Filipinos are taught how to save at a very young age—as young as five years old. Parents would hand their kids an alkansiya (coin bank) where they could drop a few coins as a way to encourage good money habits. Where does it all go? At that age, probably on toys. For Filipinos who managed to carry this financial discipline in adulthood, a portion of the savings goes toward investments.
While there’s a lot of ways to grow our money today as opposed to decades ago, Filipinos are still relatively limited when it comes to investment options to some degree. Sure, we are aware of mutual funds, stocks, and other investment vehicles, but we still feel limited and less confident in the domestic market.
Filipinos and Investing
Today, a growing number of middle-class Filipinos are diving into trading stocks as a way to grow their money. Statistics show that 21.5% of the total stock market account holders are aged 18 to 29, a significant rise from a mere 16.2% in 2017.
Meanwhile, investors aged 30 to 44 still dominate the stock market as they account for 43.1% of the total stock market account holders. Those aged 45 to 59 account for 21.6%, while those in the 60s and above represent 13.9%. These numbers illustrate that Filipinos are becoming more financially responsible as they build their wealth and prepare for their future.
Investing and trading in stocks is a good starting point for Filipino investors. Even though local stocks has its advantages, it still pales in comparison to foreign stocks in terms of profits. This is where Filipinos feel limited when investing—the lack of opportunity for global investments. It’s no wonder given the many benefits of foreign over local investments.
Having a foreign portfolio investment allows investors to participate in a global diversification of portfolio assets. Investors who hold stocks in various countries are likely less susceptible to the vulnerable market movements over their portfolio. This opens the door for higher risk-adjusted returns.
Despite being a broader industry than the local landscape, foreign markets set a less competitive playing field. In turn, having an international credit (for foreign investments) and international portfolio diversification reduces risks and boosts your gains.
How Filipinos Can Invest in Global Market
It may seem daunting and a hassle when we think about investing outside the country. But thanks to new technologies, investing in the global market is now easier and more accessible to us Filipinos.
Here are four ways Filipinos can invest in the global market (sources of figures are in the footer):
- Invest in dollar-denominated securities
Minimum investment: $600 monthly (Roughly PHP 30,900.00)
We’ve already discussed and debunked dollar investment misconceptions in our previous post and how it can benefit the average Filipinos. Just because it’s a “dollar” investment doesn’t mean only overseas workers or wealthy people who have millions in their bank account are capable of investing in it. These are typically managed by banks and insurance agencies. Putting your money on dollar-denominated assets offer security and attractive yields.
If you prefer a dollar investment option that also comes with life insurance coverage, then products like Dollar Protect Plus can give you the best of both worlds. Not only will you feel more secure about your wealth and future, but it will also give your family peace of mind if any unforeseen circumstances were to happen.
- Look into cryptocurrencies
Minimum investment: $20-$1,000 (Depending on the cryptocurrency)
Investing in cryptocurrency has its pros and cons. Since it’s still a relatively new market, it demonstrates a couple of nuances. Additionally, it is a highly volatile market compared to stocks, and the price movements are shakier.
On the plus side, cryptocurrencies have huge growth potential. If you invest in Bitcoin, for example, your $100 in 2010 would’ve shot up to $28 million in 2017. Of course, the price of 1 BTC costs an arm and a leg today. It’s best to do research first—study the price movements and strategies as a guide in anticipating which virtual coin will rise in the market.
- Consider Forex Trading
Minimum investment: $100 (PHP 5,000.00)
Forex trading, also known as foreign exchange, FX, and currency trading, is a decentralized global market for trading the world’s currencies. It is known as the largest, oldest, and most liquid market worldwide. The market rarely sleeps, as it works 24 hours a day, 6 days a week. This means we can spend one whole day to gain profits.
Making money through forex trading is similar to how it works in the stock market, but with this, you buy and sell currencies. The best thing about it is there’s no competition.
- Invest in U.S. stocks
Minimum investment: $1,000 (PHP 51,900.00)
If having a diversified portfolio in the local market isn’t enough (or if you have an aggressive risk appetite), we can start allocating a portion of your assets in the U.S. market. Why? Globally, it’s the largest financial market when it comes to market capitalization. They’re more liquid, and they also provide better diversification. They have a melting pot of big companies around the world to invest our money in.
We can invest with a local US feeder fund, which is available through local banks or financial entities. In a nutshell, they would put our capital into a large overseas fund that invests in U.S. stocks for a fee. There’s also an option to consult with a brokerage firm to see if it’s better to open an actual account for purchasing individual stocks.
For us Filipinos who have a more aggressive risk tolerance and have always thought about global investing, these are the few marketplaces where we can put our money to work without much hassle. Of course, it’s crucial that we study the economic conditions first and weigh our investment principles, goals, costs, and prospective gains before we dive head-first.
Interested in testing your luck in the global market? Visit any of the 900 BPI branches nationwide and reach out to a Bancassurance Sales Executive for more information.
Acidre, Jason (2019). 12 Best Investments for Millennials in the Philippines [Under 100k]. Retrieved from https://grit.ph/best-investments/
BPI US Dollar Income Feeder Fund. Retrieved from https://www.bpiassetmanagement.com/pages/bpi-us-dollar-income-feeder-fund