How to spot a good investment: Recommended investments (Second of a series)

Our last issue tackled the heart of investments which confronts greed as the main cause of why a lot of people get duped into bad investments. Once we are free of greed, then we are in a good position to spot a good investment. What then are these investments that one can try, whether they are in the Philippines or working abroad as an OFW?

I could only recommend four. These are stocks, mutual funds or bonds, small businesses and real estate. Let me discuss each briefly. Stocks are securities that could be bought in the stock market which represents ownership of listed corporations in the stock exchange. You earn through the appreciation of the value of the stocks and the dividends that are declared by the company. In these kinds of investments, you have to be knowledgeable of the complexities of stock investments. Thus this is certainly not for the rookie investor.

But if you would like more stable investments in “paper money”, then you can invest in mutual funds. These are funds that are managed by professional managers and you earn from the annual dividends which said funds declare. Another option is you could purchase bonds or T-bills which are instruments that carry a fix rate of interest annually. Both are more or less riskier than stock investments.

Another popular investment nowadays is venturing into small and medium scale industries. Those who are more aggressive venture into new businesses and take the plunge of being an entrepreneur. While this is very risky as records show that only 1 or 2 businesses survive after five years, it offers a huge return for those who are successful. A less risky venture would be to buy a franchised business. The advantage of this is that you are buying into an established business that already has a brand. And a system of doing things. In this case, you don’t have to reinvent the wheel so to speak. This is a good investment for new entrepreneurs. The only things that you need to watch out would be the integrity of the franchised business. This means you have to check its established system and its promised return on investment. Lastly, the investment I favor strongly is real estate. For one, land will always be in demand as it is called mother of all industries. All kinds of activities, may it be residential, commercial or industrial concerns would need land. Secondly, land is a diminishing and scarce resource. So we have on one hand a strong demand and on the other a diminishing supply. Thus the net effect is that land investments almost always increase in value thru time. Land investment is also an economic enabler. Your property investment could be used for collateral loans. In fact, it is the most preferred collateral accepted by financial institutions. If the financial experts say real estate is the most preferred asset for collateral’s then who are we to argue with their wisdom.
Thirdly, investment real estate yields passive income in terms of rent. This is an ideal investment for those who would like to earn a regular income without being hands on in the operations of the investment. This is because in an ideal investment real estate, you just receive your share of the monthly rent. The professional property management and leasing company take care of leasing and managing your unit. This investment real estate is ideal for OFWs, professionals, high wage earners, and business owners in search of additional income.

Whatever your choice is for investments, make sure that you have prayerfully considered it. After all this is your hard earned money we are talking about.***

– Alexander Bangsoy, CEO & President Goshen Land Capital Inc.