Investment Ideas during Tough Times
The strike caused by COVID-19 has blindsided many of us financially and economically. So as we recover, it’s more crucial than ever to make your money work for you.
Savings accounts in banks give a tiny interest rate; they are easily dropped out by inflation, meaning your savings lose a lot of value over time. This is why it’s prudent to place some of your money in these other instruments that can make your hard-earned cash grow much faster in the long run.
Unit Investment Trust Funds (UITFs) and Mutual Funds
Both of these instruments work the same way: money is pooled from many different people, and a financial advisor decides which stocks or other investments the money is placed in. There’s one key difference between the two: a UITF is a bank instrument administered by the Bangko Sentral ng Pilipinas, while a mutual fund is a corporation overseen by the Securities and Exchange Commission (SEC).
Either method allows you to create a good portfolio of funds based on your risk desire. You can invest in conservative funds that give simple but generally safe returns; as well as more aggressive equity (stock market-based) funds that are riskier, but offer much greater returns should the market perform well.
The best part of UITFs and mutual funds is that you can invest for as low as P5,000 to P10,000 in most of them. Most major banks offer UITFs. The UITF or mutual fund will update you constantly on the value of your investment. You can sell or add at any time you please.
Since mutual funds and UITFs invest in a basket of assets or investments, your money is diversified, and is not as receptive to volatility, compared to investing in individual stocks.
First Metro Philippine Equity Exchange Traded Fund (FMETF)
An exchange-traded fund (ETF) acts like a cross between a mutual fund and a stock. Like a mutual fund, fund financial managers select a basket of stocks to invest in. In this case, the composition is from the PSE Index, or the top publicly traded business in the nation. Like a stock, its value can go up and down and is traded in the PSE.
Unlike in more advanced economies, the Philippines only has a sole ETF in play: the First Metro Philippine Equity Exchange Traded Fund (FMETF), which you can invest in by a stockbroker or online exchange.
As with UITFs and mutual funds, you can indirectly own stocks in many companies just by getting into one instrument. But unlike MFs or UITFs, the stock price of the FMETF can be tracked at any time during the trading day.
Variable Universal Life (VUL) Insurance
Life insurance is a great idea for providers and heads of the family. A VUL from a reliable insurance company can give you a good degree of protection while allowing your money to grow.
Some VULs also offer flexible premiums. If you wish to invest more, then put in a higher amount. If you have a financial reversal then you might be able to reduce your premiums. You can also have access to the funds in case of an emergency.
VULs give the best of both worlds: protection of insurance with the ability to invest.
In terms of security and guaranteed appreciation, Real Estate is still the Gold Standard. Yes, it demands a higher level of responsibility – bigger income requirements and investment outlay, among other things – but the value they gain over time is almost undeniable.
Investing in real estate today is easier than you think; Italpinas Development Corporations has affordable, right-sized cuts with easy financing terms and the healthiest homes in the market. Get your very own investments now and check out our development in Cagayan de Oro & Sto. Tomas Batangas.