Dubai: When Rick Salud came to the UAE 21 years ago, he did not know anything about investing, because he hardly saved.
Five years ago he taught himself about investing with the help of friends and professional investors. “Once I learnt the ropes, I jumped into investing,” said the 45-year-old Dubai government employee.
Salud has been investing into Philippines mutual funds until now. But, having gained some confidence, he intends to invest directly in the stock market. Food and beverage, energy and mining stocks are among his preferred choices.
“Investment funds should be a good vehicle for first time investors, given that they are professionally managed equity funds,” said Maria Theresa M. Javier, senior vice-president and group head, BPI Asset Management.
Gregg Adrian R. Ilag, equity analyst at AB Capital Securities Inc., said: “Investing in equities has more risk as compared to mutual funds. However, this is compensated with higher returns. Currently there are mutual funds and unit investment trust funds available for such investors.” The Philippine stock exchange is currently drafting rules for exchange traded funds.
According to Philippine Investment Fund Association (PIFA), the Philippines has a total of 48 active mutual fund companies as of July 3, 2012.
Management fees for funds range between 2 per cent and 3 per cent. Salud not only invests in publicly listed companies, but also in unlisted medium size firms. “I look for stable and growing companies which will give good return on my capital. So, when I take back my capital and leave the profit, it pays for itself. Technically I own the shares for free.”
A. Halibas, who has been in the UAE for four years, has been investing in time deposits, mutual funds and a small portion in stock markets directly. Calling himself a “reluctant investor”, the 33-year-old IT specialist from Abu Dhabi, invests mostly in blue chips that pay high dividends. He has invested in telecom, real estate and power sectors.
As returns on time deposits are meagre, with interest rates for a year varying between two and three per cent, Halibas said that he invested in time deposits of cooperative banks, which are not insured. “Though I know it is risky, but they were offering 6 per cent per annum,” he said.
Salud puts aside about 25 per cent of his monthly salary to invest in Philippines mutual funds. Even though some funds have witnessed fluctuations, he has stuck with them as he considers himself a long-term investor with retirement savings as his goal.
He is aware that the stock market has been surging this year and as the index goes up, there will be corrections on the way. “So I know that at some point it will go down. Since you are in it for the long term, you should not fear because time diminishes risk.”