- What is investing?
- Facts about investing
- Investing with a small amount of money
The term "invest" always pops-up in any setting that alludes to the business environment.
We hear it in banking, trading, marketing, even networking, etc.
It's a very common word that we always assume it is so simple an undertaking for those who have resources from which they get the fund.
In the context of finance, invest — correlates with money. You can't complete your project of investing if you have no money to invest.
Nevertheless, this is not to mean that people in the low-income bracket will never be able to invest. There are investment programs fit for low-income individuals like you.
What is investing?
Investing is a financial vehicle of allocating available cash and use it as a capital for a particular nature of managing one's money so that it grows and returns to you with profit. In a manner of speaking, investing is making your money works for you, which makes you a smart person.
Facts about investing
1. Higher interest rate
Unlike any type of bank account, investment platforms offer you higher returns of investment, which is why investing your money and doing it properly, is the fastest way to prepare for the future.
2. Investing involves risks
These are financial losses that investors may experience, which are brought by inherent uncertainties in the financial and business environments such as inflation, volatility, fluctuating interest rate, etc.
3. High-risk and low-risk
These are the only two certain options you face from which you choose in investing your money. It's so simple to decide once you made up your mind. The rule is: High-risk investment gives the potential of high returns. Low-risk investments yield low returns.
4. No guarantees
As there are the risks in investing, it follows that interest rates, returns, and profits are not guaranteed. The figures in a particular investment plan are there for the purpose of presentation. That said, if all the factors are in upward trends, then the estimates in yields and earnings are achieved.
5. Knowledge first
It is included here because, as a matter of fact, you won't invest a large sum if you don't have any idea what is it you are entering into. You must equip yourself with knowledge. To overcome a lot of jargon in investing say yes to investment seminar invitations coming your way./p>
Investing with a small amount of money
We always relate investing with stocks which even if they say that you only need 6,000 or 10,000 to open an account in stock trading, well, that would only be it — an open trading account. You really need to invest more in the stock market. Below are three of the low-cost investment plans, which also considered as low-risk:
1. Mutual fund
Here, your small amount of investment is added to the collection of other small amounts of investments from other small investors.
Then the gathered money is pooled together to get the aggregate amount that in turn will be invested in high-yielding assets and instruments like money market, stocks, bonds, etc.
Mutual Fund is a good starting point for a newbie investor as you get to monitor the performance of your investment fund. However, an option is always available for you to have a Professional Fund Manager who would take care of that.
You can start a mutual fund investment plan for as low as 5,000 to 10,000 pesos. Mutual funds, considered as low to high-risk an investment vehicle, are sold by registered investment companies through SEC-licensed Certified Investment Solicitors.
2. Unit investment trust fund
Similarly, in UITF, money from different investors are pooled together to come up with large aggregate to invest.
The similarity ends there because the fund collected in UITF is used to buy you investment units, not shares which you buy in Mutual Fund.
UITFs are offered by banks, but they are not considered as deposit product, and so your money invested in UITF is still not covered by PDIC or Philippine Deposit Insurance Commission.
If you maintain a savings or a deposit account, you can approach the staff or the manager of your bank and inquire about the UITF. They are more than happy to help and guide you every step of the way.
In fact, some banks conduct free seminars about their investment products.
If you have 15,000 to 20,000 just parked in the S/A, you can use that and let that money work for you to achieve maximum earning potential not achievable in any savings account or time deposit for that matter.
3. Retail treasury bond
Retail Treasury Bond is the most low-risk investment that you can find as per my knowledge. This is because this kind of bond is offered and sold by the Philippine Government to retail investors.
Bonds offered by private corporations can be considered high-risk as anything detrimental to the existence of a certain company is always present.
With the government's treasury bond, you can rest assured that your principal goes back to you on the maturity date.
You make money in treasury bond by being loaner of the government with interest rate coming to you higher than any deposit's prevailing rate in commercial banks. You receive your interest which constitutes your earnings in any of these pre-determined schedules — annually, semi-annually or quarterly.
Meanwhile, you can only get your principal back on the maturity date. Minimum investment ranges from 5,000 to 10,000.
If you think RTB is for you, it would be perfect if you talk to an officer of the institutions to which selling of RTBs are entrusted by the government — commercial banks. You don't need to get far as you can talk about RTB to your bank's manager or assigned officer.
Final thoughts
In investing, you have to begin somewhere. Starting right deters regrets in the future. There is quite a lot of investment information on the internet. Using them as a guide is a good start.
Scratching the surface through attending seminars by financial and investment institutions is the perfect next action plan. It helps you identify your risk profile, short and long term goals, etc. Ultimately it gets you to the right path on deciding which is the right investment plan for you.
Have you invested any amount in an investment? Can you share so that we might study it? If not, what are your primary reasons you haven't got to investment yet? Kindly use comments' box below.
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