FAQs: A Brief Introduction to Investment

If you’re having a difficult time understanding how investments work, then don’t worry. With all the heavy jargon and numbers involved in every financial discussion, you are definitely not the only one getting confused. 

Investing may seem tricky, but it becomes much easier to understand once you get the hang of it. If you know what you’re doing and can comprehend how everything works, then you can definitely start investing much more confidently. 

A good way to start understanding how to invest and where to get started is to get an overview of the concept.

Here are the answers to the top 3 most common questions asked to give you an idea into the world of investment.

1. What Counts as an Investment?

Investing is not a new practice. In fact, the concept of investment can be dated back to the 16th century in ancient civilizations and has since evolved in this modern era.

The basic idea of investing is giving a portion of what you have to an institution and getting it back with interest after some time. 

But some forms of investments aren’t necessarily for financial gain. Investments like insurance get medical and security coverages in return. 

So essentially, any form of transaction that involves you giving something valuable to gain something of greater value in time can count as an investment.  

2. When Is The Best Time to Invest?

As soon as possible. 

Remember that investment not only takes money. It takes time as well. Delaying your plans to invest is precious time going down the drain. But that doesn’t necessarily mean that you should dive in right away. It still takes some research and planning to fully commit to investments of your choice.

If you’re eyeing on investments that require careful timing strategies, such as bonds and stocks, then there are a few considerations you have to make. 

However, keep in mind that there is simply no such thing as the right moment to start. With the clock ticking away, set yourself a timeframe as to when you’d like to start. That way, you wouldn’t be delaying the opportunity for you to grow your money and are still flexible about changing your starting day.

3. What are the Options?

From the stock market to the real estate industry, the Philippines offers quite a selection of investments to start with. Several industries provide different offers and perks which you can weigh out yourself.

Here is a quick rundown of the general types of investments that attract several investors:

1. Stocks and Bonds

If you hear the word ‘investment,’ these two types of investments are probably the first thing that pops into your head. Because they are so closely associated with one another, people assume that they go hand-in-hand or are the same thing. Well, they aren’t.

Stocks are units of ownership in a corporation. To put it simply, when you buy stock from a certain corporation, you technically “own” part of the company. 

Depending on the type of stock or “equity” you purchase, some other perks come with it such as being part of the decision-making of the company. The higher the amount you invest, the more power you have over it. But don’t get too excited. If you’re starting out small, then you wouldn’t probably want to go ahead and invest a large amount. 

Bonds are a lot more complex than stocks, mostly because they’re a lot tougher to comprehend. A bond is a debt security. Basically, if you were to buy a bond, you would be called a creditor. When corporations, agencies, organizations, and even the government needs funding, they turn to bonds. So as a creditor, it would be as if they’d be borrowing money from you and return it with interest. 

There are two general classifications of bonds: by maturity and by the issuer.

Maturity-based bonds are classified according to how long it will mature. 

    • Treasury Bills or T-Bills mature less than a year, so they are considered short term.
    • Treasury Bonds or T-Bonds offers 2-year bonds all the way up to 30-year bonds. 

Issuer-based bonds are classified by who issues the bonds. There are four types: 

    • Treasury Securities – issued by the Bureau of Treasury
    • Government Bonds – issued by several government agencies like PAG-IBIG
    • Municipal Bonds – issued by the local government units (LGUs)
    • Corporate Bonds – issued by public or private companies
2. Bank Products

These are the most common type of investments there is. You basically deposit a sum of money and it will be held securely and limits withdrawal. Savings Accounts, Certificates of Deposit (CDs), Money Market, and Federal Insurance all count as bank products. 

3. Commodity Futures

A commodity future is an agreement designed to buy or sell certain “commodities” at a fixed price on a specific future date. The three main areas that it covers are food, energy, and metal. How it works is that investors can buy these commodities at a lower price on a certain date and sell them at a higher price in the market when they go up.

4. Security Futures

A security future is also an agreement designed to buy or sell, except instead of commodities it would be on shares of stocks. 

5. Investment Funds

This is the capital sourced from different investors. Mutual funds count as a type of investment fund. 

6. Real Estate

There are several possible ventures in real estate investment. These options include leasing land, condotel investing, renting property, land partnership, and many more. 

7. Life investments

There are investments that ensure a much more comfortable life for you and your loved ones. These are the common investments that most people already have the funds for.

