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15 Best Investments for Millennials in the Philippines [Under 100K]

Got a 100k and don’t know what to do with it? Well, you’re lucky because we’re giving you the 15 best ways to invest and grow that money!

February 24, 2020 By jasonacidre

Last Updated on – Apr 1, 2020 @ 5:04 am

Got a 100k and don’t know what to do with it? Well, you’re lucky because we’re giving you the 12 best ways to invest and grow that money!

Don’t let it just sit in the bank. With low-interest rates from 0.5 to 1.5%, you’re better off investing it elsewhere.

And even if you don’t have a lot of cash saved up, there are still many ways to let your money work for you.

For many young professionals and entrepreneurs – in this information age – it’s conventional wisdom to consider investments early on.

Especially for young Filipinos, the time to think about investing is NOW.

If you want a more secure and brighter future for yourself, you shouldn’t put investing on hold.

What is an Investment?

An investment is a purchased item or asset that a buyer can identify as something that would appreciate its value in the future and can be sold at a higher price. It can also be viewed as an asset that can enable its owners to generate passive income and create wealth over time.

What is Investing?

Investing is using your money as capital to buy assets that can produce more money for you in the future.

It’s basically letting your money do the work for you.

Types of Investments

Stocks, Bonds, Annuities, Commodities, Real Estate and more. I bet we all scratched our heads the first time we tried to know more about these financial terms. We get overwhelmed with all the technical jargon and get buried with a ton of information that just doesn’t make sense.

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This guide aims to shed some light on the different types of investments available out there to help you achieve your financial goals. Learning about them will open up ways and ideas for multiplying your money quickly.

Here’s our quick rundown of the different types of investments:

1. Bank Products

Perhaps the most popular and common of all investments, Bank Products come in different options. The money you deposited are federally insured to up to a certain limit and can be easily withdrawn. The following are types of Bank Products: Savings Accounts, Certificate of Deposits (CDs), Money Market, and Federal Insurance.

2. Bonds

Bonds are loans offered by an investor to governments and corporations. In exchange, the borrower will pay the interest on the borrowed money at a predetermined schedule (Annual, Semi-annual) and will need to return the principal on an agreed upon maturity date.

3. Stocks

Put simply, Stocks are units of ownership in a corporation. This means that if you own or invest in stocks of a company, you become one of its “owners”.

4. Investment funds

Capital or Money that is sourced from different investors. A mutual fund is one of the most common types of investment fund.

5. Annuity

Money that gets paid at fixed intervals to an individual at an agreed upon time. That individual will first need to pay for the Annuity in one lump sum or through a series of payments also known as “Premiums”.

6. College fund

Saving money for college expenses in the future. Earnings of the money deposited in a College Fund are not subjected to Federal and State tax (depending on the location) as long as the funds are strictly used for college expenses only.

7. Business capital

Simply put, money that you put into a business to gain (active or passive) earnings or income.

8. Retirement fund

A way to have income cash flow upon retirement. While still able, workers can put money into a Retirement Fund and receive pension once they retire.

9. Commodity Futures

An agreement or contract designed to buy or sell a specified amount of a commodity at a fixed price and future date. This helps protect buyers by negating risks caused by fluctuations in price of the commodity in the future.

10. Security Futures

Similar to Commodity Futures. However, instead of commodities, its an agreement to purchase and sell a fixed amount of shares of a particular stock at a specified price on a specified future date.

11. Insurance

Insurance is essentially protection against potential financial loss, damage or harm. The Insured/Policyholder pays “premiums” to buy a “policy” that states the terms and conditions in which the insurer is required to pay.

12. Real estate

Real Estate investing aims for the generation of income or profit through purchasing, leasing, managing or selling a piece of realty property for a higher price than it was acquired (when the property’s value appreciates over time).

13. Alternative and Complex Products

Alternative and Complex products are other optional investment vehicles outside of traditional stock and bond investments. Some examples of this are Notes with principal protection and risky high-yield bonds that have low credit ratings. Most are risky but provide high rates of return.

How Much Money is Needed to Start Investing?

The short answer: Not much.

If you’re just starting out as an investor, you don’t need five or six-digit figures from the get-go. Anyone—even college students and fresh graduates—can start investing with as little as Php 25 to Php 5,000.

The actual initial investment depends on where you’re putting money in and the bank or investment company that will handle your funds.

Here are the required initial investments for the common investment vehicles in the Philippines:

Investment Vehicle Minimum Initial Investment Minimum Additional Placement
Mutual funds Php 100 to Php 5,000 Php 100 to Php 1,000
Stocks Php 5,000 to Php 1 million Php 1,000
Time deposit Php 1,000 to Php 100,000 N/A
UITF Php 25 to Php 10 million Php 50 to Php 1 million

How to Start Investing with Little Money

The advantage of growing your money through investments is that you can start small.

There’s no excuse not to get started even if you’re a breadwinner with a lot of bills to pay, as you can increase the amount you invest later on when you’re more financially capable.

But it’s important to note that you should never begin an investment journey without a solid strategy.

Take these initial steps to invest even with a small amount of money.

1. Determine how much you can afford to invest

This step is crucial if you plan to invest regularly in the long term.

You don’t want to invest a certain amount initially and then stop it altogether after a few months because you could no longer afford the monthly, quarterly, or yearly investments.

Before you start off, set a realistic and reasonable amount to invest, taking into account your income, expenses, and savings.

2. Save up for your emergency fund

A common mistake many first-time investors make is jumping right into investing without having an emergency fund.

When a financial emergency happens (like the hospitalization of a family member or the need for home repairs after a typhoon) without emergency funds stashed away, you’ll have no choice but to withdraw your funds or sell stocks prematurely.

Ideally, you need to build an emergency fund equal to six to 12 months’ worth of living expenses before starting to invest.

Make the process easier by putting away a small amount every week or payday.

The Philippine Stock Exchange (PSE) recommends putting the emergency fund in short-term, liquid investments such as savings accounts and time deposits.

You can invest the rest of your savings in medium-term or long-term instruments, depending on your financial goals.

3. Put your money in low initial investment vehicles

Look for investment opportunities that allow you to begin investing with a minimal amount.

The best investment vehicles for this purpose are mutual funds and UITFs. When you put your money in these instruments, you can invest in a diversified portfolio of bonds and stocks with just a single transaction.

Here are your options in the Philippines with initial investments ranging from Php 25 to Php 1,000.

Mutual Funds
Fund Name Minimum Initial Investment Minimum Additional Placement
Sun Life Prosperity Money Market Fund Php 100 Php 100
Philam Managed Income Fund Php 1,000 Php 500
Philam Bond Fund Php 1,000 Php 500
Sun Life Prosperity Bond Fund Php 1,000 Php 1,000
Sun Life Prosperity GS Fund Php 1,000 Php 1,000
ATRAM Philippine Balanced Fund Php 1,000 Php 600
Philam Fund Php 1,000 Php 500
Sun Life Prosperity Balanced Fund Php 1,000 Php 1,000
ATRAM Alpha Opportunity Fund Php 1,000 Php 600
ATRAM Philippine Equity Opportunity Fund Php 1,000 Php 600
Sun Life Prosperity Equity Fund Php 1,000 Php 1,000
PAMI Equity Index Fund Php 1,000 Php 500
Sun Life Prosperity Philippine Stock Index Fund Php 1,000 Php 1,000
Fund Name Minimum Initial Investment Minimum Additional Placement
Unlad Kawani Money Market Fund PHP 25 PHP 25
ATRAM Peso Money Market Fund PHP 50 PHP 50
ATRAM Total Return Peso Bond Fund PHP 50 PHP 50
ATRAM Philippine Equity Smart Index Fund Php 1,000 Php 1,000
ATRAM Global Dividend Feeder Fund Php 1,000 Php 1,000
ATRAM Asia Equity Opportunity Feeder Fund Php 1,000 Php 1,000
ATRAM Global Technology Feeder Fund Php 1,000 Php 1,000
BDO PERA Short Term Fund Php 1,000 Php 1,000
BDO Merit Fund Php 1,000 Php 1,000
BDO PERA Bond Index Fund Php 1,000 Php 1,000
BDO Institutional Equity Fund Php 1,000 Php 1,000
BDO PERA Equity Index Fund Php 1,000 Php 1,000

15 Best Investment Vehicles for Filipinos

Here are the 15 best investments in the Philippines that every hard-working Pinoy should consider.

Investment Minimum Capital Average Returns Risk Level
Exchange Traded Fund (ETF) P5,000 6 – 11% per year Medium
Pag-IBIG MP2 P500 4.58% – 8.11% per year Low
Bonds P5,000 4.7 – 6.3% per year Low
Insurance (VUL) P2,000/month 7.8 – 16.6% per year Medium
P2P Lending P1,000 10 – 15% High
Stocks P5,000 10.8% per year High
Mutual Funds & UITF P1,000 2-5% per year Medium
Small Business P5,000 High High
Real Estate (Foreclosed) P10,000 – P15,000 High High
Cryptocurrencies P100 -2% (2020) High
Blogging/Website Flipping P2,000 – P10,000 High Medium
Forex Trading P5,000 1 – 10% per month High
Angel Investing P50,000 27% in 3.5 years High
Personal Equity & Retirement Account [PERA] P10,000/year 5% – 15% per year Low
New Skills Time & Effort High Low

1. ETF

Minimum Investment: P2,000 – P5,000 (depends on the minimum board lot and market price).

What is ETF and how does it work?

ETF stands for Exchange Traded Fund. It’s a type of fund that owns assets like stocks, bonds, foreign currencies, gold bars, futures, and others—-similar to mutual funds (MF).

Ownership is divided into shares too. But unlike MF, these shares can be traded anytime in the market within the trading hours, making them easy to buy and sell.

