Financial Blog

Technology has redefined investing. Gone are the days when Wall Street turned to chalk, blackboards, and paper when making and tracking trades. Nowadays, as with all things, transactions are done and updated in real time. That means profits and losses are also updated instantly, making the margin of error–in making big or missing out on a hot stock–smaller than ever. The information is out there after all. But to make the most out of these opportunities, you first need to understand the ins and outs of the most popular investment options: UITF, stocks, and everyone’s favorite cryptocurrency, Bitcoin.

Read more: 5 Investments You Need to Have by Your 30s

When dealing with different types of investments, keep in mind that one market behaves differently compared to another. It’s not an “apples is to apples” comparison. It’s more like comparing your local wet market to a Sari-Sari store or an online marketplace. They sell the same products but do so in vastly different means and to different audiences.

UITF – Your profits depend on the difference of the NAVPU (stands for Net Asset Value Per Unit and represents the price of each unit of the fund at a given date) from the date of purchase and the redeeming date. In short, you can make money by selling your units of participation in the fund at a higher rate than when you purchased it.

UITFs are also the easiest to get into with a minimum investment of as low as P10,000. If you want to know which fund is best suited to your lifestyle, you can try Security Bank’s UITF Quiz. It only takes a few minutes with a few simple questions about your saving and investing habits.

Stocks – The rule of thumb: Buy low, sell high. Buy a stock at a low price and sell it at a higher one. Your profits will depend on the difference of your buying price and selling price multiplied by the number of shares you have on that stock.

Eg. You bought 1,000 shares of ABC Company at P5.00 per share. Then, you sold it at P7.00 per share. Your total profits would be P2,000 minus taxes.

The value of a stock changes everyday and traders either profit from value appreciation or dividends (Dividends are part of the company’s profit annually shared with their shareholders). Value appreciation is the increase in value of a stock compared to its purchase price. Warren Buffett, one of the richest in the world, gained his success by being a stock trader who uses the value investing method. This method concentrates on buying an undervalued stock (a stock valued below its intrinsic or true value) and selling the stock at its determined intrinsic value. It is a long-term game but the dividends make-up for it.

Bitcoin – Same with stocks, the value appreciation of Bitcoin results to profit for investors. The greater the increase in the value of Bitcoin, the greater the value of your money will be. But in the case of Bitcoin, volatility is much more extreme. In fact, the value of Bitcoin can make or break a millionaire. For example, $100 worth of bitcoins 5 years ago is worth $75 million today. That’s a 749,999,900% increase in value.

And that value fluctuates from month to month. In fact, volatility is the name of the game for bitcoin, so much so that astute traders keep track of the Bitcoin volatility index–a value that measures how much the price of Bitcoin varies over time. While the cryptocurrency keeps on breaking records with all-time high valuations, it’s also prone to very sudden dives (keep in mind that this currency is not regulated), with speculation as the currency’s main driver. To illustrate, Bitcoin’s value to open 2017 was $976.65. As of writing this article, one Bitcoin is valued at $60,189.10.

In the end, the kind of market you should invest in depends on your investing knowledge and objectives. If you’re starting out and want to get your feet wet in the investing world, you can opt for a UITF. But if you want to earn more and take on more risk, you can venture into stocks or Bitcoin.