Smart Ways to Invest Your Money Updated on July 2024
Is investing only for the elite? Can you invest your money like them, too?
Many people think that only rich people can invest their money. This isn’t true. Anyone who wants to grow their money can invest, even if they aren’t rich. You don’t need a lot of money to start. In fact, you can begin with just a tiny amount.
Do you want to start investing? Where should you invest your money Philippines?
Most Pinoys are risk-averse when they hear about the word investments. Their aim to grow their net worth is met with fear of losing their savings. Every investment has specific risks, so you must only put some of your eggs in one basket.
Are you one of the Pinoys wondering how to pick the best method to invest your money?
It’s time to discover that investing is for everyone who wants a passive income—those who will take on a financial venture. You don’t have to be filthy rich. There are a couple of ways to invest your money; you only need a few thousand.
Fret no more.
We listed the best choices for your investment plan and provided safety tips on how to invest your money.
Credit: https://www.financialexpress.com/money/mutual-funds/mutual-fund-investment-how-to-select-and-invest-in-small-cap-funds/1835999/
Do you want to know where to invest small money Philippines? Choose the most appropriate one for you from the list below.
Creating a savings account is the most accessible investment you can get. Almost everyone can open a bank account. You don’t need much money to start; the minimum deposit amount will do. Many banks allow you to open an account with a small amount of money.
Unlike other investment forms, you don’t need special knowledge to put money in a bank. It’s straightforward – you deposit your money, and the bank pays you interest.
Banks are secured places, and having your cash in this place assures you. Money in banks is insured, unlike if you just keep your money in your drawer. Bills can quickly turn into ash if they get caught on fire. It is almost impossible to recover it if a thief breaks into your house and gets it.
Aside from the security of your money, savings accounts have interest that can grow your money. However, compared to the rest of the list, they do not have high interest rates. Savings bank accounts have interest rates ranging from 0.1% to 0.25%, depending on how much your bank offers.
Saving your emergency funds in a savings account is a good idea, especially if you are just starting out. Your money may grow, but the returns are not as fast as those from other investments like stocks and bonds.
Time deposits are a great option if you want the safety of a savings account but with higher returns. Higher interest rates result in fewer risks than other investments. The interest rate can range from 0.25% to 2%. The exact rate depends on the maturity period: how long you agree to keep your money in the account.
A time deposit has a locked-in period. When you invest your money here, you agree not to use the funds for a certain period. It could be a few months to several years. During this time, your money earns interest. That’s why the interest rate depends on the maturity period of the deposited cash, thus the name “time” deposit.
Unlike the savings account, you can’t easily withdraw your money if it hasn’t reached maturity. If you take your money out before the maturity period ends, you won’t get the entire interest. You might even lose some funds as a penalty for early withdrawal. This means it’s essential to determine whether you’ll need cash before the maturity date.
Remember that the interest you earn from a time deposit is subject to withholding tax. A portion of your earnings will go to the government. With time deposits, you have fewer returns than more risky investments. However, the returns or gains on time deposits are still subject to a 20% tax.
Treasury bills are government securities. Often, its maturity period is less than a year. There are 3 tenors: (1) 91-day, (2) 182-day, and (3) 364-day Bills. These numbers, used by banks, indicate when your investment matures. Also, it ensures that the bills do not mature on a weekday.
Treasury Bills can be accessed through the Philippines’ central banks, such as BDO, BPI, Metrobank, and PNB. These banks make it easy for you to access T-Bills. They can help you understand your investment process and guide you in investing your money.
The Treasure Bills work like this. You buy T-Bills for less than their face value. When they mature, you get the total face value back. For example, if you purchase a T-Bill for Php 95, you will get Php 100 when it matures. The difference is your profit.
T-bills are safe since T-Bills are backed by the government. The executives will not allow you to lose your funds as it will affect them too. In addition, Treasury Bills are short-term investments. You don’t have to wait long after you invest your money. You can receive returns based on the tenor you prefer.
With different maturity periods and easy access through major banks, they are a great choice for securely investing your money. That’s why they are an excellent choice for investment beginners. Their function is simple: you can invest your money safely and securely.
Retail Treasury Bonds (RTBs) are medium- to long-term investments that can be held for several years. They are part of a Philippine government program that makes securities available to retail and institutional investors. Regular people (retail investors) and big institutions (banks or companies) can participate.
When you buy RTBs, you earn a fixed interest rate. You know exactly how much money you will make over time. The interest is usually paid out every quarter or every six months. Therefore, you get a steady income stream regularly, which can be very helpful for budgeting and planning.
