For a lot of people, the principles behind saving or investing are pretty simple and straightforward. But for some, it can be difficult to make investment decisions when there are just so many options to choose from. This is especially true for Filipinos who can’t afford to take risks with their hard-earned money. As a result, Filipinos would rather keep their money in savings accounts rather than in investment instruments with high returns. If you’re thinking of investing but don’t quite know which investment vehicle to consider, here’s a post that rounds up the top high-return investment channels to get you started in making your money work for you.


1. Investment Funds


In the Philippines, two of the most popular types of investment funds are mutual funds and unit investment trust funds (UITFs). With these fund types, your money is combined with other investors’ money in a pooled fund, which is then invested in different products or channels, such as stocks, bonds, or money market instruments.


These funds may differ in a couple of ways:


1. The Security and Exchange Commission (SEC) oversees the management of mutual funds, while the Bangko Sentral ng Pilipinas (BSP) regulates UITFs.

2. UITFs are mostly offered by banks, while mutual funds are usually a product of mutual fund companies.


There are several advantages when you invest in either mutual funds or UITFs. Aside from their low initial investment requirement (between P5,000 and P10,000), you’re also assigned certified professionals who personally manage your investment.


Fund managers also help you lessen your investment risk through diversification—the practice of investing money in a variety of assets. However, putting your money in investment funds of these types means you’ll have to make regular payments in service fees to the fund manager.


2. Retirement Funds


This form of investment guarantees that you’ll be able to enjoy a continuous cash flow upon retirement in the form of a pension. One of the main advantages of this type of investment is the so-called power of compounded interest, which refers to the ability of the money you saved to earn interest. Over time, as the interest gets added to the savings, the amount of interest you earn grows as well.

When it comes to your retirement fund, the earlier you start putting up one, the more time it has to grow—no matter how small you start. With more time on your hands, you’ll also be able to take on higher-level investment risks, such as stocks and real estate.

On the other hand, saving too conservatively for your retirement might make it difficult for you to grow your funds. The idea is to save wisely as early as possible during your working life, enabling you to earn more interest on a growing amount of funds over a long period of time.


3. Stock Market


This type of investment means buying units of ownership in corporations listed on the stock market, making you part owner or a shareholder of the company in which you invested.

There are two ways to earn money in stocks, namely through dividends and gains. Dividends are payments you receive for owning stocks that make a profit, while gains are the money you earn from selling stocks at a higher price than what you paid for them.

Since stock market prices have a tendency to rise and fall unpredictably, you should be open to the possibility of incurring losses.


4. Bonds


Bonds are a form of investment, where you lend money to borrowers, which may include the government and corporations in need of funding. The borrower will then pay the loan with interest, depending on the term or timeframe you agreed upon.


In some instances, you’ll be paid either an annual or semi-annual interest first, while the principal will be paid upon maturity date. Maturity may run from less than a year to up to 20 years, depending on the type of bond you invest in.


Needless to say, you’ll want to avoid investing in bonds when interest rates are falling, as this means you’ll have to pay a higher price to buy bonds.


5. Real Estate


There are multiple ways you can maximize your return on investment (ROI) in real estate property. You can live in the property full time, use it as a rest house, rent it out or sell it when the value increases. Whichever way you choose, the fact remains that you have a physical asset that you can use at your disposal.

While real estate may be considered one of the most stable investments you can make in the Philippines. There are also risks and expenses involved such as market fluctuations, maintenance expenses, or property taxes, to mention a few, but these risks can be minimized. Thus, it’s important that you evaluate your finances and priorities thoroughly before investing in real estate.


6. Cryptocurrency


Cryptocurrency trading has been gaining significant traction, especially in online communities as it allows people to buy and sell things using digital money. Cryptocurrency offers a revolutionary system of trading, where all transactions take place on a cryptocurrency trading platform.


This platform is only accessible to registered users and cannot be monitored by outside parties. Cryptography or blockchain technology prevents malware or other types of vulnerability from getting into the system, keeping your digital assets intact.


As a form of investment, cryptocurrency may very well have the greatest potential to help you earn money. Similar to stock trading, the value of cryptocurrency depends on supply and demand. Start buying cryptocurrencies while prices are low, then sell them later once increased demand allows you to fetch a higher price.


It doesn’t really matter where you’re located: you can buy and sell cryptocurrency as long as you have access to an online cryptocurrency trading platform. You can also invest your crypto assets in investment fund management channels where cryptocurrency is used, or you can offer it to people who need cryptocurrency to pay for certain products and services.


7. Insurance


Some insurance products, such as Variable Unit-Linked (VUL) insurance, come with investment benefits on the side. Whenever you pay your insurance premium, a portion of it is invested in an instrument of your choosing, presenting you with an opportunity to earn returns. Since VUL acts as both insurance and investment, the premiums you have to pay are much higher than similar products, but don’t forget you’re also getting insurance coverage.


Choosing Where to Invest


Investments don’t come without risks, so a good practice is to educate yourself on the pros and cons of each type. In most cases, the time you invest is more important than the amount of money you spend.


Investing early means not only giving your money enough time to grow but also enough time to bounce back from losses from factors beyond your control. It also wouldn’t hurt to diversify your investment portfolio to include traditional and newer forms of investment. Weigh your alternatives until you’re able to identify which one can give you the highest return potential.