Got a 100k and don’t know what to do with it? Well, you’re lucky because we’re giving you the 10 best ways to invest and grow that money!
Don’t let it just sit in the bank. With low-interest rates from 0.5 to 1.5%, you’re better off investing it elsewhere.
And even if you don’t have a lot of cash saved up, there are still many ways to let your money work for you.
For many young professionals and entrepreneurs – in this information age – it’s conventional wisdom to consider investments early on.
Especially for young Filipinos, the time to think about investing is NOW.
If you want a more secure and brighter future for yourself, you shouldn’t put investing on hold.
So, here are the 10 best investments you might want to consider.
1. Insurance (VUL)
Minimum Investment: Php 2,000 – 3,000
Life Insurance is something every young professional should consider.
Having an insurance is necessary if you’re thinking about getting a house or a car. But more importantly, insurance is a must if you want to ensure that yours and your family’s lives are secured.
What is VUL?
Something that people should look into is a Variable Universal Life Insurance or (VUL). According to Investopedia, a VUL is a form of cash-value life insurance that offers both a death benefit and an investment feature.
It is basically a type of insurance bundled with an investment component. You’re insured but you can also have the option to invest your money. It’s ideal because you get the best of both worlds.
Aside from that, there are other benefits to VUL that differentiates it from other traditional insurance policies, such as flexible premiums.
Any excess amount you add to the premium will go to your accumulated funds. In case of a financial emergency, on the other hand, you can choose to only pay the charges without the plan lapsing.
And speaking of financial emergencies, one great feature of VUL is its liquidity. You can still access your funds in times of need. And unlike traditional policies, this is treated as a withdrawal and not a loan.
Meaning the amount withdrawn does not incur interests. Although it is encouraged that whatever amount was withdrawn should be immediately reinvested to keep on track with your financial goals.
Tips on getting VUL/life insurance
- Do you really need life insurance? – Ask yourself if you really need insurance. If you have dependents then the answer is probably yes. But if you’re a single career person with no family as of now. You can consider putting it on hold if you don’t have the extra cash to spare.
- How much do you need? – If you’re thinking about retirement, ask yourself what your projected retirement fund will be. Will it only cover the replacement of your actual income or will it include expenses for leisure? That’s something to think about when getting your plan.
- Get Quotations and Plans from Insurance Companies – Call different insurance agent and ask for quotations or get them to send you proposals through email. This way you can pick and choose what would be the ideal plan for you. Most insurance agents now have tools that generate quick client policy proposal.
- Avoid Additional Insurance or Add-Ons – A lot of the agents you will encounter will push for additional insurance or add-ons because of targeted quotas which will mostly just benefit them and the insurance company. Stick to your basic life insurance. But it is advisable to get a critical illness add-on. You may never know if or when you’ll get a serious health problem.
- Get an Independent Financial Planner – Agents have a tendency to be biased about plans because of their quotas. So, it’s advisable to get an independent financial adviser who is paid to advise you and not to reach quotas based on plans and add-ons. It’s not necessary to do this but if you have extra cash to spend on a financial planner, get one.
- Get it now – The younger you are the cheaper the plans are. There’s no time like today to get a plan.
- Stable – Of course you have to make sure that the insurance plan you’re getting is from a reliable and stable company. Call the insurance company, or the insurance commission, and search the web. Look for reviews and research the company. Make sure they are legit.
2. Micro-lending and peer-to-peer lending
Minimum Investment: $25 (Php 1,250)
Another investment option young professionals and investors can get into is Micro-lending and peer-to-peer lending.
What is P2P Lending?
Peer-to-peer lending is the borrowing and lending of money through a platform without going through traditional means like the bank or other financial institutions.
What happens is, usually, an online company will bring together borrowers who need financing and lenders who would like to invest their money and earn through interest rates.
People are attracted to P2P because it cuts out the middleman – which is the bank, and provides better deals for both the borrower and the lender.
