2016 still has a lot to offer! In case you have not yet decided or no idea where to invest your money ,here is an article below that can help and guide you. -Icel
WRITER Maria Nimfa Nadtja H. Villaver
ILLUSTRATOR Allana Santos
If there’s one thing people are usually looking forward to, it’s the year-end. With upcoming annual bonuses and cash gifts, it’s always tempting to spend rather than save. But it would still be best to resist the urge to squander your hard-earned money, especially that the coming year 2016 has a lot to offer.
Mutual Fund and Unit Investment Trust Fund
For those who are not the adventurous type of investor, mutual funds and unit invest trust fund (UTIF) are savvy options. Mutual funds are a type of investment wherein you join other investors to form a massive fund that will be invested in various securities depending on the investment objective of the fund. The pool of funds is handled by an expert called fund manager. The mutual fund company issues the investor a certain number of shares based on your amount of investment.
Profit from mutual funds are based on the NAVPS (Net Asset Value per Share) from the time you open an account to the time you close the account or redeem your money. The higher the investment and the longer it is invested, the higher the return or profit.
On the other hand, UITF is sold by banks. You purchase units of participation in the fund, whose value is called the Net Asset Value per Unit (NAVPU). This reflects the current market prices of the instruments that make up the UITF. The NAVPU rises or falls depending on the movement of market prices. Since UITFs are sold and managed by commercial banks, these are supervised by the Bangko Sentral ng Pilipinas.
An investor needs at least a minimum investment amount of Php 5,000.00 to open a trading account. In order to buy stocks, you need to register an account with licensed stockbrokers in order to purchase securities. Afterwards, the investor can choose which stocks to buy or sell. Due diligence, extensive research, and discipline are highly critical because of the market volatility, and greater risk than other investments such as real estate.
Aside from putting up a business, buying stocks is one of the most common investments with high potential earnings. Stocks are shares of ownerships in a corporation. When you purchase stocks of a publicly listed company, you become a stockholder or shareholder of that company. Being a shareholder automatically means becoming a part-owner of the company. The bigger the stock, the more you can participate in the company’s growth and future profits. Earnings predominantly depend on the company’s performance, as well as the trends of the stock market.
According to the Trading Economics global macro models and analysts’ expectations, the Philippines Stock Market (PSEi) is expected to trade at 6920.00 index points by the end of the 4th quarter. Within the next 12 months, the stock market is estimated to trade at 6350.00. In the long-term, PSEi is projected to trend around 7760.00 in 2020, 10600.00 in 2030, and 14100.00 Index points in 2050, according to econometric models.
“The PSEi outlook will be fundamentally good because of the upcoming elections and higher GDP growth rate,” Financial Adviser and Financeph.com President Mark Fernandez told Balikbayan Magazine.
According to the PSEi, there are over 100 licensed stockbrokers. They can either be traditional (orders placed via phone call) or digitally, online. Among the list of online stockbrokers accredited by the Philippine Stock Exchange are: AB Capital Securities Inc., Abacus Securities Corp., Accord Capital Equities Corp., Angping & Associates Securities Inc., BPI Securities Corp., COL Financial Group Inc., Yap Securities Inc., First Metro Securities Brokerage Corporation, RCBC Securities Inc. and Wealth Securities, Inc.
The year 2015 has been “a great time for PH property market” according to the National Economic and Development Authority (NEDA). And for the upcoming year, the real estate industry will continue to further grow.
One good real estate investment is buying a condo then renting it out or investing in condotels. The advent of “condotels” has redefined not just the concept of condominiums but also of investment. Condotel is a condominium project, which is operated as a hotel offering short-term rentals complete with a registration desk, cleaning service and more amenities. The units are individually owned and automatically leased back to the developer, where it is then rented out like any other hotel room. Unlike condominiums, condotel owners don’t need to pay monthly maintenance & condominium dues, maintenance fees and real property taxes.
Based on a study made by global property portal Lamudi Philippines, the average price of condominiums in Las Piñas (Php64,276 per sqm) and & Muntinlupa (Php60,804 per sqm) are cheaper compared to condominiums in Manila, Mandaluyong, San Juan, and Pasig (Php95,134, Php88,174, Php87,294, and Php80,329 per sqm, respectively).
Office real estate will also become a viable investment option due to strong demand and low supply. Property developers are already offering strata-titled office developments to address increasing demand for office real estate.
