Updated: March 17, 2023
Almost everyone successful at saving money experiences difficulty when it comes to finally starting their investment portfolio.
I know I did.
There are so many options out there, so many products and investment instruments that you can choose from that it can become overwhelming.
Where should I invest? Which investment will give me the most return? Can I afford to risk my money on this product?
Those are just some of the questions that nagged me for several days when I was just starting.
In the end, I found peace by following these quick guidelines which I hope you will find useful in your own investing decisions.
1. Have an investment objective
Investing because you want to be rich is a shallow reason, sorry. Before you invest, you should have a specific objective in mind first.
For starters, ask yourself where you want to spend the money in the future.
Is it to buy a car? For your child’s college tuition? For traveling around the world when you retire?
Having realistically optimistic goals will help you immensely in choosing where you should invest.
2. Don’t time the market
Many people ask when is it a good time to invest, and my answer is always NOW.
If you have the money, then there’s no reason for you to delay, just do it and don’t wait until the market becomes “favorable” – because no matter how the economy is, there is always an instrument out there that’s good to invest in. Trust me on this.
Read more: The Benefits of Investing Early
3. Make a workable regular investment plan
Aside from investing early, you should also invest regularly. This is very, very important especially if you don’t want to time the market.
Investing exact small amounts, in frequent intervals, on one instrument, allows you to “cost average” – this investing strategy really helps manage your risk against market volatility.
To learn more about cost averaging, and see how it applies to the stock market, read this: How To Do Cost Averaging: Passive Stock Market Investing Part 1
4. Diversify your investments
While your investment decisions highly depend on your investment objectives, it’s important to keep in mind that you must also have a balanced portfolio.
This means you should not bear too much risk, nor have too little. You can’t put everything on the stock market, the same way you cannot just invest in time deposits. Diversify!
More tips here: Where and How Much Should You Invest? A Simple Formula for Creating Your Portfolio
5. Shop around
I don’t literally mean that you should go to the mall and shop. What this means is that you should take time to go around, see, ask and learn about all the investment options that are available and compatible with you.
Aside from the rates of return and potential earnings, be sure to know the investment costs and fees. You must also know their terms such as holding periods, rules for redemption, and others.
This could take some time – and that’s okay. In the meantime, while you’re still “shopping”, you can let your money earn a few bucks inside a short-term zero-risk time deposit.
6. Monitor your investments
Regularly monitor how your investments are doing, at least do it once every quarter. I do mine once a month if the market is volatile, and quarterly if everything is just steady. But it’s up to you, just don’t do it too often, like every day because that will be counterproductive already.
The reason why you need to know how your investments are performing is that you want to make sure that you’re still on course to achieving your objectives.
When you see that an investment is not earning as expected, then put a “flag” on it and see if it would be good to wait it out for a while, or if it’s better to move your money to another investment.
There are no strict rules here actually. I suggest that you just do whatever feels objectively right. Do the computations and adjust your portfolio accordingly.
Once you get yourself started in investing, you’ll see that your financial knowledge will dramatically increase. Soon, you’ll be savvier in your investment decisions and see better opportunities for your money.
The secret is again, to start investing now.
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Photo credit: spwelton
Hi Fitz!
Halata na ba that I’m an avid follower of your blog… 🙂
Anyway, I just want an affirmation of what I am doing. Recently, I started investing in the stock market. However, my objective for those stocks is to cash them in after 30 years – for retirement, period. No certain objective to travel, just for me to have some funds for retirement. Is this a wise investment objective?
Hi dada. I think investing in the stock market would be a good idea if you’re looking at long term. Although you already seem to know that. Have you considered risk management or portfolio diversification? An SEC-Certified Investment Solicitor would be able to help. Feel free to drop a message @ 09173844383. God bless.
Dear Fitz,
I learned so much about cost averaging computations on investing in stocks and I’m mos thrilled on your formula on how to come up with a value from your savings on how much investment shld you put in high, medium and low risk investments.It might be quite uncomfortable to admit that its my first time to hear such “blue chips” companies where Jollibee is one.Investing in Jollibee stocks has always been one of my preferences coz I see how these food chain mushroom in almost all corners not only in the Philippines now but in some parts of the world. I want to buy some of its stocks can you please inform me how? Of course my objective is to invest my limited resources for long term say five years coz i have to save for our trip to disney land hongkong when my only daughter graduates from college as promised if God willing.