Because rates are a lot flexible compared to banks, borrowers can get relatively cheaper interest rates while the lender can still profit from a decent amount of interest rate.
Popular P2P Lending platforms:
Tips on investing in P2P lending
Here are some tips to consider according to Paula Pant, from Student Loan Hero.
- Research before you invest – This should be a no-brainer but it is something you must keep in mind. Research about the loan history of the company you’re going to choose to invest in. Look into things such as the percentage of borrowers who default (unable to pay back) and how they screen the borrowers. Also ask about the average returns of investors in the past and how they handle late payments.
- Know your risk tolerance – “Think carefully about how much risk you are prepared to take, bearing in mind that you could lose the whole of your investment in a loan if it defaults,” wrote Graeme Marshall, CEO of FundingKnight.
- Go slow – You don’t have to invest largely in one borrower. Take advantage of the fact that you can start investing at only $25.
- Diversify your loans – As what was mentioned earlier, you don’t have to go big with just one borrower. Diversify your loans. As the saying goes, don’t put all your eggs in one basket.
- Reinvest your returns – You don’t have to cash out your returns once you can. Consider reinvesting them into new loans.
Minimum Investment: Php 5,000 (First Metro and COL Financial)
People may stay away from stocks because of having no knowledge about it. Most even just prefer to let their money be stagnant and stay in a bank.
But knowledge can be acquired so it shouldn’t stop you from investing in stocks considering it could make your money grow exponentially.
Investing in stocks allows you to buy shares of companies, you won’t be able to buy under normal circumstances, said Marvin Germo, author of Stock Smarts.
“The stock market gives you the opportunity to buy in companies, like partnering with SM, GMA, Jollibee,” he said.
Tips on investing in Philippine Stock Market
- Learn everything you can – Being too confident in the stock market can also be too risky. Learn from the books and experts first. Do your research, learn the terminologies and all the tricks, buy books, and attend seminars. If you can, get a mentor. Do everything you can to be knowledgeable on the stock market.
- Know your risk profile – Are you cautious or are you a risk taker? Your personality should reflect the stocks you buy. According to Marvin Germo, there are stocks that are volatile, with a great potential to go up but also a great potential to go down. Some are just steady but when the market goes down, the impact to the company won’t be as bad. Consider what type of stock would fit your level of comfortability.
- Buy Low Sell High – Buy stocks only when the price is below the “Buy Below Price”. The Buy Below Price is a level at which capital appreciation potential is already attractive relative to the fair value estimate. Any price below this is considered optimal to buy.
- Don’t expect money to double soon – According to an investor interviewed by Rappler, you shouldn’t expect our money to double within a year. In fact, you should be prepared to hold on to our equity investments for a longer period.
Want to get started with stock trading and investing? Check out this comprehensive guide to Philippine Stock Market investing from our friends at Investagrams.
4. Mutual funds – UITF – Balanced Fund
Minimum Investment: Php, 5,000
What are Mutual Funds / UITF / Balanced Fund?
So what are Mutual funds or Unit Investment Trust Fund (UITF)? According to Smart Pinoy Investor, a Philippine mutual fund is an investment company registered with the Securities and Exchange Commission (SEC), which pools money from many investors creating a massive fund under a common objective.
This fund is then invested in specific types of securities to achieve the stated objective.
This type of investment is ideal for young and new investors because you’re investing your money to experts who would know what to do to make your money grow.
There are four main types of mutual funds offered:
- Money Market Funds –invest purely in short-term debt instruments (one year or less).
- Bond Funds– invest in “bonds” which are really long-term debt instruments offered by governments or corporations.
- Balanced Funds– invest in a mix of shares of stock and bonds.
- Stock / Equity Funds– invest primarily in shares of stock.
Tips on Investing in Mutual Funds
- Go with Competent Fund Managers – You’re basically entrusting your hard earned money to a third party company. So you must ensure that the fund managers they have are competent enough to bring growth not losses. A good way to know is to look at the consistency of the fund performance at least in the last five years.
