In order to rely on ourselves in investing, we need to learn the basics of that investment instrument.
Is it better to invest money ourselves or rely on hedge funds, etc.?
Many of us in Cebu read your column and Philippine STAR. My question: is it better that we personally study and invest our money, or should we rely on hedge funds or other entities to invest our money even if we don’t know about them? On insurance, my family is a victim of CAP; we lost money on two pre-need education plans we bought. What happened to this case? I believe in your advocacy of promoting life insurance with Insular Life and Philippine STAR, because our father died in 2001 of a heart attack at 60 years old, and the life insurance money we got helped our mother with funeral expenses and expanding our family businesses.
Catherine Salimbangon, 26 years old, married, president of Organique Acai Drink, Cebu City
Answer
There is a certain minimum level of understanding that is required from investors in order to minimize the possibility of placing hard-earned money into questionable investment outlets. Basic finance concepts like the correlation of risk and rewards, time value of money and how investment returns are derived should be part and parcel of the decision making process whenever we consider making an investment. After we have satisfied the standards we have set for ourselves in terms of expected returns and the risk we are comfortable to assume, we can then pass on the implementation on these objectives to professional money managers or by choosing appropriate products/services provided by financial institutions.
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