Investment Questions


Question: Where should I put my money? In a bank, property, business or stocks?-Asked via Facebook

Answer: Before I answer your question, I encourage you to first consider three things: your investment objective (the reason why you are investing), time frame (how long you will keep the investment) and risk tolerance. It is critical that you know these three things before even selecting an investment option.

There is no such thing as a “best” investment. The investment instruments you mentioned have their advantages and disadvantages, merits and flaws.

Bank products are the most popular choice of many. They are among the most liquid investments you can make and the risks are also among the lowest. The downside, however, are the yields. They may be the safest options but they give the lowest returns. As they say, low risk, low returns.

Banks today offer products other than the usual deposit products. You can invest in the instruments they offer like Unit Investment Trust Funds, mutual funds, bonds and insurance. Take time to know what your bank offers other than traditional deposit products.

Property is the investment every Filipino wants. Your parents and grandparents had probably told you that the best investment was land. However, saying that land is the best investment may be too ambivalent. Real estate’s greatest attraction is its being a tangible investment, something you can see and use unlike paper investments.

Land usually appreciates in value giving you capital growth, or it can generate a steady flow of income through rentals and capital gains, when you decide to sell it. There are times, however, when real estate investments do not appreciate or, in some cases, their appreciation does not meet your expectations.

Business is another Filipino dream. Everyone wants to be an entrepreneur and why not? Businesses can potentially give you the highest returns. A business that succeeds can make one a millionaire, even a billionaire. There are many success stories of people who started with little but are now very wealthy because of their businesses. However, business endeavors are the riskiest among all these investment options.

Stocks or equity Funds are today’s rising star. There is so much attention to the stock market today as more and more Filipinos are being enticed into investing in equities because of its stellar performance in the last few years. Many investors are very optimistic with our local stock market buoyed by optimism in our economic growth and you will find many experts predicting that our stock market will further go up in the years to come.

While it is true that the stock market has been giving extremely good returns lately, there are also times when investors lost a lot of money. The stock market is not as predictable as people think it is and all the gains over the last year can also be wiped out in a short period of time. More so, investing in the stock market, especially when you plan to trade, requires a lot of competency and time. If you don’t have the competency and the time to trade in the bourse, you should keep your day job.

My advice is for you to consider all the pros and cons of the investment options you mentioned and choose those that will suit your objectives the most. A common but very wise saying we often hear with regard to investing is this: “Do not put all your eggs in one basket.” Here’s an even wiser advice for you: “But divide your investments among many places, for you do not know what risks might lie ahead.”-Ecclesiastes 11:2, NLT


randell-tiongsonRandell Tiongson is a Registered Financial Planner of RFP Philippines. He is one of the most sought-after speakers in Personal Finance and Columnist of Philippine Daily Inquirer and Money Sense Magazine. He is best-selling book author of Personal Finance Step-by-Step Guide.


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