ETFs are said to have lower operating costs compared to MFs since it’s more “passive” in it’s investing strategy (MFs are handled by fund managers) since in most cases it merely “mimics” popular indexes (Index ETF) and industries/sectors (Sector ETF).

How to Invest in ETF in the Philippines

As of this writing, only one type of ETF is available in the Philippines. The First Metro Philippine Equity Exchange Traded Fund (FMETF) by First Metro Asset Management Inc.

Buying and selling ETF is a similar affair with stocks.

To start investing, you need to open a trading account with an accredited stockbroker like Col Financial, First Metro Sec, BDO Nomura, Philstocks, and BPI Trade, among others.

There’s a long list of accredited stockbrokers in the Philippines so opening a trading account is fairly easy.

Once you have an active account, you may begin buying and selling ETFs via your preferred broker’s trading platform.

2. Pag-IBIG MP2

Minimum Investment: P500

What is Pag-IBIG MP2?

The Modified Pag-IBIG 2 is a savings program available to existing and former Pag-IBIG Fund members (with at least an equivalent of 24 monthly savings) who want to leverage higher dividend earnings (versus that of the regular Pag-IBIG Savings program).

For as little as 500 pesos, you can take part in a program that lets your money earn as much as 8.11% in dividends (their highest ever recorded dividend rate).

Their 3-year average is a solid 6.96%, way better than what you could get from bank savings accounts or other investment vehicles. You can withdraw your earnings annually or get the lump sum dividend when the fund matures (5 years).

How to Invest in Pag-IBIG MP2?

Enrolling under the Pag-IBIG MP2 program couldn’t be easier. Simply get a copy and complete the MP2 Savings Application form and submit it with copies of a Valid ID and passbook or ATM card of your nominated bank.

You can get the MP2 Savings Application form from your nearest Pag-IBIG Fund branch or download it from here.

Or you can visit this page and complete the required fields.

3. Bonds

Minimum Investment: P5,000

What are Bonds and how do they work?

Bonds are very similar to how loans work, except that they differ in terms of whom the money is borrowed.

Say a company needs Php 1 million to expand its operations. They have 2 options: they can borrow from banks (loans) or they can issue bonds.

With loans, banks will provide the company with a lump sum that they’ll have to pay based on the interest rate and other terms that the bank(s) have set. In most cases, the company will be asked to pay in monthly terms, with the interest embedded in each payment.

With bonds, it’s like doing a reverse loan.

Instead of the company approaching the lender (bank), they will print a bond (contract) that might state, “In 5 years, our company will pay the owner of this bond Php50,000”.

Since they need Php 1 million, they decide to print 20 pieces of these Php50,000 bonds and issue them to institutional investors and the public. Aside from receiving the promised Php50,000 face value back after 5 years, bondholders will also receive “coupon payments”.

For example, let’s say that the Php50,000 bond in our example features a 5% annual interest rate.

Each year, the company will have to pay the bond owner Php2,500 for 5 years. In total, the bondholder would get Php12,500 in earnings after the bond matures (2,500 x 5 years).

But it doesn’t stop there. Since bonds are classified as IOUs (debt instruments) and can be circulated publicly, they can be traded—-like stocks.

It’s possible that a bond can be sold at a higher price than its face value if the net present value of the principal and interest payments have increased.

But if the bond owner decides to hold on to it until it matures, he or she gets back the original investment (making it a good way of preserving capital) plus earnings from interest (passive income).

Different Types of Bonds

Bonds are generally classified into two: by maturity or by the issuer.

  • Maturity-based bonds – bonds that are classified according to the length of time it will mature
    • Treasury Bills (T-bills) – Bonds that mature in less than 1 year (short term). The most common tenors (length of maturity) for T-bills are 91 days, 181 days, and 364 days.
    • Treasury Bonds (T-bonds) – Bonds that have tenors of more than 1 year. The most common maturity lengths for T-bonds are 2-year, 5-year, 7-year, 10-year, 20-year, and 30-year bonds.
  • Issuer-based bonds – bonds that are classified according to who issued it
    • Treasury Securities – Bonds issued by the Bureau of Treasury
    • Government Bonds – Bonds that are issued by various government agencies like HDMF, Government National Mortgage Association (GNMA), Federal National Mortgage Association, and others.
    • Municipal Bonds – Bonds issued by the local government units (LGUs)
    • Corporate Bonds – Bonds issued by public and private companies

How to Invest in Bonds in the Philippines

For corporate bonds, some banks advise the general public through their official website and/or mailing list. Information and requirements for investing in bonds are typically posted on their website.

Some will have you complete a quick online questionnaire to get your details and contact info. Afterward, a representative from the bank will call/email you to discuss the details and next steps.

For Government bonds like T-bonds, you can visit the Bureau of Treasury website for updates and listings for any upcoming public offerings.

You can also reach out to banks and check if they have any government bond offerings.

Like with corporate bonds, they’ll provide you with details and instructions along with the paperwork to complete should you wish to proceed with the investment.

Learn More:

4. Insurance (VUL)

Minimum Investment: Php 2,000 – 3,000

Life Insurance is something every young professional should consider.

Having an insurance is necessary if you’re thinking about getting a house or a car. But more importantly, insurance is a must if you want to ensure that yours and your family’s lives are secured.

What is VUL?

Something that people should look into is a Variable Universal Life Insurance or (VUL). According to Investopedia, a VUL is a form of cash-value life insurance that offers both a death benefit and an investment feature.

It is basically a type of insurance bundled with an investment component. You’re insured but you can also have the option to invest your money. It’s ideal because you get the best of both worlds.

Aside from that, there are other benefits to VUL that differentiates it from other traditional insurance policies, such as flexible premiums.

Any excess amount you add to the premium will go to your accumulated funds. In case of a financial emergency, on the other hand, you can choose to only pay the charges without the plan lapsing.

And speaking of financial emergencies, one great feature of VUL is its liquidity. You can still access your funds in times of need. And unlike traditional policies, this is treated as a withdrawal and not a loan.

Meaning the amount withdrawn does not incur interests. Although it is encouraged that whatever amount was withdrawn should be immediately reinvested to keep on track with your financial goals.

Tips on getting VUL/life insurance

  • Do you really need life insurance? – Ask yourself if you really need insurance. If you have dependents then the answer is probably yes. But if you’re a single career person with no family as of now. You can consider putting it on hold if you don’t have the extra cash to spare.
  • How much do you need? – If you’re thinking about retirement, ask yourself what your projected retirement fund will be. Will it only cover the replacement of your actual income or will it include expenses for leisure? That’s something to think about when getting your plan.
  • Get Quotations and Plans from Insurance Companies – Call different insurance agent and ask for quotations or get them to send you proposals through email. This way you can pick and choose what would be the ideal plan for you. Most insurance agents now have tools that generate quick client policy proposal.
  • Avoid Additional Insurance or Add-Ons – A lot of the agents you will encounter will push for additional insurance or add-ons because of targeted quotas which will mostly just benefit them and the insurance company. Stick to your basic life insurance. But it is advisable to get a critical illness add-on. You may never know if or when you’ll get a serious health problem.
  • Get an Independent Financial Planner – Agents have a tendency to be biased about plans because of their quotas. So, it’s advisable to get an independent financial adviser who is paid to advise you and not to reach quotas based on plans and add-ons. It’s not necessary to do this but if you have extra cash to spend on a financial planner, get one.
  • Get it now – The younger you are the cheaper the plans are. There’s no time like today to get a plan.
  • Stable – Of course you have to make sure that the insurance plan you’re getting is from a reliable and stable company. Call the insurance company, or the insurance commission, and search the web. Look for reviews and research the company. Make sure they are legit.

5. Micro-Lending & Peer-to-Peer Lending

Minimum Investment: $25 (Php 1,250)

Another investment option young professionals and investors can get into is Micro-lending and peer-to-peer lending.

What is P2P Lending?

Peer-to-peer lending is the borrowing and lending of money through a platform without going through traditional means like the bank or other financial institutions.

What happens is, usually, an online company will bring together borrowers who need financing and lenders who would like to invest their money and earn through interest rates.

People are attracted to P2P because it cuts out the middleman – which is the bank, and provides better deals for both the borrower and the lender.

Because rates are a lot flexible compared to banks, borrowers can get relatively cheaper interest rates while the lender can still profit from a decent amount of interest rate.

Popular P2P Lending platforms:

Tips on investing in P2P lending

Here are some tips to consider according to Paula Pant, from Student Loan Hero.

  • Research before you invest – This should be a no-brainer but it is something you must keep in mind. Research about the loan history of the company you’re going to choose to invest in. Look into things such as the percentage of borrowers who default (unable to pay back) and how they screen the borrowers. Also ask about the average returns of investors in the past and how they handle late payments.
  • Know your risk tolerance – “Think carefully about how much risk you are prepared to take, bearing in mind that you could lose the whole of your investment in a loan if it defaults,” wrote Graeme Marshall, CEO of FundingKnight.
  • Go slow – You don’t have to invest largely in one borrower. Take advantage of the fact that you can start investing at only $25.
  • Diversify your loans – As what was mentioned earlier, you don’t have to go big with just one borrower. Diversify your loans. As the saying goes, don’t put all your eggs in one basket.
  • Reinvest your returns – You don’t have to cash out your returns once you can. Consider reinvesting them into new loans.

6. Stocks

Minimum Investment: Php 5,000 (First Metro and COL Financial)

People may stay away from stocks because of having no knowledge about it. Most even just prefer to let their money be stagnant and stay in a bank.

But knowledge can be acquired so it shouldn’t stop you from investing in stocks considering it could make your money grow exponentially.

Investing in stocks allows you to buy shares of companies, you won’t be able to buy under normal circumstances, said Marvin Germo, author of Stock Smarts.

“The stock market gives you the opportunity to buy in companies, like partnering with SM, GMA, Jollibee,” he said.

