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To be young, wild, and free — youth, they say, is a treasure. Being young gives you a longer horizon, which is perfect especially if you have an aggressive risk appetite to begin your first investment. It is advisable to be a risk-taker at this stage, says financial experts in the field. You’ve got nothing much to lose, no dependents to worry about, and have a lot of time allowance in case your decision was wrong. So what are the investment vehicles perfect for a young investor?


Stock Investing

This is buying shares of publicly listed companies in the hope that these companies’ value will grow and therefore we will get return.

The risk

Investment in the stock market allows you to predict outcomes. However, no matter how many news articles and charts you read, and no matter how intensive your research is, no one can ever guarantee your earnings or losses.

How to start

You need to open an account with an online trader, like COL Financial, which has a user-friendly interface and allows you to begin with a small capital or "buying power" at ₱5,000. Once you have an account,  you will have access to the platform, where you can check stocks prices and put buy or sell orders. Your order will be on queue and every order is charged by the broker, so make sure you offered a reasonable price per share. COL financial also has free seminars on trading in their office. Make sure to book it on your calendar. Additionally, a book authored by a Filipino, called "The Trading Code" is a great start.


Forex Investing

To put simply, foreign exchange investing is changing one currency for the other in the hopes of gaining some returns. News outlets often tell us how much the Philippine Peso gained against US Dollars. So say you buy $10 for ₱45.00 yesterday and then today, the USD to PHP rate is ₱47.00, then that means you’ve earned ₱20. Not bad for a free Cornetto.

The difference of this from stocks is that Forex is open 24 hours a day, seven days a week. So this is perfect for those who likes to invest in other times of the day.

The risk

Same as in stocks, you can lose money if you don’t play it well. Also, it’s not well-regulated by our law, which makes it prone to anomalies.

How to start

There are online platforms, like FXCM, where you can invest in foreign exchange for only $50 as a start. This can be paid via credit card or debit card. These platforms also provide trading tips.


Mutual Funds

Mutual fund is a pool of money from different investors. This pool of money is managed by the fund manager, who makes the trading for you. So unlike trading in the stocks market or foreign exchange where you have to do the trading yourself, here you have a manager to do that for you.

The risk

Someone else is making a financial decision for you. It can be uncomfortable for some who would rather do the leg work. So it’s important to study the fund manager’s background before you dig in.

How to start

First, choose where exactly you will invest in the mutual fund. The Philippines has a lot of mutual funds to choose from. Different financial institutions have different ways of enrolling. Some will require personal appearance to their offices or banks while others are okay with online enrolment. The common starting fund is ₱5,000 and the succeeding amount you can add is ₱1,000. Just like stocks and Forex, you can choose to add investment only when the price is favourable.

Side note

Mutual funds are available for everyone with different risk appetite. So if you’re conservative, there are short-term funds for you, which are mostly invested in safe vehicles like treasury bills. If you are moderately aggressive, you can choose balance fund which, as the name implies, a balance of conservative and aggressive investments. And then for the adventurous hearts, there are equity funds which are invested in stocks market. Information on where exactly the mutual fund invests in is available for public checking, anyway. So make sure you do check before you enrol.


How to invest wisely

Study the ins and outs of the stocks market, Forex trading, and mutual funds. There are jargons you need to understand like bull and bear, high and low, blue chips, penny stocks, spread, dividends, and so on.

A good exercise for you is to check the price per share of you favourite companies or funds 5 years ago. If you invested then, how much would have been your money now?

For example, if you’re eyeing to invest in the stocks market and would like to buy some shares of Jollibee Food Corporation (JFC), the price per share in 2012 is ₱81.78. Now it’s ₱250.40. So if you invested ₱5,000 then, it would have been ₱15,309 now. What if you invested the same amount for Emperador Inc. (EMP) in 2013? The price per share back then is ₱19.37 and the price now is ₱7.31. Your ₱5,000 would become ₱1,886.

You can do the same for other funds. But remember, historical performance is not reflection of guaranteed returns.

If you have to choose but only one thing to invest in, it should be education. Because the more you know about the confusing world of investment, the more you can make wise decision that will help you gain more ROI than you can hope for.

Lastly, manage your expectation. Sure, many people became rich investing but many people have also lost a lot of money because of uninformed financial decision. So be wise. You’re young and can take risk but take nothing less than well calculated risks.