5 Tips I Wish I Knew Before I Started Investing My Money
There’s no shame in feeling confused or anxious when it comes to investing your hard-earned money. A lot of people want to get into investing because of the potential profits but are hesitant to do so because of all the information out there that they need to take in. This is why we asked for some help from experts from one of the leading Filipino-owned stock life insurance company, Cocolife. Cocolife Chief Actuary, Maria Katarina Bernardino and Cocolife Asset Management Co. Inc. (CAMCI) Head of Sales, Melinda Valencia-Macaranas, break down some of their best practices into simpler terms so you can become more confident in investing, even as a beginner.
1| Start investing as soon as you’re earning enough to have extra money
Instead of waiting for the best possible time to invest, these experts lobby for investing money as soon as you have excess funds. “You should start as soon as you are earning regular income and have excess funds,” Macaranas points out. “Just make sure that the money that you are investing is excess funds. Make sure that you are able to attend to your obligations first like loans, credit cards, etc.”
Bernardino stresses " Now is the best time to invest. Time must not be wasted before taking action and waiting to reach a certain financial status. Money grows exponentially and the earlier you invest, the higher the long-term return.
For salary-based employees, Bernardino recommends ‘setting aside 10% to 20% of your after-tax income’, which she says is an effective and manageable way to have money meant for investing. “You still get to enjoy your take-home pay and have something for the future,” she says.
2| Know the type of investment that best works for your situation
Wise investors would take what stage they are in their lives into consideration when picking out the type of investment to get. “When you are in your 20’s to 40’s, it is better to invest in more aggressive investments like equities. If there will be years that the market may become bearish, you will still have enough time to recover the losses,” Macaranas begins. “If you are in your 50’s or above, it is more advisable to invest in more conservative investments like bonds funds, property rentals, etc. At this stage, you will need an investment that focuses on preserving the capital.”
Here are other points to consider when it comes to choosing where to invest your money, according to Macaranas:
- Time horizon: “If you are planning to get the investments less than 5 years, better opt for a conservative investment. Aggressive investment, if more than 5 years.”
- Risk appetite: “This is also important if you want more of the capital preservation, you should go with the conservative investment. But if you are up for an adventurous roller coaster ride, go for aggressive types like the stock market or equity funds in mutual funds.”
- Goals: “What are you investing for? This is important so you will be motivated to invest more.”
3| Consider the level of commitment you can give to your investments
Another thing to consider is how much time you are willing to commit to looking after your investments. “If you invest in an active investment, you have to make sure that you have the time to watch over it, otherwise your investments [can possibly] go down the drain without you noticing it,” Macaranas explains.
“If you cannot commit your time and attention to such investments, it is better to invest in passive investments like mutual funds. The fund manager will watch over your investments for you. Their portfolio managers have the expertise to choose where it is good to invest or when to buy or sell.”
4| Do your research and consult an expert financial advisor
Two pieces of advice when researching from Macaranas: Check on the available mutual funds here in the country via Philippine Investment Funds Association, and reach out to their respective Investors Relations Office to know first-hand what would best fit their requirements as a potential investor.
While doing your own research does a lot to prepare you for the task at hand, Bernardino vouches for reaching out to a financial advisor too. “There is an alphabet soup of acronyms like REITs, ETFs, and so on that will be so hard to memorize at the onset, but may be simplified over a cup of coffee. A financial advisor will walk you through different money baskets from pure bank savings, to insurance products, and even high-risk stock-index linked funds,” she adds.
Bernardino says it is also an option to make your financial advisor do the investing for you.
5| Be prepared for possible losses
Investing your money comes hand-in-hand with the need to be prepared for losses so it’s best to make peace with that reality first and foremost. “When you invest in Mutual Funds, for example, you will experience some volatility. Sometimes your fund value will be up, and sometimes down,” Macaranas explains. “Just remember that these are just paper losses or paper gains. And besides, investments are meant for the long-term.”
Bernardino prods, “In investing be ready to ride the tides. Once you have set your limits, do not adjust them with the market. It may not be possible to beat the market 100%, that is, you cannot time the market. Trust the investment process and stay in the long-term.”
For first-time investors, consider checking out Cocolife LifeVest—an investment and life insurance in one. As an investment plan, Cocolife LifeVest allows individuals to invest in expertly managed funds and earn high fund accumulation. It also offers rewards and bonuses that can help bulk up one’s investment. One of them is the loyalty bonus that is credited to the fund on the 10th year of having Cocolife LifeVest, as well as every 10 years thereafter. There’s also the allocation bonus, which amounts to ‘100% of the premium charge deducted from the initial premiums.’
Cocolife LifeVest also functions as life insurance by providing extensive product coverage up until an individual reaches 100 years old, maximum product coverage in case of emergency, and allowing insurance customization to fit one’s goals.
You can avail of Cocolife LifeVest in two ways: Single Pay which requires a minimum single premium of P60,000; and Limited Pay which requires an annual minimum premium of P30,000, and P5,000 for each premium top-up. Limited Pay can either be paid in five years or 5-Pay, or in seven years or 7-Pay.
Notably, each Cocolife LifeVest plan can be upgraded to have more life insurance benefits. Among others, the Single Pay plan can cover accidental death and dismemberment as well as critical illnesses if need be. Meanwhile, Limited Pay can cover accidental death and dismemberment, accidental disability, critical illness, and death or disability of the payor.
CAMCI is a wholly-owned subsidiary of Cocolife that is licensed to operate as an investment adviser and principal distributor of United Fund, Inc., Cocolife Fixed Income Fund, Inc. and Cocolife Dollar Fund Builder, Inc. You can choose to invest in any of these funds when you own a Cocolife investment product such as Cocolife Lifevest.
You do not need to worry about managing the fund yourself because they will be handled by experienced expert fund managers from CAMCI that are known for their investing strategy, professionalism, and wide experience in the business. These funds have also received recognition and awards both from international and local award-giving bodies such as Thomson Reuters Lipper Fund and Philippine Investment Funds Association (PIFA) for their superior returns.