Investing 101: Finding the right investment for you

Investing can be a good way to grow your money, if done the right way. If you are a first-time investor, here are some things you should take into consideration.

How to choose the right investment

1. Ask if it’s the best use of your money

The most important thing you need to think about is if investing is the best use of your money. Is there something more pressing you need the money for at the moment, such as for your debts, your child’s tuition fee, or medical bills. You need to have all your bases covered before investing your money. That means having covered the essentials first, such as life insurance, emergency funds, and other regular expenses.

2. What’s your objective

Figuring out where to invest can be done by establishing why you want to invest. For those seeking to grow their money quickly and don’t mind risking losing it all, there are high-risk investments that are suited for you. Or if you’re more conservative about your decisions, you may want the safest option to grow your money because you need it for your retirement.

Your goals will help you decide what investment you want. These goals can be one or a mixture of the following:

• Keeping your money secure because you intend to use it soon. There are several instances when this happens, like for those intending to retire or those who need to pay their bills soon. If you’re thinking of using your money soon, you do not want it to decrease in value. This makes choosing less risky investment instruments the wisest option for you, such as liquid funds (e.g Metro Money Market Fund and Metro Short Term Fund).
• Going for a moderate risk in exchange for better appreciation. If you do not need your money soon and can stand to take a little risk, then investing in other forms like bonds may be the one for you.
• Making high risks for higher gains. If you can afford to take a huge risk with your money for the possibility of higher gains, then you are thinking of growth as your goal. You should look into investing in stocks. Mix of stocks and dividend paying funds are considered aggressive and take a lot of time to make considerable gains.

It is also possible to mix your investment goals, such as having both short-term and long-term goals when investing.

3. Consider your age

Another thing to consider when investing is your age.

When it comes to investing, being young has an edge. Young investors are able to wait a longer time for their investment to bear fruit. They also have fewer responsibilities and more disposable income. In the event their investment fails, they have more time to earn back the money.

The younger you are when you begin investing, the earlier your investments start earning compound interest. Even if you put in a small amount to begin with, you can still grow a sizable amount if you leave it in for a long time.

4. Determine the time before you need the money

Not everyone is looking to invest for their retirement. Some investment goals can be longer while others are shorter. You need to take a look at when you need the money before deciding on what to invest in.

The longer you can stay invested (and not touch your money), the more risk you can take. If you need the money right away and cannot risk losing it, then it’s best to choose short term, low-risk instruments.

Note that some investments will cost you or charge you penalties if you surrender or redeem them before the holding period. If your investment falls into this category, make sure you do not need the money before the holding period is over.

5. Find out your risk tolerance

Generally, the higher the risk, the more potential for higher gains.

However, each investor has a different risk tolerance or comfort. Some are more comfortable with the ups and downs of the stock market while it may make others anxious.

Learn more about risk tolerance before choosing which investment to go for.

Analyze your situation and determine your goals before investing in the financial instrument you want. No matter the investment type, there will always be some form of money involved, so it’s best to be as informed as possible when making your decision.

Metrobank offers a wide range of investment types to suit different goals, risk tolerances, and timelines. Invest meaningfully with Metrobank today.