We all agree that the road to financial freedom is a long and arduous journey. There are plenty of factors to consider such as time, our financial threshold, and the channels we have to grow our finances. But did you know that there are several OFW investments that are worth considering?
Long ago, it’s all about having some form of savings in the bank, but in this day and age, when economic movement is rather delicate and sensitive to a variety of external factors, it’s important that we think and position ourselves above these circumstances.
5 Investments OFWs Must Consider
As overseas Filipino workers (OFWs), we are privileged with the opportunity to explore what life has to offer outside of our home country, and at the same time provide better for ourselves and our families. However, it’s not enough that we only rely on what we have right now, because let’s face it – most of us aren’t going to settle down overseas when we reach retirement age, because for us Filipinos, it’s still about family.
Having said that, our goal for our time spent working abroad is not only fixed in the present, but on the future where we see ourselves happy and hopefully successful with the kind of life we’ve achieved. And a good way to get there is by opening ourselves to new opportunities through good investments.
Here are some investment channels we can use to reach our financial goals and secure our future:
1. Pooled Funds
If you’ve been in some kind of financial training or have some background in the industry, you may have heard about mutual funds, unit investment trust funds and variable unit-linked funds. These funds are handled by professional fund managers who invest primarily in equities and bonds. Another type of pooled fund is the variable unit-linked fund, which also offers insurance coverage.
In order to determine which type of pooled fund is best for you, you have to review the profile and performance of the fund. To understand fund performance, you need to look at both the long- and short-term figures to judge the fund’s consistency.
2. Stock Market
One major difference between investing in the stock market and in pooled funds is the absence of a middle man (fund managers). This means that other than your finances, you also need to invest a significant amount of your time to understand and analyse the nature of the system to make wise inferences for your decisions, as well as to appraise risks as determined by market conditions and economic trends.
Needless to say, investing in the stock market requires some skill, which you can definitely learn and gain on your own by exposing and applying yourself to learning this field.
It’s also important to understand that diversification is necessary when investing in the stock market. A good stock portfolio can be one with both established and emerging companies.
3. Real Estate
The value of this type of investment lies in price appreciation and rental profits. In choosing the type of real estate for a good investment, the most important thing to consider would be the property’s location. Different areas have different developmental growth. Areas that have dynamic developmental programs have the greatest potential to yield the highest gains.
Another important consideration when going for this investment is the choice of developer. Trust earned is an asset that yields greater rewards. And finally, financing schemes matter, too.
4. Developmental Sectors
Investing in the country’s developmental sectors such as agriculture and infrastructure will not only benefit the investor but also help speed up the development of these sectors. Investing in agriculture will prove to be a viable option for the OFW, if the products invested in have a strong potential for market growth, both locally and internationally.
Investing in oneself through an entrepreneurial endeavour is key to helping grow the economy. This is achieved by accelerating the development of the middle class.
Starting a business from scratch is one of the two ways to get into the field of entrepreneurship. The other method is to buy or invest in an existing profitable venture. Both will require diligence and commitment to see through the daily operation and monitor the growth of the business.
With the rise of digital currencies like Bitcoin, more and more people are considering investing in cryptocurrency. OFWs can invest in cryptocurrencies like Bitcoin, Ethereum, and Litecoin as a way to diversify their portfolio.
Investing in cryptocurrencies can be a good option for OFWs who are comfortable with taking risks and have a good understanding of the technology behind them. However, it’s important to note that cryptocurrencies are highly volatile and can be subject to large price swings, making them a risky investment.
If you are considering investing in cryptocurrencies, here are some tips and warnings to keep in mind:
- Do your research: Before investing in any cryptocurrency, do your research to understand the technology, the market, and the risks involved. Look for reputable sources of information and be wary of scams and misinformation.
- Start small: Don’t invest more than you can afford to lose. Start with a small amount and see how it performs before investing more.
- Diversify your portfolio: Don’t put all your eggs in one basket. Consider diversifying your portfolio with other types of investments to help reduce your overall risk.
- Choose a reputable exchange: When buying and selling cryptocurrencies, choose a reputable exchange with a good track record. Make sure to read reviews and do your due diligence before choosing an exchange.
