Updated: November 19, 2020
Which is a better investment, stocks or equity funds? Gold or real estate? Forex or mutual funds?
If you’re new to investing, then I’m sure you have similar questions in mind.
Given the various options out there, it can become overwhelming and confusing. But always remember that the goal is to actually invest, so don’t let analysis paralysis stop you from doing so.
If you’re among those who can’t seem to decide where to invest, I hope that my recommendations below would be able to help you choose the best investment for you.
From Ms. V
Which investment gives better profits, the stock market or equity funds?
Investing directly in the stock market would give you much better profits than investing in equity funds. However, the only way to do this is to have good analytical skills so you can determine the right companies to buy.
If you don’t have the time, the patience, and the discipline to study charts and do research, then you’re better off investing in equity funds, which requires almost no effort to make good money in the long-term.
However, my advice is to not choose between the two but to increase your cash flow so you can invest in both.
From Mr. J
Should I invest in gold or real estate?
Real estate is a better investment because there is more than one way to profit from it. You can sell it later when its value appreciates, or you can convert it into a rental property.
Moreover, given the historical prices of gold, it’s hardly on an upward trend over the long-term; while a property in a good location would most likely become more valuable after several years.
Nonetheless, if you have limited funds, then it may be a good idea to learn gold trading through forex brokers.
Take note though that this is an active way to make money, which when done right, the income can be good.
But if you’re not interested in trading, then you should just opt to invest in UITFs or mutual funds instead.
From Mr. W
I heard you can make more money in forex than mutual funds, is this true?
Comparing forex and mutual funds is like comparing dogs and cats, they’re two entirely different animals with mutually inclusive advantages and disadvantages.
Forex or the currency market is best used for making money in the short-term. It provides active income and like stock market trading, requires time and a specific set of skills to successfully earn from it.
Meanwhile, mutual funds are best used for making money in the medium or long-term. It provides passive growth for your money without requiring you to have an excellent aptitude for the economy.
If you’re looking for extra income and you can commit to learning how to trade currencies, then try forex. But if your priority is to passively grow your wealth, then just leave the money in your mutual fund investments.
From Ms. S
I have an extra P300,000. Where’s the best place to invest this money?
The best place to invest your money would entirely depend on your financial goals. Where are you planning to spend that money on? More importantly, when are you planning to use it?
If that money, for example, will be used for your wedding next year, then the best place to put it is in a time deposit account.
However, if it’s for the college education of your child, which is happening five years from now, then it’s best to put it in a moderate-risk investment.
Lastly, if that money is for your retirement 10 years from now, then you should invest it in the stock market or an equity fund.
Remember that the best investment is always the one that will protect and grow your money for your financial goals.
If you plan to use the money soon, investing it in high-risk instruments will not guarantee that it will have gains, and I would advise you to NOT take the risk.
Short-term goals go with low-risk investments; medium-term goals require moderate-risk investments, and high-risk investments are only for long-term goals.
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Photo credit: kecko
So yung tinutukoy ni Ms.V is equity fund and not equity index fund?
Correct me if i’m wrong. Pero yung equity fund is the equivalent of Stocks Trading while equity index fund is the equivalent of Stocks Investing. Tama po ba?
Hi Bryan, Ms. V is referring to equity funds in general.
Equity funds buy shares of different companies, some of which can be speculative ones (not popular, often-ignored, but with potential breakout).
Meanwhile, equity index funds buy only shares of companies that are included in the Philippine index.
Moreover, fund managers are usually biased towards the long-term, so both equity funds and equity index funds can be said to be equivalent to stock investing.
Because of the sales loads and redemption fees of mutual funds, it’s not recommended that you do a trading strategy with them (buy and sell within short periods of time). So there’s no equivalent to stock trading when it comes to any type of equity fund.
Which is better, equity funds or equity index funds – hard to tell because it all depends on who the fund manager is – his/her skills when it comes to choosing stocks and timing the market.
i have an extra 20k, which i will not be using in the near future, can i invest this money in the stock market?? can i invest this in a financial company like col financing?? how??
Hi Sir Fitz,
May I know po which is better between money market and time deposit?
If you’re not planning to use the money within the next 5 years, yes, you can invest it in the stock market
None is better. Instead of choosing, invest in both. If you can only afford to invest in one, go for the time deposit. But if you get extra cash, then invest in the money market next.
Time deposits have guaranteed gains, but it will never beat inflation. Money market funds doesn’t have guaranteed gains, but it has a potential to beat inflation.
Fitz.. time deposits with high interest like that of PSBank (up to 4.5% per annum) are actually beating the current inflation rate of 2.3%.. And if u invest in Pag-Ibig MP2, it would be a lot better coz their current annual dividend rate is at 8.1%, even better than bonds & some balanced funds.. Maybe u should discuss about MP2 next..
In past articles, Fitz accurately points out the difference between a “trader” and an “investor.” One popular speaker in trading circles says, “if it moves, I’ll trade it.” Personally, I am a little more selective and prefer to hold my underlying for long periods. I do NOT want to spend all my free time in retirement looking for the next perfect stock.
For me, the best investment is a stable stock or diversified ETF with large volume and that offers options. As the underlying cycles up and down, I get all the excitement I need attempting to time the weekly swings to sell call options. That is how I cashflow my stocks and ETFs for regular income. After the sale of the options, I know the possible outcomes and get ready to make any needed adjustments on option expiration Friday. Actually, after you “get into” selling options for income, it can be quite boring as you wait. I tell folks that my “job” is like watching very slow drying paint cure. So, my perfect investment in retirement is something that I can cash flow for spendable income. Even gold (and silver also) that was mentioned in the article may be used as an underlying. Owning ETFs such as GLD and SLV will offer you the choice to write options for income