Last October 2022, the value of Philippine peso has dipped to its all-time low of PHP59 for every US dollar. The said weaknesses of currency value was attributed to the rate hike policy implemented by the US central bank over the past months. Despite its weakness these past few months, the beginning of 2023 showed an uptrend on the Philippine peso value which is a good indication that the currency is regaining its strength and slowly shifting to its usual exchange rate before the implementation of the substantial rate hike policy of US central bank. Last February 2023, Philippine peso returned to PHP53:$1 rate which is considered to be the strongest exchange rate of the currency over a seven-month period. However, the Philippine peso returning to PHP53:$1 rate was not stable these past few days. On the 7th day of February, the peso weakened to PHP55. Nevertheless, the fluctuations happening right now are still tolerable than what has happened in 2022. But the US Fed revealed that there will be one last rate hike happening this March. After the rate hike, it is expected that in the month of September that the Philippine peso will regain its strength and comeback to its usual exchange rate.
Still, majority of us wants the Philippine pesos to strengthen right away to ease the inflationary pricing of our necessities. Though for investors, the Philippine peso returning to PHP53:$1 rate might lead them to lower profits realized through forex. From this niche population of investors, we can learn something especially if we plan to make investment or to diversify our portfolio. For sure, peso returning to PHP53:$1 rate and consistently staying on such rate might be impossible. Fluctuations may still occur and sudden significant devaluation of currency may happen as well. Nevertheless, one way to mitigate the risk of getting affected by this economic crisis is to invest in steady assets. Investing is important if we want to maintain sa value of our money in the long run. With this, let’s learn more about how investing in steady assets will positively impact our financial capability in the long run.
Importance of Investment in Currency Valuation
In the field of investment, there is this belief that “a peso today is worth than a peso tomorrow”. This is also applicable to any type of currency. One factor that devalues a currency is inflation which is often caused by increased money supply or the supply and demand of goods and services. Nevertheless, the decreasing value of currency entails that the purchasing power of an average person weakens. Thus, for the average population, Philippine peso returning to PHP53:$1 rate is an indication that purchasing power of the majority will be strengthened which grants them the ability to satisfy their needs and wants without being too much restricted with their budget.
Nonetheless, in an investor’s perspective, investments will most likely realize profits from the inflation. However, you should not be fooled by the increase in its monetary amount. At face value, it may have increased. Let’s say your PHP1,000,000 investment doubled its amount due to inflation. The amount it increased is just like a compensation for the inflation. To simplify things, it is just a way to maintain its value or purchasing power if converted in monetary terms. But if we are not experiencing any economic crisis at all and the price of your investment raised due to supply and demand, the increase in value can be enjoyed because you have a better purchasing power than before.
Investing on Steady Assets
Investment is a risk. Perhaps, it may also be considered a luxury for some because you need to allot a portion of your disposable income or funds to make an investment. Well, this is a good news for new investors and people with low-risk tolerance when it comes to investments!
Nowadays, financial institutions encourage people to make investments. With this, low-risk investments or steady assets are now available to invest on but compared to high risk-high reward investments, this type of investment has lower returns yet from the name itself, it is steady. Steady returns helps you maintain the purchasing power of your money. We do not know when will Philippine peso stably return to PHP53:S1 rate or even lower. So, to safeguard ourselves with the sudden and highly impacting price fluctuations, investment on steady assets should be a good option.
If you are interested in starting to build your investment portfolio without staking a lot, you need to consider these 5 safe investments as it produces a small yet guaranteed income. It will be a good start as you try to diversify your portfolio or gauge your risk tolerance for your next investment decisions.
1. High-Yield Savings or Depositary Accounts
It is not new for everyone that deposited money in the bank earns an annual interest. However, the usual yield rate offered by banks are too small. But we do not have to worry anymore! The advent of digital banks gave us the opportunity let our saving earn more than the usual. This is a great news especially for those still undecided on what they will do with their funds. At least, even you are still indecisive with your investment decisions, your savings or funds are earning more than the usual rate given by traditional banks.
2. Time Deposit or Certificate of Deposit
This is also offered by banks and the interest rates are higher than the usual savings account. Although, there is a twist. For time deposit, your funds is restricted for withdrawal until the lock-in period lapses. The longer the period of restriction, the higher yield it earns. This is perfect if you have spare funds which you would not be needing for use in a certain period of time.
3. Treasury Bills
Treasury bills are short-term government-issued securities. Being government-issued is its biggest advantage and the primary reason why this is a considered a low risk investment. Government will not default on its debt thus guaranteeing you profits or interest from your investment even at small portion or percentages. The maturity of the investment varies from 91-day, 182-day, or 364-day. Since it is short-term, the realization of profits or its maturity happens within a maximum period of one year from the date of investment.
This might be the asset that is often overlooked by those who want to start investing. Aside from being fancy and a wearable asset, its value continues to appreciate. However, what is difficult with investing in jewelries is that you need to be knowledgeable in a sense that you need to be able to know what is genuine from not and you must know the true value of the jewelry before deciding to acquire it as an investment.
The stability of the value appreciation of jewelry is truly witnessed this pandemic. Despite the economic crises the world faced during the peak of pandemic and up to now, value of jewelry has not depreciated significantly. In fact, it continues to steadily appreciate even with the economic downturns we experienced. Additionally, this investment is considered liquid because you can sell or pledge it in pawnshops.
So, if you love looking fancy yet you want to be wise with your spendings, buying jewelry is the way to go. You can look elegant without being broke as your accessories are your investments as well. Also, if you want to save some hassle on learning more about jewelry, purchasing at pawnshops is a great option. These establishments sell jewelries which are not redeemed by its owner. Nonetheless, it guaranteed that the jewelry you will be purchasing is genuine and fairly priced based on the market.
5. Real Estate
It is intimidating to hear real estate investments. It is like you have a lot of money when you invest with properties. However, investing in a real property is easier than you think. Its cost might be high but there are financing methods that you can maximize in order to seize the opportunity of purchasing your prospective property. Aside from personal use there are a lot of ways to earn through real estate. Although, like jewelries, you need to be knowledgeable with the real estate especially if you plan to start flipping properties.
Nevertheless, a real estate investment is very flexible. It has a lot of potential if you want a stable earnings from your investment. In fact, there are real estate developers recognizing the desire of this generation to make investments without breaking the bank. We, at Bria Homes, offer the best yet affordable house and lots in the country. We know that purchasing a property demands a huge amount so to accommodate people with limited funding, you have the option to pay through different financing methods like bank housing loan or Pag-IBIG housing loan. To learn more, you may contact us through our Facebook page.