INVESTING
Session Objectives
1. Understand the basic concepts in investing
2. Learn the types of investment instruments
available in the Philippines
3. Understand the risks and factors to consider
before investing
What is investing?
Investing is the process of buying
assets that increase in value over time,
with a goal of generating income or
selling for a profit.
Source: www.investopedia.com
Saving vs. Investing
Be liquid Earn returns
Meet specific goals Build wealth
Why invest?
2000 2010 2020
Did you know?
75%
do not invest
Source: BSP Financial Inclusion Survey (2019)
Chatbox Activity
Why are you not able to invest?
a. I don’t have money to invest
b. Investments are expensive
c. I am not aware of any investment
d. I don’t think I need it
DEPARTMENT OF EDUCATION
“ Your most powerful wealth-building
tool is your income.
—Dave Ramsey
Before you invest…
Know your risk profile
Conservative
Moderately
High
conservative
Low risk
risk Moderately
aggressive
Aggressive
Know your risk appetite
Low Return High Return
Fixed income Beware of
Low Risk Investments scams!
Why invest Variable Income
High Risk in these? Investments
Investment Options
Non-Financial
Business Assets
Financial
Instruments
By type of income generated
Fixed-Income Variable-Income
Provides regular or fixed Potential returns vary
interest payments and are not guaranteed
• Treasury Bills • UITFs
• Treasury Bonds • Mutual Funds
• Corporate Bonds • Stocks
Fixed-Income Instrument: T-Bonds
T-Bonds, 2% per year
200,000
180,000
160,000 Return on
140,000
investment is not
too high.
120,000
Pesos
100,000
But you will not
80,000
experience any
60,000 loss either.
40,000
20,000
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
No. of years
Variable-Income Instrument: Stocks
You may
experience
gains and losses
over time.
COVID-19
Pandemic
But if you invest
long enough,
overall, your
money still
Global
gains.
Financial
Crisis
Source: www.tradingeconomics.com
Chatbox Activity
I have investments in:
a. Treasury Bills/ Treasury Bonds
b. Unit Investment Trust Funds (UITFs)
c. Mutual Funds
d. Corporate Bonds
e. Stocks
f. None of the above
DEPARTMENT OF EDUCATION
Investment Instruments
▪ Unit Investment
▪ Treasury Bills ▪ Corporate
Trust Funds
Bonds
▪ Treasury
▪ Mutual Funds
Bonds ▪ Stocks
Government Pooled Equity, Debt
Securities Funds Security
Government Securities
T-Bill T-Bond
• Short-term maturity • Long-term maturity
(<1 year) (>1 year)
• Debt of PH Government • Debt of PH
• Sold by Government Government
Securities Eligible Dealers • Sold by GSEDs
(GSED) • Yield seen in coupon
• Buy at discounted rate rate
from face value • Redeem quarterly
Example: PH Government’s Progreso Bonds
Source: www.securitybank.com
Pooled Funds
UITF MF
• Invested in a mix of • Invested in a mix of
financial instruments financial instruments
• Sold by BSP-authorized • Sold by SEC-licensed and
banks authorized investment
• Buy “units” of the UITF companies
• Net Asset Value per Unit • Buy “shares” of the MF
(NAVPU) changes daily • Net Asset Value per Share
• Earn if NAVPU appreciates (NAVPS) changes daily
• Earn if NAVPS appreciates
Example: Equity Index Funds
1 unit/share 1 unit/share 1 unit/share
=
1 unit/share 1 unit/share 1 unit/share
1 unit/share 1 unit/share 1 unit/share
Debt and Equity Securities
Corp.
Stocks
Bonds
• Debt of private companies • Shares of ownership in a
company
• Sold by underwriters
(banks) • Buy & sell through PSE-
accredited stockbrokers
• Maturity, interest rate, and
other features depend on • Earn when you buy low &
bond product design sell high, or when company
declares dividend
Primary Market: Initial Public Offering (IPO)
Company
Investors
(Initial Public
Offering)
Secondary Market: Stock Market
Investors Investors
Let’s play a game!
