Investing 101 - a guide for the newbie Filipino investor

Where to invest spare money

So you have extra cash? Wondering how to start investing and creating wealth? Here are choices a wise man (and woman) can consider:

The banks in your locality: The good-looking tellers there are your friends. Think more than just opening and maintaining a savings account. Consider Time deposits: Your money will be kept by the bank for a fixed period (30 days, 60 days, 90 days or more) in exchange for a higher interest rate than an ordinary savings account. How about a fancier product
like the Foreign currency? This is simply making deposits other than the Peso, like the US dollar or euro. Exchange rates are key here. The higher, the better for you.

Join your local Cooperative. Not everyone knows this avenue. A lot of people even belittle the existence of cooperatives in their locality, not knowing anybody has a chance to get rich via a strong and hard-working coop. I encourage you to personally pay a good cooperative a visit. They have programs similar to banks like savings and loans. Goods and services from them are even cheaper if you become a member.

The stock market: My personal view is that you will have to be experienced with any one (or both of) the first two choices explained above to consider getting into stocks. When investing in the stocks of a company, in effect, you get to own a portion of that company. This is a personal favorite as I know for a fact that recent Philippine history has proven that this is the most effective way of creating personal wealth. Although I must emphasize that this is over the long term. Meaning this requires 10 to 15 years of investing. Even 20.  

Mutual funds. This is the “bakas” system of investing. Your placements (meaning, your cash) are gathered together with other placements of other investors to be invested in money market, stocks, and bonds based on their market study. Professionals handle the management work for your peace of mind. This is simpler than the stock market, so I suggest you get to try this first.

Finally, try to find your niche and put up your own business. This takes a higher level of maturity though as already, you will be doing payrolls, accounting, taxation, etc. It is however a fulfilling endeavor. Especially if your business has a positive social impact. This is an example of an affordable, yet fulfilling business venture.

Get serious with your investments. Any rate higher than the inflation rate is a good deal. Hence, our battlecry: Beat the inflation rate. This is the first rule. I even personally think that this is the ONLY rule. Remember that the goal is to not only preserve your existing cash, but to make it more by the time your working days are over.

PS

There are actually no guarantees in this life of ours. Especially if you’re living in the Philippines. The above are just ways and means to creating wealth; Instruments and avenues available in the Philippines which we normally say no to.

I say it’s high time we become wise.