Quantcast
Latest Stories

Money Matters

The best investment

By

Question: I’ve been reading your articles and blogs for sometime now, which have been of great help to me. I think I am ready to make some investments now and I would like to know what investment would be best for me.

 

Answer: Thanks for reading my work, I am honored that what I write helps you. Your question is one that has been asked of me over and over again. If I had a hundred pesos every time I am asked that question, I would probably have enough to retire today.

The answer to this question depends on the person being asked. If you ask a real estate agent, he will say real estate; a stock broker will say blue-chip stocks; a banker will offer the latest bank products like time deposit or special savings accounts; a mutual fund representative will say mutual funds; an insurance agent will probably recommend a variable life insurance. The best investment for me? Well, I can’t really give an answer.

I must admit that many people give me a dumb-founded look whenever I answer them, “I don’t know, it depends.” For someone who claims to be a personal finance guy who has been in the financial services industry for more than two decades and a trainer in financial planning, I am pretty clueless ain’t I? I simply can’t tell anyone what the best investment is because there’s no such thing. My answer will always be “it depends.”

I have a simple four-rule guide that I recommend to people whenever they are perplexed as to where they want to place their hard-earned money.

Investment objective—What is the investment for in the first place? Where do you plan to use it? Is it for retirement, education, purchase of a house? Or is it just to park your money while you are scouting for other investments?

Time frame—When do you intend to use the money you are investing? Is it short (less than a year), medium (up to 7 years) or long term (more than 7 years)? It is unwise to put money in long-term investments when you will need it in the short term—you might end up realizing capital reduction or you may be levied with steep penalties should you liquidate your investment. It is also unwise to invest in short-term instruments when the purpose of investment is for the long term like education or retirement—you will not realize a good appreciation of your investments as short-term instruments give lower yields. In other words, your investment would be drastically reduced by inflation and you’ll find yourself with not much funds when you need it the most.

Risk tolerance—Investors can be conservative, moderate or aggressive. Determine your risk tolerance. Is liquidity and capital preservation an absolute must for you? Or are you willing to risk some potential capital loss in favor of potential capital hike? Remember the golden rule in investing—the higher the yield, the higher the risks and vice-versa.

Acumen—There are simple products and there are complicated products. If you are investing in the stock market and you are not familiar with some form of fundamentals, you might regret ever putting money there. If you can’t distinguish a structured note from a time deposit, you might want to reconsider your decision. I have a simple advice with regard to this—never ever invest in something you don’t understand.

Before parting with your money, you should go through the four-step rule first. Matching the right instruments with your needs will be the best investment for you.

Randell Tiongson, RFP is an advocate of life and personal finance. He is a director of the Registered Financial Planner Institute (Phils.). Attend our free personal finance talk and learn how to become RFP on October 10, 7 p.m. at PSE Center Ortigas. E-mail to reserve at info@rfp.ph or visit www.rfp.ph.


Follow Us


Follow us on Facebook Follow on Twitter Follow on Twitter


Recent Stories:

Complete stories on our Digital Edition newsstand for tablets, netbooks and mobile phones; 14-issue free trial. About to step out? Get breaking alerts on your mobile.phone. Text ON INQ BREAKING to 4467, for Globe, Smart and Sun subscribers in the Philippines.

Tags: Investment , Personal finance

  • http://pulse.yahoo.com/_47AS3MXEHKUW6IEMD5W3CCDWKQ gary

    The Patriarchs of the Phils Richest are well into their 80′s, the baton has been passed to the next generation.  Nanay Socorro Ramos featured at Inquirier is into her 90′s.They still tap dance to work. They are living well with their Philantropies..Clearly, ,wealth creation and Longevity are correlated .



Copyright © 2014, .
To subscribe to the Philippine Daily Inquirer newspaper in the Philippines, call +63 2 896-6000 for Metro Manila and Metro Cebu or email your subscription request here.
Factual errors? Contact the Philippine Daily Inquirer's day desk. Believe this article violates journalistic ethics? Contact the Inquirer's Reader's Advocate. Or write The Readers' Advocate:
c/o Philippine Daily Inquirer Chino Roces Avenue corner Yague and Mascardo Streets, Makati City, Metro Manila, Philippines Or fax nos. +63 2 8974793 to 94
Advertisement
Advertisement

News

  • What Went Before: Malacañang allies alleged involvement in pork scam
  • Timeline: Napoles tell-all
  • 12 senators on Napoles ‘pork’ list, says Lacson
  • Napoles surgery in Makati hospital successful
  • Save the queen? Aide takes fall for Enrile, Gigi Reyes
  • Sports

  • Mixers trim Aces; Painters repulse Bolts
  • Donaire junks Garcia as coach, taps father
  • ’Bye Ginebra: No heavy heart this time
  • UAAP board tackles new rules
  • Baguio climb to decide Le Tour de Filipinas
  • Lifestyle

  • The best flavors of summer in one bite, and more
  • Homemade yogurt, bread blended with pizza, even ramen
  • Visiting chefs from Denmark get creative with ‘ube,’ ‘ buko,’ ‘calamansi,’ mangoes
  • Salted baked potatoes
  • A first in a mall: Authentic Greek yogurt–made fresh in front of diners
  • Entertainment

  • Return of ‘Ibong Adarna’
  • Practical Phytos plans his future
  • In love … with acting
  • From prison to the peak of success
  • ‘Asedillo’ location thrives
  • Business

  • Philippine Airlines to stop shipment of shark fins
  • PH banks not ready for Asean integration
  • Stocks down on profit-taking
  • Banks allowed to use ‘cloud’
  • SMIC to issue P15-B bonds
  • Technology

  • ‘Unlimited’ Internet promos not really limitless; lawmakers call for probe
  • Viber releases new design for iPhone, comes to Blackberry 10 for the first time
  • Engineers create a world of difference
  • Bam Aquino becomes Master Splinter’s son after Wiki hack
  • Mark Caguioa lambasts Ginebra teammates on Twitter
  • Opinion

  • Editorial cartoon, April 24, 2014
  • Talking to Janet
  • Respite
  • Bucket list
  • JPII in 1981: walking a tightrope
  • Global Nation

  • PH seeks ‘clearer assurance’ from US
  • China and rivals sign naval pact to ease maritime tensions
  • What Went Before: Manila bus hostage crisis
  • Obama arrives in Tokyo, first stop of 4-nation tour
  • Believe it or not: Filipinos love US more than Yanks
  • Marketplace