List of the Best Investments in the Philippines for Beginners

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Written by: Maine Dela Cruz

Tired of applying for personal loans and sometimes wish money could grow on trees? Are you now looking for the best investment for beginners?

In the minds of many Filipinos, the only way to make money is to work hard to earn it. The only way to make money is to either supply a service for a fee or manage your own company. A less well-known approach to generate money is to make it work for you. This includes putting your money to work in order to increase its value. When you invest, your money grows in value over time, either through compound interest or by purchasing an asset and subsequently selling it at a higher price because its value has risen.

Filipinos, according to a BSP poll on financial inclusion for 2019, have an investment of only 25% of their disposable income. Investing correctly may help increase your money. Read on to familiarize yourself with the fundamentals of investing.

What Does Investment Mean?

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An investment is an asset or thing acquired with the expectation of future income or appreciation.

Two things come to mind when thinking about investment: time and appreciation. Investments are meant to grow your money over time. Assume you want to invest in real estate. Buying a home to live in is not an investment because it does not generate income. But buying a property to rent out becomes a smart investment because it pays for future requirements.

A return on investment (ROI) is a performance indicator that measures an investment’s efficiency. The higher the ROI, the better.

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Investment Advice For Beginners

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What are the first steps you should take as a novice investor? Considering everything you’ve learned so far, you might be hesitant to invest because there are so many things to be on the lookout for. Here’s some investment advice:

1. Make a financial plan

Investing shouldn’t be done only for the sake of investing. Make a budget and stick to it. Knowing why, how long, as well as what you want to gain from anything is critical. In other words, you’ll be squandering your money on something you have no idea about and will later regret investing in it in the first place.

Decide what you want to achieve.

What do you hope to accomplish in the next year? What are your own goals for the future?

Recognize where you stand financially.

Knowing your present financial situation is essential for knowing how to achieve your goals.

Organize your finances by creating an investment strategy.

At this point, you’re looking for methods to better your current position so that you can reach your goals in the future. This might include setting up a spending plan, saving money, getting a second job, or starting a side company.

Build a strong financial foundation to safeguard your business strategy.

Check your insurance and emergency fund levels, and make a plan to deal with your debt.

2. Determine how much you need to get started

While developing your financial strategy, it’s critical to know how much each of your goals will cost and how long it will take to achieve them. If your plan includes both a cost and a timeframe like this, you’ll have to decide how much money you want to set up for your objectives next.

If you know how much money you want to spend, how long it will take to get there, and how much capital you’re prepared to invest, calculating how much growth or return you can expect is simple.

3. Exercise due diligence

It’s critical that you do your homework to prevent falling victim to investment fraud. Know the specifics of any investment option you’re considering, such as a mutual fund, a company franchise, or a government-sponsored savings program.

Types of Investments in the Philippines

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Before we discuss the list of investments you can venture into as a beginner, here are the types of investments in the country:

1. Cash Equivalents

The whole worth of cash on hand, including goods that are similar to cash, is used as an investment asset. Cash equivalents are the safest investment for short-term investors because of their low risk.

2. Lending Investment

Lending money is a type of investment, but did you realize that? Even if the rewards are modest, lending money to a firm at a profit makes sense. Because you may get your money back at any moment if you make a loan investment, it’s regarded to be less volatile and less risky.

3. Ownership Investments

If you are starting off with a small business, this kind of investment adds to your capital. The amount of ownership you have is determined by your investment portfolio or how many assets you have invested in the business. At the conclusion of each year, ownership investments are tallied up with an increase in your contribution that generated profit or interest.

Best Investments for Beginners

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For individuals who are just starting off, you need to do extensive research on the best investment for beginners to see what best fits your personality and budget. Here are some great investing options and their minimum investment requirements:

1. Stocks

Stocks need an initial investment of PHP 5,000.

These are one of the riskiest yet most lucrative kinds of investments. If you’re thinking about making an investment in the stock market, be sure you know when to purchase. It is still a smart idea to start with stocks if you have the patience to part with your money for at least five years.

You become a part-owner of the firm by purchasing stock, which entitles you to a share of the company’s worth and revenue.

In the future, what if you decide to buy the entire stock market? Or the entire consumer industry like malls, groceries, etc? Is it possible?

That’s why index funds are created. They are investment funds that are managed in a way that they mirror the stock index.

So when you invest in index funds, what exactly happens? Remember that the fund is going to be pooled from all advanced investors. The money then is used to buy the stocks that comprise the index, which would become the assets of the fund.

The entire worth of the fund (which is asset minus costs of its operation) would then be computed, and then divided into stocks, shares, or units. They will then be issued to you as proof of your ownership or participation in the investment. Each stock, share, or unit already contains all of the companies.

How to Start Investing in Stocks

To start investing in stocks, here are some things you should consider:

Step 1: Choose a broker

PSE accredits hundreds of licensed full-service brokers. You can select the service that best suits your needs.

Step 2: Investing online (COL Financial, First Metro, and Phil Stocks)

Clients of online brokers can contact them online. Clients execute orders and have direct market access. COLF has been praised as the best online investment platform. Currently, you may fund your account for as low as P1,000.00.

