How To Start Investing With Little Money

Don't have enough cash to invest? Here's a step-by-step guide towards investing for first-timers. By Rizza Sta. Ana

How do I start investing
The key to investing is not having more money—it's finally getting started.

When we talk about investing, the first thing most people would think of is money, and lots of it. But you’re probably asking—how can one start investing, especially in this economy? Contrary to public perception, investing will not necessarily drain your monthly paycheck.

This is because the key to investing is actually not having more money—it’s getting started. Taking the first step will help you build enough investment to grow money for you later on. Here’s a quick guide on how to start investing

Investing With Little Money: A Step-By-Step Guide

1. Find the right investment to put money on

If this is your first time, finding the right investment to put money on can be daunting. A popular investment decision among Filipinos is real estate. This is because for Filipinos, home ownership ensures they are putting money on something that is tangible and has the capacity to grow you more money if you decide to divest it or put it up for rent.

Also, investing in a condo or house and lot is a win-win as well. Why pay thousands of pesos in monthly rent or lease, when you can put your savings in a home you will eventually own?

Alternatively, some Filipinos choose to invest in a small business. This does not usually require a large amount of capital; at minimum, it calls only for a small amount of overhead to spend on raw materials. A small business is also ideal for people who want guaranteed customers and periodic income (for example, franchising).

People who know their way around financial instruments go for other affordable investments like mutual funds, unit investment trust funds (UITFs), bonds and life insurance. These tend to require around P1,000 to P5,000 as an initial payment, and are well-leveraged so there’s less risk from scams.

READ: 5 Effective Investment Strategies for Newbies

2. Decide how much money you can save

The 50/30/20 rule suggests you save 20% of your income. However, reality sometimes cannot let some people afford 20% as savings. The best answer is simply this: as much as you can. You can start as small as 10% or about P500-P1,000 pesos as your target.

If you do have money left over, you may also consider increasing your government contributions a wee bit. You not only put money on your retirement fund, but also help you qualify for higher loanable amounts.

TIP: If you decide to start investing in a condo or house, allocating your savings to increase your PAG-IBIG contributions is a good idea. PAG-IBIG has no maximum voluntary amount that you can add to your monthly contribution.

3. Optimize your savings account

Just because you are a longtime client of one bank does not mean you shouldn’t explore other banks. Other banks may offer higher yields of lower interest rates, for example. If you find one that’s more to your liking, don’t hesitate to make the switch.

4. Set up your account to debit savings automatically

Most banks nowadays have an auto-debit feature that allows you to directly debit your savings toward another savings account or your government contributions. This removes the additional burden (and temptation) of actually taking physical money from your account and depositing it elsewhere.

If you are not self-employed, you need to coordinate with your HR department regarding increasing your government contributions. This will entail filling out a form informing your accounting or finance department to increase your contribution deductions from your monthly salary.

READ: How the 80/20 Rule Can Turn Around Your Finances

5. Monitor your savings AND planned investment

Naturally, you need to monitor your savings to determine if you are close to hitting your target goal. On the other hand, it also pays to monitor if the investment you are eyeing will still make the best one as well. If you are unsure of the latter, talk to a professional. If you plan to invest in a condo or house and lot, for example, a real estate agent will definitely help you secure more favorable deals.

Already have enough savings to put on a condo or house and lot for sale? Talk to a real estate agent today at