According to Jacqueline van den Ende, Founder and Managing Director of Lamudi Philippines, development will spread outside Metro-Manila. As early as 2014, real estate development in second-tier cities such as Cebu, Bacolod, Iloilo, Davao, and even cities in Luzon near Metro Manila like Angeles, Santa Rosa, Dasmariñas, and Bacoor have begun.
By 2016, one of the real estate investment options to consider is Montemaria, the newest development strategically located at the southernmost tip of Batangas Bay in Batangas City. Aside from the pilgrimage center, which boasts the 88-meter tall centerpiece of Mother of All Asia, the development will also have two residential subdivisions; a 35-hectare commercial business district; a 17-hectare hotel, resort and tourism district; and an institutional zone with an aggregate area of 5 hectares devoted entirely for religious and spiritual activities.
“AS I SEE IT, PHILIPPINE REAL ESTATE IN 2016 WILL CONTINUE TO GROW. REAL ESTATE PROPERTY DEVELOPMENT WILL EXPAND NEW GROWTH AREA SO IT WILL GIVE NEW OPPORTUNITIES FOR FRESH START AND EXPANSION FOR EXISTING DEVELOPERS. ”
–– RENE CINCO, Premier Asia Pacific Real Estate And Development President & Ceo
Any prospective real estate investor should choose location very carefully. If you decide to invest in residential properties like rental condos, accessible transportation links and high population for renters should be considered. Student housing or condos in areas with high population of students are sound real estate investment decisions.
Investing in these precious metals can be considered as a solid investment because it has retained intrinsic value regardless of economic conditions. Contrary to other investments, this kind of investment is a physical commodity because the investor actually owns a piece of precious metal. It’s also a limited commodity. The Philippines has an estimated US$ 1.4 trillion in mineral reserves, especially gold, copper, nickel, aluminum, and chromite. Moreover, according to Forbes, “buying metals represents a safe-haven approach to diversification and a partial hedge against equities.” Investing in metals keeps an investor’s portfolio balanced. This can be manifested when the value of the Dollar decreases, at least part of one’s portfolio will retain its value, despite the deflation.
You must first identify what type of investor you are—conservative, moderate, or aggressive. Then decided what type of mutual fund or UTIF best suits your preference. Similar to the stock market, a minimum investment amount of Php 5,000.00 (for mutual funds) to Php 10,000 (for UTIF) is required to open an account.
Another way for investors to diversify beyond traditional stocks and bonds is through commodities. Commodities are raw materials used in the production of goods or services being provided to consumers. It is considered a hedge against inflation because prices generally rise with inflation. Commodities include agricultural products, metals, and energy products. However, commodities are also very volatile. Prices can also drop when there’s sudden shortage due to natural or man-made calamities.
Before investing in commodities, one must understand both the basics of commodities markets, as well as the risks. Commodities are traded in the commodity exchanges through spot, futures and options contracts. Also, another significant aspect to look at is the relevant commodity prices and what this might mean for one’s investments.
The Philippine Bond Market is dominated by government issue, with comparatively high interest rates and a steep domestic yield curve. On many occasions, the Philippine National Government or its agencies issue debt securities to finance deficits and development projects. Selling to the buying public originates from the Bureau of Treasury (BTr) through a network of licensed dealers. Government securities (GS) are no longer certificated, they are known as “scriptless”. GS discount and coupons are subject to 20% final income tax, which is withheld upon floatation of Treasury Bills, or upon payment of the coupon for Treasury Bonds. No other tax is imposed on the secondary market buyer.4
Government bonds are the safest and are relatively “risk-free” because it’s fully backed by the government but it does not mean they are immune from credit/default risk, credit spread risk, or downgrade risk.. The investment is liquid because it can be traded in the secondary market prior to maturity. There are four kinds of government bonds: Treasury Bills (T-bills), Treasury Notes or Fixed Rate Treasury Notes (FXTNs), Retail Treasury Bonds (RTBs), and Dollar Linked Peso Notes (DLPN).
Government bonds can either be purchased via auction or through secondary market. Investors can purchase through Government Securities Eligible Dealers (GSEDs). Among the four kinds of government bonds, RTBs are the most affordable with a minimum investment of Php 5,000.00.