Tips on investing in Philippine Stock Market

  • Learn everything you can – Being too confident in the stock market can also be too risky. Learn from the books and experts first. Do your research, learn the terminologies and all the tricks, buy books, and attend seminars. If you can, get a mentor. Do everything you can to be knowledgeable on the stock market.
  • Know your risk profile – Are you cautious or are you a risk taker? Your personality should reflect the stocks you buy. According to Marvin Germo, there are stocks that are volatile, with a great potential to go up but also a great potential to go down. Some are just steady but when the market goes down, the impact to the company won’t be as bad. Consider what type of stock would fit your level of comfortability.
  • Buy Low Sell High – Buy stocks only when the price is below the “Buy Below Price”. The Buy Below Price is a level at which capital appreciation potential is already attractive relative to the fair value estimate. Any price below this is considered optimal to buy.
  • Don’t expect money to double soon – According to an investor interviewed by Rappler, you shouldn’t expect our money to double within a year. In fact, you should be prepared to hold on to our equity investments for a longer period.

Want to get started with stock trading and investing? Check out our Beginner’s Guide to Stock Trading and Investing.

7. Mutual funds & UITF

Minimum Investment: Php, 5,000

What are Mutual Funds and UITF?

A Philippine Mutual Fund is an investment company registered with the Securities and Exchange Commission (SEC), which pools money from many investors creating a massive fund under a common objective.

This fund is then invested in specific types of securities to achieve the stated objective.

UITF or Unit Investment Trust Fund, on the other hand, has the similar functions of a mutual fund, but the main difference is that the fund is managed by a bank (instead of a mutual fund company).

This type of investment is ideal for young and new investors because you’re investing your money to experts who would know what to do to make your money grow.

There are four main types of mutual funds & UITFs offered:

  • Money Market Funds –invest purely in short-term debt instruments (one year or less).
  • Bond Funds– invest in “bonds” which are really long-term debt instruments offered by governments or corporations.
  • Balanced Funds– invest in a mix of shares of stock and bonds.
  • Stock / Equity Funds– invest primarily in shares of stock.

Tips on Investing in Mutual Funds

  • Go with Competent Fund Managers – You’re basically entrusting your hard earned money to a third party company. So you must ensure that the fund managers they have are competent enough to bring growth not losses. A good way to know is to look at the consistency of the fund performance at least in the last five years.
  • Add Regularly – Although you can start at a low price of Php 5,000 and there is no required regular addition. It is advisable to add regularly and use it as kind of your piggy bank for your long term goals.
  • Assess Risks – All investments have their risks, so it’s important to do risk assessments. Online brokers who offer mutual funds usually have their risk assessment questionnaire which will help you decide which type of mutual fund is best for you.
  • Set Goalsand Objectives – Like with any other investments you must know why you’re investing. Is this for your retirement, leisure, capital for your future business endeavors? Be clear on where you want this to go to make the best decisions. Newbies may become disheartened when they see losses even if they still haven’t reached the end of their time frame. As with stocks, you must be patient enough to see your investments grow.

Useful Resources:

8. Small Business

Minimum Investment: Php 5,000

Small business is another investment that you shouldn’t pass up. A lot of people might not be inclined to try this out because of the fear of failure. But why should that stop you?

Failure is just a part of life and taking risks is important if you want make your money grow.

But if you’re still apprehensive, you could always start small. With just 5,000 pesos, you can get into the food business. You can go with street foods, gotohan or mamihan.

If you’re the type of person who likes Karaoke, with a few more money (around 25,000), you can do Karaoke rentals. There are several options for those who want to start a small business for under Php 100,000.

Tips on starting a small business in the Philippines

  • Find your passion – A lot of people wonder what they should sell, finding your passion can be important because it will help you push through with your business even if the going gets tough. If you have the passion for fashion, selling clothes would be ideal for you.
  • Do Market Research – The thing about most Filipinos is that, when they think about starting a business, all they think about are the basics like where to get capital and what product to sell. Those may be the main things, but market research is always important in any type of investment. You have to know your products/services, your competitors, your demographics, trends in the industry, things like that.
  • Secure Funding – Your funding will cover 2 types, Pre-operating (equipment, stock, deposits, permits, etc.) and Working Capital (salaries, rent, utilities, supplies, and contingencies). It’s advisable to secure funding for at least 6 months of operation.
  • Build a website – We live in the age of the internet and social media. So, having a website is essential these days. Your website is the digital address of your business. And it’s also basically your digital store. Having a website or at least a social media account can provide you with a digital presence and also social media marketing opportunities.
  • Network with other people – The more there are of people who know about your business, the better the business will be. So, as was mentioned above, online presence is crucial. Word of mouth is also great, but you get a wider audience through social media. Connect with people both online and offline. Attending seminars and business conventions is also a way to network.
  • Consult Experts – Getting a mentor or at least some form of advice through experts is always important. You will learn from the experiences of those who have made it. If you can’t find a mentor in person, find mentors in books or go online. Watch seminars on Youtube or search for business articles written by experts.

9. Real Estate (foreclosed properties)

Minimum Investment: Php 10,000 – 15,000

For those who would like to own houses through installment, there are cheap mortgages that would only cost Php 2000 – 3,000 a month.

Another investment to of course consider is real estate. If you’re thinking about owning a property but you’re wary about how much you want to spend, you may consider buying Foreclosed Properties to get a cheaper deal. For as low as Php 11,000 you can own a foreclosed land.

Tips on Buying Foreclosed Properties

According to, here are some tips for buying Foreclosed Properties:

  • Know where to look – To find foreclosed properties, go to banks, Lending Institutions, SPAV companies (companies formed under the Special Purpose Vehicle Act of 2002 to help banks shed their nonperforming assets), and government financial institutions like the Social Security System (SSS), Home Development Mutual Fund (Pag-IBIG Fund), and National Housing Authority (NHA).
  • Get Your Financing Ready – When you already have a housing loan approved by the bank, sellers will take you more seriously. And so, you’ll get more negotiating leverage compared to other buyers.
  • Attend Property Auctions – Attending these auctions will be a great way to discover properties not usually on online listings.
  • Inspect the Property – You shouldn’t ever buy anything without properly inspecting it. You must see for yourself if it’s worth your money.
  • Know your fees and taxes – Other than the down-payment and the property’s selling price, there are also fees and taxes charged to the buyer. For example, buyers must take care of notarial fee, registration fee, transfer tax, and documentary stamps tax, and if you’re buying a condo or townhouse units, the buyer will also be required to pay monthly association dues.

Tips on Real Estate Investing

  • Be Goal Oriented – Ask yourself what you want to achieve in real estate investing. This way you can have a vision of what you want to get from investing and will also keep you determined. If you think real estate can be the easy money you’ve been searching for, well nothing in this world can really be called easy money. There will be challenges but having a vision and determination can keep you in track.
  • Learn as much as you can about Real Estate – You need to familiarize yourself with the “ins and outs” of real estate transactions in the Philippines. Do research on the subject.
  • Attend Seminars – Just as was mentioned above, you’d have to learn a lot about real estate and one of the best ways to do that is to attend seminars and conventions on real estate. Not only can you learn from experts but you can also check out potential properties.
  • Join or start your real estate investors club – This is a great way to network and find out more from fellow investors.

10. Cryptocurrency

Minimum Investment: $20 – $1,000 (Depending on the Cryptocurrency)

What are Cryptocurrency?

If you’ve never heard of Bitcoins or cryptocurrency, don’t worry. It may be an unchartered territory for many people but it’s basically a simple concept.

Cryptocurrency is simply digital or virtual currency that people on the internet use to trade. It uses cryptography for security to ensure the safety of the traders. It’s most appealing feature is the security from the government that it offers. Because your currency is encrypted, the government can’t monitor it.

Bitcoin is mainly the most well-known type but there are other types of cryptocurrencies that are actually cheaper and might be more ideal for you.

Now you may try to avoid this because of the sketchy ways cryptocurrency can be used. But Bitcoins and cryptocurrency are legal depending on where you are and what you plan to do with it.

The Central Bank of the Philippines has issued a warning on virtual currencies but has stated that they are not subject to any regulation.

Tips on Cryptocurrencies Investing

  • Educate yourself – As with all types of investments, you must be knowledgeable on where you’re putting your money in. Coinpursuit and are just some of the sites you can check out to educate yourself.
  • Treat it as you would the stock market – Analyze trends and patterns on weekly charts. Analyzing fundamental data is key in your methodology to find a decent investment opportunity (you can also check out our guide on how to research altcoins).
  • Invest in Fund Management Platforms – As was mentioned above, cryptocurrency can be treated like stocks where fund managers can handle your investment. You can even invest in mutual funds.
  • Use it to solve problems – Find opportunities to use cryptocurrency to solve problems such as providing an alternative to traditional banking services. Some people cannot get access to traditional banking services whether due to geographical reasons or other circumstances. You can use this opportunity to provide access to products and services people cannot otherwise acquire.
  • Crypto to Money – Don’t forget that Cryptocurrency can be exchanged for money. You can use this to trade with people who are in need of cryptocurrency for products and services physical money cannot buy.

11. Buy a website (for passive income)

Minimum Investment: $200 – $1000 (depending on the bid)

Buying a website is something you should definitely consider. If you don’t want to go through the hassle of building a website and gather an audience for that site, then buying a readymade one that’s already profiting is definitely advisable.

It’s a great and easy way to acquire a passive income. You can check out to look for websites being auctioned.