- Add Regularly – Although you can start at a low price of Php 5,000 and there is no required regular addition. It is advisable to add regularly and use it as kind of your piggy bank for your long term goals.
- Assess Risks – All investments have their risks, so it’s important to do risk assessments. Online brokers who offer mutual funds usually have their risk assessment questionnaire which will help you decide which type of mutual fund is best for you.
- Set Goals and Objectives – Like with any other investments you must know why you’re investing. Is this for your retirement, leisure, capital for your future business endeavors? Be clear on where you want this to go to make the best decisions. Newbies may become disheartened when they see losses even if they still haven’t reached the end of their time frame. As with stocks, you must be patient enough to see your investments grow.
Useful Resource: Best Mutual Funds in the Philippines – curated by SavingsPinay.
5. Small Business
Minimum Investment: Php 5,000
Small business is another investment that you shouldn’t pass up. A lot of people might not be inclined to try this out because of the fear of failure. But why should that stop you?
Failure is just a part of life and taking risks is important if you want make your money grow.
But if you’re still apprehensive, you could always start small. With just 5,000 pesos, you can get into the food business. You can go with street foods, gotohan or mamihan.
If you’re the type of person who likes Karaoke, with a few more money (around 25,000), you can do Karaoke rentals. There are several options for those who want to start a small business for under Php 100,000.
Tips on starting a small business in the Philippines
- Find your passion – A lot of people wonder what they should sell, finding your passion can be important because it will help you push through with your business even if the going gets tough. If you have the passion for fashion, selling clothes would be ideal for you.
- Do Market Research – The thing about most Filipinos is that, when they think about starting a business, all they think about are the basics like where to get capital and what product to sell. Those may be the main things, but market research is always important in any type of investment. You have to know your products/services, your competitors, your demographics, trends in the industry, things like that.
- Secure Funding – Your funding will cover 2 types, Pre-operating (equipment, stock, deposits, permits, etc.) and Working Capital (salaries, rent, utilities, supplies, and contingencies). It’s advisable to secure funding for at least 6 months of operation.
- Build a website – We live in the age of the internet and social media. So, having a website is essential these days. Your website is the digital address of your business. And it’s also basically your digital store. Having a website or at least a social media account can provide you with a digital presence and also social media marketing opportunities.
- Network with other people – The more there are of people who know about your business, the better the business will be. So, as was mentioned above, online presence is crucial. Word of mouth is also great, but you get a wider audience through social media. Connect with people both online and offline. Attending seminars and business conventions is also a way to network.
- Consult Experts – Getting a mentor or at least some form of advice through experts is always important. You will learn from the experiences of those who have made it. If you can’t find a mentor in person, find mentors in books or go online. Watch seminars on Youtube or search for business articles written by experts.
6. Real Estate (foreclosed properties)
Minimum Investment: Php 10,000 – 15,000
For those who would like to own houses through installment, there are cheap mortgages that would only cost Php 2000 – 3,000 a month.
Another investment to of course consider is real estate. If you’re thinking about owning a property but you’re wary about how much you want to spend, you may consider buying Foreclosed Properties to get a cheaper deal. For as low as Php 11,000 you can own a foreclosed land.
Tips on Buying Foreclosed Properties
According to Lamudi.com, here are some tips for buying Foreclosed Properties:
- Know where to look – To find foreclosed properties, go to banks, Lending Institutions, SPAV companies (companies formed under the Special Purpose Vehicle Act of 2002 to help banks shed their nonperforming assets), and government financial institutions like the Social Security System (SSS), Home Development Mutual Fund (Pag-IBIG Fund), and National Housing Authority (NHA).
- Get Your Financing Ready – When you already have a housing loan approved by the bank, sellers will take you more seriously. And so, you’ll get more negotiating leverage compared to other buyers.
- Attend Property Auctions – Attending these auctions will be a great way to discover properties not usually on online listings.
