Where To Invest Your P100,000 Spare Cash?

The Philippine Daily Inquirer recently conducted a poll on where to place a surplus of P100,000 among experts.

The Inquirer writes,

WE ALL know this is true: One reason why the rich get richer, so to speak, is because they have access to better investment advice—the kind that is often unavailable to regular investors whose bank account balances don’t go beyond six digits...

Surprisingly, the results of our discussions with these financial experts showed that investment success was not achieved through secrets known only to the affluent, but on decisions that are mainly ... common sense.

If beauty is in the eye of the beholder, so does investing.

That’s because everyone’s risk-reward profile is different or unique. They can be aggressive, conservative, or a mix of it.

So as with the diversity in time preference of expectations, e.g. long term, medium or short term.

This also applies to one’s comfort zone (e.g. biases such as preferred industry, “home bias”, or etc...).

The objectives can also be different, e.g. hedge against a currency, tacit influence of social pressures or etc...

The level of knowledge and the scale of knowledge acquisition, as well as, degree of exposure (e.g. passive or active) are also distinct, and matters significantly.

Thus, it would signify a folly to reduce an advice to a "one-size-fits-all" frame.

While common sense is indeed the answer, common sense, while available to all, seems to be unwittingly the least of the desired path. That’s mainly because common sense is boring stuff.

At the end of the day, P100,000 in spare cash should be allocated, perhaps based on the world’s most successful equity investor, Warren Buffett advice, “Risk comes from not knowing what you are doing.”

(hat tip: Jodie Espino)