What needs to be done in Investing?
To get started with investing, choose a strategy based on the amount you'll invest, the timeline of your investment goals, and the amount of risk that makes sense for you. Once you have identified these factors, you are ready.
Start Early
The act of investing should not be a burden. You can start with a small amount to jump-start your investing. You can set aside a small amount per month from your income to develop good financial habits. This way, not only you will develop good financial habits, but you can also achieve cost averaging with your portfolio.
Investing when you are young allows you to enjoy the magic of compounding interest. This means that the yields of your investment will earn more yields.
Capital markets will experience ups and downs, of course, but investing young means you have decades to ride them out — and decades to make your money grow. Start now, even if you have to start small.
Let’s show you an example.
If you start investing at age 25 with P5,000 on a monthly basis in a balanced fund (combination of bonds and equities) with a possible yield of 5% per year, the potential amount of your investment including its earnings at age 60 is Php 7,159,169. While, if you start investing at age 45, you will have Php 1,462,346 at age 60. Needless to say, it is highly recommended to start early for you to have a high chance to achieving your goal. See the illustration below:
Start age
25
45
Monthly Investment (PhP)
5,000.00
5,000.00
Annual Interest Rate
5 %
5 %
Maturity Amount @ Age 60
₱ 7,159,169.00
₱ 1,462,346.00
Given the scenario above, INVESTING AT AN EARLY AGE IS MORE ADVANTAGEOUS.
Here’s how to start
Few tips to start:
Make a budget.Budget makes it easier to track your expenses and determine if you are already spending beyond your means. By checking what you are spending, you may find that there are unnecessary expenses that you can eliminate.
Set aside an amount. Allocate a certain amount monthly from your resources, so you will be aware of a certain "financial commitment" that needs to be met.
Enroll in Auto Debit Arrangement. With this system, the designated amount will be automatically deducted from your account. This can be a form of forced saving as you don’t have to take action but the amount will be automatically invested.
Pick an investment strategy. Your investment strategy has something to do with your personal goals and circumstance hence, asset allocations must also be as flexible as what the circumstance would require it to be.
How much do I need to set aside monthly?
As a matter of financial principle, you have to set aside 20% of your monthly income for your investment. If this is not possible, you can start on whatever amount you can spare.
With Affinity, you can open an account for as low as P5,000. The succeeding sum is P1,016, which is equivalent to purchasing 2 cups of your favorite latte per week. It is the most affordable option, especially for people on a tight budget.
Where to invest?
Investing can be done through mutual funds. This is a safe type of investment with minimal or low entry fees or sales load.
If you have zero or limited knowledge about mutual funds, here are some information:
A mutual fund is a mix of investments packaged together. Mutual funds allow investors to skip the work of picking individual stocks and bonds, and instead purchase a diverse collection of assets in one transaction.
Mutual funds are managed by a professional.
Sales load or entry fees range from 0.5% to 3% depending on fund type
Highly regulated by the govt.
You can redeem your investment anytime.
The inherent diversification of mutual funds makes them generally less risky than individual stocks.
The type of mutual fund to invest in depends on your risk profile.
What is your risk profile?
Risk profiles determine how much risk you are willing to take in order to reach your financial goals.
Your profile can either be one of the following
Conservative – wants to have steady returns while maintaining a low level of risk. Funds available:
Moderately Aggressive – an individual who wants to manage and reduce some risks. The target yield is from 3% to 5% per annum. Funds available:
Aggressive – wants capital appreciation and takes maximum risks in exchange for higher returns. The target yield is above 6% per annum. Funds available:
This material has been prepared for informational purposes only and is not an offer to buy or sell or a solicitation of any offer to buy or sell any security or instrument. The views and opinions expressed herein are those of Affinity. All opinions are subject to change without notice. Neither the information provided nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Information contained herein has been obtained from sources considered to be reliable.