Like many Filipinos, I hesitate to invest.
Aside from the uncertainty, I recently recovered from a financial slump after my parents tested positive for COVID-19. I wanted to set aside what remains of my personal fund to help my money grow in a safe manner.
At the same time, I usually rely on my salary to replenish my savings. I leave my financial future up to chance since I assume I can probably earn an “investment-friendly” income later.
A 2020 survey from Statista reported that the average monthly salary of a Filipino employee is approximately P45,000. At the same time, the majority of our income is reserved for everyday expenses, utility bills, and emergency matters. Little to almost nothing is usually reserved for financial investment.
In search of answers, I spoke to two financial gurus to widen my perspective on the intimidating concept of investing.
Something is always better than nothing so even just a small amount can go a long way in starting your investment journey. You can always start with an amount you’re comfortable with and just add in the future when you’re more capable.
Registered Financial Planner (RFP) and Philam Life unit manager Pamela Panti recalled in an email interview that many “tend to wait for the best time to invest.” However, waiting for the “best time” to invest might not be a good strategy as you might lose financial market opportunities.
“For millennials and Gen Z, it’s a good time to invest since many are not spending due to the lockdown. By starting early, they are more likely to have better financial management and discipline. They can also build a diversified financial portfolio and reach their financial and future goals faster,” Panti said.
Getting into investing
Regina Capital head of research Luis Limlingan has a step-by-step guide for beginners who are starting.
“First, choose a brokerage registered with the Philippine Stock Exchange and a licensed broker from a firm to represent you. Then, have them walk through the process to discuss with them your investment style, risk appetite, and time horizon, among others. Map out a plan based on what you’ve discussed after,” he shared in an interview on Viber.
Meanwhile, Panti advised beginners to check on their financial position before investing. She also provided me with proper avenues where I need to put my money.
“Make sure you have an emergency fund which is three to six months of your monthly salary to prepare for any emergencies. At the same time, it’s better to have a life and health insurance plan at this time to protect you and your family from life uncertainties,” she added.
Clarify everything from the start. Even though a company has a good financial background or if there’s doubt in your mind, either keep searching for the right answers to better understand it or do not invest yet.
Where is the best place to invest?
One of the most confusing parts of investing is figuring out where you’re going to put your money.
Limlingan said that beginners should be in a familiar field. “If you work in retail, buy the consumer companies that you believe would outperform. If you work in property, invest in those said stocks that will also do well.”
Asking a lot of questions is also important to inform you of the risks and benefits of your different investment options.
“Clarify everything from the start. Even though a company has a good financial background or if there’s doubt in your mind, either keep searching for the right answers to better understand it or do not invest yet,” Limlingan advised.
Panti also echoes Limlingan’s advice. She also reminded beginners to take a look at their money if they’re ready to invest. If you don’t have excess money, you need to “grow your savings more.”
Panti also provided helpful tips to those who have started investing. “It’s important to identify your risk appetite or risk profile. Are you a conservative, moderate, or aggressive type of investor? What’s good about our market now is that we have a lot of instruments available per type.”
According to Panti, beginners need to consider the instruments that suit their investment style which is the following:
- Conservative - Bonds and money market
- Moderate - Balanced funds
- Aggressive - Equities or stocks
“Something is always better than nothing so even just a small amount can go a long way in starting your investment journey. You can always start with an amount you’re comfortable with and just add in the future when you’re more capable,” she added.
Perhaps the biggest myth is you need a lot of money to begin investing. In fact, it is very small. The reason why there are no fixed amounts is the concept of uniformity.
Crafting a plan for future goals
According to Limlingan, it’s a must to adjust your investment strategy “according to your lifestyle” whether you’re a beginner, married, or retired. Once a person’s personal finances have grown, that’s when you can change your strategy.
“Perhaps the biggest myth is you need a lot of money to begin investing. In fact, it is very small. The reason why there are no fixed amounts is the concept of uniformity,” he added.
Panti believes that investing is a continuous process since a person’s priorities and goals change through time.
“Those who are younger and have more time to grow their money can invest in aggressive funds like stocks which will yield the most potential growth. While those who are older and nearing retirement should allocate more on conservative funds like bonds which will focus on preserving their money,” she finished.
Article photos provided by Luis Limlingan and Pamela Panti