This New Year comes with new hopes. With the pandemic not yet over and the world economy still grappling, the more you should work towards financial freedom. What better way to do this than through investments?
Seasoned investors already know the ins and outs of investing. Newbies on the other hand still need to learn the ropes to secure their funds even with the deluge of information online. If you belong to the latter, here’s an article that shares some actionable tips to jumpstart your investing habit this 2022.
8 Actionable steps to start investing this year
1. Start with a goal in sight.
Just like any undertaking, you have to start with a goal. Where do you plan to use your investment returns in the future? It could be to buy a property, for your child's education, as an added source of income, to ensure your health, or to prepare for a comfortable and worry-free retirement.
Your goals will inspire you to invest diligently and use your money well. Determine what your plans are right from the start, as this will also have an impact on choosing the right investment that suits your needs.
Know how much you can set aside for your investment. Use only the amount that you are comfortable investing. There are investment vehicles that don’t require a huge amount to get started. Although small, when done consistently, the amount you invest also adds up over time. Once you have already identified your budget for investment, don’t hesitate to get started.
Start saving and make it a habit. With more money saved, the more financially secure you'll be. This will help you become better at navigating through life's uncertainties without resorting to debt. As you grow your savings, you will also be more fueled to secure funds for investment.
Life insurance is a foundation that can anchor your investment even when a crisis occurs. It can help prevent devastating financial losses while still ensuring that the future of your loved ones remains secure. With life insurance, you can replace lost income and cover expenses that your savings may not be able to support. It will help you go through rough roads and still keep your investment intact.
Sun Life offers investment-linked insurance funds that can help maximize your earning potential and be assured of a financially secured future. Know your options for investment-linked insurance products here.
5. Don’t forget your emergency fund.
Investing or not, you have to allot funds for emergencies. It is advisable to set up your emergency fund first before investing. Remember, most investment vehicles require you to leave your money untouched for a certain period. Uncertainties may happen and you wouldn’t want to end up with no money allotted for unforeseen expenses. It will beat the idea of maximizing your return of investment (ROI) for your future goals. Ideally, emergency funds must be equal to 6 months of your salary.
6. Seek professional financial advice.
When it comes to finances, most experts can provide helpful advice based on your situation. Financial advisors are knowledgeable and they will assist you in setting your goals. Sun Life’s financial advisors are your Partner for Life. They will help you plan, guide you in choosing the right investments based on your risk tolerance, and teach you how to save. Find the financial advisor that’s right for you so you can get the help you need when it comes to managing your investment.
7. Understand your risk tolerance
Your risk tolerance refers to the amount of risk that you’re capable of taking with your investments. Just like other ventures, investments also have risks and challenges. As a beginner, it is important to know and understand your risk tolerance before investing your money and this applies whether you're consulting professional financial advice or going DIY.
Different risk tolerances describe different types of investors.
Conservative
This is the type of investor who can accept little to minimal volatility in the amount they invested. He/she knows the value of small profits but would want the guarantee of getting his or her capital back accordingly.
Moderate
This kind of investors can accept some losses and have a good understanding of the balance between risks and long-term returns.
Aggressive
These investors are the ones who understand market complexities. They will invest in highly volatile assets that provide high yields.
Whatever your risk tolerance is, an investment calculator would be useful so you can be guided on how to manage your money and get an overview of your potential earnings over time.
8. Know the different types of investments.
In the Philippines, there are different kinds of investments that beginners can start with. Some of them are listed below.
Stocks
One of the most popular investment vehicles today, investing in stocks allows you to become a part-owner of a company. While it is considered risky, it is also considered as among the most profitable. However, you have to know how to strategize. You also have to monitor the market prices so you can grab the opportunity to buy more stocks when prices are low.
Bonds
This investment vehicle has low volatility. It is both low risk and low profit. While many consider bonds as a safe way to invest, it also eliminates the opportunity to benefit from a company’s growth.
On the other hand, bonds offer the advantage of getting a set amount that you get to be paid over a certain period, whether a company experiences gains or losses.
Mutual funds
A mutual fund involves funds from different investors. The money that has been pooled together will then be invested in various assets through a professional fund manager who will also be responsible for making investment decisions on behalf of the investors. The company issues investors shares or units, which represent their investments.
Of the most common types of investment opportunities, mutual funds are recommended for beginners. With this investment, starting as an investor can be done for as low as ₱100! Your fund may also be used in various financial outlets so risks are reduced. Compared to traditional deposits, mutual funds also generate higher returns to beat inflation and achieve your financial goals for the long term.
Sun Life Prosperity Funds is a type of mutual fund investment that you can try to start your journey as an investor. With Sun Life Prosperity Funds, you can enjoy affordability, higher potential returns, diversification, flexibility, and liquidity. Find a Partner for Life like Sun Life via SLAMCI to take advantage of global expertise and professional fund management so you can be guided in choosing the investment vehicle that suits you best.
SOURCES: Moneymax time.com Investopedia
ALSO READ: Benefits of a VUL Insurance Plan
Should you invest now?
Some people may not find the need to invest at an early age but there are benefits that come with it that you should not overlook. Investing helps develop discipline in handling your finances and avoiding unnecessary expenses. Poor spending habits and impulse buying can be prevented at an early age. With investing, you will also understand that you need to save money to earn money.
SOURCE: veteransunited.com
The new year has just started and you still have time to decide on how you want to spend your money. Financial uncertainties will always be present and you have to take the necessary steps now that will lead you to a brighter future.
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