Which is a better investment: UITF or Stock Market?

Today I received a Facebook message from 22 year old Paula, an avid reader of my blog, with below question:

Hi! Your blog is truly an inspiration for a newbie like me. I am incredibly inspired! I’m 22 yo and I am thinking of investing but I am confused where to invest first. Will it be equity fund or in stock market. For your preference, I know this message might be too much info to give, but I want to take a shot. Thanks in advance!!! – Paula

It’s a great question, actually. As someone (myself) who’s not really technically knowledgeable about investments but instead bases his decisions on research, continuous “testing of the waters” and experiences, I think that this question makes a lot of sense and deserves to be shared to the readers of my blog.

Paula and I had a long chat over Facebook right after and basically here’s the summary of my feedback:

Hi Paula,

Thanks for your message. It feels great being able to inspire and help my readers through my blog. Congratulations as well on deciding to invest at such an early age.

Great question by the way! Since both Equity Fund (one of the UITFs/Unit Investment Trust Funds at BDO) and Stock Market investments are considered as great investment options, let me just give you my take on the comparison of the two based on my experiences with them:

  1. Earning possibility – In equity fund (or one of the other UITFs), the growth of your money is understandably sluggish but you are somehow certain that prices go up over time (UITFs have skilled fund managers who does the trading for investors). When investing in the Philippine Stock Market (PSE), the chances of earning more over the same period of time are higher (that is, if you invest in the right stocks), but the risk is higher as well.
  2. Effort – In equity fund, you have a fund manager who does all the trading for you – you do not have to think that much LOL. In stock market, however, you’ll do the trading yourself, so you have to be quite sure that you do your research and choose the more profitable company when buying company. In my experience with the stock market, I had to seek input from an ‘expert’ colleague of mine in picking the right stocks.
  3. Risk – I think the stock market is much riskier (because you have to continuously monitor and study each of the various stocks in the PSE) but with greater returns (see item 1).

It’s good that you are starting young, because if you invest in the long term, the chances are high that your money will grow significantly over the course of time. You may choose to invest in one of the two mentioned investment vehicles, but it may also be a good and wise idea to invest in both to diversify your assets (if one fails, you still have the other).

Whatever investment option you may choose, it is always a good way to test the waters before completely diving in. You may start small, just the minimum investment amount, so you may learn from your experiences over time. When you are confident enough, you may then start playing with your investment strategies.

Thanks again for your message, Paula. So glad I was able to help and I’m excited in your investing success, too! I’m sure you’ll have a great time investing. Happy New Year!

Stay rich,


What’s your take on Paula’s question? Feel free to Share Your Story, comment, share your tips, or ask a question. Please also like me on Facebook and Twitter! Thank you!

***Above explanation is my sole opinion and should never be relied on as your key deciding factor in your investments. Please note that I do not endorse investing in these funds as your decisions will be based on you, the investor, to determine if investing in these funds will be in your best interest. Please also read through the respective sites of BDO and COL Financial for more relevant and accurate information regarding its products and services.