Tips on Buying a Website

  • Know the History – You must know about the site’s history before buying it. Know about its net worth, how old the site is, and if it is legit. Just because it’s saying it’ll earn you $10k a month doesn’t mean it really will. Usually the older sites are the most trustworthy ones.
  • Be familiar with the Platform – Is it WordPress, Joomla, or something else. This will make it easier for you to know the experts who can operate the platform.
  • Demographics – Find a site that targets the demographic you want to reach.
  • Traffic Quality – The more the visitors, the more money you’ll earn.
  • Maintenance Cost – How much will this site cost to maintain? How many staff do you need to run the site? These are things you must consider.
  • Price – Something to definitely consider to make sure the site is legit, an average site would cost around $2500. Although there are sites that cost lower, this can be considered a red flag.

12. Forex Trading

Minimum Investment: $100 (Php 5,000)

According to FXCM, Forex, also known as foreign exchange, FX or currency trading, is a decentralized global market where all the world’s currencies trade.

The forex market is the largest, most liquid market in the world with an average daily trading volume exceeding $5 trillion. So, it would really be advisable to dip your toes into foreign exchange trading if you want to grow your investments.

Tips on Forex Trading

  • Choose a broker wisely – Choose a broker that will allow you to do the analysis you require. You must know each broker’s policies and how he or she goes about making a market.
  • Choose a methodology and be consistent in application – Remember that fundamentals drive the trend in the long term, whereas chart patterns may offer trading opportunities in the short term. Whichever methodology you choose, remember to be consistent.
  • Choose your entry and exit time carefully – You might get confused because of conflicting information regarding the trends and based on charts in different time frames. What may seem as a buying opportunity on a weekly chart can in reality show a sell signal on the intraday
  • Perform weekend analysis – At the end of the week, when the markets are closed, review and analyze weekly charts to look for patterns or news that could affect your trade.
  • Practice Makes Perfect – Like with any practical skill, trading is something you learn and improve on as you go along. You won’t be an expert on your first try but with constant practice you can be successful in the Forex trading business.

13. Angel Investing (Venture Capital & Private Equity)

Minimum Investment: P50,000

What is an Angel Investor?

Let’s break it down real simple. Say you want to launch your own food delivery business but don’t have the capital to begin with. After hearing about your plans, your uncle offers the necessary funding.

In exchange, he just wants the capital paid back plus 10% gain. Payable in 3 years. Happily, you accept his offer. “Thanks, tito! You’re an angel!”

You’re tito is an Angel indeed—an Angel Investor, to be exact. Often called “informal investors”, they are affluent folks who provide capital funding to start-ups in exchange for some gain or equity in the business.

What is Venture Capital?

Continuing with our scenario earlier, the money you received from your uncle is called “Venture Capital”. If you’re familiar with the tech industry, you hear about this a lot. Uber, Twitter, AirBnB, and a host of other big-name companies all received venture capital to kickstart their business.

In return, their success brought sky-high gains to their investors.

What is Private Equity?

It refers to monies or funds not included in a publicly listed exchange (e.g stock market). Funding injected by investors into a company in exchange of 100% ownership or control of the company is what makes Private Equity different from Venture capital.

How to Become an Angel Investor and/or Venture Capitalist in the Philippines

Join a network of Angel Investors

This site stands as a middleman between entrepreneurs needing funding and investors. Once you’re registered as an investor, you can proceed to choosing among the list of business proposals that you deem most worthy (and profitable) of your investment.

Start small

Most people don’t know this, but you don’t need to be uber-rich to be an angel investor or venture capitalist. If we’ll use our scenario earlier, your food delivery business might only need Php 100k to get everything up and running. It really depends on how big the project is and how much capital it requires.

There are a ton of established businesses in the country that are looking to expand, which you can easily fund for as low as P50,000.

Tips on Angel Investing

1. Have a deep understanding of what it takes to run a business

As an investor, your main job is to provide funding. However, the success of your picks will highly depend on how well you understand the nature of their business.

Most successful angel investors and venture capitalists are stringent in their selection process, often going through several rounds of in-person meetings and reviews. This helps in making sure they are not betting their money on a high-risk venture.

2. Connect with Angel Investors and VCs in the country

It wouldn’t hurt to try asking for an hour of their time to get a primer on the whole thing. A simple gesture of taking them out for lunch to pick their brains may work surprisingly well in some situations.

Most of these people are kind enough to share their knowledge. And if they can’t meet you face-to-face, online correspondence is still highly valuable.

3. Invest in something you’re familiar with

When we invest in something, it’s usually on something we truly believe in, or very familiar with.

Why? Because it takes out a lot of the guesswork figuring out stuff from the beginning. Your existing knowledge about the product or service allows you to ask the right questions.

It also gives you better insight on the future and success of the venture.

4. Don’t go all in

In just a single investment, that is. As cliche as sounds, “spreading your eggs in several baskets” also applies in venture capital.

Not only will it allow you to lessen the risk, it also opens up your pool of money to more promising investments (negates opportunity-loss).

5. Develop an investment game plan

World-renown investor Ray Dalio operates on a set of core “Principles” (the title of his book) that serves as his checklist to guide him on decisions—both in life and investing.

As an angel investor or VC, it’s a good idea to come up with a solid plan that answers important questions like:

What’s my expected ROI and when will I hit it? How much capital am I willing to invest during the course of the start-up? What type of involvement does this company require from me?

6. Try investing with a partner

Or better yet, several others. Investing is risky. In fact, most venture capitalists in the US fail.

If you’re just starting out, it might be a good idea to team up with others so you won’t have to shoulder the whole start-up capital.

Sure it will reduce your potential gains but at least you’ve significantly reduced the risk.

How do Angel Investors make money?

After putting in significant funding into a business, Angel investors recoup their investments (and more) once the company starts seeing success. For example, an app or SaaS-type of company may begin growing its user base and starts getting paid for their offering.

This influx of revenue will naturally result to growth and increased chances of getting really massive (Uber, AirB&B to name a few).

While it’s mostly a hit-or-miss situation in the VC industry, the potential returns are enormous when you chance upon a real winner. It is said in the US, the average industry standard assumption for getting a winning portfolio is 10 investments.

Out of the 10, 6 will most probably be losers, 2-3 might break even or give slight gains, and (hopefully) your last one hits home run. The winning pick should be big enough (10x your minimum investment) to make the whole thing profitable.

14. PERA: Peronal Equity & Retirement Account

Minimum Investment: P5,000 – 10,000/year

Established through Republic Act 9505, the Personal Equity and Retirement Account (PERA) is a voluntary retirement investment program.

It takes after the 401(k) and Individual Retirement Account (IRA) in the United States.

This long-term saving program aims to serve as an additional source of funds upon retirement apart from GSIS or SSS pensions or any form of retirement benefits from an employer.

What is PERA and how it works

PERA is a purely voluntary retirement savings program that allows the contributor to earn tax incentives from the amount he or she invested.

Those who choose to sign up for the program have to make certain contributions every year until they reach 55 years of age.

Upon retirement, they’ll reap everything they invested, not to mention all other proceeds earned from the contributors’ PERA account.

Some benefits of PERA include not being required to pay tax from all income earned from PERA when the contributor retires or die and 5% income tax credit until the contributor turns 55 years old, among others.

With the 5% income tax credit, you’ll get 5% off your annual taxable income allowing you to save more money in the long run.

Contributors can withdraw from PERA once they reach 55 years of age provided that they have made contributions to PERA for a minimum of five years.

In case of death, the funds invested by contributors in their PERA account will be distributed to their respective heirs. Or if they have declared beneficiaries, the proceeds will go to them at this point.

How to Invest in PERA

If you are a Filipino citizen residing in the Philippines or abroad, is at least 18 years of age, have a Tax Identification Number (TIN), and is making an income, you can invest in PERA by following the simple steps below:

  1. Find an administrator to manage your account. You can either choose between BDO or BPI. Remember, you can only have administrator , so choose wisely!
  2. Assign a custodian to receive your funds. Make sure the person or entity is officially recognized by the BSP.
  3. Select the PERA investment product you wish to invest in. You may choose from stocks, UITF, government securities, mutual funds, insurance products, and other accredited products.

Early Withdrawals

If in the future you wish to distribute funds but have not yet reached the required age, you can still do so but not without penalties. Remember that there are only two qualified cases of distribution for PERA funds–death and retirement. Distribution of funds that do not meet these requirements will result to having to compensate the government for the total tax incentives you got, including the 5% income tax credit, waived income tax for employer’s contribution, and waived taxes on the total investment income.

However, there are a few exceptions to this rule, such as:

  • When a contributor needs to claim it after being considered “permanently totally disabled” .
  • When a contributor needs it for payment of hospitalization for more than 30 days due to an illness or accident.
  • When the proceeds will be transferred to an eligible PERA investment product or administrator not more than two working days from the date of withdrawal.

Supporting documents such as certifications might be needed for the first two exceptions so make sure you secure them from the proper authorities before presenting your case.

15. Invest in New Skills

Minimum Investment: Only your time and effort

Investing in new skills and yourself is something that people tend to forget but is very important whether you want to invest in business or not. You don’t have to go to a formal school to learn new skills. But if you have the money, you can take courses or even get a post-grad degree.

For those who don’t have the money for expensive degrees, here are other alternatives you can consider:

  • Online Courses – Take online courses which are usually cheaper and may sometimes even be free. Take courses on starting your business, choosing the right investment, financial planning, blogging, SEO, marketing, anything under the sun. There are infinite courses to choose from and you have to take advantage of the services offered online. Skillshare is a great website to take classes from and you can get coupons to get free classes for a couple of months.
  • Seminars and Workshops – There are seminars and workshops you can attend to, some for as low as Php 1,000. As was mentioned above, you can take seminars for investments in real estate and stock markets to name a few. It will also be a great way to meet peers who are interested in the same endeavors.
  • Books – Books are investments. If you want solid knowledge on any subject matter, then buying a book on it is always a wise decision. The trick to reading a book if you’re busy is to look at the table of contents and to just pick chapters that would seem more applicable for you. This way you won’t have to read the whole book.
  • Youtube – Youtube is a website that is truly helpful for no cost. You can learn any skill from watching thousands of free videos on any given subject, may it be Bitcoin, Forex, stocks. You name it. The site is a wealth of information you can access with just your smartphone.

