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This 2021, the investment landscape has been evolving. There are new investment options available and accessible for almost everyone. These may create confusions as to where we will put our money in. That is why it is important to go back to the basics and follow these guides in selecting which investment option is fit for you:
1. Money to invest
There are some investment options that has a minimum of P1,000 or P2,000 for initial investment and there are some that requires higher minimum requirement. We also need to make sure that the money that we will invest will not come from our emergency fund or from a loan.
2. Purpose of Investment
This refers to goal that we want to achieve which can help us with our time frame and financial plans. This can range from retirement, children’s education, health funds, travel funds or dream house. Whatever the purpose is, it must be compelling enough so that you will continue investing until you achieve your desired goal.
3. Time Horizon
This refers to the period that you can spare without touching your investment (short/medium/long term). There are some investment options that has a minimum number of months that we to be invested in before we can withdraw. Also, there are some investment options where the duration of our investment matters to achieve optimal returns.
4. Expected Return
This refers to the amount of return that we expect to gain from our investment. There are investments that can yield higher return than the others. Always remember that if you want to get a higher return, there is always a chance that the risk of loss will also be higher. Be mindful for investments that are too good to be true.
5. Risk Appetite
This means how much risk can we take and how much we can afford to lose. This coincides with no. 4. If you want higher return, then you must be willing to accept higher risk. Meaning, if you are not comfortable taking a higher risk, you must match with an investment that does not provide extremely high returns.
6. Diversification
This refers to the distribution of assets for risk management. We should not put all your eggs in one basket. You need to balance your portfolio. You shouldn’t put all your money in a high-risk type of investment. There are many ways to diversify: one is through type of investment (stocks, bonds, land, time deposit), another is geographic location of investment (on-shore and off-shore accounts) and lastly, purpose of investment (long term or short term).
7. Security Selection
Make sure to do some research first before investing into something. You need to make sure that the company we are investing in is secure and legitimate. We suggest that you get in touch with a trusted financial advisor to insure that you will get the most value out of your money.
In choosing an investment make sure it matches your preference based on the 7 qualifications above. If you want to know more about investing or you want to talk to our qualified financial advisors, you may send us an email at customercare@aetosfph.com
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Mica is the president of Aetos Financial. She has been a financial advisor for more than 9 years. She is committed to provide quality financial services to her clients.