In addition, the liquidity of RTBs is more liquid than some forms of investment. You can quickly sell them before they mature if you need the money. You can buy RTBs through central banks like BDO, BPI, Metrobank, and PNB. You can do so on these secondary markets if you need to sell them.
Here’s an example. When you buy RTBs, you lend money to the government. In return, the government pays you interest at regular intervals. As your bond matures, you can receive your initial investment back. For example, buying an RTB for Php 10,000 with a 5% annual interest rate will earn Php 500 yearly until the bond matures.
Mutual funds are a great option if you’re new to investing and need more confidence in picking individual investments. A mutual fund is a company that pools funds from many individuals.
With mutual funds, you entrust your money to a financial institution, and a professional fund manager invests it. They choose a mix of assets like stocks and bonds based on your investment goals and risk tolerance.
A professional fund manager manages your money in mutual funds, so you don’t need to do the research yourself. However, the professional fund manager may change without prior notice and affect your investments’ performance consistency.
Various mutual funds are now accessible in the Philippines. You can invest your money in any of these as long as you put your trust in the system.
RELATED ARTICLE: Beginner’s Guide to Invest in Mutual Funds in the Philippines
UITFs are quite similar to mutual funds but with a few key differences. UITFs are curated investments offered by banks, while mutual funds are provided by insurance and brokerage companies.
In addition, UITFs are regulated by the Bangko Sentral ng Pilipinas (BSP). Meanwhile, mutual funds are regulated by the Securities and Exchange Commission (SEC). This way, you are assured that they follow strict rules to protect your investment when you invest your money.
When you invest in a UITF, you pool your money with other investors. Individual and private investors select the fund manager who makes the investment decisions. Then, the manager invests your money in assets like money market instruments, stocks, or bonds. The goal is to earn a return on your investment.
UITFs are usually more famous for positive returns than savings accounts and time deposits, which banks offer. However, they are not free from risk. All investments have risks.
Furthermore, UITFs offer diversification. When you invest your money, it spreads across different types of investments, reducing risk. If one investment doesn’t do well, others might still perform positively. Most importantly, investing in UITFs requires a relatively small amount of money. You can start your investment from Php 5,000 to Php 10,000.
The Stock Market involves high risks, and there is no guarantee of future returns. The stock market fluctuates regularly. The value of your stocks can rise or fall quickly, which means you could lose money fast. However, if the company does well, the value of your stocks can increase, and you can earn more. Therefore, studying how it works and which companies you plan to invest in is vital.
Investing in stocks is risky but gratifying. Over time, stocks have the best potential to provide higher returns than savings accounts or bonds. It makes them attractive to investors who are willing to take on more risk for the chance of higher rewards.
When you buy stocks, you purchase a share of a company. It makes you a part-owner of that company. You have a stake in the company. As a result, you may get dividends, which are a share of the company’s profits. In addition, you have the right to vote on important company decisions.
You must keep up with trends and news to invest your money in the stock market. Knowing what’s happening in the market can help you make better investment decisions. In addition, learn to identify the best times to buy and sell stocks. It often involves understanding the market cycles and economic indicators. Lastly, you may attend free seminars on how to start investing in the stock market, strategies for investing your money, and choosing which stocks to buy.
If you invest your money in the stock market, you must understand how to earn profits. Here are two main methods:
Buy and sell shares. You can sell your shares if their price goes higher. However, there is a high chance that your shares’ price will fall, too.
Here’s a scenario. When you buy company shares, you own a part of that company. If the price of the shares goes up, you can sell them for a profit. For example, if you buy a share for Php 100 and sell it for Php 150, you make a Php 50 profit.
However, the price of shares can also fall. If you buy a share for Php 100 and its price drops to Php 80, you would lose Php 20 if you sold it at that lower price. Therefore, timing and market research are crucial.
Dividends. Stock dividends are additional shares given to shareholders at no cost. It is not mandatory and will depend on the company’s discretion.
Here’s a scenario. Some companies pay dividends in cash as a portion of their profits to shareholders. For example, if a company pays a Php 2 dividend per share and you own 50 shares, you would earn Php 100.
Meanwhile, other companies share it through stock dividends. Instead of cash, they give additional shares to their shareholders. For example, if you own 100 shares and the company issues a 5% stock dividend, you would receive 5 more shares.
However, not all stock companies pay dividends, and those that do might not pay them regularly. It depends on the company’s profits and policies.
GInvest is a digital investment platform in GCash. It allows you to invest your money simply and affordably. GFunds is a feature of GInvest. Your risk appetite highlights how you can invest your money in the most trusted investment companies in the Philippines.
