Low Risk High Reward Investing

What investing is all about

Investing is making money from money. Experts even say, it is money growing without much time and effort on our part. The idea is to have more than what you started with. Remember the objective is to grow your money, so it is important to have the following criteria when making investments:

  • Protection – this means that our capital, the money that we start with should come back to us. This should be the very first issue that we check with investments. How sure are you that the capital will come back, and when should it be returned in full. What is the use of the investment if we cannot be convinced that it will be returned? Warren Buffett, the world’s richest investor, often says, he only invests in something he understands. So for investors, only invest if you understand the business which will use your money and how your earnings will be derived from it. If everyone who invests does only this (understanding the investment) then they will be spared from investing in scams or bad investments.
  • Income – this is money that is paid to you on a regular basis in addition to the increase in value (or capital growth) of the investment. Income includes rent from investment property, dividends from shares or interest payments from cash deposits. Some investments do not have income paid regularly, but it is certainly more attractive to receive regular payments especially if the investment is long term. It could also be a measurement of the performance of the investment or its managers. If they are promising returns or income payments that are not being met, then it is a good basis for deciding to continue with the investment or not.
  • Growth – this is the primary reason why people invest, to receive money in addition to their capital. There are different kinds of investments or asset classes with different growth rates. However, one should always compare the growth rate with the asset with the least risk, for example, cash at the bank kept for a year or more (time deposit). If the bank promises 5%, per year you would have a good basis for expecting the growth from your investment and be cautious of promises of excessive returns.Do not be be seduced with high returns that can not be substantiated such as tax advantages, or perhaps even the sentimentality of holding, touching, or caressing your investment.

What to Invest on?

Investments vary widely and are suitable for different economic conditions

Have a thing for bling? Investing in gold, silver, and platinum, also called “precious metals”, is something to consider. Gold is known as a safe haven given the financial troubles the world is experiencing which are due to debt related issues. You can invest on the physical product (e.g. jewelry, collectible coins) or in stocks or funds of the producers.

Want to profit from rising cost of living with a little money down? Real Estate is an attractive investment to go into especially with rising inflation. Having real estate, investors can also have the ability to borrow from banks to buy the asset or use loans for “leverage”. There is also a wide variety to choose from : raw land, residential (house and lot or condominium), commercial, industrial.

Want to start small and convert to cash quickly? Stocks – are one of most liquid investments. One can buy and sell the asset, with cash available in a few days. Most investors will also find it affordable and able to buy in small lots then add later. It is also a way to share in the profits of companies that already make money from you, therefore it is easy to find one you would be familiar with to invest on. These would include utility companies, real estate companies, banks, consumer companies and many others.

These days you can even opt to have professional managers do the investing for you if you participate in:

  • Mutual funds in the case of stocks
  • Real Estate Investment Trusts or REITS or
  • Exchange Traded Funds for gold and silver.

There are other kinds of investments that are available like bank cash products, derivatives, commodities and other kinds of financial instruments. But the above are the instruments widely available for the investing public.

To be able to invest wisely, the investor’s job is to first educate himself/herself, be willing to research about businesses and the economy as well as being analytical. This is important because many people are tasked to “sell” investments that may not be profitable at all.

The Key to Success in Investing is the Investor

All investments have risk. The best way to control the risk is to be a good investor.

The investor should be well – educated in various investments and business activities so he or she can objectively assess the risks and rewards of the investment. It helps to invest in businesses that are interesting and enjoyable to the investor. It will help in keeping him/her focused on it.

The investor should be responsible for the investment decisions and should not depend on others nor allow themselves to be easily influenced. Advisers can be brought in to enhance the research but the decision should be made by the investor relying on their own due diligence.

The investor should make investments that are appropriate to one’s life plan. If investments require too much money, taking away money for regular family spending or require too much debt to acquire, it is best reconsider the investment or the timing of acquisition.

The investor should be disciplined, especially with long-term investments. One should be able to keep and monitor the transaction records, statements and reports, ensuring that the investment is on track with regard expected performance and promptly address any risks.

The investor should know when the investment is not performing as expected or has become a higher risk so that one can take actions to preserve their capital and have the ability to reinvest in a better asset.

Charmel Delos Santos, Author of “High Heeled Traders: Understand Trading with Shopping, Fashion, and Shoes!”. Her website is //

3 thoughts on “Low Risk High Reward Investing

  • footballer

    Unfortunately, REITs and ETFs are not yet available here in the Philippines. Puro plano pa lang 🙂

  • I love how Ms. Charmel explains terms and principles in such a simple way that even non-investors would be interested to jump in the bandwagon.

  • Chin Chin

    Hi, readers! =)
    If you’re interested to invest in the Philippine stock market, you can check Philippine Stock Exchange’s Market Education website: //

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.