My Investing Guide for Dummies Part II

Develop an Investment Strategy

By Joel Barretto, CFPⓇ | via |

In my previous article, I talked about having a delicate balance between “FIXED and EQUITY assets,” in accordance to your individual financial profile, as you create a sound investment portfolio.

As a review, FIXED assets are monies invested that rely on interest for growth.  Meanwhile, EQUITY assets rely on supply and demand factors of the economy for growth.

In this article, I will further break down examples of some common FIXED assets available in the marketplace as follow:


  1. Savings accounts – This is a no brainer.  Usually offered by banks, It’s a good place to safely put some of your cash reserve funds while earning a little interest as the money sits idle until that rainy day.  This actually falls more under the “cash category,” but in the interest of simplicity, let’s just call it a fixed asset anyway.
  2. Certificates of Deposit(CD)/Time Deposit – These accounts usually carry a little bit higher interest rates than savings accounts as you lock in your money for a specified period of time (typically between 1 month to 3 years).  Depending on the interest rate environment or yield curve, longer term accounts may possibly earn higher interest returns.  As some people don’t like locking up their money longer than 3 months, a good strategy for them might be a laddered CD portfolio.  For example, a person with P100,000 may possibly split his/her cash into 4 CD accounts with varying maturity periods (i.e. P25,000 @ 3 months + P25,000 @ 6 months + P25,000 @ 9 months + P25,000 @ 12 months).  By doing so, he/she will have some money maturing every 3 months, should the need arise.  Otherwise, he/she can simply re-invest the money back into a 12 month CD.  Not to mention that he/she may possibly get higher interest rates on longer term CDs.
  3. Bonds – Simply put, these are loan instruments.  When you buy bonds, you are lending your money to an institution or government for a specified period of time, in exchange for a guarantee on your money (against the institution’s assets) and interest on your money.  Although this instrument usually pays higher interest rates than your typical savings or CD accounts, you may lose some money if you sell your bond prior to its maturity date.  There is also possibility of default by the institution borrowing the money.  Like CDs, you may also adopt a laddered bond portfolio strategy with staggered maturity dates.
  4. Bond Mutual Funds – A mutual fund is a group of investors pooling money together.  A fund manager then takes the pooled money and invests it in accordance to a specific goal.  In the case of bond funds, the fund manager diversifies the pooled money into a diversified portfolio of bonds.  Although I would argue that mutual funds should be considered “equity assets,” wealth managers consider bond mutual funds as part of your fixed asset portfolio, when they adjust for balance between fixed and equity assets.  Mutual Funds are usually offered through securities licensed officers who buy and sell shares of the fund.  I would always watch out for the track record of the mutual fund manager and expenses before investing.
  5. Bond Unit Investment Trust Funds (UITF) – Similar to mutual funds, UITFs are usually offered through bank employees.  They are less regulated, and unlike mutual funds, they sell units rather than shares of a pooled fund.  Although I was never a big fan of UITFs, some of their laddered portfolios make sense at times.

In my next article, will cover some EQUITY assets, and try to simplify it for you, so stay tuned.


Author Bio

Joel Barretto, CFP sold his financial planning practice in Irvine, California U.S.A. to promote financial literacy and awareness in the Philippines.  He is a respected Certified Financial Planner practitioner with over 24 years of experience in helping people optimize, manage and protect their wealth.  

He is a public speaker and lecturer on a variety of financial planning issues and strategies.  With a passion for entrepreneurship, Joel dabbles in venture capital projects and mentors up and coming entrepreneurs on growing their start-up companies.  He is a 2nd degree black belt in the martial art of Kempo and enjoys performing and directing stage musicals for community fund raisers. You can reach Joel at