First Step - My Very First Investment or Not At All

I had my very first investment in the form of a time deposit.  It was held in a rural bank which offered a much higher rate than most commercial banks.  It's 4.25% per annum enough to buy me a new cheap shoes, memory cards for psp, or a part of my desktop computer back then.  : )

Why time deposit?

Why it isn't an investment at all?

Why not other investment products?

I felt it was the safest way to let my money earn.  I was afraid, very afraid that I would lose my money which I worked so hard for years in companies.  I had no idea what am I about to do.  In fact, no one gave me advices what to do with my earnings.  I just researched and found that I would earn something like 4.25% per annum on that local bank and believed it was good considering I don't have to do anything.  There was no need to monitor or to check the banks what's happening with my money.

Years went on, my money is still with that time deposit.  I don't know why I postponed researching ways to make my money grow.  I didn't know that inflation basically eats up my savings/time deposit.  That is the time I finally thought that time deposit may be an investment but not an investment after all.

It took probably about 5 years when I finally heard about mutual funds, uitfs and stock trading.  That long period of time wasted waiting my money to lay eggs when in fact I had the chance to make my money lay golden eggs.  It took another 2 years before I finally plunged in and invested my money in mutual funds.

The money I have in time deposit is probably preserving its purchasing power at a certain point but I could have additional income if I only took the risk and opened up my mind in investing.  This is one of the reasons why I am sharing what I've learned from those years.  I encourage everyone to try investing and start with the more secure and safe ones.  You'll feel the thrill and be happy knowing that your money is working for you.  Just to give you a background, my first investment in mutual funds (equity) earned me 40% while the bond fund earned me 8%.  You do the math based on the amount you wish to invest.

Click here to review your possible investment options.  Remember, I don't advice to invest now and expect to have the same results like mine.  I just wish you to start considering and start with an amount you feel comfortable and willing to take risks and rewards with.

The Vehicles - Investing Options and Features

There are a lot of investment options available offered by banks, fund managers, government, companies, insurance companies, and related institutions.  The options are limitless.  It's just a matter of opening up our minds into the possibilities of earning more from our income.  Let our money work for us.

Investment products suit people depending on their needs and lifestyle.   Below are the available investment options for everyone:

Special Savings and Time Deposits
     These are always available in your banks.  They vary in amount to invest but there are banks that offers as low as Php 10,000.00 with a special rate already.  Normally, interest income would vary from 1% to 4%.    Generally, these are safe investment instruments since these are bank products and are therefore covered by PDIC.  Special savings vary depending on the bank and the amounts.  Remember, PDIC has a deposit-insurance ceiling of Php 500,000.00 per depositor.

Unit Investment Trust Funds (UITF) / Mutual Funds
     Nowadays, these two type of investments are generally similar.  They differ as to who manages the funds.  Banks normally offer UITFs while mutual funds are offered by investment companies but are at the same time partnered with a bank.

     They are generally categorized into three types:

• Bond fund - invested in government securities, treasury bills, bonds, notes.  Risk is very low since they are backed-up by government.  You earn from the stipulated interest rate from the bond usually ranging from 5% - 8% annually.  Low risk, low income.
• Balanced fund - invested in stocks, government securities, treasury bills, bonds, notes.  About 50% of the fund is invested in stocks and the rest are managed like the bond fund.  Simply put, this is the middle category.  Potential income could go higher than the bond fund but risk of loss of capital equally applies.
• Equity fund - invested heavily on stocks and a few bonds.  High risk, high income.  Good for people who are aggressive and willing to take risks in hope of bigger income.

     There are variations of funds.  You just have to check out the fund prospectus so you will know where the product is actually invested.  Ask your favorite bank or investment company if they have product similar to of the above-mentioned items.

Stocks

     Investments are managed by stockbrokers notably Citiseconline.com and BPITrade.com.  Your money is specifically invested to your chosen companies.  The potential for income is endless and so as the loss of capital.  My strategy at the moment is to invest only in blue-chip companies for the long term.

Life Insurance
     You basically pay premiums and your beneficiaries will get an amount when you die.  Not the investment you wish to earn from right?  However, this is a must.

Pension, Educational and Memorial Plans
     I don't really know where to invest in companies offering these types of products.  I still have a phobia on this.

Healthcare and Hospitalization Plans
     A good instrument in ensuring your medical bills are managed wisely.  But, if you feel that you're healthy and has a lifestyle free from bad habits, then by all means, enjoy the one offered by the government.

Real Estate Investments
    If you already have sufficient courage in investing, real estate investments are good passive income source.  The way they do it is that you buy a property loaned from a bank and analyzed if rental income could cover the amortization the property needs to pay every month.  Sounds easy?  I don't know in actuals yet.  I have yet to invest on my first property for renting.
     Another strategy for people who have huge savings is to buy a foreclosed property, have it renovated, then sell it out.  You may need a million or two for starting.

Business and Other Investment Opportunities
    Of course, the best investment you could do is to run a business.  The potential to be rich is there but not everyone has the capacity, the drive, the perseverance, and patience to run one.  You may also resort to franchising but you must take a good look whether a company is really a franchising business or a seller of a business and products.

These are basic information for you to start thinking whether one investment product fits you.  There are already tons of information available and feeding you more will only complicate your mind already made-up to invest.