- Inspect the Property – You shouldn’t ever buy anything without properly inspecting it. You must see for yourself if it’s worth your money.
- Know your fees and taxes – Other than the down-payment and the property’s selling price, there are also fees and taxes charged to the buyer. For example, buyers must take care of notarial fee, registration fee, transfer tax, and documentary stamps tax, and if you’re buying a condo or townhouse units, the buyer will also be required to pay monthly association dues.
Tips on Real Estate Investing
- Be Goal Oriented – Ask yourself what you want to achieve in real estate investing. This way you can have a vision of what you want to get from investing and will also keep you determined. If you think real estate can be the easy money you’ve been searching for, well nothing in this world can really be called easy money. There will be challenges but having a vision and determination can keep you in track.
- Learn as much as you can about Real Estate – You need to familiarize yourself with the “ins and outs” of real estate transactions in the Philippines. Do research on the subject.
- Attend Seminars – Just as was mentioned above, you’d have to learn a lot about real estate and one of the best ways to do that is to attend seminars and conventions on real estate. Not only can you learn from experts but you can also check out potential properties.
- Join or start your real estate investors club – This is a great way to network and find out more from fellow investors.
Minimum Investment: $500 – $1,000 (Depending on the Cryptocurrency)
What are Cryptocurrency?
If you’ve never heard of Bitcoins or cryptocurrency, don’t worry. It may be an unchartered territory for many people but it’s basically a simple concept.
Cryptocurrency is simply digital or virtual currency that people on the internet use to trade. It uses cryptography for security to ensure the safety of the traders. It’s most appealing feature is the security from the government that it offers. Because your currency is encrypted, the government can’t monitor it.
Bitcoin is mainly the most well-known type but there are other types of cryptocurrencies that are actually cheaper and might be more ideal for you.
Now you may try to avoid this because of the sketchy ways cryptocurrency can be used. But Bitcoins and cryptocurrency are legal depending on where you are and what you plan to do with it.
The Central Bank of the Philippines has issued a warning on virtual currencies but has stated that they are not subject to any regulation.
Tips on Cryptocurrencies Investing
- Educate yourself – As with all types of investments, you must be knowledgeable on where you’re putting your money in. Coinpursuit and Slicefeeds.com are just some of the sites you can check out to educate yourself.
- Treat it as you would the stock market – Analyze trends and patterns on weekly charts. Analyzing fundamental data is key in your methodology to find a decent investment opportunity.
- Invest in Fund Management Platforms – As was mentioned above, cryptocurrency can be treated like stocks where fund managers can handle your investment. You can even invest in mutual funds.
- Use it to solve problems – Find opportunities to use cryptocurrency to solve problems such as providing an alternative to traditional banking services. Some people cannot get access to traditional banking services whether due to geographical reasons or other circumstances. You can use this opportunity to provide access to products and services people cannot otherwise acquire.
- Crypto to Money – Don’t forget that Cryptocurrency can be exchanged for money. You can use this to trade with people who are in need of cryptocurrency for products and services physical money cannot buy.
Check out our Beginner’s guide to Cryptocurrency Investing.
8. Buy a website (for passive income)
Minimum Investment: $500 – $1000 (depending on the bid)
Buying a website is something you should definitely consider. If you don’t want to go through the hassle of building a website and gather an audience for that site, then buying a readymade one that’s already profiting is definitely advisable.
It’s a great and easy way to acquire a passive income. You can check out Flippa.com to look for websites being auctioned.
Tips on Buying a Website
- Know the History – You must know about the site’s history before buying it. Know about its net worth, how old the site is, and if it is legit. Just because it’s saying it’ll earn you $10k a month doesn’t mean it really will. Usually the older sites are the most trustworthy ones.
- Be familiar with the Platform – Is it WordPress, Joomla, or something else. This will make it easier for you to know the experts who can operate the platform.
- Demographics – Find a site that targets the demographic you want to reach.
