Investment Opportunities in the Philippines

Our future is uncertain, but we can always do something to manage the risk of uncertainty. We may work like there is no tomorrow, but we can’t always spend our money like tomorrow will never come. Investing our hard-earned money involves different levels of risk. They can be high or low. But if we know how to choose the right investment for us, the return could be rewarding. In the Philippines, there are different investments which you can choose to put your money in. They could be short-term, medium-term or long-term. If you like to know where you can put your cash now to make it grow, you may consider the following investing opportunities in the Philippines.

Investing in stocks

The Philippine Stock Market is booming, and more Filipinos are already investing their money on shares of stocks of publicly listed companies in the country. Stock investing and trading involves some risks, but if you know how to manage your investments or stock portfolio, the return can be satisfying. When you buy shares of common stocks, you are also buying a piece or pieces of ownership of a company. Hence, you become a part owner or stockholder of that company.

As a shareholder of the company, you gain when the company earns net profit and increase its stock price. You also receive dividend income when the company declares and distributes dividends to its stockholders. Here’s a guide on how to buy shares of stocks in the Philippines. You can also try to open an online stock trading account to start investing and trading stocks through the Internet. Some of the online stockbrokers in the Philippines offer a minimum of P5,000 as an initial investment fund.

Investing in bonds

When you buy a share of stock of a company, you become a part owner of that company because you are owning part of their equity. On the other hand, when you buy a bond from a company or government, you become a lender or creditor of those entities because you are loaning money to them. The Philippine Government or its agencies occasionally issue debt securities to fund projects or finance deficits.

The government issues two kinds of government securities: Treasury Bills and Treasury Bonds (also classified as Treasury Notes, Fixed Rate Treasury Notes [FXTNs] and Retail Treasury Bonds [RTBs]), in which, the Bureau of Treasury originates their sale to the investing public through a network of licensed dealers or list of Government Securities Eligible Dealers (GSED) which are mostly composed of banks or non-banks with quasi-banking license.

Investing in government securities is practically a low-risk investment since the government doesn’t default on its obligation to public investors or holders of bond. However, although they are considered relatively “risk-free”, it doesn’t mean they are immune from credit/default risk, credit spread risk, or downgrade risk. Investors or holders of bonds basically yield in two ways: through interest payments known as the coupon and through gain from selling or redeeming the bonds. You can learn more about the Philippine government securities by visiting the website of Bureau of Treasury.

Investing in mutual funds

Managing your own investments can be risky, especially if you are still new to investing. That is why there are investors who prefer to invest their money in mutual fund. A Mutual Fund is an investment company that pools or combines the funds of several investors and invests it in different security investments, which include stocks, bonds, and money market instruments. The mutual fund or the portfolio of security investments is managed by a professional or a team of professional fund managers to attain their investment objectives.

There are currently four basic types of mutual funds in the Philippines, namely stock or equity funds, bond funds, money market funds, and balanced funds. Equity funds invest primarily in shares of stock issued by Philippine corporations. Bond funds invest primarily in bonds like government issued treasury bonds. Money market funds invest in money market fund investments which have maturity of one year or less. Lastly, balanced funds invest in a portfolio of investments consisting of both shares of stocks and bonds.

Mutual fund investors can make money in two ways: they can earn dividends and interest from the fund or they can earn from the increase in value of the security investment. To learn more about mutual funds in the Philippines, you can visit the official website of Investment Company Association of the Philippines (ICAP). There, you can also check the Net Asset Value Per Share (NAVPS) Performance of different mutual funds in the Philippines in a given date.

Investing in real estate

Investing in real estate properties like house and lot, land, and condo units offer long-term investment return. Since real estate is a capital asset, it is more fixed or less volatile than stocks or equity securities. A real estate property like condominium and subdivision units can earn from rental income, and once their market value rises, investors may gain from sale of those properties. Although real estate investing seems to be a low risk investment since the market value of real estate doesn’t usually fluctuate in a short-period of time, there are also other risks and disadvantages that a real estate investor should consider.

When you are buying real estate like condominium and subdivision units for investment, you have to be careful and deal only with licensed real estate brokers and reliable real estate developers whose projects are accredited by the Housing and Land Use Regulatory Board (HLURB). You also need to consider the location of the property, terms of sale or transfer, and costs involved during the transaction, such as taxes, broker fees and other transaction fees. When the property is already transferred to you, and you want to rent it out to earn from rents, there is also a risk that you will find bad tenants, thus, you have to be careful when choosing the people who will occupy your property. Furthermore, if you are leasing your property, you are also generating business revenue and earning income which are taxable in the Philippines.

Investors of real estate should also consider not only putting all their money on real estate investment. Real estate property are capital assets, and unlike shares of stocks or short-term bonds that can be liquidated easily to convert them in to cash, real estate takes longer time and transaction processes to be sold and cash in. Hence, it is wise that you back up your real estate investment with other more liquid investments.

Investing in a business startup

If you want to have more control with your investment rather than entrusting your money with other fund managers or business owners, you can consider starting your own business. Venturing in entrepreneurship is probably the riskiest investment you can make, but if you can be successful, the return can also be the highest among other investments. There are many business opportunities in the Philippines for aspiring entrepreneurs. You can even start some businesses that only require low capital. For example, professional service businesses may not require a lot of money to start since they don’t need to buy inventories to sell to customers. Service businesses may also be run online through the use of Internet.

If you have adequate money to invest, another option is to start a franchised business. A franchise is already an established business or brand and it usually provides the franchisee with training, business processes, right to use the trademark, and other important things to help the franchisee start the business successfully. But although a franchise is already a proven business, there are still risks ordinary to a business that the investor should consider before starting a franchised business.

Becoming your own boss or even the CEO of your own business sounds good and exciting. However, unlike investing in shares of stocks of other corporations, starting your own business awaits difficulties such as business registration, taxation, accounting, business regulation, human resource management, marketing, et cetera. But if you have an achievable business plan, skills and expertise, determination, people support, and entrepreneurial spirit – starting an enterprise and taking all the risks to provide solutions to consumers and create more jobs for the people is an inspiring feat.

Investing in education

Another investing opportunity that should not be ignored by many Filipinos is education. There are many colleges and universities that offer high-quality education in the country, and some of them are even attracting foreign students, especially that English is a widely used language here. There are also short-term technical courses offered by TESDA to enhance your skills. Investing in knowledge may involve cost of money and time, but it is one of the best investments you could give to yourself since your personal knowledge can’t be stolen and be damaged by any business or financial risk. The only risk of having knowledge is the inability to use it.

Conclusion

Investing or spending money, time, and energy with an expectation of achieving a return or profit may involve risks. There are possibilities that you will not achieve what you expect. However, investing is better than wasting your money and time on things that would not benefit your life and the lives of your loved ones in the future. Returns of investment may not be certain, but with proper management and continuous learning, investing can be both fun and rewarding.

You can choose any of the investing opportunity we have discussed above that you think you can handle best. You can also combine two or more investments to diversify your portfolio and neutralize the risks involved. Finally, remember that education is the best investment you can always acquire and combine with other investments. If you want to invest in stocks, you can spend time or money to attend seminars or workshops on stock investing to lessen the risk of suffering from investment loss. If you want to start your own business, you can also participate in quality business seminars or even hire a business coach to supply you more knowledge to achieve business success.