Don't Save Your Money in Banks

That's the most significant learning I got from reading Bo Sanchez's books. No, he is not totally against saving our money in a bank. In fact, he advises all of us to put 3-6 months of our salary in a bank for emergency purposes. Other than that, the rest of our disposable money should not be parked in a bank. Why? Because we will not get the maximum gain if we do so. Not even the time deposit will grow our money exponentially. Even an 8% per annum (this, I think, is the highest rate being offered by one of the biggest rural banks in the country) is nothing if there are other charges that will be deducted once a time deposit has matured.

So, where do we put our money?

There are four options: set up your own business, invest in stocks, invest in mutual funds (MFs) or unit investment trust funds (UITFs), or invest in insurance. The safest among the four, but not necessarily the best place to invest our hard-earned money,  is the  insurance investment. Investing in a business could possibly give us the highest yield but it takes a lot of entrepreneurial spirit and business acumen for it to happen. Beside, you have to be a full-time businessperson to ensure the success of your enterprise. Part-time businesspersons may also succeed in their endeavors but they are an exemption rather than the rule.

Investing in stocks is the most risky especially if you don't have the time to monitor the market's movement.  But then, the advent of online stocks trading has made monitoring a lot easier. Once you become adept at online stocks trading, the rewards could be euphoric because you can become an instant millionaire with the right moves. Conversely, you can also become dirt poor if you make the wrong moves or your portfolio has collapsed due to market forces which, of course, are beyond your powers.

The safest bet, therefore, is investing in MFs and UITFs. Take a look at some of my previous entries discussing these two. Once you put your money here, you don't have to track your portfolio performance every now and then; quarterly monitoring is enough.  Sometimes, the annual increase of your gains in MFs and UITFs approximates or even exceeds the gains in the stock market.

There is actually another option which you can do and that is being an angel investor. What is it all about I shall discuss in my next entry.