How to Choose the Best Investments in the Philippines

Filipinos are known to be risk-averse when it comes to investing. You’re probably one of those who are wondering what kinds of investments give the best return.

The best investment yields high returns with minimal risk.

But are there really low-risk, high-return investments in the Philippines?

This may sound impossible, but you can find them if you know where to look.

The key is to check low-risk investments such as money market funds and bond funds (through mutual funds or UITFs) with the highest returns.

Money market funds and bond funds are both invested in low-risk, fixed-income securities. Time deposits and government T-bills comprise money market funds, while corporate and government bonds comprise bond funds.

How to Invest your Money Wisely

1. Diversify, diversify, diversify

With the multitude of options provided in this article, it will be foolish to choose only one and invest all of your money in it. As what has been said earlier, putting all your eggs in one basket will be a bad idea.

Pick two or more investment options. This way if one fails you can still rely on the other. More importantly, if all will become successful you’ll generate more income.

2. Don’t worry, just grow your money

Worrying too much and panicking won’t help you or your investment grow. Sometimes relaxing and taking some rest to reorganize your mind and your priorities are important too.

If you think too much about failure, you’re already failing. Just sit back relax, and let matters take its course.

3. No regrets, it’s just cash

If one investment fails don’t dwell on it too much. Especially if it’s in stocks, forex, or cryptocurrency. Expect that there will be losses. But keep a positive mindset.

And it’s very vital to only invest the money you’re willing to lose.

4. No day, but today

There’s no better time to start an investment but now. You’re still young so if you decide to start now, you can become a millionaire not in your 60s but in your 40s or even 30s. So, don’t just sit there, invest now!

Filed Under: Finance Tagged With: Investing

About jasonacidre

Jason Acidre is the Co-founder of Avaris, a digital marketing agency. He’s also the author of Kaiserthesage, a popular online marketing blog.

Reader Interactions



Dennis Casanes says

Hello Chora! I am a financial adviser of manulife philippines. I can help you realize ur investment dreams.

I made a comparison matrix of popular VUL policies in the market (Sunlife, Axa, Manulife, Insular Life, Bpi-Philam/Philam Life, Prulife). But first…..

Among VUL, mutual funds, UITF, and direct stock trading, only VUL offers simultaneous life protection, growth of money thru investing, and the many supplementary benefits (cash assistance when hospitalized, or upon diagnosis of critical illness, etc.)

With regards to investment, it would also be prudent for starting investors to enter pooled funds instead of direct stock trading unless he has large capital to invest in blue chip stocks, and has the time and diligence to track market movement from time to time, since one can really maximize earnings by trading.

With regards fund performance among pooled funds (VUL, mutual funds, and UITF), best fund managers in the country are employed in Life Insurance Companies, which offer VUL products, hence annualized returns are higher in VUL by historical performance. And among several VUL products, there are actually few funds that really stand-out. And these funds are available only in select few Insurance Companies.

If you are interested in availing VUL policy, I suggest you get as many proposals from different Insurance Companies as possible. DO NOT compare the products by the illustrated projected fund values through the years. As stated, these are PROJECTIONS, and all are mandated by Insurance Commission to show projected earning rates at Low (4%), Medium (8%), and High (10%). Different companies also offer different protection coverage periods. Some guarantees up to 99 or 100 years old, some are only up to 80 to 88 years old, so one may be swayed to get a “less expensive” policy, but this is not actually case and when you do the math, he/she is actually paying more for relatively shorter coverage, and this is not only for the life coverage but includes also for supplementary benefits (critical illness, accidental death benefits, etc.)

Lastly, keep in mind that when Financial Planners present to you a VUL policy which would require limited-term pay (5-yr/7-yr/10-yr), it is NOT guaranteed that you will only pay up to this period. VUL is investment-linked, and all will depend on the actual fund performance. Same goes with regular pay- it is NOT true also that you will pay continuously, so look for a premium holiday feature (with no premium holiday charges).

If you are interested to learn more, I was able to make a comparison matrix of all VUL products, and these cover 2-groups – Investment-Oriented and Protection-Oriented Products. I had 19 criterias as basis of for my evaluation when choosing which company gives more value to the premium (investment) that I pay, as one will be suprised that some companies charge more than other companies (and this does not include yet the hidden charges- you will only realize that it is hidden when you understand complex terminologies in the VUL policy).

Example of my criterias are: fund performance (annualized ROI/assets), market capitalization, pricing policy (single or dual), protection coverages, premium and monthly deduction charges, rules on policy lapsation, effect on short-term non-payments, etc… I also made an analysis about the pros and cons of regular pay and limited-term pay. Actually, a lot of Insurance Agents offer limited-term pay since it requires higher minimum, and with higher premium the more commission.

If you want to umderstand more, you can contact me. This is my email: [email protected] and my number 0917-5662845

ad bulanon says

thank you so much for the tips i will advise my kids

Thanks big help ��


Thank you..It helps me a lot

SmartCash is the best investment in the world of cryptocurrency. Believe me i’m in there!

A lot of young professional’s money will get slaughtered in the first 9 of the 10 tips mentioned. Due your due diligence before making an article like this. To the yappies, follow the advice at your own peril.

Angeli Mantos says

Very good read! Thank you for sharing these valuable information. God bless

Now is the best time to invest in stocks. Taking advantage of the market crashing from the corona virus! Stocks are at all time low hat will obviously bounce back. It’s a no brainer!

Arvin Roy Salvador Reyes says

I’m an OFW and this article is very helpful.

I made a comparison matrix of popular VUL policies in the market (Sunlife, Axa, Manulife, Insular Life, Bpi-Philam/Philam Life, Prulife). But first…..

Among VUL, mutual funds, UITF, and direct stock trading, only VUL offers simultaneous life protection, growth of money thru investing, and the many supplementary benefits (cash assistance when hospitalized, or upon diagnosis of critical illness, etc.)

With regards to investment, it would also be prudent for starting investors to enter pooled funds instead of direct stock trading unless he has large capital to invest in blue chip stocks, and has the time and diligence to track market movement from time to time, since one can really maximize earnings by trading.

With regards fund performance among pooled funds (VUL, mutual funds, and UITF), best fund managers in the country are employed in Life Insurance Companies, which offer VUL products, hence annualized returns are higher in VUL by historical performance. And among several VUL products, there are actually few funds that really stand-out. And these funds are available only in select few Insurance Companies.

If you are interested in availing VUL policy, I suggest you get as many proposals from different Insurance Companies as possible. DO NOT compare the products by the illustrated projected fund values through the years. As stated, these are PROJECTIONS, and all are mandated by Insurance Commission to show projected earning rates at Low (4%), Medium (8%), and High (10%). Different companies also offer different protection coverage periods. Some guarantees up to 99 or 100 years old, some are only up to 80 to 88 years old, so one may be swayed to get a “less expensive” policy, but this is not actually case and when you do the math, he/she is actually paying more for relatively shorter coverage, and this is not only for the life coverage but includes also for supplementary benefits (critical illness, accidental death benefits, etc.)

Lastly, keep in mind that when Financial Planners present to you a VUL policy which would require limited-term pay (5-yr/7-yr/10-yr), it is NOT guaranteed that you will only pay up to this period. VUL is investment-linked, and all will depend on the actual fund performance. Same goes with regular pay- it is NOT true also that you will pay continuously, so look for a premium holiday feature (with no premium holiday charges).

If you are interested to learn more, I was able to make a comparison matrix of all VUL products, and these cover 2-groups – Investment-Oriented and Protection-Oriented Products. I had 19 criterias as basis of for my evaluation when choosing which company gives more value to the premium (investment) that I pay, as one will be suprised that some companies charge more than other companies (and this does not include yet the hidden charges- you will only realize that it is hidden when you understand complex terminologies in the VUL policy).

Example of my criterias are: fund performance (annualized ROI/assets), market capitalization, pricing policy (single or dual), protection coverages, premium and monthly deduction charges, rules on policy lapsation, effect on short-term non-payments, etc… I also made an analysis about the pros and cons of regular pay and limited-term pay. Actually, a lot of Insurance Agents offer limited-term pay since it requires higher minimum, and with higher premium the more commission.

If you want to umderstand more, you can contact me. This is my email: [email protected] and my number 0917-5662845

thanks for this info it helps a lot specially when looking for various VUL offered by different companies around. If you permit can I see your comparison matrix? Thanks a lot

Hi Aldrin,
Yes, you can contact me in my email: [email protected] or thru my number 09175662845

very nice read.. thank you

drigo alejandro cura says

thanks for the information .i like small business with small capital

I can recommend one Mr. Drigo contact me at 0920-922-4027

yhan flores says

I like small business with small capital too.
Any idea pls? thank you.

Check out our massive list of business ideas here:

Thanks for reading, Yhan.

Jonard Capunong says

I just to inquire what are the investment that high in interest rate?


marjorie anne mena says

Good day! I am Marjorie Anne Mena, licensed Property Specialist from Avida Land Corp., A subsidiary of Ayala Land Inc., known to be the best in Business District Development.

We have lots of great condominium projects within Metro Manila, exclusive, secure, and organized residential and office community respectively, with residential, retail, medical, business, and lifestyle options or what we called “mmixed-used community”.

If you are interested to invest in Real Estate business, I am willing to help you get your own, now!

You may reach me thru these:
Globe 0936-444-8514
Smart 0921-393-1923
Email: [email protected]

For reference to fund performance of different investment vehicles (VUL, Mutual Funds, and UITF), you may refer to this link:

One needs to understand the difference of Annualized and Absolute Return. It would be straightforward to make a comparison of different funds and distinguish which funds are superior or perform better if the inception dates and time duration of subject funds are the same.

