This is the eight post in the Money Girl’s Beginners Guide to Becoming Rich. To read all posts in order, start with Change your Money Mindset then continue reading the rest of the series on this page.

On today’s series, I’ll show you a shortlist of simple investment options and help you begin achieving your investment goals.

Note: Personally, I think it’s important to set aside money in an emergency fund first before you begin investing. You can build up your emergency fund while investing your money. Just remember to prioritize your emergency fund first. Emergency funds are for your short-term needs, while investment funds are for your long-term needs.

Related Post: Your Ultimate Guide to Investing

As a newbie investor, I would suggest two main options: Mutual Funds or Individual Stocks. Your investment choice would depend on your investment personality and your investment goals. Do you consider yourself the conservative, moderate or the aggressive type?

As differentiated by InvestorGuide.com, “Mutual funds are widely regarded as a passive form of investing, while investing in individual stocks is a more active form. Both carry inherent advantages and risks, and it is important for investors to understand the differences between them.”

Mutual Funds or Stock Market Investing?

The best way to understand these options is to understand how these investments instruments work.

Mutual Funds

The first investment account I opened was Mutual Funds. I was 23 years old then. A newbie investor. At that time, I had no idea about the ins and outs of the stock market. What’s great about mutual funds is that it’s a ‘set and forget’ type of investment. I didn’t need to choose which stocks to buy or research about the different companies listed in the PSE. Mutual fund investing are for those who don’t have the time or inclination to learn about stock investing. Professionals handle the management work for your peace of mind. This is simpler than the stock market, so I suggest you get to try this first.

Mutual funds is an investment instrument wherein the Mutual Fund company pools together the money from investors, and invests in various instruments like bonds, stocks, and foreign exchange. The investor has no capability to choose what particular stock the Mutual Fund would be invested in. That decision is performed by the mutual fund company’s Fund Manager.

The only choice of the investor is in choosing what type of investment instruments his/her mutual fund investments would be invested in. Would the investor want his/her investments be invested more on stocks (Equity Fund)? Bonds and other fixed income investments (Bond Fund)? Or the combination of both (Balanced Fund)? All other decisions are done by the mutual fund company’s fund manager.

Stock Market

I recently started a stock market account with COL Financial and to educate myself about the stock investing, I joined Bo Sanchez’s Truly Rich Club. I’ve learned so much about which stocks to choose and so far, it’s been really helpful.

When investing in the stocks of a company, in effect, you get to own a portion of that company. It may be said that investing directly in stocks is riskier than investing in mutual funds. Stock investing requires a lot of research and a lot of discipline. You should always be updated about stock market movements. Investors generate profit from selling shares at higher value than when they were bought, or through dividends – a share of profit from a company’s business distributed by a company to its investors.

How much is it to start a mutual fund or a stock market account?

You can start investing for as low as Php 5000. Personally, I have used Sunlife Prosperity Funds to open a mutual fund account and just recently opened a stock market account with COL Financial. And it all started with Php 5000.