Travel & Tourism
The Philippine tourism industry continues to boom with a growing number of domestic and foreign visitors on uptrend. According to the Department of Tourism (DOT) industry performance report for travel and tourism, inbound receipts for August 2015 grew by 21.58%, accumulating to Php 21.97 billion (US$ 476.15 million) total revenue. Inbound visitors from January to August amounted to Php152.19 billion (US$ 3.39 billion). While the biggest visitor receipts were recorded in January 2015 with Php 22.48 billion, July and August posted double digit gains compared with other months, demonstrating high seasonality for these period during the year.
The DOT has also set a tourism revenue target of between $6 billion and $8 billion by 2016 under its National Tourism Development Plan (NTDP), which aims to attract more international tourists to visit and spend while in the country.
Having this optimistic progress in the tourism industry, you can consider investing in a travel & tourism business, especially for Balikbayans, since this type of business requires minimal startup capital.
“If you can find people at home to trust to become tour guides, that synergy can work so well, especially since you are working overseas. You are in a unique position to know what tourists are looking for. You understand global quality standards but you also know what quaint little customs and images make good experiences for tourists,” Salve Duplito, an award-winning print and broadcast financial journalist trained in financial planning, shared on the show “On The Money.”
You must decide first which tourism sector the business will focus on. Options include: travel agencies, transportation services, accommodations, guided tours, health and beauty clinics, and tour guides and hospitality business (food or beverage establishments).
“The best use of life is to spend it for something that outlasts life.”
– William James
The best investment is to invest in humanity through supporting quality education. People have heard it a million times. Education is the key to the future. Scholarships not only reduce the financial burden of underprivileged youth and their families but also contribute to the prosperity and well-being of individuals and communities.
There are a number of options to choose from should one decide to invest in the education for the underprivileged. It can either be through school scholarships or scholarship programs prearranged by non-government organizations. Or the simplest way can be someone from one’s community who needs educational assistance.
Investment opportunities are not just limited to finance, trade, and services sector. Being an agricultural country, investing in agriculture offers significant opportunities for investors. As investment consultant Daniel Go said in a daily newspaper, the agriculture sector best represents the consumer staples industry, a particular asset class that prospers even during hard economic conditions.
Investors can choose from the major agricultural products for a higher yield. The Philippines is the 8th largest rice producer in the world, accounting for 2.8% of global rice production. The country is also the largest producer of coconut which plays an important role in the economy. Moreover, the demand for food and other agricultural products will continue to grow.
Farming is a risky business. Aside from the typical factors to consider when starting a business, there are other uncontrollable factors to consider like the weather, type of soil and many more. For those planning to invest in an agribusiness, study the location first and do a market research. Basic knowledge in the chosen agribusiness sector is also a must when you invest in agriculture.
Investing in one’s self may be the most profitable investment a person will ever make. It yields not only future returns but also a current pay-off as well. Warren Buffet, the most successful investor considered in the 20thcentury, advised people to invest as much as possible in something that everyone has access to because it is their biggest asset by far.
Mplify Managing Director emphasized the importance of career advancement at his talk during the Pinoy Entrepreneurs Summit and noted to “Never settle for what skills you have.”
Investment in one’s self can start with education advancement. This can include going back to school and earning a Master’s / Doctorate degree or it can be as simple as attending trainings that will enhance your skills. Most importantly, a person must nurture his mind and take care of his health for him to fulfill his goals in life.
High-yield Savings account
For people who are skeptical in taking risk because of the unpredictable stock market and bonds, the traditional approach of saving one’s money can be a good investment as well. Some banks offer high-yield savings, a combination of savings account and time deposit account. The initial deposit, maintaining balance, as well as the interest rate is higher than savings accounts but lower than time deposits. One can withdraw his money anytime but only within the allowed number of withdrawals per month to earn an interest.
One must choose carefully the bank which offers the highest interest rate and study the required number of withdrawals per month to align with his spending.
Some people are hesitant to start their own business but would like to have one. Franchising is the best investment option to consider. As the popular adage in the franchising industry says “owning a franchise allows you to go into business for yourself, but not by yourself.” Aside from being a boss of one’s business, investing in a franchise business offers many advantages. A franchise business has a higher chance of success because it’s already an established product or service plus a tested business model. Moreover, a franchisor supports his franchisee from the opening until running the business.
Before buying a franchise, one must make a list of franchise concepts he would like to consider. The list is based on one’s budget, interest and inclination. Upon deciding the franchise concept, the investor must ask the franchisors the following: (a) franchisor’s support program; (b) total investment package (the franchise fee is just part of the total cost of the franchise); (c) return of investment; (d) number of outlets – both company-owned and franchised – and where these are located.