5 Different Investment Vehicles

I will discuss the 5 basic but powerful investment vehicles that you can ride on in starting your investment journey seriously. There are more than 5 investment vehicles available but these 5 will give a great start. I have noticed that many Filipinos only know one or two of the investment vehicles available. 

Working in a bank gives me actual vision on this and it proves the vast statistics from news and internet that there are huge percentage of financial illiterate Filipinos. It breaks my heart seeing those old people who earns decently on their younger age but on their retirement age become poor and broke. One of the reasons maybe is that they depend solely to SSS or GSIS monthly pension. Hey! I am not saying do not get the SSS or GSIS government pension plans, enroll but do not depend on it Solely. Everyone will agree that 3,000 to 5,000 monthly income is not enough.

What Is Investment Vehicle?

 Maybe your wondering what do I mean by investment vehicle. Is it something that you ride on? like a car? Yes it is like going to Davao City from Cagayan de Oro City (ahm...You know now where I live). First, I want you to visualize yourself walking from Cagayan de Oro City to Davao City. How many days will it take? Second, what if you're riding on a bicycle how many hours will it take? 15 hours or 20 hours? Third, what if you're riding on a car how long will it take? Lastly, what if you're riding on an airplane how many minutes will it take? 30 minutes? 40 minutes? You must realize now my point here. How about your investments? what vehicle are you riding?

Here are the 5 Basic Investment Vehicles that you can ride on.

 1. Savings Account - a bank account that earns a little interest, currently it is less than 1.0% a year. Yes, you can withdraw it anytime through ATM or your favorite local banks. 

http://www.sellpension.co.uk/wp-content/uploads/2013/03/saving.jpg

2. Time Deposit - a deposit in a bank account that cannot be withdrawn before a set of date. It has minimum placement period usually 30 Days or 60 Days.

http://www.dbs.com.hk/iwov-resources/images/deposits/top-time-deposit1.jpg

3. Bond - it is a debt security, under which the issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay them interest (the coupon) and/or repay the principal at a later date termed the maturity date. From https://en.wikipedia.org/wiki/Bond_(finance)

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4. Mutual Fund - an investment program funded by shareholders that rides in diversified holdings and is professionally managed by a fund manager. The shareholder (you) can choose which investment risk your are willing to take. 

http://agahgroup.com/wp-content/uploads/2015/03/mutual_funds.jpg

5. Stock Market - a stock market, equity market or share market is the aggregation of buyers and sellers (a loose network of economic transactions, not a physical facility or discrete entity) of stocks (also called shares); these may include securities listed on a stock exchange as well as those only traded privately. From https://en.wikipedia.org/wiki/Stock_market

http://business.inquirer.net/files/2011/07/philippine-stocks-exchange4.jpg

I hope this helps you in selecting what type of investment vehicle you will choose on your financial planning. I will discuss more on each vehicle - Saving,Time Deposit, Bond, Mutual Fund, and Stock Market. Please Subscribe Now to my blog and be the first one to read it all for FREE. And be Financially Free!

4 Basic Steps on Financial Planning

Many people today are planning and looking for ways to grow their hard earned money. But the big problem is that they do not use the proper vehicle in growing their money. That is why we just put it on savings account and time deposit. I am not against these things but I just want you to know that there is more than that. (It will be my next Blog Topic Investment Vehicles).   And worst, many Filipinos plunged into SCAMS. It is very evident on our country, you can see it on TV, Newspaper and recently on Social Media “Paluwagan” that gives you return of 40% in just 5 days. My heart aches seeing these people crying bucket of tires. The big problem is lack of education. I provided below some of the basic things to consider in financial planning.

These 4 simple steps are so powerful that it can be applied on savings, investments, and somehow on starting a business. These are the basic things to consider in planning your financial goals. It really helped me as well.

  1.  Objective / Goal

• You must clearly define your financial goal. Ask yourself this basic question, “What am I saving for?”

                                                                           https://growyoursavings.files.wordpress.com

        2. Time Horizon

• You must identify the number of years that your money will be invested.  Different goals may have different investment vehicles. Ask yourself this basic question, “When do I need the money?”

                                                                                              http://aiesec.org.mx/

        3. Budget

•  You must have a comfortable budget for your financial goals.  I suggest you do the computation so that you can invest the EXTRA cash only, particularly if you are in a medium term to long term investment horizon. Ask yourself this basic question, “How much can I set aside regularly?”

                                                                                      http://venturesafrica.com/

         4. Risk Tolerance

• You must know what you are getting into, where your money will be invested – stocks, mutual fund, bonds, business, real estate, and etc. Here is a tip of advice - STUDY IT FIRST. As what the financial TV show, Peso and Sense, always says, “Aral muna bago mag invest”. Ask yourself this basic question, “What risk am I willing to take?”

                                                                                                                       http://www.thehindubusinessline.com/

I hope this helps you in preparing on your financial goals. If you want to be the first person to read my blog about Investment Vehicles, subscribe now. You can see it on the left side on the screen.

My Story to Financial Literacy

It has been my dream to share my learning and experiences in financial literacy which are the results of my endless readings on different books, listening to my mentors, making research and doing practical application on investing. I have seen many Filipinos like my family, friends, office mates, managers and businessmen who have big income but after a few days it ran out like there was a storm or global financial crisis happened overnight! I am also a victim of this. I graduated in college with a degree in Bachelor of Science in Electronics and Communication Engineering (BSECE) and I have no idea on how to handle my money. In my mind I just want to spend it and buy things I did not have before. So, for 3 long years I never studied about the basics of investing; words like Insurance, Bonds, Mutual Fund, UITF, and Stock Market were alien to me.

This is my massage to you, Pay Yourself First! This is my big failure 3 years ago. I had the wrong idea of paying myself first. I thought it was by obtaining stuff for myself; buying the latest gadget, shoes, jeans, shirt and eating in expensive restaurants. My mentality was I should have this or that. Hey! Don't get me wrong here. It's okay to buy the things that you want but don't forget to Pay Yourself First. This means that you should save a portion of your income. Experts say that 20% x Monthly Income must be set aside for savings. I also believe in tithing that's why I give the 10%  of my Monthly Income (planning to increase it soonest) to my Spiritual Community which blessed me tremendously. And the 70% left will be used for my monthly expenses. The rich formula as what my mentor Bo Sanchez said that 100% - 10% - 20% = 70%, which means deduct first the 10% and 20%. I hope you can apply this on your self. There is much to learn but taking the first step takes a lot of courage. PAY YOURSELF FIRST.