The best investment

By Randell Tiongson
Philippine Daily Inquirer

 20 354 10

Question: I’ve been reading your articles and blogs for sometime now, which have been of great help to me. I think I am ready to make some investments now and I would like to know what investment would be best for me.

Answer: Thanks for reading my work, I am honored that what I write helps you. Your question is one that has been asked of me over and over again. If I had a hundred pesos every time I am asked that question, I would probably have enough to retire today.

The answer to this question depends on the person being asked. If you ask a real estate agent, he will say real estate; a stock broker will say blue-chip stocks; a banker will offer the latest bank products like time deposit or special savings accounts; a mutual fund representative will say mutual funds; an insurance agent will probably recommend a variable life insurance. The best investment for me? Well, I can’t really give an answer.

I must admit that many people give me a dumb-founded look whenever I anip swer them, “I don’t know, it depends.” For someone who claims to be a personal finance guy who has been in the financial services industry for more than two decades and a trainer in financial planning, I am pretty clueless ain’t I? I simply can’t tell anyone what the best investment is because there’s no such thing. My answer will always be “it depends.”

I have a simple four-rule guide that I recommend to people whenever they are perplexed as to where they want to place their hard-earned money.

Investment objective—What is the investment for in the first place? Where do you plan to use it? Is it for retirement, education, purchase of a house? Or is it just to park your money while you are scouting for other investments?

Time frame—When do you intend to use the money you are investing? Is it short (less than a year), medium (up to 7 years) or long term (more than 7 years)? It is unwise to put money in long-term investments when you will need it in the short term—you might end up realizing capital reduction or you may be levied with steep penalties should you liquidate your investment. It is also unwise to invest in short-term instruments when the purpose of investment is for the long term like education or retirement—you will not realize a good appreciation of your investments as short-term instruments give lower yields. In other words, your investment would be drastically reduced by inflation and you’ll find yourself with not much funds when you need it the most.

Risk tolerance—Investors can be conservative, moderate or aggressive. Determine your risk tolerance. Is liquidity and capital preservation an absolute must for you? Or are you willing to risk some potential capital loss in favor of potential capital hike? Remember the golden rule in investing—the higher the yield, the higher the risks and vice-versa.

Acumen—There are simple products and there are complicated products. If you are investing in the stock market and you are not familiar with some form of fundamentals, you might regret ever putting money there. If you can’t distinguish a structured note from a time deposit, you might want to reconsider your decision. I have a simple advice with regard to this—never ever invest in something you don’t understand.

Before parting with your money, you should go through the four-step rule first. Matching the right instruments with your needs will be the best investment for you.

When in Cebu City, please visit http://www.gregmelep.com for your real estate and retirement needs.

Avail of the opportunity to own a condominium unit in Cebu City together with your own parking space at the low amount of only P12,000.00+ and House and Lot @ P 7,306.81/month only. Hurry while supply of units still last. Just call the Tel. Nos. shown herein: (053)555-84-64/09164422611/09173373687.

Randell Tiongson, RFP is an advocate of life and personal finance. He is a director of the Registered Financial Planner Institute (Phils.). Attend our free personal finance talk and learn how to become RFP on October 10, 7 p.m. at PSE Center Ortigas. E-mail to reserve at info@rfp.ph or visit www.rfp.ph.

Philippines: The Next Investment Hotspot

 (Philstar.com) 

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Amid growing investor confidence spurred by government and private spending, the narrowing trade deficit, and sound economic policy and fiscal management, investment analysts from Philam Life state that the Philippine Stock Exchange index (PSEi) has enough momentum to hit 6,000 points by next year.

In a recent press briefing at The Peninsula Manila, Junie Banaag, First Vice President & Equity Fund Manager of Philam Life, said that the PSEi has advanced better than other stock markets over the past two years.

“The PSEi’s 32% growth from 2010-2012 outpaces that of the S&P 500, the Indonesian and Malaysian Stock Exchanges, Germany’s DAX, and even the Dow Jones Industrial Average,” said Banaag. “Strong economic fundamentals and the Philippine government’s effective management of fiscal and monetary positions will fuel the growth of the Philippine market.”

