5 Investments Worth Checking Out for Beginners
Introduction
There are different kinds of investments for different kinds of investors. So for beginners, there are a few investments that I usually recommend they check out, because they are easier to understand, maybe they’ve done well his historically, or maybe they’re just an overall less scary place to start learning how to invest.
1) Digital Banks
What Are Digital Banks
Okay, so let’s get straight into it, 1 digital banks. First type of investment are digital banks. So digital banks are banks that that operate entirely online. So they provide banking services without physical branches. The advantages of this for beginners would be the accessibility.
You can manage your finances anytime, anywhere, with user-friendly mobile apps, and a lot of digital banks also now have physical ATM cards that you can use to withdraw cash. Next is higher interest rates. We all know that banks are insured up to 500k pesos of our deposits.
Why Beginners Consider Them
So, with digital banks offering higher interest rates at around 25 to 6 per Anom. This is as compared to traditional banks offering savings accounts interest that are around 00625 to 01 per Anom. So digital banks. So if you’re keeping a lot of money in your traditional banks, normally, I would tell people to put some of it in digital banks instead.
Another is that they have better features. Most digital banks have no minimum maintaining balances, which means there are no minimum balance charges and fees, and also they usually have lower, or even zero, transfer fees when you’re transferring to other banks via PESONet or InstaPay.
Examples
So actually, digital banks and GVE, which is found in your GCash app, including CIMB, UNO digital banks, and 2 pag ibig mp2 more. Okay, so next type of investment would be Pag Ibig MP2. Pagibig MP2 is a voluntary savings program offered by our Philipp Government, through Pig, or the Home Development Mutual Fund. Advantages for beginners is that dividends n. So Pig MP2 actually provides a higher dividend compared to the mandatory regular Pig P1 savings.
2) Pag Ibig MP2
Overview and Advantages
So contributions, mandatory. So they even offer higher dividends compared to some investments that provide dividends.
So the program is, is from a government agency, so it adds a layer of security to your investments. Next is flexibility. You can choose your contribution amount, at least 500, and frequency, deposit. So you can deposit any time you want, based on your financial goals. Lastly is p medium term investment, cuz it has a five-year term, or holding period, which means it can be a great practice of discipline. So, Andraw withdraw savings n. Now, let’s 3 managed funds talk about another type of investment. Number three are managed funds. Managed funds, like Uf’s and mutual funds, pull money from multiple investors to invest in a diversified portfolio, managed by professionals.
3) Managed Funds
How They Work
These can be invested in stocks, bonds, real estate investment trust, even other funds, depend goal fund. So advantage for beginners is that since manage fund sha, my professional management, experienced fund managers make investment decisions on behalf of investors, parts a goal n. Most fund managers is diversification. So that’s another advantage for beginners, your investment is spread across various assets and companies, reducing risk. So you gain exposure to financial markets, and that’s usually a little bit challenging for individual investors to navigate when they’re just starting out. G Funds, which is in your G-Cash app, is an example of a market-pl where you can start investing in managed funds.
Why It’s Beginner-Friendly
It’s made simple, which is why it’s a perfect starting point for beginners. You can easily navigate through various funds, and start investing without feeling overwhelmed. So they have 11 fund offerings right now from ATRAM and BPI Wealth, ranging from local funds like the ATRAM Total Peso Return Bond Fund, Philippine Stock Index Fund, ATRAM Peso Money Market Fund, and even global funds like ALFM Global Multi Asset Income Fund, and ATRAM Global Technology Feeder Fund. So G Funds also indicates whether the funds are conservative, moderately aggressive, or aggressive, so you can match it with your risk appetite characteristics, then fund.
Example Fund
Like, for example, ATRAM global technology feeder fund fund picks I Microsoft, Apple, Google or Alphabet, Samsung, as of August 2022. Now, that fund invests entirely in equities of technology companies. This is a global feeder fund for foreign companies. So if you think that matches your investment goals, instead of individually investing in those stocks, which can be challenging, you can consider a managed fund like this. Now, speaking of individual stocks, that 4 stocks brings me to my fourth type of investments, which are, are stocks. So investing in stocks means that you are buying ownership in a company, so you can earn through two ways.
4) Stocks
Ways You Earn
First is through capital gains, or capital appreciation. This is when you buy a stock at a lower price, and eventually sell it at a higher price. So profit, and that’s what you call capital gains. Another way to earn through stocks is through dividends, which is when companies distribute their extra earn earnings to the owners. So if my extra profits, or earnings, owners, if you are a stockholder. So when you learn about the stock market, it helps you c understand the majority of all the other types of investments. You learn about economics, how Government and financial system works, business strategy, and a lot more.
