Investing amid economic headwinds can be daunting, but with education, research, and guidance, one can navigate the challenging waters with confidence, a financial analyst said.

The younger generation is aggressively investing, especially those entering the workforce with salaries ranging from P25,000 to P30,000, said Astro C. Del Castillo, president and managing director at First Grade Holdings, in a phone interview with BusinessWorld on Tuesday.

In 2022, online stock market accounts grew by 8.6% to 1.26 million, according to a stock market investor profile report. The average online transaction also increased to P46,236.40, up by 33.2%. As for the age distribution of account holders: 55.7% were aged 30 to 44, 20.8% were 18 to 29, and 18.4% were 45 to 59.

Against the backdrop of elevated interest rates, high inflation, and geopolitical tensions, Mr. Del Castillo offered insights for young investors.

Education is paramount

Mr. Del Castillo said that before diving into any investment, it is important to dedicate time to educating oneself.

“Number one, they should really invest time first to educate themselves on how to invest not only in stocks, but also in bonds, real estate, and mutual funds,” he said.

Understand the stock market’s complexity

Elaborating on the intricacies of the stock market, Mr. Castillo said, “I think it’s more tedious… Which companies you are buying, when and what to buy so medyo mas challenging ang stocks.”

Define your financial goals

Mr. Del Castillo said, “The rule of thumb of investing is number one, have your financial goal… What are you investing for? Are you saving for retirement? Start a business? Buy a car? Buy a house?”

Know your risk tolerance

When assessing risk appetite, he said, “You also need to understand your risk tolerance. Are you comfortable taking high, medium, or low-risk investments?”

Diversification is key

Highlighting the importance of spreading out investments, he said, “You diversify it — into stocks, bonds, real estate… So let’s say P30,000. Siguro you have P20,000 per month for expenses, then P10,000 for stocks per month.”

Start small and seek expertise

Emphasizing the importance of caution for newcomers, Mr. Del Castillo suggested, “Start small… Choose a reputable brokerage and stockbroker. Engage in conversations and learn from them. That’s when you can begin investing.”

Tailor investments to risk profile

Detailing investment strategy according to risk, he said, “Choose the stocks that are suitable to your risk. Are you low-risk? Go for blue chips… Or a combination of the three.”

Long-term over short-term

Reinforcing a long-term perspective, he said, “Better also to invest for the long term lagi. Sana yun ang una lagi rather than trading and short-term lang.”

Authorized stock brokers

He also stressed the importance of credibility saying, “Of course, kailangan authorized sila, recognized stock broker of the Philippine stock exchange and ng SEC (Securities and Exchange Commission).” — Aaron Michael C. Sy