Before you invest

I am happy to see that more and more Filipinos are investing. When I started my advocacy, I wanted to bring personal finance and investing to the mainstream and to see more of us achieve financial peace. To quote my friend and stock market advocate Marvin Germo, there should be “no Filipino left behind” as our economy recovers.

“Which investment should I buy: stocks or mutual funds?”—I get asked that question a lot. It’s always the same question but I give different answers depending on the person. As you begin to learn about investments, you’ll find out the different types of investments. Aside from stocks and mutual funds; there are bonds, unit investment trust funds, cryptocurrencies, foreign currencies and real estate as well. Because of the different types of investments, there is really no one answer to that question. Before you pick one investment over the other, it’s best to take note of these reminders beforehand.

Investing takes risk

As you read about the different types of investments, you’ll learn that these investments expose you to varying risks. In line with this, the riskier the investment, the higher the return on investment. Many Filipinos still prefer to put their money in time deposits because these are basically risk-free. You’re sure to get your 1-percent return after a year, unlike in stocks where you can lose your money one year but gain 10 percent or more the following year. Investing takes risk if you want a return that beats inflation.

Investing takes time

Time is a big factor in investing. That’s why I recommend for people to start investing as early as they can. I always relay the quote, “the best time to invest was yesterday, the next best time is today.” That’s why many fall for scams, because they’re promised with high returns in a short period of time. Investing, if you want to beat inflation and avoid market downturns, takes time. If you invest in the riskier alternatives such as stocks and real estate, condition yourself that you’re investing for the long term.

Investing takes knowledge

People are scared to invest because they fear losing their money. Many times, people would not take any risk at all. It’s a common notion that Filipinos are ultraconservative when it comes to money. That’s why they prefer to keep their money in a savings account or in time deposits. However, if you take the time to read and learn, you’ll find out that you lose money in a savings account because of inflation. This is the importance of knowledge. Investing takes knowledge and research. Don’t invest in anything you don’t know about. Read and educate yourself (even if you hire a financial adviser) so you know where your money is. This way, you’ll make the right investment decisions and avoid falling for scams.

Now that you’ve taken the preparatory steps to investing, you can read about the different types of investments. As you read along, you can make conscious decisions to decipher which investments most suit your needs and which do not.

Here’s another tip I have for you: invest in learning! Before you invest, investigate so that you realize that investing is empowering and not overwhelming. INQ Randell Tiongson is a registered financial planner of RFP Philippines. To learn more about personal-financial planning, attend the 99th RFP program in January 2023. To inquire, email [email protected] or text 0917-6248110.