GFunds offers various investment choices. It lets you choose from multiple funds managed by professionals from ATRAM and BPI Investments, Inc. These funds are regulated by the Bangko Sentral ng Pilipinas (BSP). So you are assured that when you invest your money, it follows strict guidelines for safety and transparency.
GFunds allows you to view and select funds based on your willingness to take risks. Whether you are a conservative or aggressive investor, there is something for you.
GFunds have different investment options available based on the type of investors.
Moderately conservative investors can take:
Aggressive investors can take:
GFunds is a great way to start investing with GCash. It offers a range of professionally managed funds handled by experts. Also, it is regulated by the BSP, which adds a security level to your investment. Most importantly, it offers flexible solutions that suit different risk tolerance levels. Whether you are a conservative investor looking to preserve your capital or an aggressive investor seeking high returns, GFunds provides a convenient and secure platform to grow your money.
PERA stands for Personal Equity and Retirement Account. It’s a savings and investment plan designed to supplement the retirement benefits given by the government.
Filipinos 18 years of age and above need to make a contract and have a Tax Identification Number (TIN) to open a PERA account. Once you’re an account holder, you can choose from various PERA-approved products. You can pick from the range of moderate to high-risk investments.
You can invest your money in PERA if you’re a working individual who wants to save more for retirement. But you have a maximum limit of Php 100,000 per year. Meanwhile, Overseas Filipino workers can invest up to Php 200,000 per year. Both of these two come with tax reliefs.
In addition, PERA investments are exempt from withholding tax, estate taxes, and taxes on investment income. You can receive tax credits, too. Contributors get an annual income tax credit of 5% of their contribution. For example, if you contribute Php 100,000, you get a Php 5,000 tax credit.
On the other hand, retirement savings allow you to claim your pension. When you reach the age of 55, you can claim your PERA contributions and investment earnings in a lump sum or monthly pension.
Unfortunately, there are still downsides to PERA. Returns from this investment are not guaranteed. You may incur losses depending on market price movements. In addition, early withdrawal comes with penalties. If you withdraw your money before retirement age 55, you might face fines and have to repay all tax advantages received by the BIR.
PERA is a powerful investment tool for those looking to boost their retirement savings with significant tax benefits. It’s ideal since you can enjoy the freedom to choose which products you want to invest in
MP2 is a unique, voluntary savings program for active Pag-IBIG members who want to earn higher dividends than regular Pag-IBIG savings. It is ideal for employees and individuals saving for medium-term goals or preparing for retirement. Earning more from your savings is excellent without taking on high risks.
MP2 applies to all Pag-IBIG members, regardless of age, location, or income. You can invest your money in MP2 with an active Pag-IBIG account. It includes former members like retirees and pensioners who have made at least 24 monthly contributions before retirement.
MP2 offers higher dividend rates compared to regular Pag-IBIG savings. The dividends are tax-free and secured by the government. However, MP2 savings mature after 5 years. You can receive your dividends annually or let them accumulate and compound until the end of the 5 years.
MP2 offers variable dividend rates. The MP2’s annual dividend rates are not fixed. They depend on the Home Development Mutual Fund’s financial performance, so the returns vary yearly.
In addition, you can make an early withdrawal, but under certain conditions. There are no penalties if you must pull out your funds before the 5-year maturity. If you opt for annual dividends, you can withdraw your contributions. You might keep only 50% of your total dividends if you opt for compounded dividends.
Modified Pag-IBIG II is a smart savings option for investing your money. It provides higher, tax-free dividends with government security. While the dividend rates can vary, the flexibility of early withdrawal under certain conditions and the option to compound earnings make MP2 attractive for many Pag-IBIG members.
Now you know where to invest money in the Philippines. But it’s up to you to determine what you can handle the most. Nevertheless, you must pick a legitimate way to invest your money.
It is the amount of risk you’re comfortable taking when you invest your money. Knowing your risk tolerance is essential because it helps you better prepare for potential losses and manage your finances.
Conservative investors are low-risk investors. You prefer little to no volatility in your investments. You don’t want to risk losing your money. That’s why you’re alright about earning small profits. What matters is that your initial investment will be safe and returned.
Moderate investors are willing to take balanced risks. It means you can handle some losses but still prefer a balance between risk and return. You focus on long-term gains. That’s why you aim for steady and long-term growth. This way, you can accept moderate fluctuations in their investment value.
Aggressive investors are high risks takers for higher returns. With higher rewards in mind, you understand that the investment market can be complex. That’s why you are willing to invest your money in volatile assets that could provide significant gains.
Knowing your risk tolerance is crucial for making intelligent investment decisions. Understanding your risk level helps you prepare for potential market ups and downs, whether conservative, moderate, or aggressive. As a result, you can manage and invest your money effectively.