____1___
_____2____
____3___
Do you know
these
companies? ______5____
____4__
____7_____
____6___
__
___9___
__8__
Let’s play a game!
____1____
_____2____
• Fixed basket
of 30
securities ____3___
• Biggest and
most traded ________5_____
companies
____4___
• “Blue Chips”
____7_____
___6__
Visit:
www.pse.com.ph ____9___
__8__
How to invest in the stock market
1. Open an online trading account with a PSE-accredited
broker
• More than 25 online brokers to choose from
• List of brokers (a.k.a. Trading Participants) is available at the PSE
website, www.pse.com.ph.
• Visit chosen broker’s website to download Customer Account
Information Form (CAIF) and follow the steps on how to open an
account.
2. Fund your online trading account
• Via bills payment/ bank deposit
3. Start buying stocks
• Via broker’s online trading platform
Investment vs. Insurance
Product Investment Insurance Pre-need
To ease the burden of To provide for future
To grow your beneficiaries in case of contingent needs such as
money for long- events education fund,
Purpose term goals (e.g., death, accidents, sickness, pension fund,
natural disasters) memorial service
For yourself and For defined future
For yourself and family
family needs
Banks,
Insurance Companies, Mutual Benefit Associations,
Providers Investment
Cooperative Insurance Societies
Houses, Brokers
Securities and
Exchange
Regulators Commission, Insurance Commission
Bangko Sentral
ng Pilipinas
Risks in Investing
Market Risk
Investments may decline in value because of economic
developments or other events that affect the entire market.
Liquidity Risk
You might not be able to sell your investment at a fair price
and get your money out when you want to.
Concentration Risk
You may lose money for putting all your eggs in one basket
(i.e., not diversifying)
Source: www.getsmarteraboutmoney.ca
Risks in Investing
Credit Risk
The government or company that issued the bond may
run into financial difficulties and won’t be able to pay the
interest or repay the principal at maturity.
Mortality Risk
The insurance company may suffer financially because too
many of their policyholders die before their expected
lifespans.
Sources:
www.getsmarteraboutmoney.ca
www.insuraceopedia.com
Personal Equity &
Retirement Account (PERA)
• Tax-free earnings from investment • Visit the BSP website
• 5% income tax credit www.bsp.gov.ph or
• Not subject to estate tax in case of https://tinyurl.com/P
death ERAfaq
• Choice of investment product is up
to you (gov’t securities, pooled
funds, bonds, stocks)
Accredited Investments for
PERA
• UITFs • Stocks
• Mutual Funds • Pre-need Pension Plan
• Government Securities • Annuity Contract
• Insurance Pension Product • Any other category of
investment product
which the regulatory
authority may allow
Investing Tips
Investigate before you invest.
1 Study and fully understand your chosen investment.
Invest only an amount you can afford to lose.
2 Investment returns are not guaranteed.
Always remember the risk-return principle.
3 The higher the return, the higher the risk.
The lower the risk, the lower the return.
Investing Tips
Invest over the medium to long term.
4 Develop a long term investment strategy.
Diversify your investments.
5 Invest in instruments with varied risk profiles. Develop
a “sleep well” portfolio.
“
“An investment in knowledge always pays
the best interest.” — Benjamin Franklin
“I love quotes… but in the end, knowledge
has to be converted to action or it’s
worthless.” — Tony Robbins
2021 Budget*
Follow us on social media:
Amount in million pesos
Capex Ad and
Ad and Promo 1.61
Others-OPEX 10% Promo
Periodicals/New 63.77
2% 2%
Service
Publications 7.50
CWC
Travel - Travel - Local 2.29
10%
Local CWC 9.84
2% Others-OPEX 2.14
Total OPEX 87.14
Publications Periodicals/New Service
Facebook,
66% Twitter, & Instagram
CAPEX 9.26
8% TOTAL 96.40
* Consolidated approved EFLC
budget and FES-related budget
Total = P96,399,319.00 extracted from CLIA budget
