From the trainings and the 1:1 clients that I have, one of the biggest questions that I would normally get is the question of where should one invest. Should it be in stocks, bonds, or real estate? Which is better among the three and which would give the investor the largest gain.
While I believe there is no such thing as the best investment, I really believe that each of these investments will help you build wealth overtime. Your goal as an investor is to find which investment fits you and maximize it to the fullest extent!
In this post I am sharing a TV interview with the 700 Club to quickly talk about the difference between the three and also snippets of my 4th book “Where Should You Invest?” Reading this would give you a background of the three investments but in no means would make you an expert already. I would suggest that you study further until you gain the confidence to start and make the leap from consumer to investor.
I really hope that this post helps you and it brings you closer to financial freedom. I really hope that we see more and more Filipinos move from consumers to investors.
Catch me in my live training events! (quick plug)
The heart of why I do this seminars is I want to build a generation of Filipinos with the right foundation in stock investing. I want to bring smart investing to every Filipino around the world! If you would like to know more on how you could time the market checkout the trainings below.
Stock Smarts Davao — October 20 – October 22, 2017
Stock Smarts Malaysia — November 4 – November 5, 2017
Stock Smarts Sydney, Australia — November 11 – November 12, 2017
Stock Smarts Qatar — November 16 – November 19, 2017
Stock Smarts Singapore — November 25 – November 26, 2017
Stock Smarts Manila — December 2, 3, 9, 10 & 16 , 2017
Stock Smarts Taiwan — December 21 – December 22, 2017
Stock Smarts Cagayan De Oro — January 13 – January 14, 2018
Stock Smarts London, United Kingdom — January 26 – 28, 2018
When you directly invest in the stock market the choice of what stock to buy is yours. The decision on how many stocks you are suppose to buy rests upon your analysis. The selection on which stock is good and which is bad is up to you. The question also on when should you buy or sell your investment is up to you. This is great as it gives you the liberty to select good stocks but at the sametime it entails that you need to study more. The more decisions you make the more you need to study also.
What I like about direct stock investing is that it gives you the control on how are you suppose to go with your investments and because of online trading you can trade anywhere in the world as long as you have a smartphone and an internet connection! The fees to also now are relatively cheaper because you deal straight with an online trading platform. Brokerage commissions are just 0.25% per trade! This gives you a very cost effective investment at a minimal fee. Imagine if you buy a stock and you hold it for the long term, as long as you do not sell it, it does not cost you anything anymore!
Bond Investing is one of the most basic and one of the most passive and conservative ways to get recurring income over a stretch period of time.
How does it work?
We all talked about how companies raise money via the stock market by selling their shares so investors can be part owners of the company. Bonds on the other hand is the total opposite. Bonds do not give you ownership but rather it is you basically lending the company money and they pay you a form of interest from the money that you lent them.
I believe this is one of the best investments out there! You have to understand, that land area in the Philippines remains the same but the population increases each year. As the population increases each year this would mean that more people would be sharing a smaller amount of space, a smaller amount of space with a larger amount of people would also mean that price would go up over time as the demand for the space will just keep on getting higher. Real estate investing is just really supply and demand at its finest, the closer you are to the city the bigger the demand for houses and condos, hence the higher the rental rates will be! However the further you are from the center the lower rental rates will be and you have to be more competitive in pricing your rentals.
As amazing as how property investing can be, if you started doing this in the earlier wealth phases it would not give you the most optimal results that you would want as you would have to release a relatively larger amount of money and you may need to take out a loan too if your cash cannot cover for the price of the entire property. Taking out a loan subjects you to the risk of paying out the amortization monthly even if no one is renting out the property for you. Taking out a loan on the wealth creation phase can give you the risk that if you lose your job you may end up defaulting on the property because you do not have the cash flow to pay for it.