Which Investment is Best for You?


What is the best Investment
The are many ways to grow your money. It's just a matter of knowing which among these opportunities would best help you meet your targets. That's why one of the most important advise you'll get before starting is to always consider your plan, target and timeline.

Identifying these three is very crucial in deciding which investment vehicle will make most sense to you.


One of the most common mistake when people decide about investing is that they always look first with how much money or gain will they make. So when the returns fall short of their expectations, they are easily discouraged and subsequently look for another one.

Your plan, target and timeline are important because they would give you a clear entry and exit points. You should plan when to invest, how much, how long and how often. You should also have a clear target of how much your target is, be it on gain or total invested amount.

Where do you plan to use the money? Are you planning to buy a franchise worth P100,000? Do you simply want more financial security for your golden years? Are you a passive or active investor? Are you okay with letting other people manage your money for smaller gains or are you more aggressive in doing it on your own, including the risks? These are only some of the questions that you need to ask yourself.

Once you're ready with your plans, target and timeline, it's time to learn more about the different investment options that are available. Here they are..

PERA
The Personal Equity Retirement Account (PERA) is a voluntary savings and investment account that is primarily intended for, obviously, retirement. Note that you may only invest up to P100,000 per year (P200,000 for OFWs).  
 
PERA
 
While the earnings may not be as high when compared with the other investment options included in this list, rest assured that it will earn better than that of a regular savings account. That's because the money will also be invested and regulated by the government. But as a bonus, the income you'll earn from your PERA account is exempted from tax (provided you withdraw at age 55 and beyond).

PAGIBIG MP2
The Modified PAG-IBIG 2 (MP2) program is an optional savings scheme (5 years, renewable), designed to provide PAG-IBIG I members with another savings option that would grant them with higher earnings than those given under the PAG-IBIG I membership program.

PAGIBIG MP2
 
Therefore, you must be an existing PAG-IBIG I member in order to avail the MP2 program. One notable feature of this program is that the contributions and earnings are guaranteed by the government. Find out more about PAGIBIG MP2 program here.
 
Stock Market
The stock market, as tricky as it may sound, is simply a platform where you can buy shares of known, big companies in the country. The logic on how you'll earn is quite simple as well: buy low, sell high.

Stock Market
 
The good news is that you don't need a broker or physically go to a company you wish to buy shares from. You just need to open an account with an online broker, fund your account and start buying shares! A simple and detailed explanation for beginners can be found here.
 
Mutual Funds / UITF
A Mutual Fund is basically an investment company that pools together money from different investors and invests them in the stock market, government securities and other investment options available to the public.

Mutual Funds / UITF
 
If you want to invest in the stock market but you have no feel for trading or deeper study of it, mutual funds is a safe choice. Unlike in the stock market where you directly invest and do it yourself, there are professional fund managers that will do the work for you. These funds are being managed by professional fund managers, people whose job is to study the market and all kinds of investment instruments. You can learn more about Mutual Funds (and UITF) here.
 
VUL
Variable Universal Life (VUL) is a type of life insurance that carries both a death benefit and an investment feature.  The investment feature works almost the same with mutual funds, which allows the policy holder to also choose the fund type of the investment feature.
 
VUL
 
One major advantage of VUL over traditional term insurance is that if the policy holder is still alive after the maturity date of the policy, he or she receives the invested money based on how the fund performed. The disadvantage is that getting a VUL is more expensive than getting a term insurance.

Franchising
Franchising is probably the most popular option on this list due to its high demand and awareness of the public. People are enticed by the idea of running a business with a proven system on their own. Simply put, a franchise is a license or permit that allows the franchisee the use of, but not limited to, the system, trademarks and sell the products or services of the franchisor.

Franchising

However, getting a franchise does not automatically translate to success or fortune. There have been numerous failures among franchisees, especially when they really don't understand what they're getting into. There are pros and cons in getting a franchise or simply starting your own. But the most basic advise is to only get a franchise with an already popular and stable business. Some people simply get a franchise because it's cheap, and that's very wrong! Why not create your own instead?

The advantage of getting a franchise is that you're saved from all the headaches of what the usual start-up company is required. Company name, logo, marketing, product development, permits, training, hiring, and a long list of to-dos go on. With a franchise, you'll simply pay, attend the training, find a location, get your crew and that's it. They'll even assist you on your opening day and marketing!

However, you're not allowed to sell other products or change the pricing. Some also require loyalty fees which you have to pay on top of the initial investment you paid, while most franchisors also collect renewal fees every three or five years.
 
Cooperative
A cooperative or simply coop, is an association of people who voluntarily cooperate for a mutual benefit. It typically runs one or more businesses that are owned and managed by the members of the coop themselves. In short, it's a jointly owned enterprise engaging in the production or distribution of goods or the supplying of services, operated by its members for their mutual benefit. Coops are regulated by the government body called  Cooperative Development of Association (CDA).
 