- Secure your investments: Cryptocurrencies can be vulnerable to theft, so make sure to store your investments in a secure wallet. Use two-factor authentication and other security measures to protect your investments.
- Be prepared for volatility: Cryptocurrencies can be subject to large price swings, so be prepared for fluctuations in the value of your investment. Don’t panic when the market dips and don’t get too greedy when the market is up.
- Be mindful of regulations: Cryptocurrencies are still a relatively new technology, and regulations are constantly changing. Be mindful of any regulations or restrictions in your country or the country where you are investing.
In summary, investing in cryptocurrencies can be a good way for OFWs to diversify their portfolio, but it’s important to understand the risks and do your due diligence before investing. With the right approach and a little bit of caution, investing in cryptocurrencies can be a rewarding experience.
OFWs can also consider investing in bonds as a way to earn a steady income. Government bonds are considered low-risk investments, while corporate bonds offer higher returns but come with higher risks.
Investing in bonds is a good way for OFWs to earn a steady income as bonds are generally less volatile than stocks. Government bonds are generally considered low-risk investments because they are backed by the government and have a low probability of default. These bonds are often used to finance government projects and offer a fixed rate of interest over a specified period of time.
On the other hand, corporate bonds offer higher returns but come with higher risks as they are issued by companies and are therefore subject to the company’s credit risk. The credit rating of the company can affect the interest rate offered on the bond, with higher-rated companies offering lower interest rates and lower-rated companies offering higher interest rates.
When investing in bonds, OFWs should consider several factors such as the bond’s duration, credit rating, and yield. The duration refers to the length of time until the bond matures, with longer durations offering higher yields but also higher risk. Credit rating refers to the creditworthiness of the issuer, with higher-rated issuers being less risky but offering lower yields. Yield refers to the interest rate offered on the bond and is an important consideration when investing in bonds.
It is important for OFWs to diversify their bond investments by investing in a variety of different types of bonds, such as government bonds, corporate bonds, and municipal bonds. This can help to spread out the risk and reduce the impact of any individual bond defaulting.
- Government bonds – These bonds are issued by the government and are generally considered low-risk investments. They are backed by the full faith and credit of the government and have a low probability of default. Government bonds are often used to finance government projects and offer a fixed rate of interest over a specified period of time.
- Corporate bonds – These bonds are issued by companies and are therefore subject to the company’s credit risk. The credit rating of the company can affect the interest rate offered on the bond, with higher-rated companies offering lower interest rates and lower-rated companies offering higher interest rates. Corporate bonds offer higher returns but come with higher risks.
- Municipal bonds – These bonds are issued by state and local governments and are used to finance public projects such as schools, roads, and bridges. Municipal bonds can offer tax advantages, as the interest earned on these bonds is often exempt from federal and state taxes. These bonds are generally considered to be low-risk investments, but their credit risk can vary depending on the creditworthiness of the issuing government entity.
OFWs should also be aware that bond prices can fluctuate depending on changes in interest rates, inflation, and other economic factors. It is important to monitor the bond market and make adjustments to their portfolio as needed.
8. Exchange-Traded Funds (ETFs)
ETFs are similar to mutual funds but trade like a stock on an exchange. They offer exposure to a variety of asset classes, including stocks, bonds, and commodities.
ETFs, or Exchange-Traded Funds, are a popular type of investment that offers exposure to a wide range of asset classes. They are similar to mutual funds in that they pool money from multiple investors to purchase a diversified portfolio of stocks, bonds, or other securities. However, unlike mutual funds, ETFs trade like a stock on an exchange, meaning they can be bought and sold throughout the trading day at market-determined prices.
One of the main advantages of ETFs is their flexibility. Because they trade like a stock, investors can buy and sell shares at any time during the trading day, allowing for greater control over their investments. In addition, ETFs offer a cost-effective way to invest in a diversified portfolio of securities, as they generally have lower fees than actively managed mutual funds.
However, as with any investment, there are also risks associated with ETFs. One risk is the potential for market volatility, as ETF prices can fluctuate based on the performance of the underlying securities. Additionally, some ETFs may be more complex or specialized than others, which can increase the risk for inexperienced investors.
