Earnest Stories highlights the money and investing experiences of experts, individual investors, and non-investors alike. Watch the full episode here.
For investment expert Enzo Domingo, investing should always be personal.
He believes a common mistake beginner investors make is investing in something they don’t understand or which doesn’t suit them. This often ends with selling at a loss.
So, what should new investors do instead? Enzo recommends a “goals matching” approach that involves picking investments that fit a person’s unique needs and objectives.
To do so, beginners can consider investing in Unit Investment Trust Funds (UITFs) which come in different types to suit different goals.
Why choose UITFs?
UITFs are investment funds offered by banks. The best thing about this product, according to Enzo, is that they’re beginner friendly.
He said a UITF is worth considering “if you’re used to time deposits or savings [accounts], and you want something that can give you a potentially higher return.”
Since UITFs pool investors’ money to buy assets like stocks and bonds, they can make investing more affordable. Enzo noted some UITFs are even offered at relatively low starting amounts of P1,000.
To know more about how UITFs work, read our article.
What’s the biggest misconception about UITFs?
Some people shy away from pooled funds because of perceived high fees, but Enzo believes fees shouldn’t stop investors from putting money in UITFs.
“Nothing is free,” said Enzo, adding that UITFs typically charge minimal fees of as little as 0.6% per year. “But the potential returns for those UITFS [may] exceed the fees charged by the fund,” he noted.
You can find out whether an investment’s fees are worth your money by checking how the costs might affect your actual returns over time.
For Enzo, another misconception about UITFs is that you need a lot of money or experience to invest. “It’s actually quite affordable,” he reiterated.
“One of the advantages of investing in a UITF is that it is managed by expert fund managers who know the market,” he continued.
He said investors can rely on professional managers’ expertise and treat UITFs as a potential source of passive income while they’re busy working for their active income.
Should everyone invest in UITFs?
“I firmly believe that UITFs were created so that every Filipino can access the financial market,” Enzo stated.
As baskets of investments, UITFs tend to be more budget-friendly than investing directly in a mix of stocks and bonds. This makes UITFs more accessible to most Filipinos, said Enzo.
He went on to share how people can start investing in UITFs. “You need to assess yourself. You need to have a plan.”
People can plan for their 1st investment by writing down their goals. From there, they can look for specific UITFs that fit their goals and risk tolerance.
Finally, asked about his advice for young people on how to handle money, Enzo said, “You have to seek for opportunities. I don’t believe a person gets lucky by waiting.”
“Seek for the opportunity, start investing small, start early.”
