Money Matters

Where should I invest my money?


Q: I have been a reader of your column and blogs and I have learned much from them. I am now debt free and have some emergency funds and savings and I am now ready to invest. Where should I put my money? – Name withheld upon request, asked via e-mail

A: Congratulations for being disciplined enough to be debt free, establish your emergency funds and consider investing—you are on your way to achieving financial peace!

I am sorry that I can’t give you a specific answer as to where you can invest your hard-earned money as I will need to further understand your situation before I can make any recommendation.

I can, however, give you some broad guidelines, which I hope can help you arrive at a more informed decision.

You mentioned emergency funds and savings for investing, so I will try to give you my thoughts on both.

As to emergency fund, I do not recommend that you invest that, as the purpose of this money is funding against life’s emergencies.

Whenever you invest money, there is always the risk of some capital loss and there will be some form of liquidity risk involved, as you may not be able to immediately convert the investment into cash.

It is best to keep emergency funds in cash or near-cash instruments such as time deposits and treasury bills. If you are still keen on investing your emergency fund, you may opt to put some of it in very low-risk investment instruments like UITFs or mutual funds invested in the money market or bonds. Obviously, you can’t expect much return even for those funds, but I suppose it’s better than what you can get from savings and time deposits.

I recommend that you should only invest a maximum of 50 percent of your emergency funds in the instruments I mentioned and the rest should be in cash for easy access.

As to your savings on top of your emergency fund, you should consider a few things before letting go of your money.

In my book, the No Nonsense Personal Finance: A Step by Step Guide, I outlined some basic guidelines:

Know you investment objective: Before you do anything with your hard-earned money, I would recommend that you first consider what your investment objective is.

I often tell people that our objectives will determine nearly every action we make with regards to finance. It is crucial that you first determine the reason for the investment.

What is the investment intended for? What do you wish to achieve in making such an investment? Is it for retirement, future education needs of your children, purchase of an asset, or a general fund?

Knowing what your objectives are will help you choose the appropriate investment for you.

To simplify objectives, categorize the general purposes of your investments according to the results in capital growth, income generation, or both.

Certain investments will yield according to your desired purpose.

For instance, people buy real estate properties because of capital appreciation while some people buy them for income purposes.

Know your risk tolerance—Risk and return are two correlating factors that you must always keep in mind when investing.

Some people focus too much on returns and forget about risks, while others just look at risks at the expense of returns.

Here’s a very basic principle in investing—returns will always be a function of the risks you are willing to take.

The risk-return relationship is simple but fundamental. The higher the potential yields are, the higher the risks will be; the lower the risks are, the lower the yields will be.

No amount of financial engineering can change the fundamental fact of the risk and return relationship.

Determine if you are a conservative, moderate or aggressive investor. If you are a conservative investor, it is wise for you to stay away from risky investments like stocks, lest you will experience a lot of sleepless nights when markets go south.

Know your time frame—When will you need the bulk of your investments? Are you investing your money just to park it while waiting for big-ticket items such as tuition or the proper investment? Or are you investing with a long-term goal of 10 years in mind?

There are short term, medium term, and long-term objectives, and there are corresponding short, medium, and long-term instruments for such.

It is unwise to use short-term instruments such as time deposits or Treasury bills (T-Bills) for long term investments like retirement, education, and anything that has more than a three-year life span, as you will lose on inflation.

On the other hand, you should not use medium or long-term instruments such as pooled funds (Unit Investment Trust Funds or mutual funds), equities, or variable universal life insurance for short-term objectives where you will need the funds in one year or less; you run the risk of capital loss.

Emergency funds are considered short-term objectives and must only be invested in short-term and very liquid instruments.

Take time to learn more about proper investing by reading books, articles and blogs, attending seminars and go ask as many people as you can.

Investing is not rocket science and a little effort can really help you make prudent decisions on making your money grow.

Catch me and my friends Marvin Germo and Jess Uy for iCon 2013: The Investment Conference for OFWs in Singapore on Nov. 2, 2013. Visit for details.

Randell Tiongson is Registered Financial Planner of RFP Philippines. To learn about financial planning and how to become RFP, attend our FREE personal finance talk on Oct. 31, 7 p.m. at PSE Ortigas. To reserve, please e-mail or text <name><email><RFPinfo> at 0917-3464126

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Disclaimer: The comments uploaded on this site do not necessarily represent or reflect the views of management and owner of We reserve the right to exclude comments that we deem to be inconsistent with our editorial standards.

  • Angel Gabriel

    You can invest it in Property Tax Shield Investments.. It is where you use your income tax to pay for your investment. It is like having a new property where you pay less than 10% of the total cost. You let your income tax pay for the property and the tenant. It is how Robert Kiyosaki explained to some of his books. Is it now available on the Philippines? Yes!!! visit 888 Partners,com to learn more about this.

  • koolkid_inthehouse

    Good advise.

  • OFW_Investor


  • hello stupids

    CHINA…no doubt about it

    • Sio_The_Blagger


      • hello stupids

        the early bird get the worms
        according to all the expert the answer is yes

      • koolkid_inthehouse

        time to get of communist China. Economy is not expanding, it’s mostly investments. If the western economy collapse, communist China collapses too.

      • hello stupids

        look like China have more investment in the foreign country at the moments…
        HELLO what U got in the PHILIPPINES…banana!!!!
        Banana country

      • koolkid_inthehouse

        they invest offshore because it’s more stable abroad and they laundered a lot plundered money too. Lots of communist Chinese bought real estates abroad just in case the Reds start cracking down on ill gotten wealth comrade.

      • hello stupids

        so many of them???????
        most of the city the real estate being push up by so much?
        the GDP per capita is 3 times more than Philippines.even the poorest have lots more money than U

      • koolkid_inthehouse

        you haven’t been there. millions are still impoverish ghettos.

      • hello stupids

        they are way better than U


      • Sio_The_Blagger

        nope..they may be dressed with expensive clothings but they are slaves by the politburo… you go to the bario in PH, the impoverished there are busy drinking tuba and getting druk…that’s a mile of difference my commie friend. were poor ‘coz we’re lazy…but the chinks are slave to death and yet still poor — 2nd biggest economy but 500M are still living in the minimum wage….wow! no wonder the chinks are selling their kidneys for an iphone just to look good/rich — that’s the new world order, the chinks way!

      • hello stupids

        third world people vision
        the poorest in China have their wages 3 times more the U..PYGMY
        Philippines been slaves since the Spanish until now and carry on
        girls and boys as young as 4 tested std positive by the WHO
        every single day…selling their body and their spiritual for as much as $20
        that’s always been.the Philippines piority MONEY…


      • Sio_The_Blagger

        your description fits with that of china’s? i’ve heard it’s covered with smog now…what an advance society (eww!). btw, 10% of China are still living in poverty — that’s >100M poor chinks…my goodness, there’s more poor chinks than the entire PH…

        wages is 3x higher than PH? whattt! hello, manufacturer in the whole world are flocking to china because of dirt cheap labor cost which translates to the lowest product quality this world has seen… u dunno what you’re saying u commie chinks… rubbish!

      • hello stupids

        90% of Filippo live behind the poverty…so poor
        manufacturer in the whole world are flocking to china because of the markets
        third world country people like U complain about the quality while all develop country using it everyday
        UR full of third world poor country symptoms

  • OFW_Investor

    These are the commonly available, Savings Deposits in banks, Real Estate, Stocks, Corporate Bonds , Starting a Business.
    Bank Depsoits are not really considered Investments these days due to paltry returns.
    Real Estate that produces income can be profitable at 8 to 10% normally, the drawback is the huge capital required and a mortgage loan for most Investors, it is also not liquid and your capital is a sunk cost.
    Stocks are over a any 5 , 10 ,15 , 20 year period have beaten any asset class , it is scalable, you can start with as little as 5K and build up. Considered as near cash as can easily be sold.
    Corporate Bonds, pays a fixed payment over a number of years. There are bonds avialable that yields 5 to 6% . Principal is returned after the maturity date (interest payments are subject to 20% tax)
    Starting a business requires substantial capital and personal attention,you’ll need to be smart everyday to compete .

    Take your pick.

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