Step 3: Traditional (Use a licensed full-service broker or salesman to handle account)

Your account is given to a licensed salesperson who takes orders over the phone.

Step 4: Open a stock trading account

To open a stock trading account, the trading costs start at P1,000. Fill out the forms and mail them in. You can also visit their office in Ortigas for rapid paperwork verification and clearance.

Step 5: Make a deposit

You may fund your account online. Once authorized, COL will provide you with the bank account information. You have three months to fund your account before it is activated.

You can either put money into your broker’s account or directly deposit it.

Step 6: Place your purchase online or by phone with your stockbroker.

Again, before buying or selling, research the company you wish to invest in. Begin with Benjamin Graham’s The Intelligent Investor and Robert Kiyosaki’s Increase Your Financial I.Q.

Beginners can purchase stocks regularly with the same amount of money. To invest long-term, do this. Long-term growth is achieved via the Peso-Cost average.

Step 7: Track your investments

Investing is a continuous activity as you may wish to watch your stocks’ progress. You can log on to the website of an online stock brokerage like COL. You can get all the data you need.

2. Bonds

Another one on our list of best investments for beginners is on bonds. Bonds need an investment of PHP 8,000.

There is a high level of risk involved with stock investing and having your own business. It’s possible to invest in less risky assets like bonds if you’re not comfortable with taking calculated risks.

Corporate bonds and government bonds are both types of debt obligations. Bonds have the advantage of paying a fixed amount over a given period of time regardless of the profits or losses of the firm.

You may have the benefit of growing your investment; however, you won’t be able to benefit from a company’s expansion. While it’s a low-risk investment, it’s also low-return.

3. Managed Funds

Owning individual stocks and bonds may be out of reach for the majority of Pinoys due to a lack of time and knowledge. As a result, they’re better off leaving the management of their investments in the hands of a financial institution. Managed funds exist to help with situations like these.

Examples of managed funds include mutual funds, unit investment trust funds, exchange-traded funds, and Personal Equity and Retirement Account.

Mutual funds

To invest in mutual funds, you’ll require PHP 5,000.

It is possible to invest in many types of assets by using mutual funds, such as stocks and bonds. When compared to stock investing, investing in mutual funds is a great option for new investors since a professional fund manager makes investment decisions instead of the investors themselves.

Here are some of the advantages of investing in mutual funds: First, mutual funds are among the best investments in the Philippines, especially if you are a beginner and have no time and expertise to monitor your fund’s performance. Second, the higher your investment and the longer you invest, the higher profit you’ll get.

Exchange-Traded Funds

Mutual funds (MFs) and unit investment trust funds (UITFs) are both examples of exchange-traded funds (ETFs). Investors acquire stocks or shares in firms like PLDT, Jollibees, Aboitiz, SM, Ayala, and so on through this company.

The whole value of the company is divided into stocks that are traded on the stock exchange, and it is valued based on the value of all the shares it owns. These ETF equities can then be purchased by investors for the purpose of investing.

There isn’t any certain amount you have to put up as a down payment. As stated by the Philippine Stock Exchange, the minimum number of stocks you can acquire will be determined by the price and minimum board lot of the stock you wish to purchase. For shares priced between PHP 100 and PHP 199.99, you can purchase a minimum of 10 stocks.

Personal Equity and Retirement Account

For retirement planning, you can open a PERA or Personal Equity and Retirement Account (PERA). The legislation enables everyone to begin saving as soon as feasible. The program is completely optional, so anyone at any partnering institution can take part at any time. If you have a job in the area, you are allowed to invest up to PHP 100,000. Meanwhile, PHP 200,000 is the maximum contribution for OFWs.

You’re free to increase your investment. However, the account does not give investors any tax benefits if there is an excess balance.

4. VUL Insurance

PHP 1,500 – PHP 3,000 is the minimum investment required in VUL.

VUL is a type of life insurance that combines both life insurance and investment opportunities into a single policy. Because professional fund managers manage their money in VUL, it’s a good choice for first-time investors. Even if you do not currently have life insurance, this is an excellent solution for you. VUL is, without a doubt, one of the best Philippine investing options.

5. Government Retail Treasury Bonds

Bonds issued by the government are known as Retail Treasury Bonds (RTBs). A quarterly interest rate scheme for retail investors and consumers.

Due to the government backing the RTB scheme, novice investors may readily invest. In addition, RTBs receive a set quarterly interest rate.

Newly issued RTBs are generally offered to the public via banks and other official selling partners during an “Offer Period” scheduled by the Philippines Bureau of Treasury. The initial issue or main market requires a minimum investment of PHP 5,000.

6. Cryptocurrency

If you believe in blockchain technology, cryptocurrency is a great long-term investment. There are lots of options for where to invest in cryptocurrency. In fact, Coinbase and Gemini are great options for beginners. You can deposit funds on these exchanges through their websites or on their mobile apps. Both Gemini and Coinbase let you buy crypto with a debit card, bank transfer or other cryptocurrencies. 

Key Takeaway

You can invest in more than one type of investment for a diversified portfolio. The key to successful investments is knowing and understanding their risks and the actions you have to take before committing to anything that involves your hard-earned money. If you like to DIY, so be it. There are even free trading seminars online.

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Invest wisely!

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