So you’ve moved out of your parents’ house and spent the last few years working at a job you love. Now you’re ready to take the next big step, whether it’s starting a family or becoming the country’s next millionaire.
No matter what you plan to do next, you’re going to need to set aside some money for the future. For most people, this often means increasing their earnings through a promotion or second business, setting up an emergency fund, then putting the rest in a hefty bank account. If you’re looking to increase your wealth, however, leaving your money idle in the bank isn’t enough. For one, the value of your savings could diminish over time because of inflation.
So how can you prevent market forces from lowering your value? Try making your hard-earned savings work for you by investing it. From apartment rentals to the stock market, you have several options for putting your savings to good use while earning some added income or benefits on the side.
Here we look at some of the most promising investment opportunities out there for thirty-something professionals.
Making money through the stock market is not for everybody, but it can be an effective way to gradually increase your earnings. Buying stocks is equivalent to buying shares in a given company, making you a partial owner entitled to a fraction of that company’s growth profits over time. If you’ve always been curious about stock trading but intimidated by the culture surrounding it, you can start small by signing up for an account with an online stockbroker.
Before you start trading, however, make sure you do plenty of research and get a feel for the lower-risk investments in the market. You can even try your hand at trading through a stock brokerage affiliated with your current bank, with institutions like BPI, Metrobank, and RCBC already having an established presence in the niche.
PeraTree Finanicial Tips: It wiser to invest in a basket of stocks such as a Stock Mutual Fund instead of individually picking stocks yourself, especially if you don’t have a lot of time to spend researching those companies.
Another service you can avail of from your local bank is bond investing. Also known as fixed-income securities, bonds are debt instruments that basically amount to you extending your money to a given corporation or government agency.
Treasury bonds, for example, are a contract between you and the Bureau of Treasury. By issuing you a treasury bond, the Treasury is effectively taking out a loan from you and like a loan, the bond will have both a fixed interest rate and a maturation date. At the end of the bond’s term, the Treasury must pay you back its principal plus interest.
Bonds have been widely hailed as a safe and stable addition to any stock portfolio. Banks like PNB and BDO currently allow you to sign up for corporate bonds, treasury bills, treasury bonds, or dollar-denominated government bonds. The difference between bonds and stocks is that while bonds stand for a debt a company owes you, stocks stand for your partial ownership of a given company.
Not everybody has the time or financial savvy to make money from stocks or bonds. If you want to attempt either while also minimizing risk on your end, you can try putting your money in mutual funds instead. A mutual fund consists of money pooled from many people just like you, then handled by a mutual fund manager (usually an investment company) for a fee. Mutual funds can be used for stocks, bonds, or both.
The beauty of mutual funds is that they are placed under the care of professional money managers, who possess the expertise to put the money to good use through investment. By doing their job well, these managers can produce higher financial gains for you and everyone else who put money into the fund.
When talking about using real estate as an investment, one important thing to remember is that this does NOT include the house you and/or your family currently call home. Rather, this is a completely separate property – be it a second house, vacant lot, office space or condominium unit – you keep in your portfolio as a source of additional income.
The most popular way this is done is through leasing out your property to a third party, then collecting rent. Selling property is another means of making money from real estate, though you would need either large overhead or multiple properties to your name. In either case, you would first need to acquire your own property that is (or will one day be) in high demand. A common example of this is an apartment in Makati, which tends to attract both office workers and affluent families.
This is not an investment in the strictest sense; rather, it’s more of a safety precaution designed to cushion your money in the face of potentially life-threatening events like illness or natural calamity. If you’ve ever seen a relative or close friend driven to poverty because of skyrocketing medical bills, you can appreciate just how valuable good insurance is.
Most young professionals should start out by getting the basics like life or health insurance. As your assets grow over time, you can purchase other types of financial protection like fire insurance, personal accident coverage, and health insurance extensions for your loved ones. If you’ve invested in a car, have it covered by insurance but don’t just settle for basic coverage. Compare offers from different car insurance companies to get the coverage you need.
While some of these money-growing strategies are more complex than others, all of these guarantee that your money won’t be languishing useless in your bank account. You’ve put a great deal of energy into your financial security, so it makes sense that your savings must also do the same.
AUTHOR BIO: Kyle Kam is an online marketing specialist for Moneymax.ph, the Philippines’ leading financial comparison website. Whenever he’s not working, he’s busy at home watching MMA videos the whole day. You may follow him on Twitter @undisputedkyle.