Ready to invest this New Year?


Posted at Jan 30 2017 03:48 PM

It's a new lunar year and you have another chance to grow your money by investing your savings in a fund or a venture that will reap good returns. But before you make the leap, do you know what you're getting into

Typically, funds that promise good returns are invested in high-growth instruments or businesses that may also be risky, meaning, you stand the possibility of losing some or all of your hard-earned money. While all funds state whether their investment strategy is aggressive, moderate, or conservative, you may not really know what these mean unless you take time out to reflect on your investment goals, financial profile, and appetite for risk.

So what to do? Think before you invest. That’s why it’s important to do some reflection before you call a broker and part with your money.

Here are questions you should ask yourself to ensure that you are mentally and emotionally ready to put your hard-earned cash in a financial venture.

1. Have you covered your basic needs?

It is always good to invest, but before you do, there are some basic financial needs that you have to cover first. These may vary per individual depending on personal circumstances. For most people, insurance protection or health coverage come top of the list of their financial plan. Only when they have protected their income or their children’s education will they consider investments. You may want to also look into these areas before investing.

2. Are you ready to wait just in case your money gets locked up? 

There is always a possibility that you would need to wait before the fund you invested in grows in value. The question is, will you be able to wait this out? If so, how long can you wait for this? If you can’t afford to have your money locked up, then you may be better off seeking less risky investments which may not grow as quickly, but can guarantee preservation of your capital.

3. Do you have emergency cash? 

In the event that your money gets locked up in a fund, do you have the finances for your emergency needs? Note that some funds may also slap a fee if you terminate your placement ahead of schedule. If you do not have an emergency fund that you can easily tap, then you may wish to consider putting a portion of your investments into a liquid fund that you can use when emergencies arise.

4. Can you accept the possibility of losing some of your money? 

High gains come with high risks, which means that if you put your money in any of these high-yielding funds, then you should be ready for the possibility of losing some of your capital. Can you accept these losses? How much? If you are not financially, as well as mentally and emotionally prepared for this possibility, then perhaps you should be looking for a safer haven for your money.

5. Do you know what you are investing in? 

Before you part with your money, have you asked yourself if you understand what you are investing in? You don’t have to understand the technical jargon in the fund’s prospectus, but you should at least know the factors that affect your fund – perhaps the global economy, political stability, and the like. You should try to have a basic understanding of how the fund works, and understand why you chose it.

If you were able to answer all the questions above positively then you’re ready to become an investor. However, note that investing is not free, that is you will most likely need to pay for the services of a financial institution to manage and administer your fund. It is important that you know how much this will cost upfront. It is also a good idea to shop around for funds that charge lower transaction fees.

Finally, trust is at the heart of all investment transactions, and it is important for you to have a transparent relationship with your broker or the financial institution behind the fund you are investing in. Your broker should be able to address your concerns and provide you the information to make an investment decision that is most appropriate for you. Make sure that you have done a background check on the person or institution that you have chosen to handle your money.

Good luck on your first venture and remember that you should be comfortable with the amount of money you will be investing. There are no shortcuts in building your fortune and working for a better future.


Grow Your Money is an editorial partnership between and Citi Philippines to promote financial education and provide helpful information to Filipinos on how to better manage their personal finances.

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