Banaag also points out that the Philippines has “one of the fastest growing economies” in the region and the world as of late. He points to the 5.9% GDP performance of the country in Q2, which he says makes the Philippines the fourth fastest growing economy in Asia, trailing behind China, Sri Lanka, and Indonesia. Moreover, Banaag feels positive about the recent credit rating upgrades for the Philippines, and is excited about the country’s prospects of making investment grade in the near future, which he says will surely bring in fresh funds and more investors into the country.

Sleeping Money

However, Ayen Guevara, Senior Vice President & Chief Investments Officer of Philam Life, notes that majority of Filipinos are failing to take personal advantage of the country’s economic boom, largely due to the lack of knowledge and financial literacy.

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Guevara referred to recent data from the Bangko Sentral ng Pilipinas (BSP) which shows that P4.1 trillion are “sleeping” in the banks in the form of savings accounts and time deposits, which earns only 0.375% and 2.75% per annum, respectively. Both have investment returns that are way below the inflation rate, which currently stands at 3.6%.

Matching Financial Goals with Investments

“We need to ensure correct asset-liability matching,” said Guevara. “Savings accounts and time deposits have their place in a proper portfolio --- short-term savings for short-term needs. However, as seen by the trillions of pesos in the banking system, most Filipinos place their money in short-term instruments even for their long-term financial needs, mainly due to lack of knowledge.”

“The ordinary Filipino should be able to personally capitalize on where our economy is right now and its growth prospects for the next several years,” said Guevara. “Imagine if their hard-earned money were placed in the PSEi which grew 32% in the past two years, instead of an ordinary time deposit that earns 2.75% per year, less withholding tax of 20% --- more Filipinos would be growing their personal portfolios.”

Riding on the Growth of the Philippine Economy

“We want ordinary Filipinos to gain from the economic uptrend of the Philippines,” said Anthony Bernabe, Vice President for Marketing. “With Philam Life's Money Tree, Filipinos are given the opportunity to invest in high-performing funds that take advantage of the Philippines’ booming economy.”

Philam Life’s Money Tree is a one-time payment, life insurance-and-investment plan whose various funds have yielded returns of as much as 8% to 15% per annum. The funds are managed by investment professionals who use their experience and expertise to help grow your money in the long-term. Moreover, whether you’re a conservative investor or have a strong appetite for risk, Money Tree can adjust to your risk-profile as it gives you the following funds to choose from: the less-volatile fixed-income fund, the high-risk, high-reward equity fund, or a mix of both. Last but not least, Money Tree comes with guaranteed life insurance coverage of at least 125% of your initial payment, regardless of market conditions.

“We have empowered Filipinos the past 65 years, and Philam Life has been at the forefront of nation-building all these years,” concludes Bernabe. “The Philippines is at a unique and enviable position right now, and our growth prospects over the next several years are quite positive. Philam Life wants to empower more Filipinos to greater financial prosperity and security through Money Tree, helping them take advantage of the country’s economic boom.”

To know more about Money Tree, visit Philam Life’s branch offices nationwide and ask for a Financial Advisor. You may also call Philam Life’s customer hotline at (02) 528-200, or visit their website atwww.philamlife.com, or their Facebook page, www.facebook.com/PhilamLifeAIA.

Visit www.philamlife.com to know more about Philam Life, its products, and its quest to build an educated nation of empowered Filipinos.

When in Cebu City, please visit http://www.gregmelep.com for your real estate and retirement needs.

Avail of the opportunity to own a condominium unit in Cebu City together with your own parking space at the low amount of only P12,000.00+ and House and Lot @ P 7,306.81/month only. Hurry while supply of units still last. Just call the Tel. Nos. shown herein: (053)555-84-64/09164422611/09173373687.

                 

Bankers’ best investment bets in a low-interest-rate regime

Bankers’ best investment bets in a low-interest-rate regime

When in Cebu City, please visit http://www.gregmelep.com for your real estate and retirement needs.

Avail of the opportunity to own a condominium unit in Cebu City together with your own parking space at the low amount of only P12,000.00+ and House and Lot @ P 7,306.81/month only. Hurry while supply of units still last. Just call the Tel. Nos. shown herein: (053)555-84-64/09164422611/09173373687