Cooperative
 
There are different types of cooperative and many cooperatives registered under that type. Just be sure to check if it's registered at CDA. Also, the earnings and rates varies from one coop to another, so the best way to find out more about a specific cooperative is to attend their Pre-Membership Seminar (PMES) which is a mandatory requirement before you can join one. You can read the basic things you need to know about cooperatives here.
 
Crowd Funding
Crowd Funding has the same concept of a cooperative. You buy shares or fund a percentage of a certain business and co-own that business.

Crowdfunding
 
For example, I wanted to open a 7/11 franchise, which costs 1 million pesos, but I only have P500,000 on my savings. Instead of applying for a loan and pay high interest rates, I can find other people who are willing to invest their money on my proposed plan, which is to open a 7/11 store. Of course, we'll share both the profits and the risks. But the good thing is that I will manage the business, while you just wait for your earnings.
 
Agri-Business
More popularly known as online pa-tanim or pa-iwi program, this type of investment creates a win-win scenario for both investors and farmers. It's basically the typical “pa-iwi” program where you fund a certain project, such as raising a goat or planting crops, and the farmer takes care of the rest.  The profit is then divided between you and the farmer on a mutually agreed percentage.

Agri-Business
 
Imagine that same scenario, only this time, using an online platform. It will eliminate the need for you to physically visit the farm before, during and after harvest since you can monitor everything from your online account.
  
Cryptocurrency
Arguably the option with the highest risk in this list due to its high volatility, more and more people start to catch up with the Crytocurrrency mania. There has been quite a lot of fuzz going on about Cryptocurrency, particularly Bitcoin. For some, they say that the Cryptocurrency is the next big thing in the financial world. While skeptics see it as another bubble, waiting to explode as it is not backed by anything.
 
In countries that accept it, you can buy groceries and clothes just as you would with the local currency. You can use it as a form of payment for your online transactions the way you do with online banking. The notable difference, of course, is that Bitcoin (or any form of Cryptocurrency) is entirely digital. Meaning,  no one is carrying actual Bitcoins in their pocket. There have already been numerous articles that best explains what Cryptocurrency is and why you should or not invest on it.
 
Cryptocurrency
 
There are 2 ways to earn money: (1) mining and (2) trading. Mining involves solving some heaven-knows-what-algorithm-is-it problems where you are rewarded for doing so. There are 2 ways to do mining: (1) via cloud and (2) setting-up your own hardware. Trading is just like how the stock market works, you buy digital money using your real money, hope it gets high, and you sell to take profits.
 
As with any form of investment, never put your money on something you don't truly understand. Don't invest only because your friends are doing it.

Real Estate
This option needs the least explanation as it's already a popular and relatively old way to earn money. Of course, there are two major ways to earn through real estate investing: (1) buying a property, develop it and sell for a higher price and (2) buying a property and have it leased or rented. An important addition to what you may already know is that there are actually three broad categories of real estate (based on its use): residential, commercial and industrial. Residential include undeveloped land, houses, condominiums and town houses. Commercial include office buildings, warehouses and retail store buildings. Industrial include factories, mines and farms.

Real Estate

But contrary to what many think that real estate investing requires huge capital, some investors are actually making money out of zero to little capital. How? They'd find a good property, loan an amount for paying the upfront, and have it rented. Some claim that the rental fee would sometimes cover not only the monthly amortization of the unit but also the monthly fee of the loaned amount used for paying the downpayment. Of course, this method requires serious study and probably, years of experience in real estate.

Forex
The concept of trading and making money from Foreign Exchange, or simply “Forex”, is similar on how the stock market works. You buy at a price then sell for profit. The notable difference is that instead of trading shares of a company, you trade money. Yes, Forex trading is where the currency of one country is traded for that of another, having the US Dollar (USD) as the most commonly traded currency pair.

Forex

Forex trading is always traded in pairs. The most common currency pairs are the Euro Dollar (EUR/USD), British Pound (GBP/USD) and Japanese Yen (USD/JPY).

Your Turn
If you have other investment ideas you'd like to share, please let us know in the comments section!
 
PisoandBeyond
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55 comments:

  1. Jared SantosDecember 19, 2017

    Allow me to give "actual" samples for each that I have:

    Mutual Funds - PhilEquity, Soldivo, PhilAm Life and Sun Life
    UITF - BPI Equity
    VUL - Sun Life and PruLife
    Franchising - Siomai King (Planning to have Potato Corner by 2018)
    Cooperative - KsK Cooperative, Nutriwealth (Planning to join FILO Coop by 2018)
    Crowd Funding - PhilCrowd
    Agri-Business - FarmOn
    Cryptocurrency - Bitcoin and Etherium

    ReplyDelete
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