Where Can I Invest My Money?

This is the fifth post in Your Ultimate Guide to Investing for Beginners. To read all posts in order, start with What is Investing? then continue reading the rest of the series on this page.

Contrary to popular belief, investing is not just for rich people. Nowadays, you don’t have to have a lot of money to start investing. (You can start an investment account for as low as Php 5,000.) Investing is one of the best ways for anyone to create wealth and become financially independent.

One effective strategy in becoming rich is actually investing small amounts continuously over a long period of time. To accomplish this, you must have implement a proper strategy and stay patient, disciplined and diligent.

To help you get started, I will show you where inexperienced investors can start investing your money and how. You can start investing in these three main investment categories, or “asset classes”: Equities, Bonds, and Cash.

Option One: STOCKS

Equities or Stocks are shares of ownership in a corporation. They have historically provided more long-term growth than bonds. But they’ve also been more volatile or risky, so they can lose a lot of money in the short term. You can invest in equities or stocks by placing your money either in the stock market, mutual funds or UITFs.

STOCKS or EQUITIES have HIGH GROWTH POTENTIAL and HIGH RISK.

Related Post: How to Invest in Mutual Funds

Option Two: BONDS

Bonds are basically interest-bearing loans you make to a company or government. They generally offer smaller long-term returns than stocks do, but also less short-term risk. You can invest in bond by placing your money either in mutual funds or UITFs.

BONDS have LOW GROWTH POTENTIAL and LOW RISK.

Related Post: How to Invest in Mutual Funds

Option Three: CASH

Cash, or a “cash equivalent” like a cash savings account or a money-market fund, is the least risky asset class, but it also offers the lowest return.

CASH have ZERO to LOW GROWTH POTENTIAL and ZERO to LOW RISK.

Passive Investing vs Active Investing: Strategies For The Stock Investor

Here’s one of the most basic questions you have to answer: Do you want to manage your money “actively” or “passively”?

On Active Investing. An active investing style really boils down to stock market timing: picking, buying and selling stocks every few days or sometimes even within a day in an attempt to secure the best possible return. It’s usually called a “buy and do homework” strategy because active investors may have to research their investments by reading and analyzing financial statements.

Ideal for newbie investors who have a mentor, people with experience with investments, people who have time to manage their investments
Investment Options for the Active Investor: Stock Market Investing

On Passive Investing. This simple approach relies on no expensive research and no unnecessary attempts to watch the market. Instead, you are buying an asset class and getting, in essence, the returns of that given class. Passive investing just keeps on buying carefully chosen stocks on a regular basis and seldom sells, allowing more time for the investment to grow.

Ideal for newbie investors, people who are not familiar with investments, people who do not have time on managing their investments
Investment Options for the Passive Investor: Mutual Funds and UITFs

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