For many Filipinos, the holiday season typically comes with the added cheer of windfall money.
Employees in the Philippines expect to receive part or all the mandatory 13th-month pay, as well as year-end or holiday bonuses. For freelancers, the season could bring extra gigs. While kids and young adults receive cash gifts, also known as “Aguinaldo.” It is tempting to splurge, but there is another way to use one’s bonuses: investing.
Investing is essential for financial wellness, because—when done right—it can help individuals grow their money and reach their goals more quickly. Money loses its value due to inflation if you just leave it in a jar or tuck it away under a mattress.
Investing is the act of allocating your money into assets with the expectation of generating a return over time. However, investing may not be a straightforward process. Always remember that all investments carry a degree of risk, and money can be lost in investing. It is essential to learn as much as possible about investments to reap benefits while minimizing the risks involved.
Filipinos’ view on investment
Many Filipinos usually view investments in two ways. One involves setting up a small business, buying a rental property, or taking classes to build skills and grow professionally. This is what most people think about when asked about investments. The other type is through financial products offered by institutions, such as banks.
Both types can help you reach your financial goals. But the latter will require an understanding of financial products, including their risks and rewards. Please note that there are no guaranteed returns. However, with a clear understanding of your risk profile, economic capacity, and investment options, you can achieve better returns on your investment.
Some examples of financial products:
- Time Deposits: A type of deposit account that earns a higher interest than a regular deposit account if you keep funds with the bank for a fixed period.
- Unit Investment Trust Fund (UITF): Money is pooled together from clients and invested collectively by professional fund managers. To learn more about UITFs, click here.
- Bonds: An investor essentially lends money to the bond issuer for a specified period in exchange for interest payments and the return of the principal amount upon maturity. Read an explainer about bonds here.
- Stocks: A share of the ownership of a company, including its earnings and assets. Investing in stocks may require a technical understanding of stock market movements and terms. Stocks are available through accredited stockbrokers. Learn more about stocks here.
It is essential to do your research, understand your risk tolerance, and consider consulting with a financial advisor.
Investing myths versus truths
Myth: You need a lot of money to start investing.
Truth: Many investment options, such as UITFs, allow you to start with small amounts.
Myth: Investing is complicated.
Truth: While investing can be complex, there are many resources available, including financial advisors and online platforms, to help you navigate the process.
By investing a pay bonus wisely, one is taking a proactive step toward building a stronger financial future. Make this holiday season a time of economic growth and prosperity!
Earnest Learning discusses more about investing in Chapter 9 of its free e-book.
Disclaimer: This article is for general information purposes and does not constitute formal financial advice. Always do further research before making financial decisions.
Learn more about the other G.I.F.T methods:
G - Get guided by goals
F - Follow your budget
T - Take advantage of deals