Before investing, find out your investment objectives first
November 28, 2006
You probably know by now the different types of investment products. Before deciding whether to go for time deposits or mutual funds or UITF or savings accounts, assess your objectives for investment first.
Overview of the different types of investments
November 26, 2006
Citibank provides below a short and simple explanation of various investment options available to investors. For a more detailed discussion of these investment products, read the Time deposits, stocks, bonds, mutual funds, real estate: Where to invest my money? article.
DEBT INSTRUMENTS
When the government or a corporation needs to raise cash, it may borrow from investors. A corporation can borrow privately from lending institutions using promissory notes. A corporation can also borrow publicly by issuing commercial papers which are registered with the SEC.
On the other hand, the government can borrow from the public through instruments such as treasury bills, notes and bonds.
Since debt instruments are normally longer-term investments, interest payments tend to be higher than term deposits.
STOCKS
A common stock is a unit of ownership in a corporation for which the holder can vote on corporate matters and receive dividends from the company’s earnings. Therefore, when the investor purchases a stock, he becomes a part-owner of the whole company.
Although investing in stocks involves higher risks versus investing in debt or money market instruments, you can take advantage of the higher earning potential that can be gained from stocks through capital appreciation and dividends. Furthermore, stock investments have in general outperformed bond and money market instruments over time.
FUNDS
An investment fund pools money from unrelated investors with similar investment objectives. The fund is managed by a portfolio manager who invests the money in a portfolio of securities and / or other instruments according to the specified investment objectives.
A fund offers several distinct benefits to investors:
- As a single investor, it may be difficult to achieve diversification. Funds enable you to purchase various types of securities and other instruments to build a diversified portfolio.
- The fund is managed by experienced professionals who have access to information on the economy and market movements.
- Through the fund, you can invest in a diversified portfolio, enjoying the same earnings potential from the securities that would have been accessible exclusively to institutional investors.
- Funds make it possible for investors to buy instruments at a lower cost. When the fund buys different instruments, the cost of buying these instruments is divided among all investors versus the sole investor bearing the total cost.
Time deposits, stocks, bonds, mutual funds, real estate: Where to invest my money?
November 5, 2006
YOU’RE working hard with a specific goal in mind: provide well for your family’s needs today and in the future. That’s why you’re keen on saving, a key strategy in securing your financial future.
But where should you put your money? Are savings accounts enough? Savings accounts are good in that your money is easily accessible anytime, but the interest they earn can be so small that you’d be missing out on higher potential returns other investment instruments may offer. You may want to consider keeping some money in a savings account and invest the bulk elsewhere.
Here are a few suggestions on where you can invest your hard-earned money:
Test: What type of investor are you?
October 1, 2006
Here's a simple, six-question test to check what type of investor you are. Don't worry, there are no right or wrong answers. Your score is simply an indication of how you balance risk and opportunity. The corresponding meaning of your score illustrates a suggested mix of instruments selected to suit your profile. Take note that this test is not a substitute for investment advice from a professional.
Ready? Grab a pen and paper and start answering the investor profile questionnaire below. For each of the questions, choose the letter of the sentence that best reflects you.
UITFs vs. Mutual Funds
September 28, 2006
Both are pooled funds. Both offer higher returns compared to banks but also are not risk free. Both are measured in terms of the net asset value per unit (NAVPu) or share (NAVPS). So what’s the difference between UITFs and mutual funds?
A unit investment trust fund or UITF is a banking product that replaced common trust funds (CTFs). It is managed by the offering bank’s treasury department or group. A mutual fund, on the other hand, is offered by an investment company and managed independently by an appointed fund manager, which may or may not be related to the investment company.
