How Do You Diversify Your Investments?

[mameejhy]

How Do You Diversify Your Investments? How do you spread your money? Do you put them in one bank/ company but, in different accounts? Nag fofocus ba kayo let's say, savings account + real estate lang. Or, may savings, mutual fund, stocks + real estate?
 
Just curious. 

[freelancer_babe]

I have several accounts scattered among 4 banks. But only one bank, BPI, is used too often to receive income, pay bills, save for non-emergency but important needs (which I call the sinking fund), and emergency fund - so most of my money are in this bank. I have 2 savings and one checking account which I simply transfer funds from each other using online banking. I prefer BPI because their bank service fees generally cost less than other banks.

I have a Unionbank account to receive Paypal - without getting charged on incoming remittance fees because they are the only bank so far that doesn't charge any remittance fees. I maintain a Landbank account for receiving PAGIBIG loan proceeds, because PAGIBIG only credits funds on Landbank accounts.

I also have Metrobank savings account which I use as gift/donationbackup fund. I'm not supposed to open that account but later I decided to have one because my kid also have a passbook fun savers account. Sayang ang trip sa bangko just to help my kid deposit her money. At mas nasisiyahan ang kid ko kung pareho kaming nagdedeposit.

It's quite complicated to own several bank accounts. For many people two is enough which simplifies finances enough. There would just be less banking rules to remember, less fees to avoid, less bank and ATM locations to memorize, less trip to the bank to withdraw then deposit back the account to avoid dormancy charges, and most of all, less money to put up as minimum or average maintaining balances.

As I have explained earlier, the other two accounts would just to take advantage of no-fee remittances (Unionbank), or simply accommodate what PAGIBIG wants (Landbank).

If BPI would stop charging P150 for incoming remittance fees from Paypal and PAGIBIG would consider depositing funds in BPI, then I would rather simply maintain BPI bank account, and Metrobank as backup - most useful especially when travelling because both banks have a lot of ATM machines.

I'm not into real estate, so I have no money there. I would be more willing to place my money on UITF, mutual funds and stocks. I would diversify investing on UITF and mutual funds sometimes, especially if the funds are invested on different industries. For stocks, I'll just pick a stockbroker, and diversify stocks from there.

There's no point for me to diversify SDAs too, as all SDAs would just be deposited in BSP.

[chocobo]

EON lang ba ang no charge sa remit o pati kahit ibang savings account ng unionbank?

[mameejhy]

I have several accounts scattered among 4 banks. xxx

I'm not into real estate, so I have no money there. I would be more willing to place my money on UITF, mutual funds and stocks. I would diversify investing on UITF and mutual funds sometimes, especially if the funds are invested on different industries. For stocks, I'll just pick a stockbroker, and diversify stocks from there.

There's no point for me to diversify SDAs too, as all SDAs would just be deposited in BSP.

Oh so, sis more of liquidity sa yo? Kasi diba lahat nasa banks... I will take note of that - different investment vehicles in different banks/ institutions Thanks.

[singidsnoel]

Diversification is a form of risk management. Kailangan ma-identify ang risk associated with your specific investment vehicle. Para ma-manage ang risk, meron cost incurred.

Since eto ang essential na investment, take banks as an example. One risk is kung mawalan na ng access to cash ang banko mo. Ang at risk sa pera mo is ang portion na di covered ng PDIC, part that exceeds Php500,000. Eto ang first reason to have many banks para within ka sa PDIC limit. Ang cost naman nito is lower ang makukuha mong interest. Kung napansin nyo sa schedule of interest rates eh higher interest ang bigger na deposit. Another cost is intangible, eto ang convenience in transacting.
*Take note though, di covered ng PDIC ang funds ng banko na gumagawa ng unsafe at unsound banking practices.*

Eto naman for pooled funds like Mutual Funds, UITF or VULs. Diversified na ang mga portfolio ng mga funds. Ang diversification on your part is ang pagpili ng multiple pools to take advatage sa magkaibang strategies ng mga fund managers na nagpapatakbo ng mga investments na to. Ang cost nito is average lang ang return mo compared sa possibility na nalagay mo lahat sa top performer for the year. In case kung loss naman ang investments, mas maliit ang magiging loss mo kung diversified ka kesa kung napili mo itodo ang funds mo sa worst performer for the year.

Di required na mag-diversify kung ang risk appetite mo is mataas. At the end of the day, eto parin ang rule of thumb ng investing, "The greater the risk, the greater the return; and the lesser the risk, the lesser the return".

[beach]

i only have one bank but i have two accounts with them... savings and current... i also pay for insurance every year (i have a Sun Exclusive Plus with sunlife, para syang insurance/pension fund)... i invested some for my online business, and i have money din in the stock market... m looking forward to buying some mutual funds this year...

