Where to invest money in the Philippines? Here are your 9 best investment choices

Only few people invest a part of their money. If you’re reading this because you decide that you want to invest, congratulations on taking the first step.

The second step is choosing where to invest. This step is also sometimes the hardest because if you’re a new investor, there’s a chance that you are not familiar with the investments on where you could invest.

In this post, I will share to you the best investments that you could invest in.

Another reason why most people don’t invest their money is that theydon’t have enough money left to invest.

Even though you are having difficulties meeting your spendings. It is still possible to  invest. If you’ll just have the discipline to budget your money.

Also it doesn’t take that big amount of money to start investing. You can invest in some investments for as low as P1,000 . Later I will show you theaffordable  best investments.

Here are the 9 good investments that you can invest in ( in no particular order) 

 #1 UITF (Unit Investment Trust Funds )

UITF are pooled funds. Money of investors are pooled together and then invested. UITF is a good investment because UITF is:

• simple
• easy to start to invest in
• low minimum required investment

UITFs are invested in stocks, bonds and money market instruments. It is a good investment because they are professionally managed. UITF investments are also diversified resulting to less risk . 

Also it is easy to start investing in UITF. UITFs are offered by banks. To open an account :

1. Visit the bank where you would invest.
2. Bring valid IDs and your initial investment (P10,000 in most UITFS).
3. Fill up some form and deposit your money. 30 minutes later you will have your UITF investment.

If you want to invest in the stocks but don’t have the time to track your investments. It is a good idea to start investing in UITF first.

To me, the best thing about UITF is that some UITF allows you to SAVE AND INVEST at the same time.

For example, BDO has Easy Investment Plan and BPI has Regular Subscription Plan. This is where they will automatically deduct a fixed amount to your bank account, then  invest it. It could be semi-monthly, monthly or quarterly.  And the minimum amount is P1,000. This is great for those who just started working. If you are a millennial and just started working. Allocating P1,000 a month for investment  is  very much possible. 

In investing, if you are young, it is very important to start early.  

If you like to know more about UITF,  I have a separate articlehere.

#2 Mutual Funds 

Mutual funds are very much the same as UITF. They are also pooled funds invested and manage by professionals.  One of the major difference is that Mutual Funds are regulated by SEC while BSP regulates UITF. 

Mutual Funds are good investments because they are professionally managed. They also provides you with diversification.Mutual funds has also low initial investment. Most mutual funds only requires P5,000 initial investment.

Mutual funds invest in stocks, bonds and money market instruments. If you want to invest in stocks in a simple way, mutual funds are a great investment  choice along with UITF.

#3 Stocks

Stocks is probably the most famous type of investment. When people hear the word investment, most of the time the first thing that comes to their mind is investing in stocks.

Stocks are ownership in a company. You can earn money in stocks through:

1. Dividends- payment made to owner of stocks.
2. Gains- when you sold the stock more than what you paid for it.

To start buying shares, you need to open an online brokerage account first. Here is the list of online accredited brokerage firms.

Investing in stocks may require some time and effort to learn. You’re face with the decision of what stocks to buy.

If you want to invest in stock market but don’t have the time to learn the process of investing in stocks, your alternative is to invest in pooled funds like UITF and Mutual Fund.

#4 Government Securities

Goverment Securites (GS) are bonds issued by the government. A bond is where you invest a principal amount that will be return to you after the term of the bond. Over the term of the bonds, you will earn fixed interest.

GS are investments that are virtually risk-free and return of your investment is guaranteed.

GS pays fixed interest at prevailing market rate. The most common type of GS are Fixed Rate Treasury Notes (FXTN) and Retail Treasury Bonds.(RTBs)

FXTN pays interest semi-annualy while RTBs pays interest quarterly.

To invest in Government Securities, go to your bank and ask if there is an offering of FXTN or RTB.

If you like to learn more about bonds, here is a more detailed article.

#5 Business

Putting up a business is one of the best investment in the Philippines. However it is risky and will take a lot of time. Also the need for capital is one of the biggest obstacle.

Anyway there are still business ideas that won’t need you to invest  your lifetime savings. You know someone who has a sideline and makes money from it on his free time. Here are most common business ideas you can earn money:

• Selling. Whether beauty products,bags, clothes etc. Nowadays you can open an online store without even spending a cent. You can sell through Facebook, Instagram, Shopee etc.
• Consulting. If you’re an expert in something. Why not earn from it? You earn money and also you help others by sharing on what you’re good at.

#6 Real Estate

Real Estate is a popular choice among Filipinos. It is one of the considered best investments because these type of investment is tangible. Unlike stocks, bonds ,mutual funds, real estate is a physical ownership.

You can earn in investing in real estate when you sold your property or when you rent out the property. ( I will not talk about this investment because this type of investment is not really the expertise of this blog, there are other blogs and lots of books written about investing in real estate. This is just to give you an idea of the investment opportunities out there.)

#7 PERA

PERA stands for Personal Equity and Retirement Account. If you’re not familiar with PERA, PERA is a retirement account. The retirement account is invested in  UITF.

