Low-Lying Investment Opportunities

Growing up, being a professional was the only career path I knew. Both of my parents were doctors and both sides of my family teemed with teachers, doctors and engineers with a smattering of accountants and lawyers. Working for a salary or receiving professional fees was what we knew best and entrepreneurship was virtually non-existent or looked upon with distrust.

However, my father tried his hand at entrepreneurship a few years before his retirement from government service and heavily invested in agri-businesses in our province in Biliran. He was planting the seeds so that he would not be bored in his retirement and would not have to rely on his pension or our resort's income for his financial upkeep. 

Big, expensive and labor intensive agri-businesses were my father's investment of choice. He once shuddered at the thought of investing in stocks because it was supposedly too complicated and "was only for rich people." So I grew up thinking that the only way to make a living was to become a professional. Also, I believed that investing was better left to big boys in snazzy suits because it was only those type of people, not our kind, who have the know-how and bucks to dabble in investments. 

But now that I'm ever so enlightened and a self-proclaimed guru on the art of investments, I can confidently tell my father that even small fry like us can invest with practically no hassle and that we don't have to go all-in all the time when it comes to investing.



If you want to get rich at the earliest possible opportunity, then I highly recommend going into business. Scan the market, identify a gap and fill in that gap by providing the necessary services or items. Work 24/7 for 2-5 years while setting up systems in place so that you can eventually hire people to run your systems, freeing you up for leisure activities or to set up a new business. It's the quickest way to get rich, but not the easiest.

However, if going all-in and full-throttle is not your style, fret not because there are still other investment opportunities for you. Of course, these investment vehicles will not garner dramatic results like having your own business will, but being low-maintenance investments, you can concentrate on your career or other sources of income while still building up this alternative income stream at the same time.

The easiest investment I can think of is becoming a member in the savings and loan association (SLA) in your office, if you have it. Republic Act No. 8367 or the Revised Non-Stock Savings and Loan Association Act of 1997 defines an SLA as a "non-stock, non-profit corporation engaged in the business of accumulating the savings of its members and using such accumulations for loans to members to service the needs of households by providing long term financing for home building and development and for personal finance."

An SLA gets funds from the contributions of its members which it then lends out to its members. Member-borrowers are charged a high interest rate so that members can also enjoy a high dividend rate. Member contributions are deducted from their monthly salary, so there's no danger of forgetting to put in your monthly investment or running out of money before making your monthly investment. Easy right? 

Another investment vehicle which is also worthy of attention is Pag-ibig's MP2 program, a voluntary savings platform for Pag-ibig members. An MP2 account has a five year lifespan and annual dividends which averaged 7.65% from 2016 to 2018. Accounts can be renewed after 5 years and even former Pag-ibig members (i.e. pensioners) can open an MP2 account.

You can open an account by filling out an MP2 Savings Application Form and submitting it to the Pag-ibig Fund office nearest. Minimum remittance is Php500 and there is no imposed maximum. Remittances can be made through salary deduction or any Pag-ibig office or accredited collection agency.*

A 7% annual, tax-free dividend is nothing to scoff at specially when compared with time deposit rates of 1.75% to 3.875% p.a. There's no doubt about it, if you're choosing between time deposit and the MP2 Savings program, I highly recommend going for the latter.

The third low-lying investment I can recommend are index funds or a basket of funds that mimic the performance of the stock index composed of 30 blue chips companies. Investing in index funds removes the problem of what stocks to choose and when to buy them, thereby simplifying your investing life to no-brainer status. For an exhaustive article on index funds, I suggest heading on over to Pesolab's page.

So there you go dad, I mean guys, investing doesn't have to be difficult at all!


* Check out the MP2 FAQ page if you have other questions.
** Please like the Frugal Honey page on Facebook for post updates and relevant information for your own personal finance journey! 

Comments

  1. I definitely prefer investing passively over having a business. My wife aggressively contributes to her Coop (around 4pct in dividends plus low loan rates) and am somewhat satisfied with our index fund (negative now but 10+ year horizon). If I have extra cash, we will consider the MP2 one. ��

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    Replies
    1. I can't imagine going into a business too as I love my free time too much. That's why I really like these low-lying, no-sweat investments so I can still invest as much as I want without sacrificing my sleep schedule.

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  2. Hi Jill, what index fund did you eventually invest in? There is no saving and loan association where I work but I have tried investing in cooperatives. The interest rate is higher than market rate (4% p.a. for an ordinary deposit last I checked). I think plenty of people overlook them as they're not widely marketed, unlike the techy CIMB and ING online banks.

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    1. Hi George,

      I invested in FMETF because it has the lowest fees among the other available index funds.

      Last year, our SLA gave a 12% dividend (but was really nearer to 15% when I computed) to its members, but I heard that the loan interest rate is at 30%! So nakaka-guilty din how us members earn our dividends :(

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  3. Not an entrepreneurial person myself. I've also been noticing how being an employee is demonized in some circles, but I digress.

    I feel lucky to live in a time when it's possible to invest in stocks online and learn as I go along. I was also able to subscribe to a UITF without having to go to the bank (via BDO online).

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    Replies
    1. Yeah, there was a time when creatives were lauded for having soul while those in corporate were reviled for being money-obsessed and soulless. Is it still like that now? Are these caricatures still rolled out?

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  4. Wow. This article has great insights. I'm considering Pag-IBIG MP2 now. Thank you!

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