Updated: July 10, 2021
Welcome to another installment of Reader Mail, the section of this blog where I answer questions from my readers about money matters.
Today, we’ll focus solely on investing and I hope you find my answers helpful.
As always, please note that I am not a professional financial adviser and my responses are solely based on my knowledge and experience as an investor, this means you should always take my advice with a grain of salt.
Anyway, without further ado, here now are the Q&A’s:
I want to start investing, where should I go?
There’s a lot of places you can go to invest, but the most convenient for me is through your own bank. Go and ask them about their Unit Investment Trust Fund or UITF products.
Which stocks are good to buy?
I’d recommend AC, ALI, AP, BDO, BPI, DMC, EDC, FMETF, GTCAP, ICT, JFC, MBT, MPI, MWC, RLC, SM, SMPH, TEL and/or URC.
Don’t know what these companies are? Then check it here: Best Philippine Stocks For Long Term Investing
I invested in stocks but I don’t have an emergency fund yet, what should I do?
Stop investing in stocks and save up for your emergency fund first. Don’t sell your current shares either, it’s okay to just hold on to them for now. Come back to the stock market once you have your EF.
Would you recommend getting the COL Financial x2 Margin offer?
That product is for seasoned stock market traders who want to leverage and not for stock market newbies. The interest rate of 18% is too high for long-term investing but acceptable for short-term trading – but that’s assuming you know what you are doing.
Can I invest while saving up for an emergency fund?
Yes. Save up for an emergency fund. When you reach 3 months’ worth of your EF, put the next 3 months in a 30-day time deposit. Then the next 6 months’ worth of your EF in a low-risk UITF or mutual fund.
So total, you have 1 year worth of EF, placed in a savings account (3 months liquid), a 30-day time deposit (3 months), and a UITF / MF (6 months).
Is it okay to buy IPO shares if I’m a newbie investor?
It depends on the company, but I personally don’t recommend it for newbies.
The stock price of companies that go on IPO tends to be volatile and sometimes, it’s overpriced too.
Without previous price history, and very little public info (in terms of financial records, because they’re previously a private company) – you don’t really know how the company performed in the past and will perform in the future.
According to Suze Orman in an interview with Karen Davila, we should invest in the Philippine Stock Index Fund. How do we do that?
The Philippine Stock Index Fund is a UITF product of BPI. Suze Orman was brought here by BPI, so expect her to recommend BPI products. If you want to invest in that fund, just go to any BPI branch.
As always, more than listening and understanding financial and investing advice that’s going around right now from many people – try to also see where that person is coming from so you’ll know the rationale behind that advice.
I can save 15k a month, can I split it into 3 and invest in my emergency fund, mutual fund & stocks simultaneously? Or should I do it one at a time?
The plan to split it into EF, MF, and stocks is okay. But you should really come up with your specific goals. Investing without an objective is like driving a car without a destination.
Your financial objectives will actually dictate where you should invest, how much you should invest, and when you should liquidate your investments.
One final tip, as an entrepreneur, I would say that owning a business someday should be a financial goal because it will be a good source of passive income when you retire.
Paper asset investments are great for capital growth, but a very poor source of passive income – which is more important if you want to retire early.
I have an extra P100,000 that I can invest in a mutual fund. Is it better to invest all of it now, or is it still better to just invest P5,000 every month for the next 20 months?
You can choose to study the market and speculate if it will go up, down, or sideways for the next 20 months.
Read and listen to the news and learn the market sentiment, collate all the predictions and decide which direction you believe the fund price will go.
If it’s up, then it’s okay to invest all at once. Otherwise, if it’s down or sideways, or if you don’t want to study the market at all, then it’s better to cost average your investment and just put P5,000 every month into the fund.
Is it still wise to invest in the stock market considering that I might be needing money for my husband and me soon? Do I still have time to be a millionaire? How much should I invest monthly to make millions say after 5 years?
How soon is soon? If it’s more than 5 years, then it’s relatively safe to invest in the stock market.
Do you still have time to be a millionaire? Of course! Colonel Sanders started KFC at the age of 65! He died a billionaire at the age of 90.
Lastly, don’t ask how much you should invest, and how long you should invest. Ask yourself first the reason why you want to invest – what will be the money used for?
When you’ve answered that question, then knowing where, how much, and how long to invest becomes easier.
This ends another edition of Reader Mail. Thank you to everyone who continues to value my opinion on these matters. Lastly, please subscribe to Ready To Be Rich to get the latest updates on this site. Cheers!