For the past few years, the word “investment” has become a buzzword for many young adults. Sales people in malls use the phrase “for investment” while handing out fliers. And even networking companies use “investment” as a tool to entice their prospects to buy their products.
The work “investment” has become a sort of magic bullet that many people use to catch the attention of young consumers who have money to spend. But what is an investment anyway?
According to Investopedia, an investment is:
An asset or item acquired with the goal of generating income or appreciation… an investment is the purchase of goods that are not consumed today but are used in the future to create wealth.
In short, it’s something you purchase today with the idea that it will generate you income in the future, or you can sell for a higher price in the future. Investments are valuable items and a must-have for young adults that want to be financially independent in the future.
But not all investments are good. Some investments are bad because it doesn’t beat inflation; an example of this is a savings account in a bank. If you have enough money in your savings account, you can earn interest (like a payment the bank gives you for using your money), but the interest they give you is much lower than the rate of inflation. In this case your money actually loses its value over time, and you’ll end up with money that has little value in the future.
Ending up in that situation is a nightmare. Below, we’ll give you a look at some good investment products you can put your money in.
SSS PESO Fund
Risk: low
SSS PESO Fund is an optional savings program offered by the Philippine Social Security System to its members. A Member can save an amount on top of his/her SSS Monthly Contributions. This is an optional savings program, tax free and is guaranteed by the Government (meaning, you are assured that you won’t lose your savings). SSS PESO Fund offers higher interest rate (1.85% to 3.75% per year ) compared to the savings and time deposit rates of banks. Minimum savings account is Php1,000 per contribution and is capped to Php100,000 per year only.
After five years of saving under the PESO Fund, a member can claim only up to 35% of his/her savings from the medical and general purpose accounts. The rest of the fund (65%) can be withdrawn only when a member reached the age of 60 or when you file for retirement or total disability with the SSS.
PAG-IBIG Modified 2
Risk: low
The MP2 Savings Program is a voluntary savings program for Pag-IBIG members who wish to save more and earn higher dividends than the regular Pag-IBIG Savings Program. Minimum monthly contribution is Php500 pesos and unlike the SSS PESO Fund, there is no maximum contribution limit. Interest rate is 4.58% to 8.11% per year (average of 7.65%). Member can withdraw his/her savings and interest earned after five years.
Variable Univesal Life (VUL)
Risk: low-moderate
Variable Unit Life insurance or VUL is a financial product that has a 2-in-1 function: it’s a future security measure and acts as an investment vehicle.
When you get a VUL life insurance, your insurance premium goes to an insurance policy that provides your family with monetary compensation in case of death; and to an investment fund that grows over time and which you can use when you’re alive.
The good thing about VUL is that the terms are flexible, and you can choose what terms are beneficial for you and your future goals. The downside, however, is you pay more for VULs compared to traditional life insurances. You’ll also have to pay for “riders” or other benefits that are not covered by your VUL product.
Unit Investment Trust Fund (UITF)
Risk: Moderate
Like VULs, UITF is another financial product that can help you become financially stable in the future. UITFs are similar to VULs, but without the insurance component. This means for the same price as a VUL, you put more money on the investment instrument rather than split it between a life insurance and an investment product.
You also don’t have a monthly obligation if you get a UITF. You can put money in the investment product at any time. On the downside, your family doesn’t get any compensation in case you pass away, and the money you put in a UITF can’t easily be withdrawn by your family when you are gone.
Stocks
Risk: High
Young adults searching for places to put their money in have probably heard of “stocks”– and for good reason too.
Historically, stocks have given the biggest investment return of all the investment instruments available. Stock returns can be as high as 12% per year, much higher than the 8% that mutual funds can give and the .25% interest of savings.
But stocks have a high risk tag on it; not everyone can earn from the stock market. Veteran stock traders look at financial sheets, analyze market trends, and read financial news regularly to maximize profit and really earn.
The market is very volatile, and if you’re not knowledgeable enough to invest in stocks, you’re bound to lose money. Anyone who wants to invest or earn big in the stock market must learn how the market works, and how to manage risks over returns. If you don’t want to play a high-risk game, stock trading might not be for you.
So, which of these are you ready to invest in? Let us know!
