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💰Investing 101: What Every First-Time Investor Should Know

💰Investing 101: What Every First-Time Investor Should Know

Happy Labor Day! Let's dive in the What, Why, and How of Investing—Simplified.

Marianne Lim
May 01, 2025

A lot of Filipino yuppies are starting to dip their toes into investing, and that’s a smart move. The earlier you start, the better your chances of building real wealth.

Let’s break down the basics of investments in the Philippines, so you can begin your journey with confidence—even if you’re not a finance major.

In today’s edition, we’ll go over:

What investing is and what it’s not
Why you should invest
Beginner-friendly investments to choose from

TLDR;

The Bottom Line

Investing is great, but it probably won’t buy you Ferraris.
Protect yourself from inflation by investing.
Invest early. Compounding is in your favor.
Choose investments that fit your goals and risk level.
Build consistency, not perfection.

The content

What is Investing?

📖 According to Investopedia:

“Investing is the act of allocating resources, usually money, with the expectation of generating an income or profit.”

✅ Example:

Let’s say you invest ₱5,000 in a Mutual Fund that grows by an average of 8% per year. In 5 years, that principal of ₱5,000 could become around ₱7,300. You earned ₱2300 without lifting a finger.

What Investing is Not

You might have heard by some guru on Tiktok that if you follow their investment strategy, you can be rich overnight.

Let’s make it clear: Investing is not magic. It’s not a get-rich quick scheme.

Why you should start investing (even if it won’t buy you Ferraris, probably)

The short answer: inflation is eating up your savings.

You would think saving keeps your money safe. Wrong. Half the battle is against inflation.

If you're only saving in a traditional bank account earning 1% annual interest, you're basically losing money slowly. Inflation in the Philippines is 3–6%. Every year, you lose at least 2% of your wealth.

It’s hard enough to set aside money for savings. Your future self won’t even get to taste the whole pie because inflation has already nibbled on it.

“Investing is just for rich people.”

Many think you need ₱100,000 or more to start investing. Think again. You can begin with as low as ₱50 on apps like GCash. It’s not about the amount. It’s about consistency. By investing little by little every month, you are building discipline.

Time > Timing: the Power of Compounding

Investing is one of those things that being young is an advantage - thanks to the power of compounding. To better explain what compounding is, here’s an example.

Let’s say you invest ₱1,000 per month consistently, and your investment earns an average of 10% interest per year, compounded daily.

🧑‍🎓 Scenario A: You start at 22 and invest until you're 60

That’s 38 years of investing.
Total contributions: ₱1,000 x 12 months x 38 years = ₱456,000
By age 60, your money grows to: approx ₱5.3 million

👩‍💼 Scenario B: You wait until 40 to start and invest until you're 60

That’s 20 years of investing
Total contributions: ₱1,000 x 12 months x 20 years = ₱240,000
By age 60, your money grows to: approx ₱770,000

The result?

Even though the 22-year-old invested only ₱216,000 more, they ended up with ₱4.53 million MORE than the one who started at 40.

Key takeaway: There is no perfect time to invest. The earlier you start, the less you have to invest but the more you gain.

Time is literally money. So if you're in your 20s, you’ve got a superpower. Use it.

Actionable Tips For You

How do I start investing?

Investing is a very personal journey, and there are three key things that determine how you should do it: your risk profile, financial goals, and time horizon.

Risk Profile: Understand how much risk you’re comfortable with. Higher risk can mean higher returns but also bigger losses.
Set Clear Goals. Are you investing for a short-term need, like a trip abroad or a long-term one, like retirement? Your goals will define your strategy.

Time Horizon. This should match with your goals.

Short-term (0-3 years) = safer investments (short-term bonds, time deposits)

Long-term (more than 3 years) = growth investments (stocks, real estate)

Your Emergency Fund is Your First Investment.

Before jumping into stocks, build an emergency fund (we will tackle this in a later issue). It’s not sexy, but it protects your investments from being touched when life happens (e.g., layoffs, medical emergencies, or broken gadgets).