- Traffic Quality – The more the visitors, the more money you’ll earn.
- Maintenance Cost – How much will this site cost to maintain? How many staff do you need to run the site? These are things you must consider.
- Price – Something to definitely consider to make sure the site is legit, an average site would cost around $2500. Although there are sites that cost lower, this can be considered a red flag.
9. Forex Trading
Minimum Investment: $100 (Php 5,000)
According to FXCM, Forex, also known as foreign exchange, FX or currency trading, is a decentralized global market where all the world’s currencies trade.
The forex market is the largest, most liquid market in the world with an average daily trading volume exceeding $5 trillion. So, it would really be advisable to dip your toes into foreign exchange trading if you want to grow your investments.
Tips on Forex Trading
- Choose a broker wisely – Choose a broker that will allow you to do the analysis you require. You must know each broker’s policies and how he or she goes about making a market.
- Choose a methodology and be consistent in application – Remember that fundamentals drive the trend in the long term, whereas chart patterns may offer trading opportunities in the short term. Whichever methodology you choose, remember to be consistent.
- Choose your entry and exit time carefully – You might get confused because of conflicting information regarding the trends and based on charts in different time frames. What may seem as a buying opportunity on a weekly chart can in reality show a sell signal on the intraday
- Perform weekend analysis – At the end of the week, when the markets are closed, review and analyze weekly charts to look for patterns or news that could affect your trade.
- Practice Makes Perfect – Like with any practical skill, trading is something you learn and improve on as you go along. You won’t be an expert on your first try but with constant practice you can be successful in the Forex trading business.
10. Invest in New Skills
Minimum Investment: Only your time and effort
Investing in new skills and yourself is something that people tend to forget but is very important whether you want to invest in business or not. You don’t have to go to a formal school to learn new skills. But if you have the money, you can take courses or even get a post-grad degree.
For those who don’t have the money for expensive degrees, here are other alternatives you can consider:
- Online Courses – Take online courses which are usually cheaper and may sometimes even be free. Take courses on starting your business, choosing the right investment, financial planning, blogging, SEO, marketing, anything under the sun. There are infinite courses to choose from and you have to take advantage of the services offered online. Skillshare is a great website to take classes from and you can get coupons to get free classes for a couple of months.
- Seminars and Workshops – There are seminars and workshops you can attend to, some for as low as Php 1,000. As was mentioned above, you can take seminars for investments in real estate and stock markets to name a few. It will also be a great way to meet peers who are interested in the same endeavors.
- Books – Books are investments. If you want solid knowledge on any subject matter, then buying a book on it is always a wise decision. The trick to reading a book if you’re busy is to look at the table of contents and to just pick chapters that would seem more applicable for you. This way you won’t have to read the whole book.
- Youtube – Youtube is a website that is truly helpful for no cost. You can learn any skill from watching thousands of free videos on any given subject, may it be Bitcoin, Forex, stocks. You name it. The site is a wealth of information you can access with just your smartphone.
Other Tips on Investing
- Diversify, diversify, diversify – With the multitude of options provided in this article, it will be foolish to choose only one and invest all of your money in it. As what has been said earlier, putting all your eggs in one basket will be a bad idea. Pick two or more investment options. This way if one fails you can still rely on the other. More importantly, if all will become successful you’ll generate more income.
- Don’t worry, just grow your money – Worrying too much and panicking won’t help you or your investment grow. Sometimes relaxing and taking some rest to reorganize your mind and your priorities are important too. If you think too much about failure, you’re already failing. Just sit back relax, and let matters take its course.
- No regrets, it’s just cash – If one investment fails don’t dwell on it too much. Especially if it’s in stocks, forex, or cryptocurrency. Expect that there will be losses. But keep a positive mindset
- No day, but today – There’s no better time to start an investment but now. You’re still young so if you decide to start now, you can become a millionaire not in your 60s but in your 40s or even 30s. So, don’t just sit there, invest now!