[singidsnoel]

i only have one bank but i have two accounts with them... savings and current... i also pay for insurance every year (i have a Sun Exclusive Plus with sunlife, para syang insurance/pension fund)... i invested some for my online business, and i have money din in the stock market... m looking forward to buying some mutual funds this year...

Diversification in your case could mean purchasing either bonds/RTB or MF/UITF/VUL bond funds.

[jiffy]

Just attended a financial planningseminar and the right quote daw is the higher the risk, the higher POTENTIAL return. Di kase assured.

[Jon24]

I've just started investing this 2012 so I don't have much to diversify YET! haha. I have shares for a mutual fund invested in stocks. But I also plan to invest in bonds, so that my portfolio would consist of 80 percent equities and 20 percent bonds. Or perhaps I could have 75 percent stocks, 20 percent bonds and 5 percent cash in savings or time deposits. When I reach the economies of scale, I'd do stock investing on my own. hehe.

[mameejhy]

Since eto ang essential na investment, take banks as an example. One risk is kung mawalan na ng access to cash ang banko mo. Ang at risk sa pera mo is ang portion na di covered ng PDIC, part that exceeds Php500,000. Eto ang first reason to have many banks para within ka sa PDIC limit. Ang cost naman nito is lower ang makukuha mong interest.

Eto naman for pooled funds like Mutual Funds, UITF or VULs. Diversified na ang mga portfolio ng mga funds. Ang diversification on your part is ang pagpili ng multiple pools to take advatage sa magkaibang strategies ng mga fund managers na nagpapatakbo ng mga investments na to. Ang cost nito is average lang ang return mo compared sa possibility na nalagay mo lahat sa top performer for the year. In case kung loss naman ang investments, mas maliit ang magiging loss mo kung diversified ka kesa kung napili mo itodo ang funds mo sa worst performer for the year.

Re banks - if emergency fund, dapat siguro if may 300k eh tig 150k sa 2 banks? Sa savings account naman kasi mababa lang talaga ang interest.

Re pooled funds - Ok lang kaya let's say may Equity and Balanced Funds in FAMI, PEMI, BDO & BPI? The downside is maliit lang ang return kasi naka spread yun money. This is my plan, actually but as of now, I now have Equity and Balanced sa FAMI.

i only have one bank but i have two accounts with them... savings and current... i also pay for insurance every year (i have a Sun Exclusive Plus with sunlife, para syang insurance/pension fund)... i invested some for my online business, and i have money din in the stock market... m looking forward to buying some mutual funds this year...

Sis, gusto ko yan ganyan - diversified talaga! 

I've just started investing this 2012 so I don't have much to diversify YET! haha. I have shares for a mutual fund invested in stocks. But I also plan to invest in bonds, so that my portfolio would consist of 80 percent equities and 20 percent bonds. Or perhaps I could have 75 percent stocks, 20 percent bonds and 5 percent cash in savings or time deposits. When I reach the economies of scale, I'd do stock investing on my own. hehe.

Yeah, me too. Siguro kapag confident na ako, mag stocks rin ako.

[aquacharly]

How do I diversifiy our investments?

1.   Thru Bank Diversification
      That is the most basic way to do it.  Use at least 3 banks.  I go over the PDIC cover, but I choose stable banks na... eh kung ang mga ito eh lumagapak pa, it means our Phil. economy went under too...  The SDAs are their best offers to-date.  Well, what can we do?  But I shift my SDA placements around, more with the bank that gives me the little edge/difference in rate for the usual 30 days.  That way, the branch negotiates for better rates with its Treasury coz they peg me as very interest-sensitive. lol  It pays to do so,  a .1 net difference translates into quite a a tidy amount.

I just have something to say about all these high falluting labels they have for all kinds of funds banks offer.  There are only 3 basic queries to ask,, regardless of the fancy names and glitzy brochures they give you... 1st:  Is the principal guaranteed, or not?   2nd:  Is the interest guaranteed, or not?    3rd:  Cost implications of pre-termination?        Whatever labels they use -- those are the questions to ask when putting funds in banks. 

2nd  US Stocks vs Phil. Stocks
       We no longer let international banks/brokerages handle our stock  foreign portfolio.  We discovered that we are better at maximing our gains if we do our stocktrading directly, which we do as a hobby and answer to insomnia -- real time trading on the NYSE/Hang Seng.
       Phil stocks are our sleeper stocks:  San Miguel, Meralco ... mga hay nako patulugin mo ng taon taon.

3rd    Real Properties with with lease incomes
         The only non-earning property we hold is the house we reside in;  all other properties must currently earn and not just wait for price appreciation.

4th   Equipment with rental  income
       
5th   Bridge Financing       Banks offer, but not to most clients,  from time to time opportunities for bridge financing from 1 monoth to say 3 months.   If they have a corporate client with say a massive need for funds for a month or so (bridge financing) that is usually associated with inventory build up or importation that is coursed through the bank...  the bank calls on some of its cilents for participation.  The rates are good.  The risk is manageable since it is all overseen by the bank, the client is known to the bank and the client must have an existing standby credit line with the bank.   

