Where to invest my money?

Ah, here again is that perennial question, "Where is the best place to put my money?"

We already have a lot of articles like this before (just scroll down to see other Related Posts), but people seems to have that insatiable thirst for the ultra-mega-super-cool-best way to invest their money.

Fret not, we have another article to fill you up. It gives you a comparative pros and cons analysis of various traditional investment products.

Read it after the jump.

Here's an excerpt from an article published as part of the "Take Charge of your Money" series in the Philippine Daily Inquirer.

The anatomy of a diversified portfolio

There is no right mix of investments that will suit all people. Everyone is different and faces unique circumstances. You have to determine for yourself the right investment portfolio that will work for you given your goals and financial situation. A financial planner may help you out. Study the different investment vehicles available and see where best you can park your money:

• 1. Bank deposits

Pros: They are safe since the Philippine Deposit Insurance Corporation (PDIC) insures deposits up to P250,000. They provide steady interest income. They are also easily accessible. A savings and current account can help you manage your day-to-day expenses.

Cons: Interest on savings and current accounts are minimal.

What to do: Consider investing in a time deposit for higher interest. The secret to earning in a time deposit is to hold it for a long term at an interest rate higher than the inflation rate. You can also have investment in foreign currency to take advantage of higher rates depending on the market.

• 2. Government securities

Pros: They are relatively reliable since these are guaranteed by the Philippine government. They also provide steady income. You can easily access them and sell them through the money market as handled by banks.

Cons: Interest may be lower as compared to other investments.

What to do: Hold some government securities as part of your portfolio. You may want to invest directly in Treasury bills or join a mutual fund or unit investment trust fund investing in fixed income instruments like government securities.

• 3. Bonds

Pros: As fixed income instruments, they give fixed interest income for a specified number of years. This rate is usually higher than that offered by government securities or bank deposits.

Cons: Bonds come with a risk. They are not guaranteed by an insurance company like PDIC. The higher the interest offered, the higher the risk that the company will default on payments.

What to do: Put some money in bonds depending on your financial goal to let you realize more returns. Hold it for the long term. Choose only bonds with good rating. You may want to join a mutual fund or unit investment trust fund directly investing in bonds to save you the trouble of identifying the best performing bonds in the market.

• 4. Stocks

Pros: When there is a bull run in the market, stocks perform well. You also gain a lot when you get good stocks during the initial public offering. In the long run, stocks may outperform bonds in terms of yield.

Cons: There is a big risk of losing your capital as market prices change daily.

What to do: Invest only what you can afford to lose. Hold your stock investment for the long term to ride out market price fluctuations. You may also invest in stocks via a mutual fund or a unit investment trust fund.

• 5. Real estate

Pros: You may earn a lot as the price of property appreciates over time.

Cons: Sometimes the real estate market is down and you may not get a good market value for your property. It is also not very accessible since you need time to sell it off should you need the funds. Maintenance costs may also be high.

What to do: When buying real estate, time it right when you can get a good price for your property. If you can rent it out, you can use the money to invest elsewhere.

So have you decided where to invest?

Join others in looking for the best investment opportunities. Visit the discussions in the Investors board or the Banking and Personal Finance board of the PMT Forum.