Parents usually have an Education Fund investment tucked away for their children’s future, one of the most expensive being a college fund.

Insurance is a definite investment that everyone has to acquire. This investment comes in handy when emergencies come around. It’s that assurance that the financial side of life is covered in case something goes wrong.  


And when people want to live the rest of their life comfortably when they eventually stop working, then they would have to invest in a Retirement Fund at a young working age.

With a general idea of the types of investments, you’d also have to plan out your course of action when you want to embark on investing. Here are a few tips and insights:

A Guide: How To Start Investing

The Starting Point

If you’re new to investment, then jumping into high-risk investments head first may not be the best strategy. Assess your capabilities to keep up an investment before signing any contract. If you think you can’t make the payments required, then look for another vehicle. 

But if generating income is not a big problem, then you would need to run a trial before risking it all. Test it out by going with lower investment vehicles and slowly build up as you go along. That way, you would leave yourself some room to grow.

Also to keep in mind is that it wouldn’t be the best decision to invest ALL of your funds right away. Allocate an emergency fund for just-in-case moments. You wouldn’t want to have just started an investment and sell it right away when something unexpected comes up.

How Much You’ll Need

You don’t need six figures to start investing. In fact, you don’t even need five or four. With as little as Php 100 to Php 5,000, you can already start investing for your future. 

The actual initial investment (starting amount of your investment) and minimum additional placement will ultimately depend on where you choose to invest and what their requirements are. 

How Long it will Take

Keep in mind that investment isn’t an overnight success. While you may not get instant gratification when you start investing now, the difference that time makes can help you in the future. When it comes to how long you’re going to invest, there are two types: short term investments and long term investments.

Short term investments are usually sold after three years or less. Examples that fall under this category are stocks, mutual funds, and a few bonds and bond mutual funds. Meanwhile, long term investments can last for up to a 10-year period. These also include stocks alongside ETFs, real estate, and retirement funds.

The advantage of keeping your investments for the long ride is that you would probably get much more profit the longer that you keep it up. But it ultimately all boils down to the goals that you have in mind. While it is alright to have short term investments, make sure that you have some money left to put into some long term investments as well.

Considering everything that you would need in order to start your investment plan, take a look at the possible investment vehicles in the Philippines that you can pursue this 2020.

If you’re having a difficult time understanding how investments work, then don’t worry. With all the heavy jargon and numbers involved in every financial discussion, you are definitely not the only one getting confused. 

Investing may seem tricky, but it becomes much easier to understand once you get the hang of it. If you know what you’re doing and can comprehend how everything works, then you can definitely start investing much more confidently. 

A good way to start understanding how to invest and where to get started is to get an overview of the concept.

Here are the answers to the top 3 most common questions asked to give you an idea into the world of investment.

1. What Counts as an Investment?

Investing is not a new practice. In fact, the concept of investment can be dated back to the 16th century in ancient civilizations and has since evolved in this modern era.

The basic idea of investing is giving a portion of what you have to an institution and getting it back with interest after some time. 

But some forms of investments aren’t necessarily for financial gain. Investments like insurance get medical and security coverages in return. 

So essentially, any form of transaction that involves you giving something valuable to gain something of greater value in time can count as an investment.  

2. When Is The Best Time to Invest?

As soon as possible. 

Remember that investment not only takes money. It takes time as well. Delaying your plans to invest is precious time going down the drain. But that doesn’t necessarily mean that you should dive in right away. It still takes some research and planning to fully commit to investments of your choice.

If you’re eyeing on investments that require careful timing strategies, such as bonds and stocks, then there are a few considerations you have to make. 

However, keep in mind that there is simply no such thing as the right moment to start. With the clock ticking away, set yourself a timeframe as to when you’d like to start. That way, you wouldn’t be delaying the opportunity for you to grow your money and are still flexible about changing your starting day.

3. What are the Options?

From the stock market to the real estate industry, the Philippines offers quite a selection of investments to start with. Several industries provide different offers and perks which you can weigh out yourself.

Here is a quick rundown of the general types of investments that attract several investors:

1. Stocks and Bonds

If you hear the word ‘investment,’ these two types of investments are probably the first thing that pops into your head. Because they are so closely associated with one another, people assume that they go hand-in-hand or are the same thing. Well, they aren’t.

Stocks are units of ownership in a corporation. To put it simply, when you buy stock from a certain corporation, you technically “own” part of the company. 