[chefron]

Re pooled funds - Ok lang kaya let's say may Equity and Balanced Funds in FAMI, PEMI, BDO & BPI? The downside is maliit lang ang return kasi naka spread yun money. This is my plan, actually but as of now, I now have Equity and Balanced sa FAMI.

different companies but same type of investment

[mameejhy]

I just have something to say about all these high falluting labels they have for all kinds of funds banks offer.  Whatever labels they use -- those are the questions to ask when putting funds in banks. 

2nd  US Stocks vs Phil. Stocks
              Phil stocks are our sleeper stocks:  San Miguel, Meralco ... mga hay nako patulugin mo ng taon taon.

3rd    Real Properties with with lease incomes
         The only non-earning property we hold is the house we reside in;  all other properties must currently earn and not just wait for price appreciation.

4th   Equipment with rental income
       
5th   Bridge Financing  Banks offer, but not to most clients,  from time to time opportunities for bridge financing from 1 month to say 3 months.   If they have a corporate client with say a massive need for funds for a month or so (bridge financing) that is usually associated with inventory build up or importation that is coursed through the bank...  the bank calls on some of its clients for participation.  The rates are good.  The risk is manageable since it is all overseen by the bank, the client is known to the bank and the client must have an existing standby credit line with the bank.   

It's great to *see* you, again!

Are you referring to UITFs?

Stocks - I'm interested in these but, not now. I'm fine with mutual funds for now. I will buy may be 5 stocks and let them *sleep* for 5-10yrs 

Real properties - I have a duplex now and I plan to have more rental properties. Which do you think is better (for a possible rental property): buying & renovating foreclosed houses, buying & building houses or building houses on owned vacant lots?

Equipment - like trucks, forklifts? Can you explain further, please?

Bridge Financing - is this like Bank's client lending money to another bank's client? 

different companies but same type of investment

Yeah, same type of investment but they "invest" the money on different stocks (for equity, example)... 

[chefron]

Equipment - yes like those cause aquacharly is into construction.

bridge financing- is this also the midnight banking na tinatawag nila?

[aquacharly]

^No. 
Bridge financing is what businesses resort to in the short term before they nail themselves down to a medium or long-term financing arrangement.   
Sometimes,  the business is in the process of still finalizing or locating a more advantageous financing arrangement for the long term. 
Or, the lender/financing institution does not want to commit to a  financing arrangement yet until the business has put in place whatever is the subject matter of the financing.  Eh di na chicken and egg na the business... so bridge financing (usually this is 1 year at the most) solves it for the business and the financing institution.

I do not know what that midnight banking is.  But I do know there is an overnight accommodation for the banks. 

There are a lot of equipment, aside from construction heavy equipment, that can be rented out.
Office equipment, clinic equipment ... madami under the sun.   

[chefron]

pang big time talaga yan sis 

btw, di ko alam if tama ang term ng midnight banking or if banks does that or kasabwat lang the teller hehe nasagap lang naman ng tenga ko to..some kase daw nag overnight lending practice in exchange for some interest. maybe im wrong in my perception too.

speaking of equipment, welding machine grinder etc can also be rented out hehe naalala ko kase nabanggit ng karpintero kahapon

[aquacharly]

^Interesting. Yes, you may be onto  something there though this is new to me.  But what do I know, anyway, konti lang.
Perhaps it is like what they all deny but happens:  the trading  of pesos & dollars between accounts/clients that branch managers facilitate. Hehe
Maybe what you overheard is in connection with the last BSP directive that funds for checks MUST be in the account already 1 day before encashment or clearing. 

[helencons]

2nd  US Stocks vs Phil. Stocks
       We no longer let international banks/brokerages handle our stock  foreign portfolio.  We discovered that we are better at maximing our gains if we do our stocktrading directly, which we do as a hobby and answer to insomnia -- real time trading on the NYSE/Hang Seng.

Sis aquacharly, could you expound on this further pls.? What platform do you use to directly trade foreign stocks?  I hope you could give an insight on how we can do it independently from international banks/brokerages.

As always, your inputs are very informative and helpful.

[mameejhy]

There are a lot of equipment, aside from construction heavy equipment, that can be rented out.
Office equipment, clinic equipment ... madami under the sun.   

Oi interested ako dyan hehe Paano ang set up sa ganyan? Papa rent sa individual or businesses (corporate)? Monthly? Paano ma sure na isoli rin nila yun equipment? Paano kung nasira nila?

speaking of equipment, welding machine grinder etc can also be rented out hehe naalala ko kase nabanggit ng karpintero kahapon

Ah talaga? Hehe... Sino humihiram, mga contractor o carpenters?

[chefron]

usually mga karpintero kase wala silang budget para dun.. although some meron din. minsan yung nagpapagawa din ng bahay mismo