Know thy investment, but know thyself, too

How does an investor make his money work for him (or her)?

There seems to be no easy answer, as financial industry experts will offer any investor a whole range of moneymaking options depending on his risk appetite and the amount of funds he has at his disposal.

Of course, investors can start building their fortunes with as little as P5,000 nowadays—the minimum amount required to buy into some mutual funds or the government’s retail treasury bonds—but most bankers and fund managers agree that, to make an impact on the bottom line, a larger kitty would be necessary.

Thus, we at the Inquirer decided to poll financial industry executives on where people should invest a theoretical amount of P100,000, given current market conditions, for them to experience the best returns without exposing themselves to too much risk.

Not surprisingly, stock market investments figured prominently in their recommendations, as recent headlines have been dominated by news about the record-breaking performance of stocks on the Philippine Stock Exchange, as well as of other bourses worldwide.

With a menu of choices, how would an investor know which one is right for him? Experts offer this final piece of advice: Knowing what kind of instrument to invest one’s P100,000 in is important but not as important as knowing what kind of return one is looking for—and the commensurate risk one is willing to tolerate.

Marissa Arce-Romero

Senior assistant vice president

Banco de Oro Unibank

“If someone has P100,000 and is ready to go beyond the traditional bank deposit products, I would strongly suggest to consider investing in the unit investment trust funds (UITFs). UITFs are funds from different investors with similar investment objectives that are pooled together and invested as one by professional fund managers.

“For a retail investor, participating in the UITFs is not just a good opportunity to gain access to the bond and stock markets, which are usually just available to bigger investors, but also an opportunity to avail themselves of the expertise and services of seasoned fund managers at lower costs.

“One can easily invest in UITFs since these are readily available in the branches of reputable banks with trust licenses. Like in the case of BDO, the bank has more than 740 branches that can offer a wide selection of BDO UITFs that will enable an investor to choose one or a combination of UITFs that can match his investment needs, financial requirements and even his risk appetite.

“BDO’s UITFs are very affordable in terms of minimum amounts and the fees that the bank charges are one of the lowest if not the lowest in the industry. With the BDO UITFs, one can even opt to do a one-time investment of his P100,000 or do it in tranches at regular intervals.”

Wick Veloso

Managing director,

Head global markets group

HSBC

“At this point, equities should form a significant part of any investor’s portfolio,”

“The dynamics of the financial markets have changed due to the massive amounts of cash released in recent months and years by the US Federal Reserve and the European Central Bank in their attempts to stave off the lingering effects of the global financial crisis.

“All the support by the Fed and the ECB has flooded the market with liquidity to the emerging markets, especially the Philippines. It depressed interest rates to levels that don’t entice people to consider (bonds) for capital gains but more for security.

“I would invest my P100,000 in local blue chip companies that would offer good returns while providing a certain amount of security for shareholders.”

Karen Roa

President, CEO

Philam Asset Management Inc.

“Mutual funds are a very good option at this point. These instruments offer investors the benefit of diversification and active management.

“These features are especially important during times of market volatility when constant attention is required—preferably from people intimately familiar with the market’s dynamics—for one to be able to make money.

“Mutual funds are also attractive because they offer investors a high degree of transparency (one can know at a glance how one’s portfolio performed in any given day) and investor protection.

“But if you’re looking for higher returns, equity funds are more suited for you.”

Chinky Lukban

Vice president,

Head of deposit product management

Bank of the Philippine Islands

“BPI Advance Savings Account is perfect for the conservative investor. It’s a good alternative to time deposit as it lets you enjoy your earnings just a day after you deposit.

“Interest rates are higher than a savings account, comparable with that of a time deposit without having your funds locked in and no pre-termination fees.

“The bank’s new approach to deposit accounts gives clients not only liquidity but fluidity as well as instant returns on your savings that is accessible where you want it, when you want it.”

Anna Martirez-Siapno

Vice president for marketing

Malayan Bank Savings and Mortgage Bank

“Malayan Bank offers a unique and secure investment plan called the Premium Saver. This deposit product guarantees a high yield plus monthly interest pay-out for a minimum placement of P50,000. I strongly recommend this investment to readers with extra cash.

“It feels great to save for the future and receive monthly pay-outs, too.”