3 Important Facts About Investing

What you need to know before you start investing

1. Interest rates on bank cash deposits will never beat inflation.

I’ve met people who don’t like to risk losing money so they just put their savings in the bank. Some of them are even proud of the millions they have in their time deposits.

What they don’t know is that because of inflation, they’re actually losing money by not investing. The Philippines’ average inflation rate is 5% (2000-2012), so if your time deposit is earning 4% pa, then your money is losing 1% of its value every year.

Putting your money in moderate and high-risk investments is the only way to beat inflation over the long-term.

2. You cannot just copy how other people invest.

Investing is a personal task. People invest for different reasons. My financial goals are not the same as yours, which means you cannot just invest where I invest.

The best investment for you depends not only on your goals, but also on your financial capabilities, your risk tolerance, and your investment personality, among other things.

3. Constant cashflow is your investment foundation.

There are hundreds of investments out there and people waste a lot of time comparing and choosing which among those investments will give them the best returns.

My advise has always been to invest where it is convenient for them so they can go back and focus on making more money. Take advantage of your productive years and do everything you can to increase your cashflow.