8 Important Facts About Investing That People Often Forget

Updated: May 20, 2022

These days, learning about personal finance and investment is as easy as searching online.

However, this is a double-edged sword because while information has become more accessible, not everything you’ll read on the Internet will be true or helpful.

I’ve seen websites with misleading data, people telling false stories, and the worst of them all — investment scams being shamelessly promoted online.

So how do you sort out the good from the bad? I believe it is by remembering these eight important facts about investing, and allowing them to guide you in every investment decision that you make.

1. Protection comes before investing.

All investments carry a level of risk. Most people try to avoid the risk by going for products with guaranteed returns, which more often are scams. Or they put their money in low-risk investments and just accept the low returns.

The best way to manage investment risks is to financially protect yourself when things go south. Those who invested in the stock market in the past two years know too well that “parties” don’t last forever.

Your best tools for protection are an emergency fund, health insurance, multiple streams of income, and for the worst-case scenario that you die, life insurance.


2. You need to have a financial goal.

Investments are like modes of transportation — a bicycle, a car, a bus, a plane, etc. — what you take depends on where you’re going. This means your financial goals will dictate where you should invest.

A lot of people invest in what’s hot and trendy. They look at the news and see that the stock market is up, so they think that’s where they should put their money and forget to ask themselves if it’s really what they need to reach their goals.

A friend has P200,000 that he plans to use for his wedding next year. Putting that money in the stock market is like riding a helicopter to go to a nearby mall. It’s fast and exciting, but risky. I’d rather take a car or ride a bike, or in the case of my friend, I advised him to put the money in a time deposit or a low-risk fund instead.

3. Interest rates on bank cash deposits will never beat inflation.

I’ve met people who don’t like to risk losing money so they just put their savings in the bank. Some of them are even proud of the millions they have in their time deposits.

What they don’t know is that because of inflation, they’re actually losing money by not investing. The Philippines’ average inflation rate is 5% (2000-2012), so if your time deposit is earning 4% pa, then your money is losing 1% of its value every year.

Putting your money in moderate and high-risk investments is the only way to beat inflation over the long term. Don’t play it safe with bank cash deposits because it’s actually a sure way to lose money.

4. You cannot just copy how other people invest.

Investing is a personal task. People invest for different reasons. My financial goals are not the same as yours, which means you cannot just invest where you invest.

The best investment for you depends not only on your goals, but also on your financial capabilities, your risk tolerance, and your investment personality, among other things.

So the next time you read or someone tells you about a great investment — ask yourself first how that investment fits and complements your personal financial plan before putting money into it.

5. Constant cash flow is your investment foundation.

There are hundreds of investments out there and people waste a lot of time comparing and choosing which among those investments will give them the best returns.

My advice has always been to invest where it is convenient for them so they can go back and focus on making more money. Take advantage of your productive years and do everything you can to increase your cash flow.

That’s the reason why I spend most of my time building multiple sources of income rather than studying which investment is the best. When I have more money, I don’t have to choose at all because I can invest in all of them.

6. Your portfolio’s growth is more important than the performance of your individual investments.

Diversification is a common piece of advice given by financial experts, but what does it really mean?

Most people simply understand this as making sure that you put your money in different types of investments. While correct, it is short-sighted because what you actually want is a robust portfolio that grows in value every year.

Your goal is not to choose investments that never go down. Rather, your goal is to create a portfolio that increases in net value year after year even if some of your individual investments go down.


7. In investing, time is more important than timing.

A lot of people like timing the market. They try to predict its behavior so they can buy low and sell high — but not only is this time-consuming, but it’s also easily frustrating.

Interestingly, while financial analysts don’t always agree when the market will go up or down, most of them however will agree that the longer you are in the market, the better it is for your investment.

Again, I’d rather focus on making more money than spending most of my time speculating and being a fortune teller. I put my money in stable investments with a long-term growth outlook and let it grow over time — it’s less stressful.

8. Never invest in something that you don’t understand.

There’s a lot of misinformation out there when it comes to personal finance — most of them feeding on the fear or the greed of a person just to convince them to put their hard-earned money into their investment.

I’ve seen too many people getting fooled into investing in something just after being presented with some made-up statistics and fake testimonials. It’s unbelievable how these sneaky marketing strategies still work.

But you should be wiser now. Remember that ignorance is expensive, that’s why knowledge is and will always be the best investment. Learn more, keep learning — learn for life — and you’ll never be poor.

What to do next: Click here to start your financial journey with IMG Wealth Academy

Photo credits: rednuht and laughingsquid


  1. Great post Fitz!

    #5 – Build your cashflow – It’s always best to invest in income generating assets so you never run out of money.

    #7 – Yes, timing the market really is time-consuming and frustrating at times. I used to trade in the stock market when I was just starting out. You could make a lot of money trading but it’s probably more useful to spend your time building multiple streams of income instead of analysing stock charts the whole day.

    #8 – I agree. Invest in yourself first. Learn how to improve your finances and get started investing.

  2. As ever thank you Fitz for all of these facts about money investing. In addition, if I may contribute on the dilemma of meeting inflation in the country, let me share my experience.

    Sometime in 2004, I tried to put my money in a cooperative bank in Ilocos sur. I enjoyed the passive income which my money earned back then. It was apretty 10% per annum. That was great in deed. Then came 2010, interest rate went down to 7.5, not bad compared to commmercial banks. Fast forward, 2014 my money earned 5% and now sad to say it’s hardly earning 3.5% per annum. OOOsshhh I have a hard time computing for all the lost interest income but until now my money is still in a deep slumber in that cooperative bank coz I do not know where to invest. It’s good you mentioned about the products of BDO. This coming saturday I will go to the bank and inquire more. hopefully I will be brave enoufg to start invsting. It’s a relief if BDO accepts as low as 1k in their uitf. I wish I could buy stocks directly from Ayala, Jollibee and other top rating businesses but I just don’t know how. Please advise.



  3. Great article!

    I totally agree with number 8 – never invest on something you don’t understand.

    Lately I found a broker selling it’s members a long-term health plan with investments. I got curious because it is very promising as to returns once you reach aged 60, I wanted to invest so I searched for its background.
    I went to the PIC website to confirm its legality and I also went to SEC and searched the web. I was looking for its financial statements both for the broker and the company selling health plan to the members but it is nowhere to be found.
    I emailed a lot of people as to where I could find a financial statement but I was unsuccessful.
    The question going on my mind now is that, why are these companies letting the public invest on them but they’re not making their financial position transparent to the public investors? I never wanted to invest hundreds of thousands for a company who does not want to make their financial statements public. And why is the government letting this happen?

    I started investing on shares of stock of companies 5 years ago but I always review their financial statements first before putting in my money. But this broker now and the investments it offers has got almost everybody crazy investing in them, sadly the company is not transparent as to its financial standing. In short, it’s all just promises.

Leave a Reply

Your email address will not be published. Required fields are marked *