There are a lot of different ways to invest, which is great news if you’re trying to look for one that matches your needs.
However, it can also be a challenge to go over your options when you’re a beginner and aren’t quite sure where to start. Read on to discover a few choices to consider as you make your first investment.
What makes a good investment for beginners?
In the Philippines, you’ll find a lot of options like stocks, bonds, pooled funds, and many others. As a first-time investor, you’re likely looking for a product that meets one or a few of these requirements:
- Easy to understand
- Can help you reach your goals
- Involves a level of risk that you’re comfortable taking
- Has an affordable starting amount
You may have different requirements in mind that align with your unique goals. That’s why there are a few things to know and prepare before choosing your first investment.
It will be easier for you to filter out options and find a good match once you understand your risk profile, money goal, and time horizon.
Where to invest your money as a beginner in the Philippines
As a newbie investor, you may want to test the waters first with a product that’s easy to manage. If that’s the case, an ideal investment is one that won’t require too much money or time for research and upkeep. Here are 3 choices:
1. Time deposits
If your money is in regular savings accounts and you want to see what else is out there – but you aren’t ready to take on a lot of risk – then time deposits are worth looking into. As a bank product, time deposits are a lot like savings accounts, although there are key differences.
Time deposits generally offer higher interest rates than regular savings accounts. This is because your money will be locked away for a certain period.
Why time deposits are good for beginners:
- Fixed, guaranteed growth
Your money will increase at a predictable rate. You’ll know exactly what you’ll get at the end of the term.
- Low risk
With a fixed interest rate, there is very little chance of losing money. Time deposits also covered by the Philippine Deposit Insurance Corporation (PDIC) within certain limits.
Learn more about investing in time deposits in this article.
2. Voluntary savings programs
Savings plans are ideal if you want to put money away for medium- and long-term plans while also giving it a chance to grow. Examples include the Modified Pag-IBIG2 (MP2) and SSS Personal Equity and Savings Option (PESO).
How will you earn through these programs? Each one puts money in different investment vehicles and your earnings will depend on the investments’ performance.
Check out a quick comparison below.
| Savings program | What it invests in | Maturity period |
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Pag-IBIG MP2 |
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| SSS PESO |
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Why voluntary savings programs are good for beginners:
- Medium and long-term investing
Savings programs encourage members to leave their investments untouched for certain periods. They can help you start putting away money for major life goals like home ownership and retirement.
- Low minimum investment
They require a relatively low minimum amount to start investing. For MP2, you can invest with P500, while PESO’s minimum contribution is P1,000. You will not be required to add money every month and the payment schedule is up to you.
These savings programs may also offer tax benefits which means your earnings will be tax-free. Make sure to check the unique requirements and features of each option before applying.
3. Pooled funds
When searching for investment options, you’ll likely hear about choices like bonds and stocks. Can you invest in those as a beginner? There’s no concrete answer to this, but you should know and can withstand the risks before making the decision.
If you aren’t confident enough to invest directly yet, pooled funds offer another way to put money in these assets. Pooled funds include mutual funds offered by investment companies and Unit Investment Trust Funds (UITFs) available through banks.
Why pooled funds are good for beginners:
- Wide array of options
There are many kinds of pooled funds that invest in different types of assets. Because of this, you have a high chance of finding one that matches your risk profile and preferences.
- Relatively affordable
In a pooled fund, you’re combining your money with the money of other investors. This makes it easier to invest in some products, especially if you can’t afford the high minimum requirement if you invested by yourself.
- Managed by experts
Pooled funds have dedicated fund managers who do the research and decision-making. You can rely on their expertise instead of doing things on your own.
Read our articles about investing in mutual funds and UITFs to learn more.
Keep in mind that your choices are not limited to the ones listed above. It’s ideal to consider different investments and diversify your portfolio once you’ve gotten the hang of investing.
What’s next:
