On investing

I attended a talk on investing a week ago, the very first talk about investment that I went to, and it was well worth it.

I never had an eye for finances, accounting, and investments. I know the basics but I never had a talent for effective planning in this aspect. I had lessons on some of the computational aspects of it in before, but I never truly understood what it was for and how I could use it to my advantage. This talk was a big eye-opener for me.

The talk focused on how to invest with the goal of beating inflation. They say that the reason for investing should not be just about amassing tons of wealth. The first reason for investing is to be able to keep up with inflation. Since inflation means that the actual value of money actually decreases over time, we should make sure that our money is growing alongside inflation, so that we at least have the same purchasing power with what we have. The average inflation rate of the Philippines over the past years is around 7%, although last year’s inflation rate was just 4.8%. Of course, one should consider long term values when planning to invest long term.

Second reason for investing is to be able to achieve a financial goal. If we would like to retire at a certain age and sustain ourselves with interest revenue of our money by that time, there is a certain way we can save up and invest our current money to achieve an adequate retirement fund.

Further, they discussed the portfolio concept, and the corresponding risks of certain investment instruments. Basically, the higher the potential return, the higher the risk. Sometimes, the people who invest just because of the desire to earn lots and lots of money go for investments that bring the highest possible return but with very minimal “stated” risk. These are the people who are most likely to get duped by scams and questionable investments, again because high returns will always mean higher risks. If someone offers you a high return investment but with a very low risk, think twice.

In case you are interested to find out, you can try to find a financial advisor to give you more information about your options. You can also check online. Here are two sites I’m most familiar with:

http://www.philamfunds.com.ph/

https://www.bpiassetmanagement.com/

http://www.sunlife.com.ph

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