- Do your research and choose an ETF that aligns with your investment goals and risk tolerance.
- Look for ETFs that have a long track record of solid performance and low fees.
- Consider the tax implications of ETF investments, as gains may be subject to capital gains taxes.
- Diversify your ETF investments across a range of asset classes to minimize risk.
- Avoid putting all of your money into a single ETF or asset class, as this can leave you vulnerable to market fluctuations.
- Consult with a financial advisor or investment professional before making any investment decisions. They can help you assess your risk tolerance and develop an investment strategy that aligns with your long-term financial goals.
9. Peer-to-peer lending
Peer-to-peer lending platforms allow investors to lend money directly to borrowers, cutting out traditional financial institutions. This can offer higher returns than traditional savings accounts or certificates of deposit.
Peer-to-peer (P2P) lending has become increasingly popular as an investment option for OFWs. It involves lending money to individuals or small businesses through an online platform. The platform matches lenders with borrowers and facilitates the loan process, making it a convenient and relatively low-cost way to invest.
Investing in P2P lending can offer higher returns compared to traditional savings accounts or certificates of deposit. However, like any investment, there are risks involved. One of the main risks is default risk, which is the risk that borrowers will not be able to repay their loans. As a result, it is important to do your due diligence and carefully evaluate the creditworthiness of the borrowers you are considering lending to.
When investing in P2P lending, here are some tips to consider:
- Diversify your portfolio – Investing in multiple loans can help spread your risk and minimize the impact of defaults on your overall returns.
- Start small – Start with small investments to get a feel for the platform and the types of loans available before committing larger amounts.
- Consider the fees – P2P lending platforms typically charge fees for their services, so be sure to factor these into your returns.
- Evaluate the borrower’s creditworthiness – Look at the borrower’s credit score, income, debt-to-income ratio, and other factors to determine their likelihood of repaying the loan.
- Understand the terms of the loan – Be sure to understand the interest rate, terms, and any other terms and conditions of the loan before investing.
When investing in P2P lending, it is also important to be aware of the risks involved. As mentioned, default risk is a significant risk, and there is also the risk that the platform itself may fail. Be sure to thoroughly research the platform and understand the risks before investing your money.
10. Art and Collectibles
Investing in art and collectibles can be a good way to diversify a portfolio. This type of investment should be done with caution and with the help of an expert, as it can be highly volatile.
Art and collectibles are unique investments that can provide a high potential for returns, but they can also be highly volatile and difficult to value. Art and collectibles can include anything from classic cars, vintage wine, fine art, stamps, coins, and other valuable items.
One of the main benefits of investing in art and collectibles is that they can hold their value over time and potentially appreciate in value. However, there are a few important tips and warnings that OFWs should keep in mind when investing in this asset class:
- Research the market: Before investing in art and collectibles, it’s important to research the market thoroughly. This can include studying recent sale prices, trends, and the reputation of dealers and auction houses.
- Work with experts: It’s important to work with an expert in the field when investing in art and collectibles. An expert can help you understand the value of an item and provide guidance on what to buy and when to sell.
- Diversify your collection: Diversification is key when investing in art and collectibles. It’s important to invest in a range of items across different categories to spread out your risk.
- Store your items properly: Art and collectibles can be fragile and require proper storage to maintain their value. Make sure to store your items in a secure, climate-controlled environment.
- Beware of forgeries: Art and collectibles can be a target for forgers, so it’s important to be aware of the risks and work with a trusted expert who can verify the authenticity of an item.
- Be patient: Investing in art and collectibles can take time and requires a lot of patience. It can take years for an item to appreciate in value, so it’s important to have a long-term perspective.
Investing in a franchise can be a good option for OFWs who want to start a business but don’t want to start from scratch. Franchising offers a proven business model, marketing support, and training.
Franchising can be an attractive investment opportunity for OFWs who are looking to start a business because it offers many benefits. By investing in a franchise, OFWs can benefit from an established brand, a proven business model, marketing support, and training. Additionally, the franchisor provides ongoing support, including advertising, product development, and operational support, which can help the franchisee grow their business.
