Why I Choose to Put My Eggs in Several Baskets Than Just One in Investments

I could remember my BSBA days and MBA days in the University of San Carlos-Main Campus. There were the accounting classes, business calculus classes, and the finance classes. If there's one advice that's very often ignored--don't put your eggs into one basket. It's really, absolutely risky both literally and symbolically. 

Imagine the farmer who has a harvest full of good eggs. However, the farmer foolishly decides to try and fit all his eggs into one basket even if he had many. The farmer goes to the market to try and sell all of them at once. However, something bad happens and it causes him to lose all his eggs at once. Had the farmer decided to put the eggs into several baskets--he may have had been able to sell a lot of his eggs even if some of the baskets may meet misfortune. Putting the eggs into different baskets was meant to minimize the losses of the eggs. The farmer could've created different baskets for a different amount of eggs. Sure, it will take time but it will minimize the losses that could've been incurred.

The same can be true with investing money. Don't put all your investments in one basket. There are some legitimate ways to invest money. Definitely, I'm still wary of cryptocurrency in contrast to stocks. Though, I still feel my understanding of the stock market is very raw so I'm using a simulated stock experience for now. Now, we could think of many ways that money can be invested. We can think of many ways that investing money can take place. Some people, unfortunately, think that they can just pool all their resources into one business or investment which isn't a very good idea. 

A business isn't always meant to be consistently strong. Sometimes, even a seasoned businessman can screw up like a young businessman can also screw up. I remembered incurring uncollected accounts receivable from a family friend. Until now, the debt wasn't paid. If I relied too much on that source of income--it would've been a goner. Some businessmen started to invest in the real estate industry by opening spaces for rent. Some businessmen refuse to sell their spaces so they can continue to make money for a long time from rentals. Selling property can be pretty much a one-shot deal in contrast to leasing a property. It's very difficult to purchase new property. Some businessmen who ran strong businesses now have slow businesses. Some even closed their previous businesses down (such as Tony Tan Caktiong and his ice cream shop) in favor of the businesses that did better (such as Jollibee and being a co-owner of Double Dragon Properties). 

If there's one thing business tycoons know--it's to diversify. Tony Tancaktiong has Jollibee, Chowing, and Mang Inasal. Jason Hyatt and his wife Anna founded the Abaca Group of Companies. Lucio Tan has Fortune Tobacco, Asia Brewery, Eton Properties, and Philippine National Bank (PNB) to name a few of his properties. I would believe that before Tan became rich--he knew how to diversify his earnings back when he started out as a janitor. It would be very easy to think about how one isn't the tycoon. One doesn't need to be a tycoon to understand how to diversify one's income. Not everyone will become billionaires. However, anyone who manages their money well will definitely be able to at least not become poor or get out of poverty. 

My own little experience with learning how to diversify 

Based on my experience, I wanted to get into stocks because of the high gains. However, I was discouraged because of how risky it was even if the stock markets are legitimate investments. I was told there were other diversified ways to earn money. I remembered how I had my share of profit from our practicum at USC Main. Rather than spend it and splurge on it--I decided to open a savings account first. However, the savings account has a very low interest. However, I at least needed a savings account to have some security with money if I ever needed it. It was just the start but the interest was rather slow. I had to do it for safety reasons.

The next thing I knew was that I had enough money to spare for a time deposit. I kept some money in the savings account. Members of the business got an allowance per week while the rest of the money was kept in a common account. I got my allowances and I couldn't get more except for necessities. I started to look at the wisdom of why there was a joint account and members of the business had an allowance. It was that the joint account was meant for operational usage and not personal expenses. If I wasted it--it was my discretion. What I did next was to open that time deposit worth the minimum. I deposited more money into the time deposit every time it was due. It was just the beginning of diversification--though I was still more careless with myself at that time! I started that diversification because bad decisions are inevitable.

The next thing that I learned was through the use of the Retail Treasury Bond (RTB). I had saved some money through the time deposit. I decided to transfer that money to the RTB money market. The RTB is where the government borrows my money and issues it as corporate security. I remembered selling one RTB. What I did next was to let the new amount of money roll into the RTB as security. Later, I decided to open a Long Term Negotiable Certificate of Deposit (LTNCD) as another investment. Before that, I also tried AXA which I had basic life insurance then started to move forward with Health Max.

I wanted to get into stocks but as some Metrobank advisers said in a symposium at USC-Main--only invest excess money if possible. I think that's one of the most sound advice since stocks are more volatile due to supply and demand. It was at that time I got cheated out of a lot of money. Fortunately, not living like kings made it possible to spring back even if the money was never returned. Many MBA students even fell for Ponzi schemes. I almost fell for a Ponzi scheme back in my BSBA days. Soon enough, I decided to stick with less risky investments such as the RTB at that time. Later, I discovered AXA also offered another investment called the Chinese Tycoon package.

Chinese Tycoon is a mutual fund run by AXA. These stocks are done by money managers who invest in Filipino-Chinese companies. Some, they prefer to do it themselves but not all have the time or expertise. Sometimes, it's better to do stocks yourself but study first. Sometimes, it's better to have the assistance of a financial manager. It would be wise to have a financial manager who's aware of the higher risks of the stock market to guide one. Just make sure to get a sound financial manager like those from Metrobank or from AXA for a start. If a financial firm makes promises too good to be true--label it as a scam and run as far as you can!

I confess that I have some attention deficit going on which also causes impulsive spending. That's why I decided to lock up some of my money in investments to avoid splurging the money. I have my common splurging with food even if I don't go to fancy restaurants all the time. I would probably still be eating at Red Lizard over the more fancy foods of the Abaca Group of Companies. I'd probably still be more comfortable eating at Fung's Noodle House over the high-class Chinese food at Marco Polo Hotel once a week. Still, I can't deny how I tend to splurge on stuff I want. I even wanted an expensive Samsung phone. Locking up a good amount of money in investments really helped curb that spending. 

I ended up learning to use GCash during the pandemic. I used GCash to make some payments. I feel so silly that I didn't decide to use GCash immediately. I ended up having GSavings and I'm trying to get the hang of GInvest. What I didn't realize is that GCash has been so convenient during the pandemic especially in paying people. GSavings is linked to Commercial International Merchant Bankers (CIMB) from Kuala Lumpur, Malaysia. I think having a GCash to serve as a wallet and GSavings to serve as another bank to put money is a step further into diversification. There's also GInvest which allows little investments for as low as PHP 50.00 to PHP 1,000.00 minimum as a start. Though, one must know one's risk appetite first before knowing which account to put more money into.

I would say that having different baskets can be a real safeguard. For instance, the savings account can serve as an emergency fund or the source of all money. The securities can come in the form of investments such as the RTB, LTNCD, AXA investments (such as Chinese Tycoon), and the use of GCash to name a few. Hopefully, I will get the hang of how to trade stocks myself after knowing how to do it through a simulator. Right now, I think I need to just think of other ways to diversify my own personal income (which is confidential) to have good security.