Investing is
the process of putting your money in a certain venture with the hope of growing
more money.
It is
financially rewarding to invest if you choose the right investments. On the
contrary, it is possible for you to lose your investments in case of negative
change in the market. This change may be brought by uncontrollable factors like
global financial crisis and recessions.
If you intend
to start building your investment portfolio, you must consider the following
points below before you dip yourself into investing.
Debts and Loan Obligations
If
you are paying huge sum of loan obligations and debts, investing at the moment
is untimely for you just yet.
Your
risk tolerance is low and in case of negative change in the value of your
investments, you will be possibly repressed more into debts and
accountabilities.
At
the moment, focus your efforts to pay your debts. Make a plan in the form of a
spreadsheet. Check again your SPIE
where you can remove some of the necessary expenses and convert those into
savings. Use these savings to pay your debts and liabilities until you paid
them full.
Build your Emergency Cash Fund
After
you paid your loan balances and debts, you must prepare for the rainy days to
come.
Emergencies
are unavoidable and therefore you should be prepared for these circumstances by
building your emergency cash fund of at least three to six months’ worth of
your monthly family expenses.
Use your SPIE
Calculator (see related topic on this blog) to compute your one month budget. Multiply this amount into six months
and the cash reserve you will need will be the resulting figure.
Open
a savings account and deposit each cash you can save until you have completed
your emergency cash fund.
Build Your Confidence By Reading Books
About Investing
Every
venture is risky if you are not informed about its pros and cons. Help yourself
by reading books and literatures about investing. I have included a list of
books in this blog site for your reference. Most of these books are available
in most of National Bookstore branches. It is always helpful to buy one for yourself as
reference.
Know
your niche. If you feel that you are more comfortable about real estate and
rental properties, focus more about this topic. Search the internet about blogs
and sites that discuss topics about real estate investing. One of the very
informative sites about real estate investing is www.thinkrichpinoy.com by Dr.
Larry Gamboa, the author of the best-selling book Think Rich Pinoy.
Build Your Investment Capital
Now
that you feel ready for investing, build your seed money or capital for your
investment plans.
You
need to determine how much you need as start-up capital for your venture.
If
you are planning to invest in rental properties through real estate
foreclosures, you may need bigger amount. Bank foreclosures usually require down
payment of about 20% on the total selling price of the property. Sometimes, banks approve down payments for as
low as 5 to10 percent of the total selling price through negotiated sale.
For
mutual funds, you can invest by as low as P5,000 pesos as your initial
investment. You can add more amount as you go along and build your confidence
in a later time.
For
Unit Investment Trust Funds, some banks offer as low as P10,000 pesos as initial
investment. For more information about this, you can visit any branch of the
bank of your choice near your area. UITFs are being handled by the bank’s Trust
Division.