Okay, let’s say you have a hundred grand to spare. You have no financial obligations like credit card debt or immediate financial needs like travel. Where do you invest P100,000? Here are some options:
1. Special savings deposits. You can place the money in a special savings account that earns a much higher interest than a regular savings account.
2. Time deposits. “P100,000 can be invested in a variety of ways. If you can’t tolerate any risk and would like your money to be near cash, or very liquid, stick with time deposits,” says J. Randell Tiongson, a Registered Financial Planner (RFP).
3. T-bills. If you want relative safety, place your money in short-term government securities like Treasury bills (T-bills).
4. RTBs. You can also invest in longer-term government securities like Fixed Rate Treasury Notes (FXTNs). Alternately, you can invest in Retail Treasury Bonds (RTBs), which require much smaller amounts.
5. UITFs. Unit Investment Trust Funds (UITFs) are pooled funds that trust departments of commercial banks invest in various securities.
6. Mutual funds. Similar to UITFs but more regulated, mutual funds pool money from thousands of investors. There are different types depending on your investment objectives. Randell explains, “Mutual funds and UITFs may be good options as they show good capital appreciation especially if you hold on to them for a long time.”
7. Stocks. You can buy shares of publicly-listed stocks and ride the current bull run. “There’s always the stock market if you can take the risk,” says Randell, adding, “Another option is an equity-based mutual fund or UITF that can take care of managing the stock investments for you.”
8. Foreign currency. You can exchange your P100,000 into foreign currency like the euro. Banks and forex brokers let you do this.
9. Insurance plans. Whole life insurance plans have a savings component. A variation is the variable (also called unit-linked) insurance plan, which gives you greater control on how your premiums are invested.
10. Endowment plans. These are insurance products that don’t provide lifetime coverage. They are often positioned as investment products because the emphasis is on the returns. Randell says, “You can also opt to purchase a single pay life insurance with an investment portion or an endowment. You can grow your money and get some insurance coverage while waiting.”
11. Pension plans. You can buy a pre-need pension plan, that is, if you’re undeterred by the negative news on certain pre-need companies.
Now, which is best? Well, it depends on your objective, risk appetite, and time frame. Randell concludes, “Just remember the general rule: the higher the yields are, the higher the risk.”
source: moneysense.com.ph, photo from www.philstar.com