Finance 101: Investments Fixed-Income Instruments: T-Bonds
What is investing? - Return on Investment is not too high
- But you will not experience any loss either
- Investing is the process of buying assets
that increase in value over time, with a Variable Income Instruments: Stocks
goal of generating income or selling for a
- You may experience gains and losses over
profit.
time.
- But if you invest long enough, overall,
your money still gains.
Investments Instruments:
- Government Securities:
o Treasury Bills:
▪ Short Term Maturity (<Less
than 1 year)
▪ Debt of PH Government
▪ Sold by Government
Why are you not able to invest? Securities Eligible Dealers
a. I don’t have money to invest. (GSED)
b. Investments are expensive. ▪ Buy at discounted rate from
c. I am not aware of any investments. face value
d. I don’t think I need it. o Treasury Bonds
▪ Long Term Maturity (> 1
Risk Profile: Year)
- Conservative ▪ Debt of PH Government
- Moderately Conservative ▪ Sold by GSEDs
- Moderately Aggressive ▪ Yield seen in coupon rate
- Aggressive ▪ Redeem Quarterly
- Pooled Funds
o Unit Investment Trust Funds
(UITFs)
▪ Invested in a mix of
financial instruments
▪ Sold by BSP-authorized
banks
▪ Buy “units” of the UITF
Investment Options:
▪ Net Asset Value per Unit
- Business (NAVPU) changes daily
- Non-financial Assets ▪ Earn if NAVPU appreciates
- Financial Instruments o Mutual Funds
▪ Invested in a mix of
Types of Income Generated: financial instruments
1. Fixed Income ▪ Sold by SEC-licensed and
a. Treasury bills authorized investment
b. Treasury Bonds companies
c. Corporate Bonds ▪ Buy “shares” of the MF
2. Variable Income ▪ Net Asset Value per Share
a. UITFS (NAVPS) changes daily
b. Mutual Funds ▪ Earn if NAVPS appreciates
c. Stocks
- Equity, Debt Security - Credit Risk
o Corporate Bonds o The government or company that
▪ Debt of private companies issued the bond may run into
▪ Sold by underwriters financial difficulties and won’t be
(banks) able to pay the interest or repay the
▪ Maturity, interest rate, and principal at maturity.
other features depend on - Mortality Risk
bond product design o The insurance company may suffer
o Stocks financially because too many of
▪ Shares of ownership in a their policyholders die before their
company expected lifespans.
▪ Buy & sell through PSE
Investing Tips:
accredited stockbrokers
▪ Earn when you buy low & 1. Investigate before you invest.
sell high, or when company a. Study and fully understand your
declares dividend chosen investment
2. Invest only an amount you can afford to
How to invest in stock market
lose.
1. Open an online trading account with a a. Investment returns are not
PSE-accredited broker guaranteed.
a. More than 25 online brokers to 3. Always remember the risk-return
choose from principle.
b. List of brokers (a.k.a. Trading a. The higher the return, the higher
Participants) is available at the PSE the risk. The lower the risk, the
website, www.pse.com.ph. lower the return.
c. Visit chosen broker’s website to 4. Invest over the medium to long term.
download Customer Account a. Develop a long-term investment
Information Form (CAIF) and strategy.
follow the steps on how to open an 5. Diversify your investments.
account. a. Invest in instruments with varied
2. Fund your online trading account risk profiles. Develop a “sleep
a. Via bills payment/ bank deposit well” portfolio.
3. Start buying stocks
a. Via broker’s online trading
platform
Risks in Investing
- Market Risk
o Investments may decline in value
because of economic developments
or other events that affect the entire
market.
- Liquidity Risk
o You might not be able to sell your
investment at a fair price and get
your money out when you want to.
- Concentration Risk
o You may lose money for putting all
your eggs in one basket (i.e., not
diversifying)
