Stock Market Alternatives: Where To Invest Aside From The Stock Market

Posted by under Investing . Updated: November 21, 2016

“If I don’t know or if I’m not yet ready to invest in the stock market, where can I put my money instead?”

That’s the question many newbie investors are asking, especially when I published the previous article, that’s why I decided to write this post.

Below, we’ll discuss a handful of stock market alternatives that you can invest in.

After each one, I’ll briefly state why it’s a good replacement, and the reason why you should consider it.

I hope this will help you in making better investing decisions.

Let’s start.

Equity Funds

Equity funds are managed investments that mainly invest in the stock market.

They are available in commercial banks under Unit Investment Trust Funds (UITF), or through Mutual Fund companies.

Because Equity Funds primarily invest in the stock market, it will move in tandem with it. This means if the stock market goes up, then Equity Funds go up as well. But if stocks go down, so do equity funds.

Why invest here?
If you’re still studying how the stock market works (or don’t have the time yet to learn), then Equity Funds is a simpler alternative. Just give the bank or the mutual fund company your money, and let the fund manager do all the stock market investing decisions for you.

equity-funds-vs-stock-market

Bonds

Bonds are long-term debts and as an investor, you’re simply lending your money to the government (as treasury bonds) or to a company (as corporate bonds). Your profit comes in the form of interest payments from them (because they borrowed money from you).

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Long-time investors consider bonds as the classic alternative to the stock market. When stock prices go down, many investors take their money towards bonds for safety and diversification.

Why invest here?
If you’re looking for a relatively safer, medium to long-term investment, then bonds are a good alternative. Just go to your bank and ask about treasury bonds, T-bills, Long-Term Commercial Papers (corporate bonds) or their Bond UITFs. You can alternatively go to a mutual fund company and ask about their Bond Funds.

bonds-vs-stock-market

Balanced Funds

An investment fund that primarily puts money in both the stock market and in bonds is called a Balanced Fund. Just like bonds, this is a relatively safer, medium to long-term investment.

Balanced funds have a strong correlation with the stock market. If stock prices go up, so do the gains of a balanced fund – although not as much. While that may seem to be a disadvantage, it’s actually not because if stock prices go down, then balanced fund prices will go down as well, but the losses will not be as much as the stock market.

Why invest here?
For the same reason why you’ll invest in bonds – to have a relatively safer, medium to long-term investment. And just like equity funds, you simply invest through a bank or a mutual fund company and let the fund manager do the investing decisions for you.

balanced-fund-vs-stock-market

Your Own Business

When you invest in the stock market, you’re simply buying shares of a company and becoming part-owner of that corporation. Under this perspective, putting up your own business gives you the same end result – so why not just start your own company instead, right?

Starting your own business is riskier, more difficult and requires more time – but the potential profit is so much higher than investing in the stock market. And who knows, maybe someday your own company will be able to list itself in the stock market, imagine how great that would feel – people actually buying shares of your company.

Why invest here?
Having your own business is the only alternative I can think of that can outperform the profits you’ll get from the stock market. Plus, it doesn’t just provide capital growth, but constant cashflow as well.

business-vs-stock-market

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7 Responses to “Stock Market Alternatives: Where To Invest Aside From The Stock Market”


  1. Ross Banal says:

    Great article! It is worth noting though that equity funds and balanced funds incur management fees which can actually be costly as compared to the cost of trading in the stock market. In the long term, these fees may actually eat up on your returns.

  2. Tannie says:

    Hi Sir Fits,
    Simple, informative and great article.
    How much money do you need to start investing in Bonds and how long is the usual time horizon?

  3. Dan O. Palarca says:

    Sir,
    I have a UITF at the near peak of the stock market around 7,000. Now the NAVPU is around 40 pts. below, its losing. What is the best thing to do? The way our stock market is going it seems to me as an ordinary, novice investor that it will take a long, long time to reach that peak again just to break even. What is the best approach to do? Shall I pull it out losing, and wait until the market crash and then put it back again to recover the loses. Or shall leave it as it is and say hello to my UITF 10 years from now. Thank you.

  4. reynante ipil says:

    good day po sir,ano po ba ang mga kailangan para makapag apply sa uitf ng bdo? ( aside from money)

  5. Fitz says:

    @Ross
    Trading the stock market is more risky IMO, but investing in it is better. Also, management fees do eat up some of the profit, but it won’t be as much, especially for long-term placements.

    @Tannie
    Just go to your bank and ask if they have available bond investments (both government and corporate). Some companies also announce it in newspapers as Long-Term Commercial Papers. Usual time horizon is 10 years, but there are several which are shorter and longer.

    @Dan
    Leave it and come back to it after at least 5 years. It should be noted that you shouldn’t invest in high-risk products if you plan to use the money within 5 years.

    Also READ THIS

    @Reynante
    Just go to the bank and accomplish their investor risk assessment form. The bank manager will then advise you of the right UITF you should get with respect to your financial objectives and current financial standing.

  6. arianb says:

    Hi Fitz,

    If I’m not mistaken, Warren Buffet once said: “Be fearful when others are greedy; Be greedy when others are fearful”. With the current situation of the PH market, this advice is really helpful.

    Also, If one is doing cost averaging, then one does not need to worry much.

    Agree?

  7. jon calabig says:

    hi sir im ofw and i want to invest in stock market or mutual fund uitf bond fund etc.how can i start investing if my still here abroad how much is the initial investment?it is much ok if im in the philippines to apply personally trhu bank or some investment company thanks and god bless

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