Tnx fitz and praise God for the gift of intelligence/wisdom that ur sharing everyone in ur column. Godbless.
I agree! The most important thing is to start investing now.
It’s always good to not put all of your eggs in one basket… try investing in an assortment of things, and see what you like/don’t like. It helps if you have a natural interest in researching, analyzing and tracking various investments.
Short but very concise! I salute your write-up! I’m also in investing, still a beginner though. But this greatly helped! Thank you!
Hi,
I’m an OFW and would like to invest MF but I’m not sure of which company or bank should I invest.
Fees and taxes are quite high..banks ksi they have taxes daw while private companies ang taas ng sales load.. Saan ba ko mag iinvest..
I’m looking at a long term investments..
Should I invest in philequity? PAMI? Sunlife? Or bpi?
Any suggestions…
Hi,
As a college student, san ba magandang mag invest yung mga students na gaya ko?
and how much is the minimum rate for investing? na curious lng ako sa sinsabe saken ng parents ko na, i invest ko ang money ko, so in the future I can gain it for emergency uses, thank’s
Hi Matt. You’re lucky to have parents that encourage you to invest.
I always believe that one should invest in things that you understand, and for starter investors, specially students – that’s the time deposit.
A time deposit is a straightforward investment with no risk of losing money (unless the bank closes but that’s another story). So I suggest you open one for now.
Then, take the time to learn about other investments, specially UITF and stocks – and of course, entrepreneurship.
Hi Lee,
I cannot speak for any Investment Companies except for Sun Life because that is where I work. What I can tell you is that their Risk Managers are very “conservative”. They favor of long-term investments.
About the sales load, the company is willing to should the tax incurred of your investment provided that you allow them to keep your money for, at least, 5 years. But that doesn’t mean you’re locked out from your money. You’re allowed to withdraw from your investment but the you will have to take responsibility of the tax. The tax incurred will be depending on the amount you withdraw. Starting from 5% on the first year, 4% on the second, 3%, 2%, 1%, until it’s free on the 5th year.
Btw, if there would be a better time to invest your money, it would be now because of the situation over Indonesia regarding their petrol subsidy being cut.
Feel free to drop me a message @ 09173844383. God bless.
Hi Sir Fitz,
Would you mind if I repost this blog entry and the others as well to my blog? I’m just starting with my own and I just want to share the wealth of information you’re giving to your readers like me. 🙂
Hi Poli, sure you can repost, but please link bank to this page and give proper credits. Thanks for asking permission. 😀
Hi JB,
Many thanks for your message really helpful.
I made an inquiry on your website but Im not comfortable with the way they managed my inquiries.
That’s why I posted my concerns here.
But in fairness you are good 🙂
Cheers,
Lee
@Lee,
I am also a fellow OFW. Investing in mutual fund is a good investment too. In my case, I put some of my idle cash in Metrobank’s UITF. It’s not complicated (no tax issues, etc.) and so far my returns are quite favorable. i also do invest in bonds. We all have our takes when it comes to investing, but I feel at ease dealing with banks rather than other types of financial institutions. I also discussed in details UITFs and other investment vehicles in my blog. Goodluck
@Anieflor
In order to be able to invest in Jollibee stocks, you must first have a broker. There are several brokers out there but dealing with online brokers are the easiest way to buy and sell stocks. Once you open an account with them, that’s the time when you can buy your Jollibee shares and do your cost-averaging.
Just my two cents.
Desertman
@desertman
Thanks for your message.
Ask ko lang ulit,which has a better returns un sa banks ba or sa finacial institution..ksi very enticng un mga returns ng PAMI,Philequity etc sa banks di ko alam kung pareho lang din ba sila returns?
Though i know u’ve mentioned that u invested ur money in metrobank. Just wondered if they have similar sa returns..
Thank u po…
@ Lee
Sorry sir but I’m not familiar with any specific mutual funds. In Metrobank, I normally invest in UITF equity funds. It’s a bit risky because about 98% of the fund is invested in the stock market. But so far my return is okay. As of now, my running return is about 22% for about 7 months now. A far cry if you’re going to compare it with the normal time deposit.
But like what I’ve said, the return will depend on the type of fund you will choose, the ability of the fund managers and the amount of risk you are willing to take.
BTW, hope you can visit my blog too.
Just my two cents.
Desertman
Hi Lee,
Thank you for your kind words. Don’t hesitate to drop me a message anytime. I suppose I still have my habits as a customer service agent and it’s proving to be helpful.
