Explore Your Investment Options in the Philippines

Money management has been a major concern since the introduction of currencies. People have long been curious about where they should put their money. When someone saves their money somewhere, they need to be certain of a number of factors, including the safety hazards associated, the return on investment that they will receive, and the location where their money is held.

If we go back around ten years, we can see that there were few options for investing money. However, as time passed, investment kinds expanded.

In this post, we will look at the many forms of investments available in the Philippines. But, before we go any further, let us define an investment.

What exactly is an investment?

Investment is the process of acquiring an asset with the intention of profiting from it. To produce income from an asset, either regular income or asset appreciation can be employed. Appreciation refers to the increase in the value of an item over time.

The investor does not plan to use an asset acquired for investment reasons. Instead, the investor will utilize it to his advantage in order to profit. The basic purpose of investing is to buy an item now and sell it tomorrow at a higher price.”

People can invest their money in a variety of various forms of investments.

Let us now look at the different forms of investment options in the Philippines.

Investment options in the Philippines

Mutual funds, UITFs, and Balanced Funds 

Mutual funds, UITFs, and Balanced funds are examples of funds in which the investor invests in a trust fund and subsequently gets money based on the success of the fund in which he or she invested. What’s fantastic about this sort of investment opportunity is that you get to put your money in the hands of specialists who know how to develop it.

Variable Universal Life Insurance

Variable Universal Life Insurance, also known as Variable Unit-Linked Insurance, mixes insurance with investing. A portion of your premium is dedicated to insurance, while the remainder is allocated to other financial assets such as stocks, bonds, and index funds. These are handled by skilled and competent money managers, giving investors confidence in the possibility of substantial returns.

Earnings from investments are reinvested in your account, increasing the cash value of your policy over time. It is also possible to withdraw it or convert it to premium payments. In the event of death, the recipient will get the insurance payout as well as the investment returns without having to pay the estate tax.

Bonds

A bond is a sort of investment in which you lend money to a company, government, or other institution. In exchange, the bond issuer pays you interest on the borrowed money while also repaying you the original amount you paid for the bond (principal).

Bonds are a type of fixed-income investment. Interest is commonly paid in quarterly or semi-annual payments. The complete principle, on the other hand, is paid on the maturity date of the bond. Bonds are often favored over stocks, although they might nevertheless produce lesser returns. Government bonds are more secure than corporate bonds. If you buy individual bonds, make sure to sell them before it matures to get the most out of your investment.

Government bonds

Treasury Bills (T-Bills), Retail Treasury Bonds (RTBs), and Fixed Treasury Notes (FXTNs) are fixed-income instruments with the principal and interest fully guaranteed by the Philippine government. These are debt securities that are used to fund government programs including infrastructure, education, and health care.

Treasury notes are sold at a discount and are redeemable at face value when they reach maturity. Retail Treasury Bonds and Fixed Treasury Notes pay interest quarterly or semi-annually during the stated period, with the principal returned at maturity. These securities may also be resold before maturity to achieve short-term interest profits.

Corporate bond funds

Firms registered on the local exchange, like government entities and the Bureau of the Treasury, can issue corporate bonds to finance company development or maintain operations. Bondholders effectively lend money to the issuing corporation in exchange for periodic coupon payments at a set or variable interest rate until maturity. The payment for the coupon is calculated as a percentage of the face value. The principal is repaid to the investor when it matures.

Stock Funds

An equity investment is a stock market investment. Purchasing stocks or shares allow investors to have a piece of the company’s ownership. Stocks are acquired with the intention of producing regular income in the form of dividends as well as capital gain. When stock prices rise, investors can benefit by selling their shares.

Stock returns are market-dependent, making them the riskiest investment option. Share prices are influenced by market demand and supply, as well as market sentiment. A good feeling will result in an unanticipated market surge, whilst a negative emotion will result in a share price decline.

Money Market Mutual Fund

Money market mutual funds, which are not to be confused with traditional savings accounts, allow investors to leave a specific sum in a bank for a set length of time. When money market accounts are done, you receive your principal back, but at a slightly higher interest rate. The time period granted ranges from three months to a year. Although you may issue checks from money market funds, doing so reduces the value of your investment.

Property Management or Real Estate Investment

When you think about investing, one of the first things that come to mind is undoubtedly owning a real estate property. It is because property values rise over time, providing you with several possibilities to gain. Aside from appreciation, you may profit from real estate by leasing it for commercial or residential reasons depending on the area, turning it into a company location, constructing a storage or parking space, or flipping houses. Leverage can also be obtained through the Pag-IBIG Fund or banks.

Real Estate Investment Trust (REIT)

Consider Real Estate Investment Trusts if you do not have enough money to buy a home (REITs). They have publicly listed corporations that hold and manage real estate properties for profit.

According to Philippine legislation, REITs must pay out at least 90% of their taxable profits as dividends to shareholders. REITs provide for property type diversity and offer reduced risks and greater returns. Investing in REITs is a less expensive option than owning a rental property.

Savings Account

A high-yield savings account allows you to earn more than a conventional savings account. Your existing bank may already provide this financial instrument, in which a growing interest rate is paid when a specific average daily balance is attained for a set period of time. Some banks will also pay you bonus interest if you don’t make any withdrawals for a month.

Consider establishing an account with a digital bank to take advantage of even greater interest rates. They provide attractive rates of up to 4.5% on savings accounts, compared to typical banks, which offer rates ranging from less than 1% to 1.66% each year. Digital banks provide the same liquidity as traditional banks, but with a simpler account-establishing process, no minimum beginning amount, no sustaining balance, and minimal or no fees.