Why Learn Stocks
That’s why even if challenging you stocks, as compared to the other things I’ve talked about today, I still really high encourage beginners to understand how it works, and even dip their TOS into investing in stocks. So n mention it’s a little bit more challenging, but there are still advantages for beginners. First is ownership. You become a part owner of a company, sharing its potential future success. Next is growth potential, stocks offer the potential for higher returns over the long term, compared to the others we’ve been talking about today. Beginners often start with blue chips stocks. These are stocks, bigger companies, and they are considered more stable.
Blue Chips and Sectors
So, for example, a Psse, we have 30 blue chip stocks, but examples of that are Globe, Aala, BPI, Music, Jolibe, anytime soon. So when I started out with stock investing, for a long time, I focused my efforts in learning about blue chip stocks. Next is market participation. So you get to participate in the growth of various sectors of the economy. So sector economy stock market, like financials, industrial, holding firms, property, services, mining and oil, etc. So these sectors can also help you diversify, and spread out your risks.
Access with GCash
So GCash also has a platform that you can use to start investing in stocks. It’s called G Stocks PH. Again, it’s available in your GCash app. So it’s in partnersh ship with AB Capital Securities Inc, which is one of the leading stock brokerages in the Philippines. It’s great how accessible it is, that even the Unbank can start investing, because, again, it’s just within your GCash app. This means that you can start exploring and investing in the stock market without having to download a whole new app, filling up a lot of forms, opening a bank account, etc, cu honestly, before this feature, requirements, open stock brokerage account, to a certain extent.
So now, with GCash, you can start investing in the Philippine stock market with over 280 plus companies. So it’s a lot simpler now with G Stocks PH. Okay, so the last type, 5 ETFs, of investment I want you guys to check out are ETFs, or exchange traded funds. ETFs are investment funds traded on stock exchanges. They represent a basket of assets, and usually they mirror the performance of indices. So a significant difference between manage funds and exchange traded funds is that you can buy and sell ETFs directly from stock brokerage, real time, during trading hours.
5) ETFs (Exchange Traded Funds)
Key Characteristics
So, with funds, c usually it takes about three to five banking days. Another difference is that ETFs typically don’t have a professional fund manager actively managing them. Instead, ETFs often passively track as specific indexes performance. So that means limited difference atfs, they’re just mostly following like the stock index, or you sector index, now we talked about earlier. So let’s talk about the advantages for beginners. First is diversification. ETFs provide instant diversification by holding a range of assets within a single investment. So, for example, kina, we talked about the 30 blue chip stocks from the Philippine Stock Exchange.
Diversification and Costs
So an ETF would follow how that index performs. So that means, by investing in an ETF, you are essentially investing in those 30 blue chip stocks. Another advantage is that it’s low cost. Typically, ETFs have lower fees compared to actively manage funds, fund managers, or professionals. Next is easy accessibility. So you can actually just trade ETFs like how you would individual stock. So you can actually trade it in an exchange, or brokerage, like G Stocks PH. In the Philippines, we only have one stock index ETF. So that’s following the 30 blue chip stocks. So far, that’s the FM ETF.
Examples and Markets
But in the US stock market, for example, mar. So they have hundreds of ETFs available, and here are some examples. So there’s VO, SPY, QQQ. So they follow nam man like the SNP 500, which consists of the 500 top US stocks, or the NASDAQ 30, which follows the 30 tech stocks. I hope we have more ETFs in the Philippines soon. But yeah, so yeah, those are the five investments that I highly recommend you guys check out when you’re just starting out. When, tips, you’re starting out in your investing journey, here are some things that you need to consider.
Tips When You’re Starting Out
Research
First is research. Before investing, conduct thorough research on each investment options to understand the risks and potential returns. Try to understand how the investment works, so that you can understand how you are earning from this type of investment. Do your own research, and understand where you’re putting your money. So a lot of people c bandwagon, Facebook, or straight up give their money to strangers on the internet. Please don’t do that. Always use legit platforms, like GFunds and G Stocks PH, instead of transferring your money to strangers online. Next is diversify. Spread your investments across different assets to manage your risks.
Diversify
That’s why there are five examples, because focusing all your investments in one asset can actually be dangerous as well. It’s important that we start by studying one type of investment first, overwhelm. But remember the saying, don’t put all your eggs in one basket. So eventually, we do need to learn a couple type of investments to eventually find what works for us, and our investment portfolio. Lastly is to assess your risk tolerance, and time horizon. So, assess your risk tolerance, and, and choose investments aligned with your financial goals and comfort levels.
Risk Tolerance and Time Horizon
So this means you also need to know when you would possibly be needing that money, would it be short, medium, or long term. So this can make it easier for you to figure out if a certain investment is for you, because some investments can be great for the short term, medium term, and long term, then so match nang. But despite having different time horizons for each investment, remember that, in general, final thoughts, investing is a long term commitment. It’s not a get rich quick thing. And we’re doing this to secure our financial future. Ideally, we will be investing until we retire, soala decades for most of us, right.
Final Thoughts
So remember that it is a marathon, and not a sprint. Patience and persistence are really the key to reaping the rewards when it comes to investing.