If you’re planning for retirement, this is one of the best option. Advantages of investing in PERA includes:

• You can deduct 5% of the amount you contributed to your tax.
• The earnings of the PERA fund when you withdraw are exempt from tax. 

Currently PERA is only offered by BDO and BPI. The minimum investment in PERA is P1,000.00. If you’re interested in having a PERA account, just visit these 2 leading banks and inquire about it. 

#8 Insurance

I’m actually torn apart whether should I get a life insurance or not. There is this running joke that insurance is the thing that make you rich when you’re dead. Despite that joke, insurance is one of the common investments that people invest in. It is because insurance is frequently marketed by agents.

So should you get an insurance?  If you will get one, I suggest getting first a Health and Accident Insurance. Life insurance is usually for family members. If you can afford one , go get one.

Some said that  before you invest first, you need to have an insurance and emergency fund.Is this true? We will talk about that later at the end of this post.

#9 Invest in yourself

(Okay this is a bit cheesy and doesn’t provide a return of investment in form of money but hear me first). When I say investing in yourself, I don’t mean buying things like gadget, clothes or car for yourself.

Instead invest in yourself in this two particular things:

• knowledge
• health

Why you should invest in knowledge? I owe a lot of most of the things that I know because I read books. Investing in knowledge is not going back to school or enrolling for something. In fact, I can say that I have learn a lot more from reading books than in school. You don’t need to spend any money to invest in knowledge. You can download an eBook on the internet on any topic that you want to learn. Money, business, leadership, meditation etc.

The second one is health, you wont probably realize this until its too late. So take care of your mind and your body.

An investment in knowledge pays the best interest. -Benjamin Franklin

Do you need to have an Emergency Fund and Insurance first before investing?

Some said that you need to have an emergency fund and insurance first before investing. This not a rule. This is what just other people say.

But what is the purpose of having emergency fund and insurance first?

It is to protect your investments when unfortunate events happen. If you don’t have emergency fund and insurance. In case of emergencies. You will be force to use  your investment.

This defeat the purpose of investing. Also investing is long term. So you will start over again. This is the reason why others recommend having emergency fund and an insurance first.

The problem with this is that bulding an emergency fund will usually takes time. Some says that emergency fund is 3x of your monthly salary. Let’s say that your monthly income is P20,000.You need to have P60,000 emergency fund first. This is harder than making your first initial investment of P5,000 in mutual fund or a P10,000 initial investment in UITF! It also delays your investing, in investing the earlier the better.

But don’t worry I got a solution for you if you believe that you have to build a emergency fund first.

Here’s what to do:

Invest now while building your emergency fund. You can never know when emergencies will happen. So start investing now while building your emergency fund. By investing now, you take advantage of the time. While also building an emergency fund that hopefully you won’t be needing. 

How to avoid investment scam

If you hear the words “quick easy money, risk free, double your money quick”. Beware, this might be investment scams.

The legit investments are registered in the government. So before you invest, always ask someone. Luckily we have the internet, we can research if the investment is legal . We can also ask others forum, facebook groups etc.

Stocks,UITF, Mutual funds, VULs are among the most popular investments in the Philippines. All of these are regulated by the government. So to be sure, before you invest:

• Investigate first before you invest.
• Check if the investment is regulated.

CONCLUSION 

There they are, our pick for the best investments in the Philippines for your money. No matter what type of investment you choose, the best thing to do is to do it NOW. There is no better time than today. Allocate a portion of your monthly income for investment. And do it regularly.

Home Budget: Cost-of-Living Reality Check

You’ve heard the mantra over and over: budget, budget, budget. This is money management rule number one as you graduate, start bringing home a paycheck and begin life in the real world. But if you’ve never had to pay for life’s essentials yourself, coming up with a realistic spending plan can feel like wandering in the dark.

If your parents have been covering or subsidizing your living expenses at home or college, you probably need a reality check before stepping out on your own. For many young adults, the combination of lower-than-expected take-home pay coupled with higher-than-expected living expenses can be a recipe for financial disaster. We’re here to shed some light on your finances and help you build a home budget that avoids surprises.

Your income

Let’s start with your paycheck. While you know that Uncle Sam gets first dibs on your hard-earned money, you may not be prepared for how much the government will take. For example, if you earn a salary of $35,000, you’ll likely only see about $28,356 after federal taxes, Social Security and Medicare are subtracted. That doesn’t include state taxes or any deductions from your paycheck for workplace benefits, such as medical and dental insurance or a retirement savings plan. When all is said and done, you’re likely looking at a take-home pay of—brace yourself—$25,350 or so per year. That’s a net income of about $2,100 per month.

Your expenses

Now that you know how much you can expect to bring home, you can divvy up your paycheck. Here’s a general guide to help you budget your money to make sure your expenses are covered. You may have to make some adjustments for your situation. If you spend less on housing, for example, you can put the extra money from that category toward paying down debt. The dollar figures in parentheses are based on our above example of a $35,000 gross salary with a monthly take-home pay of $2,110 per month after taxes and other deductions.

