The Different Investment Types for the Filipino Investor

Since I work in the forex industry, many of my friends often ask me whether forex trading is fit for their specific investment needs. My answer, as always, is - it depends.

It depends on your risk appetite, on how much money you’re willing to invest, and most importantly, what you want to achieve with your investment.

Not all investments are made equal. Various investment options have different characteristics that make them suitable for different investment types.

Risk-averse investors, for example, should definitely avoid high-risk investments like forex or commodities. At the same time, investors who want relatively fast growth on their investments should not expect it from government bonds.

If you’re like my friends and can’t decide what investment is right for you, I’ll list down some investment types and what kind of investor they’re best for.

For Risk-Averse Investors

Variable Universal Life Insurance (VUL)

Insurance is an investment that everybody reading this blog should consider getting. It’s one of the most important ways to safeguard your family from unexpected occurrences. Traditional insurance has always been fairly popular, but in recent years, many insurance companies have begun attaching an investment component to their products.

Known as variable universal life insurance, these kinds of products can be customized according to the client’s needs or preferences. The investment portion of the VUL can be changed to include bonds, equities or a different mix of investment vehicles.

VULs are typically long term investments that are ideal for those who are saving for future needs such as children’s education or retirement.

Fixed-Income Securities

Fixed-income securities are investments that are typically offered by corporations and governments that provide fixed returns over a period of time. An example of a fixed income security is government bonds, which are a type of debt security, offered by a government that provides periodic interest payments as well as the face value on the maturity date.

For risk-neutral investors

Unit Investment Trust Funds (UITF)

A UITF is defined as an open-ended pooled trust fund denominated in pesos or other acceptable currencies and is operated and administered by a trust entity – usually banks or other financial companies. UITF products can vary according to their investment objectives as well as the types of assets that the fund is invested in.

UITF products are usually offered as a medium-risk, medium to long term investment that is ideal for investors who are looking for a higher rate of return that what banks usually provide through their savings accounts.

For risk-seeking investors

Stocks

One of the most popular types of investments is stocks, which are essentially the equity stake of a corporation and its owners. When you own a stock, you essentially own a part of the corporation that issued it. An investment in a stock of a company means betting for the company’s value.

Stocks are considered riskier than other investment types because, unlike governments that are only disrupted under extreme circumstances, companies are exposed to greater risks, covering everything from low sales to bankruptcy.

Foreign Exchange

The forex market is widely acknowledged as the largest market in the world, and boasts high volatility. It’s not unheard of for experienced traders to make massive gains on the forex market in a single day.

At the same time, it’s also easy to wipe out your whole investment in a matter of hours. This makes forex trading the ultimate high-risk, high-reward investment that is ideal for investors who want the fastest potential investment growth.

Critical Investing Decisions

If you’re still undecided which investment is right for your needs, my best advice is to reach out to the companies that offer investment products. Many of them have financial advisors who can help you make a decision.

You can also try attending financial seminars, where you can get a better picture of the different investment vehicles and how they fit your situation.

About the Author:
Bwayan Jordison, is a contributor and Forex Trader at Metisetrade Inc., he writes articles to help and educate everyone about the benefits of investing to Foreign Exchange in the Philippines.

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