Depending on the type of stock or “equity” you purchase, some other perks come with it such as being part of the decision-making of the company. The higher the amount you invest, the more power you have over it. But don’t get too excited. If you’re starting out small, then you wouldn’t probably want to go ahead and invest a large amount. 

Bonds are a lot more complex than stocks, mostly because they’re a lot tougher to comprehend. A bond is a debt security. Basically, if you were to buy a bond, you would be called a creditor. When corporations, agencies, organizations, and even the government needs funding, they turn to bonds. So as a creditor, it would be as if they’d be borrowing money from you and return it with interest. 

There are two general classifications of bonds: by maturity and by the issuer.

Maturity-based bonds are classified according to how long it will mature. 

    • Treasury Bills or T-Bills mature less than a year, so they are considered short term.
    • Treasury Bonds or T-Bonds offers 2-year bonds all the way up to 30-year bonds. 

Issuer-based bonds are classified by who issues the bonds. There are four types: 

    • Treasury Securities – issued by the Bureau of Treasury
    • Government Bonds – issued by several government agencies like PAG-IBIG
    • Municipal Bonds – issued by the local government units (LGUs)
    • Corporate Bonds – issued by public or private companies
2. Bank Products

These are the most common type of investments there is. You basically deposit a sum of money and it will be held securely and limits withdrawal. Savings Accounts, Certificates of Deposit (CDs), Money Market, and Federal Insurance all count as bank products. 

3. Commodity Futures

A commodity future is an agreement designed to buy or sell certain “commodities” at a fixed price on a specific future date. The three main areas that it covers are food, energy, and metal. How it works is that investors can buy these commodities at a lower price on a certain date and sell them at a higher price in the market when they go up.

4. Security Futures

A security future is also an agreement designed to buy or sell, except instead of commodities it would be on shares of stocks. 

5. Investment Funds

This is the capital sourced from different investors. Mutual funds count as a type of investment fund. 

6. Real Estate

There are several possible ventures in real estate investment. These options include leasing land, condotel investing, renting property, land partnership, and many more. 

7. Life investments

There are investments that ensure a much more comfortable life for you and your loved ones. These are the common investments that most people already have the funds for.

Parents usually have an Education Fund investment tucked away for their children’s future, one of the most expensive being a college fund.

Insurance is a definite investment that everyone has to acquire. This investment comes in handy when emergencies come around. It’s that assurance that the financial side of life is covered in case something goes wrong.  


And when people want to live the rest of their life comfortably when they eventually stop working, then they would have to invest in a Retirement Fund at a young working age.

With a general idea of the types of investments, you’d also have to plan out your course of action when you want to embark on investing. Here are a few tips and insights:

A Guide: How To Start Investing

The Starting Point

If you’re new to investment, then jumping into high-risk investments head first may not be the best strategy. Assess your capabilities to keep up an investment before signing any contract. If you think you can’t make the payments required, then look for another vehicle. 

But if generating income is not a big problem, then you would need to run a trial before risking it all. Test it out by going with lower investment vehicles and slowly build up as you go along. That way, you would leave yourself some room to grow.

Also to keep in mind is that it wouldn’t be the best decision to invest ALL of your funds right away. Allocate an emergency fund for just-in-case moments. You wouldn’t want to have just started an investment and sell it right away when something unexpected comes up.

How Much You’ll Need

You don’t need six figures to start investing. In fact, you don’t even need five or four. With as little as Php 100 to Php 5,000, you can already start investing for your future. 

The actual initial investment (starting amount of your investment) and minimum additional placement will ultimately depend on where you choose to invest and what their requirements are. 

How Long it will Take

Keep in mind that investment isn’t an overnight success. While you may not get instant gratification when you start investing now, the difference that time makes can help you in the future. When it comes to how long you’re going to invest, there are two types: short term investments and long term investments.

Short term investments are usually sold after three years or less. Examples that fall under this category are stocks, mutual funds, and a few bonds and bond mutual funds. Meanwhile, long term investments can last for up to a 10-year period. These also include stocks alongside ETFs, real estate, and retirement funds.

The advantage of keeping your investments for the long ride is that you would probably get much more profit the longer that you keep it up. But it ultimately all boils down to the goals that you have in mind. While it is alright to have short term investments, make sure that you have some money left to put into some long term investments as well.

Considering everything that you would need in order to start your investment plan, take a look at the possible investment vehicles in the Philippines that you can pursue this 2020.

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