However, before investing in a franchise, there are some important things to consider. First, it’s important to do your research and choose a franchise that is a good fit for your skills, interests, and budget. This includes understanding the franchisor’s business model, the company’s financial performance, and the expectations for franchisees.
Another consideration is the cost of the franchise. Franchisors typically require an initial investment, ongoing royalty fees, and advertising fees. It’s important to understand the financial requirements and the expected return on investment before investing.
Additionally, it’s important to carefully review the franchise agreement, which outlines the terms and conditions of the franchise. This includes restrictions on the franchisee’s ability to operate the business, as well as the franchisor’s rights to terminate the agreement.
It’s also important to note that franchising is not a guarantee of success. While franchising offers many benefits, there is still a risk of failure, and the success of the franchise depends on a variety of factors, including the quality of the franchisor, the franchisee’s ability to execute the business plan, and market conditions.
Investing in a franchise can be a good option for OFWs who want to start a business, but it’s important to do your research, understand the financial requirements, review the franchise agreement carefully, and be prepared for the risk of failure.
Video: Vince Rapisura 031: How OFWs should invest while abroad
The featured video addresses a common issue faced by Overseas Filipino Workers (OFWs) – how to ensure that they are investing their hard-earned money in the right way while they are working abroad. Sir Vince, a financial advisor and popular YouTube personality, dives into the challenges that OFWs face when it comes to investing, including the limited time they have to research and manage their investments while working abroad.
Throughout the episode, Sir Vince offers practical tips and advice on how OFWs can make smart investment decisions, including the importance of diversification, the benefits of investing in stocks, mutual funds, and other investment vehicles, and the importance of creating a solid financial plan that aligns with their long-term goals.
He also touches on the emotional aspects of investing and offers insights on how OFWs can overcome the fear of investing and take control of their financial future. Throughout the episode, Sir Vince uses real-life examples and relatable language to break down complex financial concepts into actionable steps that OFWs can implement in their own lives.
Frequently Asked Questions:
1. What are the best investment options for OFWs?
There are several investment options available for OFWs, including pooled funds, stock market, real estate, developmental sectors, entrepreneurship, cryptocurrency, bonds, mutual funds, ETFs, peer-to-peer lending, art and collectibles, and franchising. It’s important to do your research and choose the investment options that are best suited to your financial goals and risk tolerance.
2. Why is it important for OFWs to invest their money?
Investing your money is important because it can help you build wealth over time. By investing your money, you are putting it to work for you, earning interest or dividends, and potentially increasing in value. Investing can also help you achieve your long-term financial goals, such as saving for retirement or buying a home.
3. Is investing in the stock market a good option for OFWs?
Investing in the stock market can be a good option for OFWs, as it offers the potential for high returns over the long term. However, it’s important to remember that the stock market can be volatile, and there is always a risk of losing money. It’s important to do your research and invest in a diversified portfolio that aligns with your risk tolerance.
4. What are pooled funds?
Pooled funds are investment funds that pool money from multiple investors to invest in a variety of assets, such as stocks, bonds, and money market instruments. Pooled funds are managed by professional fund managers and offer investors the benefits of diversification and professional management.
5. What are the benefits of investing in real estate?
Investing in real estate can offer several benefits, including potential capital appreciation, rental income, and tax benefits. Real estate investments can also offer a hedge against inflation and can be a good diversification tool for an investment portfolio.
6. What are the risks of investing in developmental sectors?
Investing in developmental sectors, such as infrastructure or energy, can offer high potential returns, but it also comes with high risk. These investments are typically long-term and require a significant amount of capital. It’s important to do your research and invest in reputable companies or funds that have a proven track record of success.
7. How can OFWs manage their investments while working abroad?
Managing your investments while working abroad can be challenging, but there are several ways to stay on top of your investments. This includes using online investment platforms, hiring a financial advisor, or setting up automatic investment plans. It’s important to monitor your investments regularly and adjust your portfolio as needed to ensure that it aligns with your long-term financial goals.
Overall, whatever matches your profile and goals as an investor should inform the OFW investments you should consider. It’s important to develop an innate commitment to learning because as we learn more, the opportunities become endless and we become an asset not only to our own families but also to society, and perhaps one day, even at a larger scale.
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