice
Investment experts, such as banks and financial consultants, have specialized knowledge that gives you valuable insights and a broader perspective. Experts can access research, analysis strategies, and market contacts, helping you sharpen your judgment. Knowing that someone can give you a second opinion also gives you peace of mind.
Diversify
Generally, beginner investors are advised to consider bundled investments like UITFs to diversify their assets. This allows you to spread the risk across various factors like market instability, economic situations and other fluctuations. Diversification also helps you take advantage of market trends and opportunities.
Think long-term
When you approach investing with patience and discipline, you avoid making impulsive decisions. Some investments need time to grow—and the result is well worth the wait. Long-term investors know that market fluctuations come and go and that staying focused on their investments’ overall direction is more critical.
Are you ready to invest? Visit Chinabank’s investment options to learn the best ways to achieve your financial goals.
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