Learning About Three Other Safer Methods of Investing Money in the Banks

Stocks certainly have high yields but have high risks.  During the time I wanted to invest in stocks, the bank said, "Sir, you should only invest in stocks if you really have lots of money.  Other than that, you might as well want to try other safer means of earning money.  Then again, somebody may suggest to buy low price stocks and only a certain amount, then sell them later.

It's like my mistake of allowing a huge purchase in credit hoping for high returns, only to be defeated by my own foolishness.  As said, in life you can never say you will never stumble down.  I'd like to talk about my modest knowledge of safer investments based on my experience.  Banks earn money by gaining interest from loaning the money to others.  The money you deposit is loaned to the bank, the bank loans it to others thus creating a cycle of interest.

1.) Time deposit

Money is being locked up in the bank, with a higher interest rate than savings account.  A minimum of PHP 10,000.00 is set.  It gets interest within a fixed period at the choice of the banking client.  This has compounded interest where interest increases together with the increase of money.  You may not withdraw or add more money until the next rollover or date of maturity.  Doing so renders you with penalty which may lessen the interest earned.

2.) Unit investment trust

Another form of investment you may want to enter instead of stocks is the Unit Investment Trust.  These investments may be resold in the secondary market.  It provides capital appreciation and/or dividend income.  These are fixed, unmanaged portfolio generally of stocks and bonds as "redeemable units" for investors for a specific period of time.  

3.) Treasury bill

This is a high-earning investment but not always available.  Bonds are securities that are marketable, sold at fixed interest with a maturity of more than ten years.  They are sold in the money market.  For example, a treasury bill investment today is merely PHP 10,000.00 but if its price increases, you may call the bank to sell it for instant profits to your savings accounts.  It is not always offered as when interest rates goes up, considering it is a debt, the money might as well be rolled over to unit investment trust or time deposit for the meantime.

Some learning experiences

Based on the three alternatives, it's always best to know the economic situation by reading the daily newspaper.  At the same time, DO NOT take preposterous promises like double your money in five years.  My experience before with double your money with a now bankrupt bank was simple.  Although I recovered the money because of insurance, but the money did not fully double.  Most people were scammed into believing it... plus it's too good to be true.  Doing the Math from Finance 101 (most people tend to forget even the basics), you end up in utter disaster.  

What kind of banks may you want to avoid?  Avoid banks that spend too much.  The banks are using your money to finance their operations which is why they pay the quarterly interest or you earn interest.  You are the lender, the bank is the debtor.  Certainly it was foolish for me to loan a lot of money to a heavy spender and gambler.  Until now, I haven't recovered the money and I can only rely on any money I earned to survive.  Banks that spend too much are most likely to crash, provide incompetent services and not to mention may need to be bailed out because of its weak financial stand.

Again, I am not a financial guru or anything, I'm just sharing my experiences.