Please allow me to share information I have learned throughout our training regarding UITF and MF. What I admire about our company is that they don’t encourage us to manipulate knowledge to our advantage. If you ask around, you will understand that whatever investment vehicle you choose, what makes them different is their level of risk, profit, and liquidity.
So if we take 3 examples: bank savings, mutual funds, and UITFs, we’re looking at the least profitable to the most profitable; from the least risky to the most risky.
Now, if a client prefers to short-term, high-interest investment, we are obligated to refer them to bank UITFs. But if clients are looking for long-term, high interest investment, we are called to be confident in introducing them to the beauty of mutual funds – stock trading managed by risk experts.
Based on experience, my clients’ investments have increased by 20% in 3 months and it’s still going up.
Hi JB,
Thank you for enlightening us about your company. But I want to share with you what I understand about MF vs UITF.
Basically, they are similar types of investment. There are some technical differences only between the two like UITFs are offered by banks (governed by BSP) and MFs are for non-banks (governed by SEC). But where they invest the fund and how they manage it basically are the same. They put it in stocks, bonds, time deposits and alike.
So with regards to profitability and risk, they all follow the same principle here – less risk less profit, more risk more profit and the longer the investment horizon, the higher the returns.
If a client wants a short-term high-interest investment just like what you said, then you can’t give him UITF right away because there’s no UITF product that caters such which is also the same as in MF. I can safely say that both only have short-term average-return. Because if UITFs have short-term and higher interest, then nobody will be willing to put money to MF’s long-term high interest investment. Got my point?
So, I guess, when you referred to your “MF’s-stock trading managed by risk expert”, it’s counterpart in UITF is the UITF Equity fund which is also concentrated on stock trading. They are two similar products and the returns will just be depended on the stock market performance and the fund managers’ decision making.
To sum it up, MF and UITF are just same bananas but differs only in technical qualities and both will always follow the same investment principles. I’m not in anyways connected with any banks or financial institution because I am an OFW. I just based on my personal experience the earnings I mentioned in my previous comment.
BTW, I discussed these topics in details in my blog too. 🙂
Just my two cents bro.
Hello JB and Desertman,
I luv our discussions.
If UITF and MF works with the same principle and both are possibly investing on the same bluechip companies then, why should I invest on financial institution wherein they deduct my money for sales load, exit fees and annual fees.
While in UITf I can add money on mt investment without being charge for sales load..
And IF the ROI’s are relatively close or probably the same?
Am I correct?????
Please let us hear your thoughts…..
Thanks,
lee
Hi Lee,
I tried to post a comment yesterday about your question but it there seems to be a problem with the system. Anyways, I’ll try to answer it again.
As I’ve said, I am not familiar with the details of any MF. I am a big fan of UITF because it’s more straightforward and easy to manage. All the fees are incorporated in the UITF unit called NAVPu. But all banks will tell you how much % they are charging and I can tell you that it’s just minimal. Anyhow, it’s really straightforward and here how it works:
If you are going to invest P100K in UITF and the NAVPu at that day is 1.6, then you will get 62,500 units (100K / 1.6). Then after a year and the NAVPu for that day is 1.9, your total proceed will be P118,750 (62,500 x 1.9).
It’s as simple as that. As I’ve said, you don’t have to think about any fees once you get a UITF. The NAVPu is published everyday in the bank’s website.
There’s a holding period for each type of UITF and of course, just like in any other type of investment, you will be charged accordingly if you will preterminate it.
Hope you can visit my blog too. 🙂
Just my two cents.
Desertman
Wonderful day!
@ Desertman
Thank you for sharing that valuable insight. I had not know that much until you stated them plainly. And your blog seems useful. It mentions some questions i have raised not too long ago. Inspires me more to start my own weblogging.
Cheers!
@ Lee
I cannot speak for UITFs yet, until I do some thorough research on it or until our company releases a certain news that’s pleasantly surprising to us.
But as for your query, it seems that sales load varies from company to company. As Sun Life explained it to us, sales load includes administration fees, tax, etc. I think UITFs call it Trust Fees.
The thing is, Sun Life is willing to shoulder this sales load. Since they’re all about long-term, if you opt for shelf your money in Sun Life for at least 5 years, you can go for the Back-end Sales Load. This means you don’t pay Sun Life anything if you really keep your money there for the long haul.
