Tips for Beginner Investors

I found this guidelines which I hope you will find useful in your own investing decisions. (Source: Ready To Be Rich site)


1. Have an investment objective
Investing because you want to be rich is actually a lame reason, sorry. Before you invest, you should have a specific objective in mind first.
For starters, ask yourself where do you want to spend the money in the future? Is it to buy a car? For your child’s college tuition? For travelling around the world when you retire?
Having realistically optimistic goals will help you immensely in choosing where you should invest.


2. Don’t time the market
Many people ask when is it a good time to invest, my answer is always NOW.
If you have the money, then there’s no reason for you to delay, just do it and don’t wait until the market becomes “favorable” – because no matter how the economy is, there is always an instrument out there that’s good to invest in. Trust me on this.


3. Make a workable regular investment plan
Aside from investing early, you should also invest regularly. This is really important specially if you don’t want to time the market.
Investing exact small amounts, in frequent intervals, on one instrument, allows you to “cost average” – this investing strategy really helps lessen your risk against market movements.


4. Diversify your investments
While your investment decisions highly depend on your investment objectives, it’s important to keep in mind that you must also have a balanced portfolio.
This means you should not bear too much risk, nor have too little. You can’t put everything on the stock market, the same way you cannot just invest in time deposits. Diversify!


5. Shop around
I don’t literally mean that you should go to the mall and shop. What this means is that you should take time to go around, see, ask and learn about all the investment options that’s available and compatible to you.
Aside from the rates of return and potential earnings, be sure to know the investment costs and fees. You must also know their terms such as holding periods, rules for redemption and others.
This could take some time – and that’s okay. In the meantime, while you’re still “shopping”, you can let your money earn a few bucks inside a short-term zero-risk time deposit.


6. Monitor your investments
Regularly monitor how your investments are doing, at least do it once every quarter. Personally, I do mine once a month. It’s up to you, just don’t do too often like everyday because that will be counterproductive already.
The reason why you need to know how your investments are performing is because you want to make sure that you’re still on course to achieving your objectives.
When you see that an investment is not earning as expected, then put a “flag” on it and see if it would be good to wait it out for awhile, or if it’s better to move your money to another investment.
There are no strict rules here actually. I suggest that you just do whatever feels objectively right. Do the computations and adjust your portfolio accordingly.


Once you get yourself started in investing, you’ll see that your financial knowledge will dramatically increase. Soon, you’ll be more savvy in your investment decisions and see better opportunities for your money.


The secret is again, to start investing now.

Investing: The Secret of the Rich People

I shared about mutual fund on my Feb's post, it might be a 'don't know-how' or 'don't know what' if you don't have any idea what is all about investment. To give you an idea, here are some of the lessons I learned that I want to share for you to understand what is mutual fund.

Let us first define what is investing. Simply the act of making money without working. Note: Investing is different from Trading.

One of the safest ways of investing is thru mutual fund.

•          It is where your money will be invested into different sources such as real state, forex, stocks and bonds together with other mutual funds of investors.

•          The money is handled by a professional financial manager.

•          The good thing is that you can start slow and with little money. Initial amount: P5000

•          Is it safe? Yes, it is good and safe investment

Why mutual fund? Why not bank?

Let me share you the story about Ann, Nicole and Mae. Ann, Nicole and Mae are sisters. Gary, their father gave them a test, that is, to increase the 100,000 in 36 years.

Ann thought of saving in the bank, anyway, it has an interest of 1%, it will still grow in 36 years. While Nicole thought of putting in a Time Deposit. (Refer below link for the interest rates for different bank in the Philippines.) The interest varies from bank to bank but on my example I put an average of 4%, Nicole’s earning of course is higher than Ann. Now, its Mae’s turn, Mae did not save in the bank or in Time Deposit. What she did first is to search via Internet some tips of saving and how to make her money grow. After that, she attended seminars on Investment. She read books about savings and investments. She asks for mentors and financial experts who can help her. Then, she learned that one of the safest ways to invest is through mutual fund. Please note this is for long investment.  I  place a note above that trading is different from investing, to give you a very simple difference of the two, trading is that you buy your share today, then sell it tomorrow when you want. But investing is saving in a long period of time. This is what we call the concept of compound interest.  So to demonstrate the earnings of the three sisters, here it is:

Table of Earning per Interest Rate

	ANN (1%)	NICOLE (4%)	MAE (12%)
29 years old	P100,000	P100,000	P100,000
AFTER 36 YEARS
65 years old	P200,000	P400,000	P6.4M

Now you have an idea what I am I talking about.

Want more tips? I learn this in IMG (International Marketing Group) when I attended Finance 101

We call this Pay Yourself First

By paying yourself first, you have to make sure to save before your expenses.

SALARY – SAVINGS = EXPENSES

This might have a 0 negative equivalent because your expenses might be higher than your salary.

SALARY – EXPENSES = SAVINGS

Some FACTS for you to ponder:

•          Some facts: Do you know why banks has this tall, nice and expensive buildings? Because the money that you save in the bank invested in mutual fund.

•          Do you that in the Phils, less than 1% of Filipinos invest in mutual fund and 99% of them put their savings in the bank. But in America, 70% invest in mutual fund while 30% save in banks.

            Why not by-pass the bank? Why don’t you invest your money where the bank invests their money?

Interest rates for different bank in the Philippines Link

http://learnfinancialeducation.com/time-deposit-rates-of-banks-in-the-philippines/

The Concept Of Compounding

http://www.investopedia.com/university/beginner/beginner2.asp#axzz1o9HBcjKL