You may not realize it, pero may investment ka na at some point in your life. You may have invested time and money in a college degree. Or, nag-invest ka in a job, a small business, or even a property. In due time, umaasa kang kumita from these investments.

Investing, therefore, ay ang pag-allocate ng resources into an asset. Each investment comes with the expectation na tataas ang value nito someday. While you can invest time and other resources, Investment 101 focuses on investing money. When done right, makakakuha ka ng profit o income. Eventually, these profits will help you build your personal wealth.

Later on, you’ll learn na hindi kumplikado o mahal ang pag-invest. Lahat tayo ay pwedeng maging investor with the right knowledge, time, and patience!

What you’ll learn from Investment 101
  • Inflation, at kung paano nakakatulong dito ang investing
  • Investment principles to remember bago mag-invest
  • Common types of investments
  • Know if you’re ready to invest using The Beginning Investor’s Checklist!
The benefits of investing
It maintains your buying power kahit may inflation

To best illustrate the value of investing, we have to talk about inflation.

Every year ay tumataas ang presyo ng goods and services dahil sa pagbabago ng ekonomiya. This increase in prices over a period of time is called inflation. Sa pagtaas ng inflation rate, nababawasan din ang value ng iyong pera.

Let’s say na ang price ng paborito mong burger in 2020 ay Php 100. Inflation rate rose to 4.2% in 2021, kaya ang price nito ay tumaas rin to Php 104.2.

Kung patuloy na tataas ang inflation rate by 4.2% taon-taon…

Year

Burger Price (with 4.2% annual inflation)

2020 Php 100
2025 Php 122.84
2030 Php 150.90
2035 Php 227.70


…by 2035 — which is 20 years from now — ang price ng burger mo ay Php 227.70 na. In short, halos half na lang ng burger ang mabibili ng Php 100 in 2035. Nakakalungkot, ‘di ba?




It’s best to have investments para masabayan ang pagtaas ng inflation rate (at pagmahal ng burger).

First, many investments earn higher interest than the 0.25-4% interest rate ng savings accounts. Compared to most savings accounts na fixed ang interest rate, the value of investments also change or increase.

It gets better if you’re an aggressive investor who earns dividends instead of interest. For example:

Nag-invest ka ng Php 10,000 sa stock market. Then, nag-save ka rin ng Php 10,000 in a savings account with 4% interest.

Ginalingan mo at nag-trade ka everyday sa stock market for 1 year. This resulted in your investment doubling to Php 20,000. Meanwhile, your savings increased to Php 10,400.

In this case, nalagpasan ng investment profits mo ang earnings ng iyong savings in the same amount of time.

Investments also earn compound interest

Second, investments take advantage of compound interest. It means na kumikita rin ng interest ang iyong investment earnings as time goes by. It’s a good way to prepare for long-term financial goals, such as retirement. So choose an investment an babagay sa iyong risk profile at goal timeline. Ito ay para mag-grow ang pera mo just in time to meet your investment goal.



Know these important investment principles

To make smart decisions, mahalagang maintindihan ng beginner investors ang mga sumusunod.

Investing has risk and rewards

Earlier, we mentioned that investments often have higher interest rates than most savings accounts. Still, hindi laging guaranteed ang growth ng iyong investment. All investments have a degree of risk. Ito ay dahil pwedeng bumaba in value o magsara ang businesses involved sa fund na iyong napili. Hence, laging may possibility na mawala ang parte o lahat ng perang iyong na-invest. Your investment may also not grow over time.

In principle: the higher the risk, the higher your potential earnings will be. Due to this risk, you need savings before investing. Accordingly, you also need to know your risk profile and investment goals. These will guide you sa pagpili ng  investment that meets your timeline and expectations.





Don’t put all your investment eggs in one basket

To reduce risk at losses, mag-invest sa iba’t ibang types of products. Furthermore, these products should have different levels of risk. Ang tawag sa technique na ito ay diversification. Kapag bumaba ang value ng isang investment, hopefully ay tataas o mare-retain lang ang value ng iba mong investments. This ensures na hindi ka mawawalan ng pera.

The earlier you invest, the more potential rewards you’ll gain

Long-term commitment ang investments. Kaya naman it’s best to start early! The reason is para mas maraming maipon na compounding returns ang iyong initial investment.

When you’re younger, mas mataas din ang iyong tolerance for risk. Choosing high-risk investments at this stage gives you an early start sa pag-grow ng iyong personal wealth. You also have enough time to recover from investment losses.