Nadj Villaver | Negosentro.com
Planning to start a business but don’t have sufficient capital yet? Don’t worry! There are surefire investments that will turn your savings not just a capital for your dream business, but also might turn you into a millionaire in the right time.
Here are 7 guaranteed investment ideas:
Stock Market
Aside from putting up a business, buying stocks is one of the most common investments with high potential earnings. Stocks are shares of ownerships in a corporation. When one buys stocks of a publicly listed company, he or she becomes a stockholder or shareholder of that company. Being a shareholder automatically means becoming a part-owner of the company. The bigger the stock, the more one can participate in the company’s growth and future profits. Earnings will depend on the company’s performance, as well as the stock market.
The Philippines Stock Market (PSEi) is expected to trade at 6920.00 Index points by the end of this quarter, according to Trading Economics global macro models and analysts’ expectations. Within the next 12 months, stock market is estimated to trade at 6350.00. In the long-term, PSEi is projected to trend around 7760.00 in 2020, 10600.00 in 2030 and 14100.00 Index points in 2050, according to econometric models.1
“The PSEi outlook will be fundamentally good because of the upcoming elections and higher GDP growth rate,” says Financial Adviser and Financeph.com President Mark Fernandez.
According to the PSEi, there are over 100 licensed stockbrokers. They can either be traditional (orders are done via phone call) or online. Among the list of online stockbrokers accredited by the Philippine Stock Exchange are: AB Capital Securities Inc., Abacus Securities Corp., Accord Capital Equities Corp., Angping & Associates Securities Inc., BPI Securities Corp., COL Financial Group Inc.,Yap Securities Inc., First Metro Securities Brokerage Corporation, RCBC Securities Inc. and Wealth Securities Inc.
How to invest: An investor needs at least a minimum investment amount of Php 5,000.00 to open a trading account. In order to buy stocks, one needs to register an account with licensed stockbrokers to purchase securities. Afterwards, the investor can choose which stocks to buy or sell. Research and discipline are important because it’s riskier than other investments.
Mutual Fund and Unit Investment Trust Fund
For those who are not the adventurous type of investor, mutual fund and unit invest trust fund (UTIF) are good options. Mutual fund is a type of investment wherein one joins other investors to form a massive fund that will be invested in various securities depending on the investment objective of the fund. The pool of funds is handled by an expert called fund manager. The mutual fund company issues the investor a certain number of shares based on his amount of investment.
Profit from mutual fund is based on the NAVPS (Net Asset Value per Share) from the time one opened an account to the time he closed the account or redeemed his money. The higher the investment and the longer it is invested, the higher the return or profit.
On the other hand, UITF is sold by banks. One buys units of participation in the fund, whose value is called the Net Asset Value per Unit (NAVPU). This reflects the current market prices of the instruments that make up the UITF. The NAVPU rises or falls depending on the movement of market prices. Since UITFs are sold and managed by commercial banks, these are supervised by the Bangko Sentral ng Pilipinas.2
There are four basic types of mutual funds and UITF categorized based on the objective investment:
- Money Market Funds – short-term debt instruments (one year or less)
- Bond Funds – long-term debt instruments in fixed income securities offered by the government and other private companies. The type of investment with moderate risks and is ideal for long term investors.
- Balanced Funds – mixed investment of high-quality debt and equity securities
- Stock Funds / Equity Funds – investment in shares of stock chosen by the fund manager
How to imvest: One must identify first what type of investor he is – conservative, moderate or aggressive. He can also choose what type of mutual fund or UTIF is suitable for him. Similar with the stock market, a minimum investment amount of Php 5,000.00 (for mutual fund) to Php 10,000 (for UTIF) is needed to open an account.
Real Estate
The year 2015 has been “a great time for PH property market’” according to National Economic and Development Authority (NEDA). And for the upcoming year, the real estate industry will grow further.
According to Jacqueline van den Ende, Founder and Managing Director of Lamudi Philippines, development will spread outside Metro Manila. As early as 2014 there had been evident real estate development in second-tier cities such as Cebu, Bacolod, Iloilo, Davao, and even cities in Luzon near Metro Manila like Angeles, Santa Rosa, Dasmariñas, Bacoor, etc.
Office real estate will become a viable investment option due to strong demand and low supply. Property developers are already offering strata-titled office developments to address increasing demand for office real estate.
“The old adage “safe as houses” still holds true in real estate, but you have to understand the market thoroughly, know where the demand is, and what the market requires. Rental properties make sense because the landlord builds equity in the property through the monthly rent he or she charges (used to pay off mortgage) and when the loan has been paid in full the majority of the monthly rent can become profit. The property may have also appreciated in value over the course of the mortgage, which will leave the landlord with a more valuable asset. However, the question of whether a property will appreciate in value and by how much depend on several factors, chief of which is location. Hence, it is of extreme importance that the would-be investor chooses his or her location carefully,” van den Ende shared with Balikbayan Magazine.