Again, it doesn’t mean you’re locked out from accessing your funds before then, you can withdraw some or all of it for a corresponding tax fee i mentioned in a previous post.
Therefore, just so we’re on the same page, 0 Fee is possible in Mutual Funds. More than welcome in Sun Life’s MF.
But i equally respect your interest in investing in UITF. I have stumbled upon another blog while doing some research on my free time. It may help you as much as it helped me.
http://www.pinoymoneytalk.com/are-uitfs-right-for-you/
It’s a beautiful day today. With a good news to boot it earlier today.
Be blessed!
~JB
@ JB
Thanks for the kind words about my blog. Also, thank you giving us some insights about Sun Life’s MF.
Good luck everyone and happy investing. 🙂
Just my two cents
Desertman
Hello Desertman,JB and Fitz,
Thanks to all of you…
It really makes me feel good and relax… whether I invest on MF(sunlife)or UITF my money will surely grow..
Because both institutions are keen to make our investments grow….
This type of discussions online are really good and informative;
I hope more and more Filipinos will be enlightened and encourage to invest…
More power sa mga blogs and more power to all Filipino like u guys who spend time to educate people like us…
More Filipino Millionaires to come!!!
God Bless..
cheers,
Lee
Hi Fitz,
I trust u are well…
I like the idea of franchising bayad centre or goldilocks..
BUT I have no idea about the cost and the procedure..
OR maybe you can suggest which type of service or food to franchise.
Gusto ko sana un profeSsional and wag un uso lang..
Any suggestions please let me know? Also the price should be within the budget and also the ROI should be realistic…
Thank u…
I know a product that offers several fund investment options from which you can dictate the 100% allocation of your funds into various types of financial instruments to match your medium-to-long term financial protection needs and immediately optimizes the potential earnings from your policy.
If you are in need of a medium-to-long term financial protection instrument that requires a one-time payment, and gives you immediate optimal yield potential, if you are searching for a sound alternative to help diversify your medium-to-long term financial portfolio, and if you’re looking for a reliable financial instrument option that allows for a great deal of financial flexibility on your part, you should visit Manulife China Bank Life Assurance Corp. and ask for their Financial Sales Associate.
hi kuya fitz,
I’m learning a lot from your blog. 😀 I was planning on opening a peso time deposit account early next year but I am now considering UITF (bonds) which I discovered through your blog. I do not have any plans for my investment, I just want to let it grow because I have no use for it yet… might as well earn some interests. I might use it for emergency reasons like when I get married or pregnant, haha! I am 21 years old and just started working, I save half of my salary each month and I live independently. I have a small dollar time deposit account which I opened early this year, and I also have a separate account aside from my payroll atm which has a small amount of money for emergency purposes. I am planning to transfer that to another savings account so it could earn some interest as well. Do you think opening a UITF account would be okay at my age?
Hi Rin, yes I think that would be okay. Put half of your emergency fund in a simple savings account, then half in a 30-day time deposit. The rest, you can invest in a UITF account.
Invest a fixed small amount only, but do it regularly (monthly, or quarterly) over a long period of time (2-3 years or more).
Which UITF, ask your bank to give you an investor risk assessment exam and they’ll recommend to you the best fund you can invest in.
I was planning on investing on equity, balanced and short term fund. I will invest on BDO’s EIP for equity and balanced fund. 2,000 for equity each month and then 3,000 for balanced. Then I will also invest in BPI’s RSP short term for 1,000 each month. I understand the initial capital for BPI is 10k. Is that okay or should I just invest in one fund? I used your allocation method to divide my investments. 10% for low risk, 50% for balanced and 39% for high risk.
follow up question kuya fitz, after investing how do I monitor my investments? Do u have a spreadsheet like the one you used to explain cost averaging that I can use so I can compute my earnings? thanks 😀
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Sir Fitz,
I just started reading your blog today, as I have the sudden urge to find out more about investing (I have been planning to invest for a time now). I find your blog really helpful.
Anyway I just want to ask about STEP 5 which has a statement that says “Investments, in general, do not immediately translate to passive income. Your active participation is required for it to become stable and profitable.”
Does that mean that UITF also needs my active participation besides regularly putting money on it? Can’t it be considered as a potential semi-passive income since the only thing I am required to do is to give cash?
On the other note, I would like to ask some advice/comment on my plan next month. I would like to know if it would be good enough since I’m just a newbie with just a meager savings of 3000 per month.
