Gone are the days when your money should be kept safe in the piggy bank, in a metal box inside your drawer, or even with your mom. With the ever-increasing cost of living in the Philippines, the interest incurred in a bank can only get one so far. Young people, even fresh graduates, are encouraged to start securing their futures by investing as soon as they start their first job.

So the question is, what do you do with the savings you get from your paycheck? One way is through investing! But before you start investing, you must first know what kind of an investor you are based on your priorities and willingness to risk your hard earned money.

1. Conservative Investor

You’re the kind of investor who cannot tolerate any amount of loss and would rather get low returns. You feel that it’s best to put your money on regular bank savings, or you even prefer to store your money personally.

2. Moderately Conservative

You’re the kind of investor who prefers the slow but sure return of money. This means you are comfortable with time deposits and insurances.

3. Moderately Aggressive

You accept some degree of volatility and are not afraid of losses in short term.

4. Aggressive

You take advantage of volatility and seek superior long-term returns and see crashing or “bad” markets as opportunities. Remember, becoming an aggressive investor takes time and knowledge, so it is best to start out as moderately conservative and make your way up as you learn more about the basics of investing opportunities. Fortunately, banks and other trading or investment platforms offer tests to see what kind of an investor you are.

After finding out your investment personality type, there are three basic kinds of avenues for you to choose from:

Bonds

Bonds are similar to loans but are far more secure. The government or a company will use your money and in return, you will be paid with interest. Typically, bonds are considered conservative types of investments because you can choose the length and term of the bond and know exactly how much money you will get back at the end of the term. The only way you can lose money on a bond is if the company or government issuing the bond defaults on their obligations. The interest or return rate, however, is lower and is more recommended for conservative or moderately conservative investors.

Stocks

Stocks, on the other hand, are ownership in a public company. You may have heard of this being casually mentioned in movies or TV shows. When you buy a piece of stock and that company does well, the worth of the stock will increase. Remember that more returns come with more risks. When the company does bad, however, the worth of the stock will decrease and you will lose part or your entire investment.

Funds

Mutual funds involve pooling your investment along with others. A fund manager strategizes the best way for your money to grow. Every mutual fund publishes a prospectus or the strategies, objectives, risks, fees, and expenses of the investment. By investing, you will own a part of the portfolio and hopefully grow your capital.

At the end of the day, the difference between investing and gambling your money is knowing exactly how and where your money will be spent. It is important for you to find that sweet spot on how you’ll divide your savings among these different types of investments, especially when you’re just starting to earn your own income. Seek out the assistance of your local bank or financial advisor. The safety of your future depends on how you spend your money today.

For more tips on how you can be financially smart even if you’re just starting out in the adult world, visit Career Conversations at Edukasyon.ph!