Unfortunately in reality, investment funds have different inception dates. You can actually verify inception dates from Fund Fact Sheets. In the example given from this article, all three (3) funds have the same inception dates, and the author used the equity fund of one insurance company. But you will identify in the link I posted earlier that there are actually VUL Funds that perform better than their counterparts, and these VUL Funds are even superior than Mutual and UITF fund counterparts

Without knowledge of how investments perform, an investor could be committed to an inferior investment and never even know it. An Annualized Return figures the investment’s average annual return or how much the investment has grown on a yearly basis for a specified period of time, while the Absolute Return measures the overall return for the entire period you’ve held the investment since inception date.

For example, a 5-Year Annualized Return at Year 2020 will tell you how much return your investment has generated on a yearly basis from Year 2020 up to Year 2020 (5-year duration). On the other hand, an Annualized Return Since Inception will tell you the average annual return of your investment since the inception date, hence if the fund’s inception date is Year 2009, that would be average annual return for nine (9) years. Therefore, Annualized Returns are very useful when you want to compare two different funds or investment vehicles (of the same category) where time duration and/or inception dates are different.

Each Insurance and Investment Company will show you numbers in the way they look attractive to them to sell it to you. But in my experience, annualized returns (with consideration of Assets Under Management) are the most effective way to calculate the returns and compare fund performance of different Variable Life (VUL)-investment linked products.

If you want to understand more, you can contact me. This is my email: [email protected] and my number 0917-5662845

If you have any questions, you may email me at: [email protected] or you may text/call me at: 0917-5662845. Just to share a little background of myself, I currently have one (1) Investment-Oriented VUL Product, one (1) Protection-Oriented VUL Product, and two (2) Certificate of Participation for UITF.

I wrote in my previous post that there are VUL Funds offered by select few Insurance Companies that have shown superior fund performance over their Mutual Fund and UITF counterparts. At this point, I would like to explain another important benefit of VUL Product- The Total Disability Waiver.

1. Note that Variable Life Policies are investment-linked products, which means that so long as the Fund Value/Account Value/Full Withdrawal Value is not zero (0) and is sufficient to cover the monthly deductions, the plan will not terminate, and the insured person is covered with minimum guaranteed benefits. The minimum guaranteed benefits in most VUL Policies are presented in Item Nos. 2/3/4 below. Is it possible to have a Fund Value less than zero (0) or negative during the early years into the policy? The answer is YES and No. If a VUL Product has no Contract Debt Feature, it is possible that Fund Value will become negative in the early years of the policy, and Policy Owner will then be required to make a top-up payment. However, some VUL Products provide Contract Debt Feature, and this will prevent the Fund Value to be negative during the early years of the policy. Therefore, always look for the Contract/Policy Debt Feature in a VUL Product.

2. What is the 1st minimum guaranteed benefit per Item No.1? This would be the death benefit of the policy. This represents the “Face Amount” or “Benefit Amount” of the policy that will be paid out on a tax-free basis to whoever the Owner and/or Irrevocable Beneficiary of the policy is. This is equal to 500% of the basic monthly premium or the Policy Face Amount whichever is higher.

3. What is the 2nd minimum guaranteed benefit per Item No. 1? This would be the accidental death benefits. In most VUL Policies, this is a built-in feature in the product already. However, there is one Protection-Oriented VUL Product that I know that offers accidental death benefits as an optional rider only, which means the rider can be detached, and therefore savings on the overall Rider Premium. The Additional Death Benefit provides additional coverage of up to 100% of the Face Amount or Benefit Amount if death is due to accident.

4. What is the 3rd minimum guaranteed benefit per Item No. 1? This would be the Total Disability Waiver. This is a built-in feature in VUL Policies without charge. This waiver of premium rider pays all Basic (Life insurance and Investment Allocation) and Rider (Supplementary Benefits) Premiums due if the insured person becomes disabled and unable to perform work.

5. The waiver of premium benefits the less well-off policy owners the most, because they would least be able to cope with paying for all future premiums if they become completely disabled, and this include the premium that is allocated to investment (cash value). This can provide the insured person with potential passive source of income (thru partial withdrawals in the policy) if the insured person becomes injured and/or disabled, hence unable to work or perform the key income producing duties. Passive income comes from earnings that one receives with little or no work required. For this case, passive income would refer to investment earnings.

6. A Term Life Insurance Policy (referred to as TERM in BTID or “Buy TERM and Invest the Difference”) is a type of insurance plan that offers financial security to the family of the insured upon Insured’s death. When the insured person dies within the period covered, his beneficiaries get paid. If nothing happens to the insured person within the term, he/she does not get anything. While optional riders can be attached to a Term Life Insurance Policy for more comprehensive coverage (similar to VUL riders), it would not still be able to level the coverage of Total Disability Waiver Benefit for VUL Product as premiums do not earn cash value. Note that in a VUL Policy, the waiver of premium includes the amount that is allocated for investment, which cannot be applied in a Term Insurance Policy.

7. In relation to Item No. 6, this is one of the reasons why VUL Products continus to be more appealing and valuable to people. A total disability or being unable to work due to injury (i.e. when a classical musician permanently injures his arm) will inevitably decrease a person’s income. When insured person becomes disabled, it makes much more difficult for him/her to save money and will impact the retirement plans. With less savings, and less ability to add money to savings, a total disability will have a significant and negative impact on a person’s net worth, which is the amount that he/she is able to save for retirement, and the amount that he/she will be able to pass along to his/her beneficiaries.

In continuation on the previous post..

If you have any questions, you may email me at: [email protected] or you may text/call me at: 0917-5662845. Just to share a little background of myself, I currently have one (1) Investment-Oriented VUL Product, one (1) Protection-Oriented VUL Product, and two (2) Certificate of Participation for UITF.

At this point, I would like to address a popular misconception that a VUL Policy is more expensive, and yet offers inferior benefits on the life insurance and investments of the insured person compared to BTID (Buy Term and Invest the Difference).

8. In a VUL Policy, every time one pays a premium, a certain percentage of the premium goes toward premium expense charges and the balance goes towards the Cost of Insurance and Cash Value (investment portion). Premium expense charges include administrative fees, commissions, and the life insurance company’s overhead.

9. In my own opinion, I see nothing wrong with giving sales commissions to Financial Advisers or Insurance Agents, especially if they are really providing holistic and personalized service to their clients. This include regular updates on the fund performance and giving recommendations when to make fund switches or apply changes to the fund allocations in the policy. Note that same with Mutual Funds and UITF, one can really maximize the returns of his/her investments by making strategic fund switches and changes in fund allocations. Oftentimes, the facilities offering Mutual Fund and UITF Products provide only transactional service, which means that after an investor gives his/her investment, Mutual Fund and UITF Brokers/Agents may not bother to do periodic monitoring and reporting of fund performance to the investor.

10. In relation to No. 9, Financial Advisers or Insurance Agents, at their own expense, had to pass two (2) rigorous licensing exams and register with an official regulating body- in the Philippines it would be the Insurance Commission. Afterwards, they had to do several prospecting, and if successful, set meeting with their prospect Clients. Note that the Insurance Company does not pay its Financial Advisers and Insurance Agents with a daily or monthly allowance. Financial Advisers or Insurance Agents will have to spend their own money for business-related expenses (phone bills when calling the client, transportation expenses when meeting the client, internet usage when drafting and sending product proposals online, miscellaneous expenses such us purchase of coupon bonds and printing of product proposals, etc.), not to mention the challenges they face when chasing tough potential clients.

11. When one is a VUL Insurance Agent, he/she needs to understand how the VUL system works. I have mentioned in my previous post that VUL Policies are complex insurance products. There are a lot of factors that need to be look at when a prospect client would want to make comparison of various VUL Products offered from different insurance companies (i.e. market capitalization, assets under management, annualized and absolute returns, equities, long-term/shirt-term bond pools, etc.). The responsibility of VUL Insurance Agent is to make the client understand the features of the policy and give reliable recommendations, hence diligent study of finance and wealth management is required for a VUL Insurance Agent.

A VUL Insurance Agent is no different with Licensed Doctors, Lawyers, or Engineers who charge their clients with consultancy and/or service fee. If we are willing to pay Teachers, PUV Drivers, and several others for the services rendered, I don’t see the point of discriminating VUL Insurance Agents and Financial Planners. I am a Mechanical Engineer by profession, and I don’t see myself providing free consultancy services to my Clients on mechanical design.

12. The next question would be, are VUL Insurance Agents receiving big commission for every case closed? The answer is NO. The range of sales commission in most VUL Products (Single and Regular Pay) is between 2% to 30% of the annual premium payment for the 1st year, while for the remaining paying period for the premium charges, the range would be somewhere between 2% to 10%. The sales commission is only a part of the premium charges. Therefore, if the annual premium for a VUL Policy is Php 25,000.00, the maximum sales commission during 1st policy year is Php 7,500.00. If you look at the big picture, wherein your investment has the potential to grow 400% after 20 years (at 10% projected earning rate), the Php 7,500.00 sales commission is actually not a big deal anymore.

13. Note that different Insurance Companies offer different paying period for the premium-charges. Investment-Oriented VUL Policies have less premium charges and shorter paying period on premium charge, compared with those of Protection-Oriented VUL Policies. Note that VUL can be classified as either investment-oriented or protection-oriented. There are insurance companies that may require paying period on the premium-charges up to the maturity of the plan (lifetime), some could compress the paying period between 2-years to 4-years but at relatively higher premium charge rate, while others could present very low premium charge rate on the product proposal but actually have ‘additional monthly deductions’. Regardless of the paying period, it is worth mentioning that payment of premium charges is only temporary (short-term). What most BTID advocates may not be aware of is that there is actually one VUL Product offered by an Insurance Company that charges very minimal premium rate, and that would be 75% of annual premium for the 1st policy year only, which means that from 2nd policy year onwards, 100% of the premium will go toward the cost of insurance and investment (cash value). I can attest to this because this is the current plan that I own.