1. Put 1/3 of my EMERGENCY FUND in BDO SAVINGS ACCOUNT (done)
2. Put 2/3 of my EMERGENCY FUND in BDO TIME DEPOSIT (half done)
3. Start BDO UITF Balanced Fund (EIP type) (for my WEDDING 4 Years from now)
4. Start CITISEC EIP (Cost Averaging) (maybe by April 2013) (Retirement)
Thanks for the time and the info. I’m glad I was able to stumble on your blog. Reading Bo’s “Maid Invest” and BDO’s info was not enough, but now I think I have a general/better idea on investing.
@Rin
Yes, your plan sounds good. It’s better if you diversify, specially since you’re doing cost averaging.
I monitor my long-term investments at least once a month, and yes, I just use a simple spreadsheet to track the progress. I’ll probably write about that topic soon and upload a spreadsheet template which everyone can download.
@angelmicx
Yes, when it comes to UITF investments, it can be considered semi-passive as it’s less volatile than say, stock market investments.
Moreover, regular monitoring (at least once a month) is recommended so you can measure your progress. Plus, it gives a feeling a satisfaction when you see that your money is growing, and that motivates you to invest more.
With regards to your plan, everything looks excellent. Great job!
Thanks for sharing your plan, I’m sure others will find that very helpful.
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@Desertman
I was trying to visit your blog but it is not working. Anyway, how can I contact you? Thanks in advance.
Hi Fitz!
After reading your blog and other comments about investments, I have decided to invest in BPI UITFs (Equity Fund) and I have read the risks of putting it in a long-term fund. I am planning to invest Php 10k then do the cost-averaging (monthly or quarterly) in 5 years or more.
Now, I just want to convince myself that I really have to invest on immediate basis even I haven’t read the history of the prices, haven’t talked to the fund manager and other concerns.
Please advise if I am in a good position to proceed. Thanks!
Hi Fritz,
I would like to ask if I want to participate actively in stocks buying and selling, can I do it on a day after day basis? My goal is to have more capital by consecutively buying and selling stock in a short period of time.
Hi Alvin, yes you can do that. That’s called short-term stock market TRADING (and not investing). You should study fundamental analysis, technical analysis and market sentiment analysis to be able to succeed in that venture.
My number one goal was always to NEVER be the guy with no money when a great oppertunity is presented. I have rebuilt IRAs (US tax advantaged retirement accounts) several times after heavy drawdowns. When my first wife fell ill, we had need for additional funds over and above insurance and disability payments. Early distributions are allowed under some circumstances. After her passing, one top priority was getting the accounts back to pre-emergency status.
It is good to have patience with your investments. Not always easy. I have option trading privileges on all of my accounts. First rule is that I avoid high fee funds, ETFs w/high fees and any non-optionable instruments like mutual funds. High fees absolutely eat into your long term gains. The repeatable process we use is: find stocks or ETFs that are in out of favor sectors, ready for a turn-a-round. Find potential positions that are, for no good reason beaten down and trading well below fair value. When the list is narrowed down to the prospects we like best, either do a buy-write (purchase stock-sell call) or sell a CSP (Cash Secured Put) below the market to ” go fishing” at a price I like. If not assigned and the put expires worthless, I keep the premium as income. If assigned, I just purchased a block of 100 shares of the underlying at below market prices. Covered Calls may be sold in many time frames but I love the rapid THETA decay of short options one to two weeks out in time. If you are not assigned and the short calls expire worthless, rinse & repeat for additional income as you wait for the position to move.
Doing this Covered call and CSP (Cash Secured Put) plan allows the best of both worlds. I gain regular income even if a chosen underlying goes nowhere for long periods of time. I also have staying power in slight corrections and patience as I wait for my position to run. So, how does this fit with the long term goal I mentioned in my first sentence of paragraph one? I pile up income from writing options, I may receive some capital gains when positions hit my targets. Also, many good candidates pay a dividend and are considered more stable by investors. I will do a mix of non-divy stocks because the option premiums are generally much higher and my favorite divy paying ETFs and stocks. That cash that piles up may be invested in even more positions or withdrawn (TAX FRRE these days) , has allowed me to “NOT be the guy with no money” when great opportunities come along. Since entering early semi-retirement, I have been blessed with a second chance of happiness in my marriage and multiple business opportunities. Together with Beautiful Bride, we were ready as the saying goes, ” when oppertunity knocked” to test and then fund each new business.