Six tips before investing
THE year 2020 has been an arduous year for all of us. Around the globe we experienced community quarantines resulting to the closure of a lot of businesses. We have read in the news that even billionaires are faced with a lot of profit losses.
We can say that we are all in the same boat. This pandemic redefined the meaning of stability. We need to adapt, innovate and pivot in order to thrive and not just survive.
As we face a health and financial crisis, there are still opportunities around us. As the adage says, there are opportunities amidst adversities. And some of you guys are asking is it good to invest at this season? Looking back at the historical of the stock market, we can see that in every crisis, we can also position our investment. Combined with fundamental, technical analysis and risk management, we can capitalize and ride the recovery of the economy.
With or without pandemic, here are some of the parameters that you should consider before investing:
1. Create a financial roadmap.
Before investing, sit down and take a look at your current financial condition. Ask help from a professional to guide you since there are also risks involved in investing, it should be done with due diligence and wise decisions.
2. Evaluate your risk tolerance.
Each financial instrument has a unique risk-reward benefit. Depending on your goals, you can consider instruments such as the stock market, balanced fund, mutual funds or other tools that can help you achieve your goals.
3. Diversifyyourinvestments.
Placing your investments in different platforms can help you manage the risk and return since the market may fluctuate from time to time.
4. Create and maintain and emergency fund. This fund can be around three months to six months of your monthly income. An emergency fund can help us in times of unforeseen situations without withdrawing our investments.
5. Avoid overpromising platforms and/or tools.
There are lots of groups that will share overpromising return which could be fraudulent. Before investing always be diligent and do necessary research to be sure that the company legitimate.
6. Get protected from life risks. Income protection is very important because it will cover the needs of our family members in the event of sickness, accident or untimely demise. Cost of insurance is lower compared to the benefits that we can get. If you have not protected yourself, the money invested can be needed and withdrawn and will defeat its purpose. Protection goals should be set up before you set up your money in investing.
Establishing your “why” behind your investments will help you in creating strategies.
One of the investments that you may consider is the stock market. Nowadays, we can access investing platforms through online brokers here in the Philippines such as COL financial, First Metro Securities, BPI Trade, BDO Nomura, Philstocks and many more.
Aside from investing in direct stocks, investors can also access mutual funds. if you are quite busy in your work and/or business, you may choose in this kind of investment so you can leverage on the skills of fund managers. Once you’re invested in stocks, for sure, you may consider investing in real estate properties. It’s a good way to create passive income for our retirement years. This is something that we can also pass to the next generation as most millionaires and billionaires love real estate. Look for developing areas where businesses will soon base their offices such as nearby areas of Metro Manila like Bulacan, Pampanga, Cavite and Laguna.
As we all look forward for the “Build, Build, Build” project of the government, we can see that the main islands of our countries will be soon connected to one another. As of this moment, big developers are also building townships in the Visayas (Cebu, Iloilo, Bacolod) and Mindanao (Davao) area.
Despite of the challenges last year, our economy is slowly opening and private organizations are hopeful to regain profits this 2021. I personally believe that the progress of our country is at hand as we help one another reach our goals. There’s no specific investing formula for all. Conduct due diligence because during this season there are also scammers.
Make sure to invest in reputable and established companies. Know what particular industry you want to invest in. Again the principle behind what we are doing is about stewardship, because God entrusted us resources, the goal is grow it for a bigger purpose. At the end of the day, whatever we have is from God and we can use it for His purpose.
Karlo Biglang-awa is a registered financial planner of RFP Philippines. To learn more about personal-financial planning, attend the 88th RFP program this March 2021. To inquire, e-mail info@ or text at 0917-6248110.