Updated: September 1, 2022
A few days ago, I saw on an online news website a sponsored article, which gave the best investment options for young professionals.
The post enumerated four items, particularly life insurance with investments, real estate, stocks, and business as possible investments.
I couldn’t help but react to the article on my Facebook account, particularly on the advice about life insurance and real estate.
On Life Insurance with Investments
First, young professionals, particularly those who don’t have dependents, should NOT “invest” in life insurance. Their money is best put elsewhere.
And for those who do have dependents, it’s best to get term insurance, which provides the needed protection at a more affordable cost than investment-linked insurance products.
Investment-linked insurance policies are expensive and if you’re just starting with your career, then it will probably eat up a large portion of your salary.
This is not an ideal situation given that there are better places to put your money in, which I’ll enumerate later.
On Real Estate
Buying real estate that will serve as your future home is NOT an investment. The reason because that property will technically not make money for you unless you’re willing to sell it later or you will have it rented out. Of course, this is unlikely if you’re living in it.
Also, the return of your money will take years. Instead, remember that flipping real estate is best done through foreclosed properties where it’s possible to realize profits within months, even weeks if you have the right network.
There’s nothing wrong with buying real estate for personal use, especially if it’s your dream house or condo unit. But it’s wrong to think that it’s an investment if you don’t have the strong resolve to make money from it later.
I’ve met too many people who said they’ll sell the condo unit or have it rented out in the future – only to succumb to using the property instead because they fell in love with their “investment”. So be realistic and practical with your decisions.
7 Great Investment Options for the Young Professional: My Recommended List
Spend your money on books. Attend seminars and workshops, both free and paid ones. Increase your knowledge and enhance your skills.
The learnings you’ll get from these will help you make more money in the future that’s why this is a great investment.
2. GOOD FINANCIAL HABITS
Learn the habit of saving regularly and following a spending budget.
If this means buying an app, getting a book, or paying for a money management seminar, then go for it!
Don’t hesitate and invest your money in things that will help you become more financially responsible.
3. PERSONAL NETWORK
Getting ahead in life, it’s not just about knowing the right things, but also knowing the right people.
Invest in personal development skills training if you must, if this will help you get over your fear of talking and networking with strangers.
More importantly, attend events even if you have to pay entrance tickets; join organizations even if you have to pay membership fees; do volunteer work even if there’s no cash allowance – just get yourself out there and start meeting people.
When you’re young, your greatest asset is yourself – so do your best to protect it.
If you’re employed, then learn all your HMO benefits and take advantage of them. If you’re a freelancer, then get health insurance, even if it’s just PhilHealth.
But more importantly, take care of yourself and don’t abuse your body. Invest in a sport and start living an active lifestyle while you’re still young.
The stock market is a high-risk investment. But given that you’re still young, you can afford the risk – especially if you’re buying good companies that have long-term growth potential.
Apart from investing in knowledge about the stock market, remember that when it comes to stocks – the longer that you’re in it, the safer your investment becomes.
Based on the history of the Philippine Stock Market, all index stocks bought before 2009 are currently net positive.
Don’t know what companies to buy? Then check out this post: The Best Philippine Stocks For Long Term Investment
6. POOLED FUNDS
Pooled funds are Unit Investment Trust Funds and Mutual Funds. When you buy investment-linked life insurance, the insurance company invests your money in these. So why not just invest in pooled funds directly, right?
Remember that when you fail to pay your insurance premiums, your policy will get canceled. But if you fail to top-up your investments, then nothing bad happens and your investment just stays there.
Need a primer about pooled funds? Read: How Do You Make Money From UITF Investing?
Finally, investing your money in a business is one of the best things you can do while you’re still young because if your business fails, then you still have many years ahead to rebuild your finances.
While that’s a worst-case scenario – remember that the best way to learn about entrepreneurship is to become one – and as always, the earlier you do it, the better.
More importantly, if creating your own business is difficult given your financial resources and limited free time – then consider joining a network marketing business.
Don’t dismiss and avoid multi-level marketing companies because they’re one of the best ways to learn and practice your entrepreneurial skills.
Signing up with the right MLM company will develop your selling skills, presentation skills, and people skills; and teach you how to build effective and efficient teams – traits of all successful entrepreneurs.
How do you choose the right MLM company? Then read this: How To Choose The Right Multi-Level Network Marketing Company
Young professionals have the whole world in front of them. They have within their reach countless opportunities just waiting to be seized.
You may have little or limited funds now, but remember that you have on your side the most valuable asset in wealth building – TIME.
So don’t be afraid to explore, make mistakes, learn, and eventually become better, wealthier, and happier.