My 2017 investment picks - Lazy Investing Way

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Monday, January 09, 2017

My 2017 investment picks


In 2017, we will face a polarized political environment. The various wars and killings around the world, Brexit, the U.S. election result, and key upcoming votes in the EU are likely to make investors more uncertain. However, despite both internal and external concerns, the broader backdrop should be positive for investors next year.

Conditions in the Philippines are ideal for business investments. For one, we have a rich resource of talented people. Our wage rates give us a comparative advantage over other countries together with proper government spending focused on growth. Here are some of my investment picks for 2017.

Index  Funds
Index funds are low-maintenance, low-cost pooled funds (either Exchange Traded Funds, Unit Investment Trust Funds or Mutual Funds) designed to follow the price fluctuations of a broader index like our PSEi.

Right now, our index is slowly going down due to various factors but once signs of recovery appear (maybe 2017), you can definitely start investing or even automate your savings to keep on pouring into your index pooled fund. They are definitely boring investments but they work.

PERA:  Personal  Equity Retirement Account
The PERA Law was established via RA 9505 (PERA Act of 2008) to promote capital market development and savings mobilization in the Philippines. It aims to help Filipinos, specially OFWs, to save for retirement.

The Pera allows for maximum yearly contributions of Php100,000 and Php200,000 for overseas Filipinos. Although it was enacted into law in 2008, it is only now or 8 years after (in the middle of this month) that the implementation was given the go-signal by the Bangko Sentral ng Pilipinas (BSP). To put it simply, it is an Investment with tax benefits. Here’s a quick rundown of it:

• Tax Credit – your contributions within the calendar year is entitled to a 5% tax credit which can be used against your income tax liabilities.

• Tax Exempt Investment Income – Yes, you read that right! Investment income which is income earned from investments and reinvestments of PERA assets in the maximum amount allowed is exempt from taxes on investment income.

The contributions will be invested in various products such as trust funds, mutual funds, insurance, pre-need, government bonds and listed equities for the money to grow, the proceeds of which may be claimed once a person reaches the age of 55 or has invested in the fund for at least five years.

So far, only BDO Unibank, Inc., and the Ayala-led Bank of the Philippine Islands have been accepted as PERA administrators.

Invest in yourself
Now if you don’t want to spend money even in low-cost index funds or through a PERA account, might as well invest in learning more about the investment world or gain some skills that will be useful for your business or career.

After gaining the necessary knowledge and experience, then you can create your own ‘personal investment fund’ which is a no-load, no-cost, or no-expense fund since you don’t charge yourself but your gains will depend on your own ability.

Investors need to constantly remind themselves that markets react emotionally at first but always return to a fundamentals driven environment. Let’s help each other make the journey through 2017 a profitable one.

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The writer is an RFP® - registered financial planner of RFP PH, Licensed Real Estate Broker and Director of CERTA, Inc., a family estate planning and investment advisory firm. To know more, please visit www.certa.ph
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Originally Published in Philstar - The Freeman Newspaper last December 27, 2016.

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