How to invest: Any would-be real estate investor should choose location very carefully. If one decides to invest in residential properties like rental condos, accessible transportation links and high population for renters should be considered. Student housing or condos in areas with high population of students are also good real estate investment option.
Travel & Tourism
The Philippine tourism industry continues to boom with a growing number of domestic and foreign visitors on uptrend. According to Department of Tourism (DOT) industry performance report for travel and tourism, inbound receipts for August 2015 grew by 21.58%, accumulating to Php 21.97 billion (US$ 476.15 million) Total revenue from inbound visitors for January to August amounted to Php152.19 billion (US$ 3.39 billion). While the biggest visitor receipts was recorded in January 2015 with Php 22.48 billion, July and August posted double digit gain compared with the other months, demonstrating high seasonality for these period during the year.3
The DOT has also set a tourism revenue target of between $6 billion and $8 billion by 2016 under its National Tourism Development Plan (NTDP), which aims to attract more international tourists to visit and spend while in the country.
Having this optimistic progress in the tourism industry, one can consider investing in a travel & tourism business, especially for Overseas Filipino Workers (OFWs), since this type of business requires little capital only.
“If you can find people at home to trust to become tour guides, that synergy can work so well, especially since you are working overseas. You are in a unique position to know what tourists are looking for. You understand global quality standards but you also know what quaint little customs and images make good experiences for tourists,” Salve Duplito, an award-winning print and broadcast financial journalist trained in financial planning, shared on the show “On The Money.”
How to invest: One must decide first which tourism sector the business will focus. Options include: travel agencies, transportation services, accommodations, guided tours and tour guides and hospitality business (food or beverage establishments).
Collectibles
Investing in collectibles is an alternative option to earn profit. A collectible is any physical asset that appreciates in value over time because it is rare or it is desired by many. Items can be stamps, coins, fine art or sports cards, but there really are no strict rules as to what is or is not a collectible. The value of the collectible can vary widely, but is dependent for the most part on supply and demand for the asset. And the value increases in time along with inflation
How to invest: A keen eye for trash and treasure and careful planning are critical to the success of a collectibles business. To start, one can buy an item which he foresees will become popular in the future then sell it years later for a high profit.
High-yield Savings account
For people who are skeptical in taking risk because of the unpredictable stock market and bonds, the traditional approach of saving one’s money can be a good investment also. Some banks offer high-yield savings, a combination of savings account and time deposit account. The initial deposit, maintaining balance, as well as the interest rate is higher than savings accounts but lower than time deposits. One can withdraw his money anytime but only within the allowed number of withdrawals per month to earn an interest.
How to invest: One must choose carefully the bank which offers the highest interest rate and study the required number of withdrawals per month to align with his spending.
Yourself
Investing in one’s self may be the most profitable investment a person will ever make. It yields not only future returns but also a current pay-off as well. Warren Buffet, themost successful investor considered in the 20thcentury, advised people to invest as much as possible in something that everyone has access to because it is their biggest asset by far.
Mplify Managing Director emphasized the importance of career advancement at his talk during the Pinoy Entrepreneurs Summit. “Never settle for what skills you have,” he said.
How to invest: Investment in one’s self can start with education advancement. This can include going back to school and earning a Master’s / Doctorate degree or it can be as simple as attending trainings that will enhance your skills. Most importantly, a person must nurture his mind and take care of his health for him to fulfill his goals in life.
In the book ‘The Eternity Portfolio,’ investment advisor Alan Gotthardt said that “investing money is the process of committing resources in a strategic way to accomplish a specific objective.” Whatever investment option one chooses, it is best to define his goals right from the start. In this way, the investment will be successful.
FOOTNOTES:
1 Trading Economics, “Philippines Stock Market (PSEi) Forecast,” 20 Oct 2015 <http://www.tradingeconomics.com/philippines/stock-market/forecast>.
2 Unit Investment Trust Fund, 20 Oct 2015 <http://www.uitf.com.ph/>.
3 Industry Performance For Travel And Tourism, 20 Oct 2015 <http://www.tourism.gov.ph/pages/industryperformance.aspx>
References:
http://towardfinancialfreedom.blogspot.com/2011/03/equity-mutual-fund-vs-direct-stock.html
http://philpad.com/how-to-invest-in-mutual-funds-in-the-philippines-make-money-make-millions/
http://www.uitf.com.ph/article_details.php?article_id=174#gsc.tab=0
