The Need To Invest


Aside from death and taxes, another thing that is certain is change. Change is constant. Nothing is the same forever. One powerful proof is we all get old and there is no stopping time from moving forward. The song “Some Good Things Never Last” show that even in the field of romance, nothing is permanent. As per my personal experience in my former job, I have seen changes in my tenure. From day one, I told myself that I will serve my employer until I reach the age of 60. How would I have known that my retirement at age 46 is dependent on the company’s change of direction? Luckily, I was able to do something earlier that most employees fail to do: I took the risk and decided to invest. As Facebook founder Mark Zuckerberg said, “The biggest risk is not taking any risk. In a world that changes really quickly, the only strategy that is guaranteed to fail is not taking risks”.

What is investing?

Investing is an act of buying assets with the hope that it will generate income or will appreciate in the future. Most of the time, the investment is a monetary asset purchased with the idea that the asset will provide income in the future or will be sold at a higher price for a profit. Investing also can be in the form of time you put into the study of a prospective business. It must be noted that time is also money. Facebook was the result of investing time to create a program from which Zuckerberg is now reaping tons of benefits. His idea benefited us all by making us virtually connected, and it made him one of the richest people in the world.

Why invest?

Investing wisely is the key to building wealth. But remember that investing comes with a risk. The return is not guaranteed so it is very important to make a research first. To build wealth, the investment value must outpace inflation. As prices of goods keep going up, our money should grow at a faster rate.

How to invest

Depending on the knowledge acquired, you can make an investment through a bank, a broker, or even via an insurance company. In most cases, these organizations pool the investment money to make more large-scale investments, and each individual investor has a share of the larger investment. You can also make an investment with a broker, who will handle the order in exchange for a fee or commission.

Types of investment

There are two major kinds of investment: Fixed income and variable income. Fixed-income investment refers to an investment instrument that brings in a regular amount of interest income on a regular basis, such as bonds or time deposits. Variable-income investment refers to business or property ownership, such as mutual funds or stock shares. In the variable-income investment, the income that results can come in many forms, including profit and appreciation, especially in the long term. Another kind of income can come from trading/speculating, which are short term in nature and often deal with heavy turnover and, consequently, a higher amount of risk.

Before investing, make sure you have done the following:

Paid off-debts. Nothing beats being debt-free. Without the burden of debt, you are free from bondage.

Emergency funds. Emergency fund strikes anytime so it makes sense to have a buffer fund so that you do not have to “bother” your money to make more money for you.

Insurance. You need to cover life’s risks as the occurrence of the risks can easily wipe out your investments and might put you in debt.


Edmund Lao is a registered financial planner of RFP Philippines. To learn more about personal-financial planning, attend the 64th RFP program this September 2017. To inquire, e-mail or text <name><e-mail> <RFP> at 0917-9689774.


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