How to make the right investments this holiday season

MANILA, Philippines — Undas and Halloween have come and passed, and the 'ber' months are in full swing. Homes and establishments are decked out with lights and decorations, and the chaos of planning Christmas parties, shopping and get-togethers have begun. 

With Christmas season well underway and malls gearing up for big holiday sales, consumers are readying their wallets. All over the country, preparations for the holiday season are at the forefront of Filipinos' minds. But what is being forgotten amid all the celebrations?

Financial literacy  

Christmas season is the season of good cheer and giving, but it can be a bit of a drain on the finances if spending behavior is left unchecked. It's not new for Filipinos to change their spending habits during the holiday season. The pressure to take advantage of seasonal sales as well as buying and distributing gifts among coworkers, friends, and family can be deadly when it comes to savings. 

According to a study by Deloitte, the average American household is set to spend over $1,500 this Christmas season. While the context is obviously different, Filipinos can be expected to spend a very similar amount during the festive season. E-commerce platforms have taken advantage of the season, offering huge discounts to Filipino shoppers via promotions like the 11.11 sale.

Revenue in the Philippine e-commerce market is at $953 million in 2019, according to Statista, and it’s expected to go up by 14.4% year-on-year. 

The number of Filipinos using e-commerce sites is 48.7 million and this increases by 3.1% year-on-year, with a user penetration of 45.1%. These numbers will only continue to increase in the coming years, with user penetration in e-commerce expected to hit 47.4% of the country's population by 2023. 

Holiday spending is often seen as a necessary part of the season, with major expenses being brushed off as happening only once a year or allowed due to Christmas being a special occasion. However, without proper guidance, it's easy to fall into the trap of spending indiscriminately. Filipinos who aren't careful may end up finding themselves in the red once the holidays are over. 

Financial literacy is an important part of a person's lifestyle. It is especially relevant during the holiday season, where proper financial planning and budgeting often falls by the wayside in the rush to take advantage of Christmas sales and deals. Filipinos who are prone to overspending would do well to take advantage of financial literacy programs like Cashalo's CashAcademy, which aims to develop a generation that is more financially knowledgeable, responsible, and empowered. 

The Department of Education has also taken steps to ensure that financial literacy education starts at a young age, having formed a technical working group in 2017 to institutionalize financial literacy in the basic education curriculum. Financial literacy is essential not only because it contains the skills necessary for proper budgeting and money management, but also because it helps Filipinos take control of their financial future. This includes being empowered to make the right choices not only when it comes to savings, but also investments and other ventures. 

Making investments 

When Filipinos think of the Christmas season, it's more common to visualize money flowing out of their wallets, rather than keeping them in. For many of us, extra money like Christmas bonuses and 13th-month pay are used to pay off debts or buy Christmas gifts. The holidays are known as the season of spending, so rarely is any money left over for proper investments or savings. 

Filipinos should do their best to avoid the trap of depleting their savings during the holiday season. The simplest and best way to counteract the reduction of your finances during the end of the year is finding ways to make your money grow. While making investments may seem intimidating to newbies, the digital age makes doing your research on companies and stock trends easier than ever. 

The first thing to do when beginning your journey to financial literacy is doing your due diligence. Start researching for the types of investments you can make, and see what's best suited to your risk appetite. Are you an aggressive investor looking for high risk, high return on your investments? Or are you more conservative and looking to make your money back slowly over a series of years or decades? You could also be a balance of the two, comfortable with losing 5-10% of your investments but somehow able to manage the risks. 

Next, you should set a timeline for when you wish to make your investments and cash out on your investment returns. Using a bit of your Christmas bonus to make investments during the holidays can be a good idea, as stock markets traditionally perform well during January. Stocks are more bullish during the start of the year as this is when investors have fresh capital to buy shares and invest in the market. You should also pay attention to trends during January, as to how the market performs during these early months can be crucial in predicting how it will do the rest of the year. 

Choosing the right time to make your investment is important, so is choosing the right time to cash it in. Pay close attention to trends in the market and other news that might affect the prices of your investments. For example, the land will always appreciate in value the longer you hold onto it, but for stocks, you should pay special attention to how the company and the market are doing before you make the decision to sell. Research may seem intimidating, but doing it right can mean a return on your investment that's better than you ever imagined. 

Investing during holidays 

If you feel that the time is right for you to begin your investment journey, then there are tons of things you can invest in this holiday season. Here's a shortlist of some of the most popular investments that you can make with your Christmas bonus this year. 

1. Real estate

Investing in real estate can be one of the best choices you can make, as it has one of the best and most reliable returns. However, choosing to go into real estate can take a lot of capital and legwork, so make sure to do your research and prepare appropriately. 

2. Cryptocurrency

One of the most popular investments currently is cryptocurrencies like Bitcoin. The advent of technology like blockchain means there has been a lot of changes not only for the financial market but for other markets where you can invest in as well. If you aren't sure where to begin, tech writer Daniel Ling has written a primer on blockchain in the Philippines that could help you get started. 

3. Insurance

You may think that investing in insurance is an unnecessary expense, but there's no better way to protect your health and your finances. Benefits of insurance plans like Paramount Direct's PrimeCare Cash Plan (PCP) include guaranteed acceptance, so you don't have to worry about spending extra on medical exams. It also has affordable premiums that can go for as low as P213 a month depending on your age and the type of plan you purchase, making it an affordable investment both for you and your health. 

4. Stocks

When you think about investments, you might be picturing the stock market. Investing in a company's stocks is one of the most common ways to make an investment. It gives you a lot in return if you know how to play your cards right. First Metro Investment Corp's stock brokerage arm says that millennials are behind when it comes to investing in the stock market. Luckily, online stock market investing is as easy as ever in the digital age, and you can find all the information you need online.

To know more, visit the Paramount Direct website at https://www.paramountdirect.com/.