14. Another thing that BTID Advocates may not be aware also is that for Pure Investment Vehicles, such as Mutual Fund and UITF, there are also Premium or Administrative Charges, although they are called differently. Example, for a mutual fund there would be Shareholder Fees- these are Sales Charge on Purchases (similar with commission you pay to a broker) and Deferred Sales Charge, Redemption Fees, Exchange Fees, Account Fees, Purchase Fees. There are also Annual Fund Operating Expenses, and these include the Management Fees, Distribution Fees, and other Expenses. And as long as the investment stays in the fund, the payment of Shareholder Fees and Annual Fund Operating Expenses will continue, unlike with most VUL Products where payment period of premium charges is short-term only.

15. Perhaps one interesting feature of VUL is that it uses a Single-Pricing Method. On the other hand, Pure Investment Vehicles use Dual-Pricing Method. For funds operating a single pricing policy, the Net Asset Value Per Unit (NAVPU) is the same when you buy the fund or sell it. As a result, there will be no additional fund management charges during fund switching and/or changing of investment allocations.

For funds that implement dual pricing, the price at which you buy the units, is known as the Offer Price, and the price at which you sell the units, is known as the Bid Price. A Bid-Offer Spread is the amount by which the Offer price exceeds the Bid price for an asset in the market. The Bid-Offer Spread is supposed to account for the difference between buying and selling prices that the fund manager pays when buying and selling units in the fund. A Bid-Offer Spread includes profit margin for the fund manager/s, and this is on top of the Shareholder Fees and Fund Operating Expenses. As a result, there will also be additional charges during fund switching and/or changing of investment allocations.

For investors who put investments in multiple fund allocations and do strategic fund switches from periodically to maximize growth of investment, the single-pricing would be more attractive due to less overall deductions from the Fund Value. Also, most Mutual Funds are close-ended pool fund, compared with VUL and UITF that are open-ended pool funds. With close-ended pool fund, it is more difficult to make fund switches to take advantage of the movement of asset prices resulting from changing financial climate.

16. What most BTID Advocates may not understand also is that a VUL works similarly as a BTID, except that the former offers more coverage for death benefits and living benefits (thru optional riders as I explained above). Why is this so? The Cost of Insurance (per Item No. 17) in a VUL Policy is the premium that one would pay for the life insurance portion of a Term Life Insurance Policy, while the investment allocation is the lump sum or premium that one would pay to a Pure Investment Vehicle (Mutual Fund, UITF, direct stock trading) for BTID. I was fortunate to have had the opportunity and time to gather different VUL and Term Insurance Policies, and according to my evaluation, the Cost of Insurance (plus Accidental Death Benefit and Total Disability Waiver) for VUL and Term Life are just the same, while in some cases, the Costs of Insurance of certain VUL Products are lower than their term insurance counterparts. Most BTID Advocates confuse the Premium/Administrative Charges of a VUL Product with the Cost of Insurance.

17. In relation to the Cost of Insurance, while most Insurance Companies determine the Cost of Insurance based on the Insured’s gender, health, age, and death benefit amount, there is one Insurance Company that offers temporary Cost of Insurance for their VUL Policies. This is possible since the computation of the Cost of Insurance is based on the Net Amount at Risk (NAAR) to pay the death benefit. For example, if the death benefit amount is Php 1,000,000.00, and the Fund Value is already at Php 1,000,001, there will be no more Cost of Insurance as far as referred VUL Product is concerned. In the same way, when the Fund Value is at Php 999,999.00, the Cost of Insurance will be computed based on the NAAR which is valued at Php 1.00 only. Per my evaluation of the comparison matrix, all other Insurance Companies charge continuous Cost of Insurance.

18. Kudos to this engineer who made actual computations on investment returns for BTID and VUL. However, as I was familiar with the terminologies used in product proposals of different Insurance Companies, I am sure that the VUL product proposals used in the particular study came from a certain Insurance Company that charge high premium rates in comparison to its counterparts (the company requires 10-year payment of premium charges and 5-years of other monthly charges on-top). Therefore, think about how soon the investment returns of BTID will be overtaken by that of Protection-Oriented VUL Policies which charge low premium rates and shorter premium-charge paying period (

5 reasons why you should invest in market research

A quick-fire guide to making the case for greater investment in market research

There’s so much you can learn from customer satisfaction surveys, exit-intent surveys, claims testing, ad testing, concept testing and by simply getting closer to your customers.

Market research is always changing but maybe isn’t talked about as an industry as much as other parts of marketing, such as SEO, paid media and even CRO.

There’s a whole new world of opportunity out there to get insights, quicker, faster, and cheaper than ever. Research should always be done to the highest quality, with standards respected – and I think, combined with its often-lengthy timescale, this scares people off. But it shouldn’t. You wouldn’t produce a blog post without typo checking it and you wouldn’t write an ad for Google Ads without making sure the message is relevant to the audience you’re targeting. Market research is no different.

It’s easier than you may think

Firstly, conducting research is easier than you think. Just like with SEO, paid search, and content marketing, there’s a wealth of information out there and hundreds of high-quality training courses that can help you with anything from writing questionnaires to selecting the right respondents and interpreting the data. Marketers work with data a lot and especially B2B marketers who may produce a lot of insight reports into the industry. Smart Insights spends a lot of time surveying our members to produce useful reports that help us all to understand the industry.

Smart Insights produces objective, non-leading questions, survey our members and incentivize fairly and then produce a visual report that helps our members. This is market research in a nutshell: good questions, finding relevant participants, interpreting the data, and sharing the insight with relevant people.

It’s also cheaper, quicker and faster than you might think

The industry hasn’t slowed down. Companies of all sizes have worked tirelessly to make research faster and cheaper.

Zappi, formally known as Zappistore, has also produced solutions with large market research companies to provide ad testing, concept testing, and all sorts of other useful research but as an all-in-one solution for less. Knowledge of statistical methods isn’t needed as they have the whole solution all set up for you. Research agencies are also innovating to automate research and reduce cost. YouGov has recently launched YouGov Collaborate that automates research services and gives you an expert researcher to help you along the way. A truly innovative service and exactly what the market needs.

From Udemy courses to loads of webinars by various market research agencies and the industry associations Market Research Society (MRS) and Esomar – there are lots of options when looking for online and offline training courses.

Recruitment is easier than ever

The biggest challenge and cost can be getting relevant respondents, but Survey Monkey Audience, Toluna, and Google Surveys have produced solutions which get you responses from just $0.10. One of the hardest parts of market research is recruiting relevant participants, as it’s integral to the validity of the research. Research panels can help to get you the panels you need as they have large pools of participants who want to take part in surveys and research. There are also participant recruiters who can help recruit for focus groups and depth interviews.

Here’s a handy process for conducting a survey online, which is compatible with the tools mentioned above:

  1. Screening questionnaire: These are the questions that help you get the respondents you need. It’s important to make sure your requirement isn’t obvious so you get genuine respondents who are relevant.
  2. Write survey: Start by writing your survey in a Word Document. This makes it easier to tweak between stakeholders and then you can copy and paste directly into your survey platform of choice.
  3. Recruitment respondents: You can do this via email if you have your own database, social media, panels or using a service like Google Surveys or SurveyMonkey Audience.
  4. Analyze: Read through your data, create and review charts – create a story and summarize your insights.
  5. Influence: Make decisions based on your research.

People are increasingly building their own research panels, especially if they conduct research often. But if you need niche audiences or want to tap into pools of large databases of real people who actively take part in research there are panels and participant recruiters that can help you.

It helps confirm a plan and reduces risk

Risk is a critical factor for businesses – reducing risk helps stabilize the business, encourages investment, and provides stability for employees. By conducting research with customers and employees you can make better, more informed decisions and react to how customers and employees feel. You can assess the risk of a change and an investment.

Let’s also take employee surveys and employee satisfaction as an example. Recruitment costs are high – replacing staff isn’t cheap and employees surveys can help you to make sure you’re supporting staff and they have what they need to do their job. The changes you can make based on this insight mean staff will be less likely to leave your business, increasing morale and reducing cost. Ideas for reducing risk include:

  • Testing messaging and advertising before launch
  • Testing changes to products and services before they are made
  • Testing new concepts before proceeding
  • Testing pricing if you’re struggling to increase sales

As a result, your marketing will be more targeted and your customers will be happier as their needs are met.

It helps you understand your customers

It’s time to get close to your customers. This isn’t just the latest marketing industry buzzword or phrase, it’s an obsession with getting close to customers to make informed decisions. Not all customers can be pleased all of the time but the closer you get the more understanding you will have of their experiences. For example, are customers genuinely happy with the online ordering process and is customer support resolving complaints?

There is only one way to find out what customers are thinking – ask them! There are quirky ways of getting close to your customers, such as focus groups that can involve testing activities and exercises. Walking with a customer while they browse your shop, conducting user testing or holding a customer workshop are all ways of getting your customers involved. You could also have a mini customer ambassador panel comprised of customers who use your products or services regularly and can give feedback in regular one-on-one meetings.

Understanding your customers helps you plan for the future, give customers what they need, and find issues you never knew existed. The best thing – customers want to talk to you more than ever!

Market research guide

Learn how to conduct market research and gather meaningful insights from your customers that will inform your future digital marketing strategies.

