To say that 2016 was rough for market investors (stocks and managed funds alike) is an understatement but despite the volatility throughout the year, PSEi is just down 1.6% from 2015 closing. Hence the constant need for diversification and in 2017, we should look forward to doing more of diversification. As follows are some of the investment options I want you to consider for next year:
Something new. This sector is relatively young in our country and I believe SEC (and other governing bodies) are still trying to firm up regulations about these entities. Basically this is pooled funds from various retail investors, funds that will be invested, this time not necessarily in managed funds (unlike UITF / Mutual Funds) but in actual businesses. While we have many cooperatives in the country which act basically the same way, as follows are 3 of the relatively new entrants which capitalized on internet presence to reach prospective investors (and new breed of young investors).
Note that for 2016, we observed and followed these crowdfunding groups but we do not have actual exposures yet as we want to see their stability and let them iron out their operational kinks first. Which you as a prospective investor should do as well. Due diligence. As they say, “aral muna bago invest.” We also wanted to see the initial public reception on these new investment channels. For 2017, barring negative investor feedback, etc., we are seriously considering putting actual money to one or more of these groups. Another thing to check will be the ease of withdrawing your money if need be. Caveat emptor. If you have other crowdfunding alternatives you want to consider, let us know!
- Philcrowd: Registered as a cooperative, Philcrowd pools money from investors and allows investors to choose which business to fund, ranging from cacao or mushroom farms, Andok’s lechon manok franchises, 7-11, Potato Corner and a whole lot more. Advantage here is that Juan does not have to put up a big amount to have a stake in these best-selling franchises. But of course Juan is also reliant on how Philcrowd will manage the business on behalf of the retail investors hence very limited control. Members can also choose the plain vanilla membership in the cooperative and rely returns on investments through the overall growth of the cooperative. Visit their website to know more.
- Cropital: This crowdfunding platform is focused on various farms throughout the country, with short-term and long-term investment options. I would say investor take up this year is very brisk, as the newly posted farms for funding (3 to 4 batches this year) get fully funded in just a matter of hours or a few days. The additional benefit compared to traditional farming is that their farms have crop insurance in case of environmental / weather hazards. If you want to invest and help in growing our agricultural industry, this might be for you. Visit their website to know more.
- FarmOn PH: Another crowdfunding platform assisting our farmers up North (Isabela and Quirino) to find capital for their farms, assist them in improving their farming practices through technology, as well as in marketing and selling the harvest produce. Likewise, supply of capital for their farms is brisk, which I hope bodes well for the future of farming in the country. Visit their website to know more.
Something tried and tested. Less than 1% of Filipinos are in the stock market so work smarter than the 99%. Of course, this will always be an option, especially now that market did not move as much from 2015. Some would say that this is not the time to buy since the market is going down (and it might go down further). But if your investment OHA allows you a long-term investment, then slowly buying quality names can prove worthwhile in the future and you don’t necessarily have to time the market because only few gifted ones can (and not sustainably at that). Click here to start investing in stocks online.
Market volatility will always be there and in 2017, it remains to be seen how the PH economy will grow as we have a longer experience of the Du30 administration and his economic managers. Global trade needs to be assessed as well, on how the interactions of various economies, commodities and currencies will play out, plus the upcoming Trump US administration.
PREFERRED SHARES / BONDS
More of this. A move we prioritized in 2016 that proved fortunate in hindsight was to invest aggressively in preferred shares and bonds. We started the year with the goal of diversifying to fixed income money market instruments. Given the downward direction of our stocks and managed funds investments, the passive income from preferred shares / bonds helped provide growth and stability in our portfolio. We expect more of the same in 2017 as many companies are still lining up their offerings, just have to choose the quality companies.
Retain monthly investments. If you don’t have this yet, then don’t let 2017 pass without having investments to managed funds, especially regular monthly investments. Sign-up with your favorite bank for UITFs or fund managers for mutual funds. COL Financial also allows you to buy funds online. Or if you have VUL insurance, then you also have exposures to managed funds. For half of 2016, the markets have been going down but we kept on buying as we have auto-debit enrollments that allow us to invest regularly and capitalize on cost-averaging. While I wasn’t so active in buying stocks for my personal fund during the downtrend, the various enrollments and VULs kept buying and buying on this short-term sale. Incurred paper losses for sure, but I can more than handle it and I’m actually excited for the potential growth once market rebounds.
Something new for the young and old. Stands for Personal Equity and Retirement Account. Simply because you and I want to retire more comfortably. We should have more knowledge and options by next year to enable us to shop for the best PERA administrator. ‘Nuff said. For more details, read our previous article: Open PERA, Grow Your Money, Retire Comfortably.
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In 2017, may all Pinoys have richer lives!