Reader Mail #23: No Nonsense Answers To Investing Questions
This article is posted under Reader Mail.
Welcome to another edition of Reader Mail, the special article series on this blog where I answer questions from readers.
For today, I’ll be tackling several questions about investments, most of which have been sent to me multiple times by different people over the past few weeks.
Honestly, I’ve been flooded by such inquiries lately, and I’m poorly behind answering all of them.
Not that I’m complaining, I’m actually glad that many are getting interested on investing – it’s a good sign that people are starting to think more seriously about their finances today.
So for those still waiting for my reply, thank you for your patience; and I hope some of your questions get answered below.
How do I start investing in the stock market?
First, look for a stock broker and open an account. I’m with COL Financial (formely Citiseconline), but any stock broker is fine as long as they’re duly licensed and registered with the SEC and the Philippine Stock Exchange.
When you open an account, make sure you tell your stock broker that your plan is to invest in the stock market and not trade it. There’s a huge difference between investing and trading.
Of course, if you don’t know anything about the stock market, then learn it first before opening an account.
You can start by reading this series: How To Invest In The Stock Market
Is insurance an investment?
No, an insurance is not an investment, unless you’re talking about VUL’s or Whole Life Insurance or any type of insurance that promises to give you some form of return in the future.
Term-life insurance, short-term health insurance, auto insurance, fire insurance, business insurance and all others – they’re a form of protection and not an investment. Among those, term-life insurance and short-term health insurance are what’s important and something you should consider getting before you start investing.
Moreover, VUL’s and similar products are second-tier investments – meaning, they’re not as great as other investments and you should only get them because:
- You’re “too lazy” to look for better investments.
- You already have funds and stock investments.
- You want to help a friend who’s selling you that type of insurance.
Lastly, the better solution is to do BTID – buy term, invest the difference. I’ll write a post about this soon.
What’s the best mutual fund company in the Philippines?
Don’t look for the best performing mutual fund company – because there’s none really.
Why? Because all of them invests in the same market (generally speaking), so in the end – all of them would have very close performance ratings.
Instead, look for the best mutual fund that will help you achieve your financial goals. Attend my investing workshop and you’ll learn how to exactly do this (I know, it’s a shameless plug )
The same argument goes for Unit Investment Trust Funds (UITFs).
What’s the best investment to fund my retirement?
The stock market and equity funds are always great options – but that depends on how old you are and when you plan to retire. However, the thing that I don’t like about them is that they’re just for capital growth.
So if you ask me, the “best” investment for retirement is actually real estate AND/OR long-term businesses. Rental properties and business ventures will give you passive income that can cover your expenses when you finally retire.
Ask yourself, 10 years from now, would you like to have 20 million pesos cash? Or own several businesses and rental properties worth 10 million pesos but passively earns P200,000 per month for you? Think about it.
Personally, I choose both! That’s why I invest in the stock market, but spend most of my time putting up businesses.
This ends another edition of Reader Mail. Thank you everyone for sending emails. Please don’t forget to subscribe to Ready To Be Rich so you’ll be updated if a new article is posted here. Cheers!
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