By Robert Jones

Robert Jones is a specialist in Insight, UX Research, Digital and Content Marketing. He has a Psychology Masters of Research, has built research panels and worked in insight roles for Vision Critical, ASDA and WhatUsersDo. He also managed all of Smart Insights member resources and published several guides such as “How to conduct Persona Research” as well as contributing over 100 blog posts to the Smart Insights blog. You can connect with Robert on LinkedIn or follow him on Twitter

Turbocharge your results with this toolkit containing 13 resources

5 Reasons Why Money Is The #1 Cause of Divorce

Have you ever wondered what happens between “I do” and “we’re done”?

No one wants to get divorced. Not even those celebrity unions that seem doomed from the start. They don’t want it. No one wants the pain and wreckage of divorce.

A bride and groom gaze down that aisle and envision a future of dedicated teamwork fulfilling hopes and dreams.

Photo Courtesy: Thinkstock

A little thing called money.

No one hopes to fight. No one dreams about arguing. But what couples may not see as they gaze into their future is how a little something that they’ve known since their childhood could easily come between them. A little thing called money.

Research shows money is the #1 reason couples cite when filling for divorce in America. And money is often blamed by people divorcing who have plenty of savings and cash.

What are the reasons behind this often ignored, but destructive force and what can you do about it? Start by considering these 5 reasons why money is the #1 cause of divorce and the solutions:

Photo Courtesy: Pina Messina/Unsplash

1. You make money decisions every single day.

When you deal with something in your marriage over and over, it stands to reason that you would have an increased chance of experiencing conflict over it. Probably not a lot of people fight with their spouse about who gets to drive the yacht, but fighting over daily use of money stands to get a lot of air time.

Bring two people together and you’re guaranteed a difference of opinion at some point. She thinks their budget would look better if he took his lunch every day instead of eating out at work. He thinks she could grab a cup of coffee at home each morning versus spending $5 a day at the drive-thru. And so it begins.

Solution: Address issues as they arise. Don’t let them fester or build. If your spouse doesn’t seem to think it’s an issue, but it bothers you – it’s worth discussing.

Photo Courtesy: Unsplash/Christin Hume

2. You may not realize it, but money fights feel very personal.

You may think money is just a “rate of exchange” or dollars and cents – something very tangible and unemotional, but that is not necessarily the case.

When someone criticizes your use of money it feels very personal. The accusation or attack feels like it’s about you, the core of you, not just about lattes, credit card swipes, and receipts.

Photo Courtesy: Pexels

The way you approach money is central to your character.

The way you approach money is part of your DNA and central to your character so any blaming or attacking about your use of money feels like you are being criticized for who you are, not just how you spend or save.

Solution: Stop and consider your differences. Recall that your differences were part of the initial attraction to one another. Remember the old “toothpaste rule”. Saying a hurtful word is like squeezing a tube of toothpaste, it’s messy and once it’s out, you can’t put the mess back in the tube.

Photo Courtesy: Kyu Lee/Unsplash

3. Roles are undefined or ill-defined.

Another reason couples experience conflict when dealing with money is their lack of understandable roles or poorly assumed or “assigned” roles in handling finances.

You married a helpmate, a teammate, a friend, and a co-collaborator. Not your mom or your dad. The wisdom of the word tells us to “leave and cleave” so avoid establishing a parent/child relationship when you and your spouse handle your money.

No one should feel like they are receiving an allowance from their spouse. And no spouse should be left in the dark about the financial realities of your household. An imbalance steers the relationship into dangerous waters. The “parent” feels all the pressure and potentially wields too much power and the “child” feels belittled or unappreciated.

Photo Courtesy: Unsplash/Ryan Jacobson

Meet to make sure you’re both on the same page.

Solution: Evaluate your roles – spoken or unspoken. Consider your strengths and weaknesses and play to those when managing your money. Communicate openly. Communicate often. We suggest meetings: brief, weekly updates and monthly in-depth meetings to make sure you’re both on the same page. Take turns running point on your money. Trade off months or 60-day periods. You will understand your finances better and appreciate the time and effort required to manage them.

Photo Courtesy: Charles Deluvio/Unsplash

4. The cycle repeats itself.

We know that people think talking about money just leads to fighting about money. So couples avoid discussing it or they do bring up money in the same ineffective ways and the cycle continues.

If your spouse (or you) defaults to nagging, controlling, dishonesty, or using guilt to “deal” with your concerns about money, you aren’t really dealing with anything. You are inflicting pain and driving your relationship closer to destruction. No one operates optimally when he or she is injured.

Solution: Recognize your contribution to the cycle. Pray for wisdom and God’s power to end your behavior and break the cycle. Confess your sin to your spouse and ask their forgiveness. Their sin is … their sin. Pray for your spouse and your marriage. Avoid the temptation to point out their flaws.

Photo Courtesy: Thinkstock

5. God wired your spouse to approach money the way they do.

After decades of research and work with a statistical scientist we have found that an individual’s approach to money is hardwired from an early age. We call this approach to money your Money Personality. Like whether you are naturally quiet or talkative.

You have a Primary Money Personality and Secondary Money Personality that drive every decision you make about money.

Watch any group of kids with a stash of candy and you’ll see their Money Personalities play out in a variety of ways as they handle that “currency”. Their approach is hardwired from a young age.

Photo Courtesy: Unsplash/Annie Spratt

Approach to money is hardwired from a young age.

You may not realize this, but you assume everyone else thinks about money the exact same way you do. And if they don’t, they are wrong. That goes for your spouse too.

You wouldn’t ask your spouse to get taller or try harder to change the color of their eyes. Secretly hoping a person who loves to save money one day wakes up and has no anxiety over a risky investment is similar. This isn’t to say that we all can’t grow and mature in our ability to recognize our character traits and plan accordingly. BUT someone who loves to spend money is going to enjoy that feeling forever, and they aren’t wrong.

Solution: Invest in yourself and your marriage and identify your Primary and Secondary Money Personalities with a scientific, statistically sound assessment. Then talk about it.

Photo Courtesy: Pexels

Don’t let money get in your way.

Identifying your Money Personalities is so critical to a harmonious marriage that we created a free, online, confidential Money Personality Assessment to help every person and every couple in the world discover theirs for free. Knowing your Primary and Secondary Money Personalities arms you with powerful information. Sharing them with your spouse and respecting each other helps you both create a healthier, wealthier future together.

God ordained marriage to be a light to the world. To show others a tangible example of His love for us. God designed it and laid it out in Genesis and then Jesus underlined it during his earthly ministry just to make sure we didn’t miss the point. A united front is priceless.

Divorce-proofing your marriage is critical for you, your family, and a watching world. Don’t let money get in your way.

Photo Courtesy: Unsplash

About the Authors

Scott & Bethany Palmer, The Money Couple, are love & money experts, authors, speakers, each have 20 years of financial advising experience, and help couples solve money issues in their relationship. Grab a copy of“The 5 Money Personalities: Speaking the Same Love and Money Language,” and take theFREE online Money Personality Assessment.

8 Reasons Why it is Better to Invest Long-Term Instead of Short-Term

If you intend to invest, it helps a lot to research wide to decide which type of long term investment you should go for. During such a moment, you need to take the holistic approach that involves not only looking at the possible returns but also the process, and the impact of the type of investment to your well-being. That’s why long-term investment is better than stressful day trading.

8 Reasons Why Long Term Investment is Better

1. You control your time

The first advantage of long term investment is that you have all the time you need to conduct a portfolio review or even conduct research on a specific company.

You are not in a hurry and hence you seek information from various sources including invaluable online platforms such as Investors Hangout.

That way, you get all the knowledge and information you require before investing your money. This is an advantage when compared to a day trader who has to monitor the market continuously and so they react to the market.

2. The ability to reinvest profits

When you buy stocks for the long term, you get the advantage of compounding or reinvesting your profits which gives you the benefit of generating even more enormous profits with time.

Reinvesting your profits while still in your youth could double your money at retirement. That’s the beauty of reinvesting your profits over the long term.

3. It’s easy to do

As a long term investor, you won’t be trading daily. Hence you need not study different styles of trading or even know the various trading platforms.

All you need is to take your time, research, study, and pick a portfolio of well-managed businesses and hang on to them for the long.

Also unlike a day trader, you won’t have to wake up early to find out whether your portfolio exploded or took a dive overnight. Most probably, the companies you invest in are stable and so their volatility is relatively low.

4. You have the chance to correct your mistakes

Since you are investing in the long, you have the opportunity of investing in companies that have only shown the propensity for growth. You can correct your investing mistakes. With day trading, there’s no time to fix any of your mistakes.

5. Investing is less risky

Day trading carries a lot of risks. That’s why day traders employ strategies that use leverage to make the trade profitable.

Indeed, day traders are known sometimes to lose more than what they have in the bank. A day trader has to determine which way a currency/commodity/or stock is going to move during a day.

Remember, if you are not right, you’ll require a 100% gain on the next one to break back even. That’s is not the case with long term investing since you do not depend on leverage; hence you can only lose what you have invested.

6. There are no commissions

Long term investing does not involve paying commissions or brokerage fees daily. You only pay commissions when you transact.

Day traders, on the other hand, make multiple trades each day and so they pay huge brokerage fees annually. Hence commissions costs play a significant role in a day traders strategy while it’s an afterthought for the long term investor.

7. Tax advantages

Investing in the long-term has a lot of advantages as regards tax. It provides tax advantages on capital gains. You will be taxed at a rate that is below your income tax bracket.

However, when you are a day trader, the short term gains are usually taxed as regular income.

8. Time-saving

As a long term trader, you have a lot of your time since you don’t have to follow the market constantly. You can use the time saved to do other productive activities.

On the other hand, a day trader is wholly encumbered with trading; hence they can’t get any time to engage in any other activity.


Every type of trading involves risks and disadvantages regardless of whether its day trading or long term investment. However, the risks and disadvantages of day trading outweigh those of long term investment.

Day trading is stressful, has high transactional costs, you pay high taxes, and does not provide you the opportunity to fix your mistakes.

Author: Charles Watley

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