Money-smart Gen Zs are looking for ways to grow their cash in ways that are as easy and accessible as online shopping. The pandemic is still here and it pays to have as many sources of income as possible.
Almost everyone has a GCash account they use for bills payment and other contactless transactions. More than just using it to store virtual credit, the app also offers investment to users via GInvest with a low barrier to entry. If you’re looking to invest via the GCash app, here are some things you might want to know.
Understanding Unit Investment Trust Funds
Very simply explained, a UITF is a pooled fund, meaning lots of people all invest into that fund.
If 10 people invest P1,000 each into a fund, a fund manager will study and decide how to best divide and invest that accumulated P10,000 into the fund’s different placements and companies.
Essentially, you’re putting out money to buy shares of the fund that invests in other companies. You don’t actually own shares of the company the fund is investing in.
UITFs are offered by banks and are regulated by the Bangko Sentral ng Pilipinas. The UITF has the Net Asset Value Per Unit, or the price of each unit. If you invest P50 and each unit is P5 each, you have 10 shares in that UITF.
If the price of each unit goes up to P10 in let’s say, six months, you will have earned an additional P50.
The NAVPU is computed on a daily basis where total debt is subtracted from how much the fund has, divided by the number of shares.
What types of funds can I invest in?
The funds on GInvest are handled by asset manager ATRAM and can be separated into two types, local and global funds. There are three for local, and two for global funds.
Money market funds
The money market fund is a low-risk investment in time deposit placements. Starting investment can be as low as P50.
Bonds are debt and usually these are corporate and government bonds. Think of it this way, a company or the government will borrow money from you (these are the shares you buy) and they pay it back with interest. Starting investment is also P50.
Equity fund invest in stocks
Another local fund is the equity fund, which is invested into stocks of companies like SM Investments and SM Prime Holdings, Ayala Land, BDO, and JG Summit Holdings to name a few. Starting investment is at P50.
All the global funds in GInvest are feeder funds, which means local fund managers are using your money from the fund to invest in another fund overseas. Simply put, your shares in the local fund are being used to invest in a bigger, global fund.
Global Tech Feeder Fund
This fund invests in Facebook, Microsoft, Apple, Samsung, and other tech companies and household names. For P1,000, you can start investing in this fund.
Global Consumer Fund
This fund invests in consumer products so brands and companies like Amazon, Alibaba, EA, Nintendo, Facebook, Netlifx are part of the fund. It also requires P1,000 to invest.
What about the risks?
Before you put money into a fund, GCash will assess what kind of investor you are through your risk appetite.
Some find comfort in minimal risk and are conservative investors. Those more comfortable with greater risks may be okay with investing in funds with an aggressive risk rating.
There’s more to your appetite than just your willingness to put money into a fund. It will also take into consideration how much you make, how much you’re willing to put in, and how frequently you plan to invest.
Be honest when answering this test so you can figure out the risk appetite that best fits you. There are no wrong or right answers, and your assigned risk appetite will not limit what funds you have access to. It is merely a guide if you’re new, but your personal risk appetite may change as you invest more.
How do I get started?
For as little as P50, you can invest in moderate funds, like the ATRAM Total Return Peso Bond Fund. More aggressive funds like the ATRAM Global Consumer Trends Feeder Fund require a minimum of P1,000 initial investment. For this example, I will invest P100 into the ATRAM Total Return Peso Bond Fund. With P100, I was able to buy 0.77 units.
Processing can take up to three business days. You’ll be updated via text once it’s confirmed. After confirmation, you can now track your investment via GInvest and observe the trends.
Earlier, I invested P1,000 in the tech feeder fund. On one day it gained my P26, but today it went down to P15.
You won’t make a million overnight and an upwards trend doesn’t always happen every day. There is risk to investing, and while minimal depending on the fund you invested in and how much you put in, be prepared to earn less than expected or even lose money.
Past performance isn’t always reflective of future performance since the market is volatile and several factors could drive prices to go up or down. If a potential investment seems too good to be true, it probably is.
Do your own research
Investing is relatively easy after you’ve put in the money, but you still have to do your fair share of research. It helps to monitor your investments daily and if you have time, you could check the trends on the GInvest website at least once a week.
GInvest is a good way to dip your toes into investing at a relatively low price and if you get the hang of it, you can begin investing more or foray into other types of funds or stocks outside the GInvest system.