There are many different types of investment however the Colayco Foundation recommends the following especially for those with little experience in investing so far:
1. Time Deposit and Special Deposit Accounts – These are bank based investments. Low Risk, PDIC insured and may have tax advantages. Average Return: 2.5-5% annually. Minimum investment: can be as low as Php5000.
2. Retail Treasury Bonds – These are government securities. Low Risk, Guaranteed by government, and may have tax advantages. Average return: 5-8% annually depending on the offering. To avail you must have an account with a government securities eligible dealer (GSED). For a list of GSEDs visit http://www.treasury.gov.ph. Minimum investment: in multiples of Php5000.
Guita’s note: I recommend you approach a non-bank GSED as they are often easier to interact with.
3. Mutual Funds – These are security or equity investments. Medium-high risk. Volatile (price changes daily). No guarantee and no-insurance. Average annual return: 10-20% (but in some years i.e. 2008 it could be -40%). You can read more about mutual funds on http://www.pifa.com.ph or check out the links below. A list of available mutual funds can be found on the PIFA website. You need to be willing to remain invested for at least 3-5 years. Minimum investment: usually as low as Php5000.
If you are retirement age/nearing retirement it would be best to put most of your money (at least 70%) in #1 & #2 as these will give you regular income (from interest earnings) and are low-risk which means that the chance that your investment doesn’t give you what you are expecting is low.
There are other traditional investments available such as stocks, corporate bonds, real estate, business and franchising as well as non-traditional investments: foreign exchange, gold (and other precious metals), etc. however these require more knowledge and skill for you to be able to utilize them effectively in your wealth generation.
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