• 30%   ($634) Housing
• 10%   ($211) Utilities and other housing expenditures (including renters insurance)
• 15%   ($317) Food (at home and away)
• 10%   ($211) Transportation (including car loan)
• 10%   ($211) Debt repayment (student loans and credit cards)
• 10%   ($211) Saving
•   5%   ($106) Clothing
•   5%   ($106) Entertainment
•   5%   ($106) Car insurance and miscellaneous personal expenses

In terms of dollar figures, this actually breaks down pretty close to the lines of what things will actually cost you. Housing, of course, will vary depending on your location and also on whether you live alone or with roommates. Debt repayment is another wild card for which you may have to make adjustments. But for now, let’s take a closer look at the utilities and household expenses categories.

Utilities

We start with utilities, such as gas and electric. Your actual cost will vary by your location, season and how well-insulated your apartment is. If you live in Las Vegas, for example, you’ll spend a lot more on air conditioning this summer than someone in Minneapolis. But budgeting an average of $50 to $60 per month to power a one- or two-bedroom apartment should suffice. Many apartments come with garbage and water service included so you may not have to worry about that.

Renter's Insurance

For renter's insurance, a good policy can run about $200 a year—or $17 a month.

Internet, Cable, Phone

You can save money on your Internet service by going back to the stone age of dial-up. You can find service for about $10 a month. But if that’s too drastic for your lifestyle, consider getting high-speed service through your cable-TV provider. You can usually get a cut-rate deal for bundling services together. The national average cost for basic cable is about $15 a month—$30 for expanded basic, to which the vast majority of cable watchers subscribe. Add a high-speed Internet connection for $40, and you’d do well to budget $70 or so for the whole package.

You might save money on your phone bill by scrapping your landline altogether and sticking to your cell phone. (A bare-bones landline service typically costs about $20 to $25 a month.) Cell phone bills can vary widely by location, provider and, of course, your own personal use. But the average cell phone bill in the U.S. runs about $50 to $60 a month. If that’s too steep for your budget, consider using a prepaid cell phone that charges you only for the minutes you use. If that’s too conservative, you may have to look for other areas to cut back.

Total

Now let’s add ’em all up: $50 for utilities, $17 for renter’s insurance, $70 for cable and Internet plus $50 for your cell phone, and you’re looking at $187 a month. We had budgeted $211, so that leaves you a $24 cushion for those months in which costs may vary. And if you live with a roommate, you may be able to share the cost of your utilities, cable and Web access, giving you, even more, leeway in your budget.

Possible adjustments

Two of the biggest areas to watch out for is the transportation and debt repayment categories.

Transportation

If you own your car outright, $211 a month for transportation is a good estimate—perhaps even too high. But if you have a car loan, your monthly payment will probably be more than $211 to begin with, let alone the money you’ll spend on gas, parking, maintenance, and repairs. So before you rush out after graduation to buy your first set of wheels, make sure you are aware of the real cost of buying a car. For maintenance and repairs, you should budget at least $500 a year, or $42 a month—maybe more if you’re buying an older car.

For gas, let’s assume you drive 1,000 miles a month and your car averages 23 miles per gallon. You’d need to budget $117 per month with prices at $2.70 per gallon. That leaves only $52 for a car payment, parking, and other transportation expenses. Clearly, not enough. (And, of course, wildly fluctuating gas prices can throw a curve ball here.)

Some cities are easy to live in without a car, thanks to good public transportation and bike paths. But in other cities, a car truly is a necessity. Look into carpooling with friends or coworkers. Or cut back somewhere else in your budget—say, spend less on food and entertainment or take on a roommate to split the cost of rent to help make ends meet.

Debt repayment

As for debt repayment, a college senior graduates with at least $20,000, on average, in student-loan debt. If you fall into that camp, you’ll spend $230 a month on a standard ten-year repayment schedule at 6.8 percent interest. You may need to negotiate a different time schedule with your lender, say, a 15- or 20-year repayment. Or you can ask for a graduated repayment schedule where you pay less per month now, but more toward the end of your loan period. There is also an income-contingent repayment which bases your bill on a percentage of your actual salary.

The average college senior also graduates with $3,300 in credit card debt. At 18% interest and paying $80 a month (4 percent minimum payment of initial balance), it’ll take you about 2½ years to rid yourself of that debt. And that’s assuming you don’t charge another dime

Pay yourself first

One category we’d like to see you stick with the fixed amount (or higher) is savings. This is an excellent habit to get into right from the get-go.

Start by building up your short-term emergency savings, and then branch out into investments for the long term. If a 22-year-old saves $211 every month and earns an average annual rate of 8 percent on her money, she’ll have about $951,000 saved up by the time she turns 65. If she increases her monthly contribution every time she gets a raise, sticking with the 10 percent savings rule, she’ll have well over $1 million – perhaps even $2 million.

There is an exception to this rule, however. If you have high-interest debt, you’d do better to take your 10 percent savings allotment and pay off your credit cards first and then start saving. It doesn’t do any good to earn 8 percent on your savings if you’re paying 18 percent on your credit card balance.

Of course, your ability to set a realistic budget depends on many factors. Turn to Yota to help you manage your money and stay on top of your spending.