Choosing the most suitable investment is crucial, but you can also make minor changes in your daily life to save more money and boost your financial health.
If you’re serious about growing your money, one of the first things you should do is set investment goals. Determining precisely what you want to achieve will guide you make intelligent investment decisions.
Whether you want to buy a house, prepare for your children’s education, or build your retirement fund, having clear goals gives you direction. Therefore, you can invest your money in a way that aligns with your financial goals.
Budgeting helps you see where your money is going. When you compare your income to your expenses, you get a clear picture of your financial situation. Although it is simple, it is also a powerful tool. It helps you understand your finances better, improve your spending habits, and save more money.
Start by tracking your income and expenses. This way, you can see how much funds you have coming in and going out. Then, make small yet necessary changes to increase your savings. So you can save more, even if your income stays the same.
When you set your budget, remember to set aside money for an emergency fund. This will help you stay financially flexible if something unexpected happens. An emergency fund is a backup for unforeseen expenses, like car repairs or medical bills. If you have one, you can keep yourself from dipping into your investments.
In addition, an emergency fund gives you peace of mind. Having a financial safety net can reduce stress. Most importantly, it helps you stick to your financial plan without interruptions. You stay on track with your finances and investments.
Invest your money regularly, like once a month, every two months, or quarterly. Whichever schedule you prefer, it is essential that you do it continuously. By consistently investing your money, you manage risks, especially with stocks.
Stock prices fluctuate unexpectedly, and setting aside funds regularly helps you balance out the highs and lows. Furthermore, it ensures you’re following the budget you set for investment. Therefore, you’re on the right path to growing your funds.
You earn more money if you’ve recently received a salary increase or started a new side job. If this happens to you, avoid falling into the lifestyle inflation trap. Just because you’re making more money doesn’t mean you should spend more.
Stick with your set investment goals and try to live on less than you earn. Enjoying some treats and leisure occasionally is okay, but don’t go overboard. Your primary focus should be on saving more money. It might be challenging initially, but keep trying because your efforts will pay off in the long run.
If this is your first time investing your money, you are expected to get confused and overwhelmed. It is normal to feel this way when you’re doing something new. The best way to handle it is to keep learning about investing.
If you want to invest your money, understand that knowledge is power. The more you know, the better you’ll be at making wise choices and finding the best ways to invest your money. So, stick with it and keep learning—it will help you become a better investor and make your money work for you.
Always consider these tips to ensure your investment funds are on the right track. Remember, you invest your money to grow, not to lose them.
Naturally, Filipinos will make safe investments with high returns in the Philippines. These ventures have more assurance of returns. This is why many Pinoys would instead invest in things that can be sold eventually, such as jewelry, real estate properties, and life insurance. Less than 1% of us invest in stocks, bonds, and other financial ventures.
The best and most legit investment in the Philippines is financial literacy! Whether wealthy, an entrepreneur, or employed with a minimum salary, you can invest your money and save more for the future.
Whatever your financial status, you must invest time, effort, and a bit of money to learn how to handle your money and save up. There are books written by financial advisers to help you with budgeting, saving, and investing. Also, blogs teach people how to handle loans, regain financial stability, and grow their money.
If you want to invest in your business but need more cash to start it off, you can apply for a personal loan at Cash Mart. Cash Mart offers quick cash loans with flexible payment options. Check Cash Mart at cashmart.ph today.
You can invest as little as Php 500 to Php 5,000 in things like VULs, stocks, mutual funds, and government-backed programs. If you don’t have much, you can start with more affordable options like GFunds. You can invest your money for as low as Php 50. Though the profits might not be huge, it’s excellent for beginners wanting to invest and build the habit.
However, having more money to invest is better. The more you invest, the more you can spread your funds to lower risk. For example, you can put some money into stocks, some into bonds, and some into Pag-IBIG MP2. This way, you’re not putting all your eggs in one basket.
The funds you wish to use depend on your goals and how much you can afford. A common rule is to invest 10% to 15% of your monthly income. For example, if you make Php 20,000 a month, try to invest at least Php 2,000 each month. Nevertheless, the value is not the priority. The most vital thing is to get started, no matter how much you invest.
Yes. The BIR charges a Capital Gains Tax when selling, giving away, or trading capital assets. This tax is taken from the profit you make from these transactions.
First, pay off your debts and build an emergency fund before investing your money. High-interest debts can quickly eat up any profits you make from investing, so it’s better to settle them first.
Also, having an emergency fund is essential. If something unexpected happens and you don’t have money set aside, you might need to withdraw money from your investments early. It can lead to losing money and facing extra fees. So, settle your debts and save for emergencies first, then you can start investing.
