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How can I invest if my savings is only 5,000?

09 December 2016

By Francisco J. Colayco

I always encourage those who have Php5,000 to put it in a well-managed Mutual Fund.  My assumption is that the Php5,000 is only a start.  In fact, I ask you to use the formula “Income minus Savings equals Expenses” and the Savings can be added to the Php5,000 in the Mutual Fund each time it reaches P1,000.  This is easy to do if you are determined and if you have the discipline to remember to do it.

A well-managed Mutual Fund is somehow diversified.  A Mutual Fund invests in different kinds of companies. An Equity Mutual Fund invests in many companies that are listed in the stock market. A Bond Mutual Fund invests in the borrowings of different companies or of the Philippine government.  A Balanced Mutual Fund invests both in companies in the stock market and in the borrowings of companies and the government.

Most Mutual Funds are investing in the same companies.This is because the companies in the Philippines that will allow investments from people who are not the original owners of the company are limited.  We are still in the process of developing our capital markets particularly the stock market.  It also takes time for companies that need big borrowings to be considered as credit worthy enough to bring in people and other companies to invest in them.

The differences among the Mutual Funds are really in their managers’ ability to choose how much is to be invested in each company and the timing of their investments. You can see this in the performance of each Mutual Fund that is available in the website www.pifa.com.ph

If your only savings is the Php5,000 and you are not earning any other income, then, you may need to re-think putting the entire Php5,000 in a Mutual Fund.  Although it is unlikely that you will lose your entire Php5,000 in a well-managed Mutual Fund, you might  find yourself in bad need of cash and be forced to sell your shares when the fund value is not good and thus lose some of your money.  Your first priority is to set aside funds for emergency.  You are not really in a position yet to invest long term if you have not yet saved for personal emergencies.

If you have big savings, you may want to invest in other options in addition to Mutual Funds.  You choice will again depend on when you will need your money.  You need your Statement of Assets and Liabilities and Net Worth and your personal financial plan.

And for those with regular income, another option is the Variable Universal Life Insurance which covers you for health, investment and protection.

When in Manila, consult on how to invest your savings of Php50k, come to Unit 807 Citystate Center Condominium; 709 Shaw Boulevard Pasigany day Monday to Friday; 9am-6pm.Call for an appointment with our trained advisors: 02-6373741, 09178537333, 09199990906.

Give the gift of knowledge.  My books are available with free delivery and special offers for Christmas.

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Francisco J. Colayco is an entrepreneur, a venture developer and financial advisor.  He is the Author of Seven Bestsellers in the Pera Palaguin Series, the latest of which is now available in bookstores:  “Wealth Reached. Money Worked. Pera Mo, Pinalago Mo!” Find his works and catch him on TV and radio.  Check out: www.colaycofinancialeducation.com, www.franciscocolayco.com, www.kskcoop.com, FaceBook and Instagram.

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