Project Rise
Project RISE (Retail Investor & Shareholder Empowerment) is a SharePHIL initiative designed to give every Filipino access to high-quality, easy-to-understand materials that guide them on their investing journey. Developed in partnership with the FINEX Research and Development Foundation and the Capital Market Development Foundation, Inc., the project features a digital library of educational videos and short reels that explain investing concepts clearly and practically.
Designed especially for self-directed investors and young professionals, the program covers essential topics such as getting started with investing, how the stock market works, and diversification and risk management. Beyond teaching the basics, the library also aims to build good investing habits such as patience, discipline, and a long-term mindset. As more Filipinos gain the capacity and interest to invest, Project RISE seeks to equip them with the tools to make informed decisions, participate responsibly in the capital markets, and contribute to a stronger and more inclusive economy.
Wealth management specialist Melvin Esteban emphasizes that the ability to create and grow wealth is more accessible today than ever before, requiring the right skill, education, and discipline rather than sheer luck. He draws an analogy between money management and nurturing a tree: with proper care and patience, money can grow in value over time.
Core Concepts Explained
Investing versus Saving:
- Saving: The act of setting aside money regularly without expecting it to grow significantly beyond its nominal amount (e.g., a traditional childhood piggy bank).
- Investing: The commitment of funds with the expectation of a positive rate of return, achieved through capital appreciation or income generation. Investments carry risk levels tailored to expected returns.
Three Life Phases of Money:
- Man at Work: Earning money via employment or business.
- Man and Money at Work: Saving some income and making that saved money work by earning interest or returns.
- Money at Work: Achieving financial independence where money generates income without the need for active work.
Key Formula for Saving
Traditional Formula: Income − Expenses = Savings (Problem: Increasing income often increases expenses, resulting in minimal savings).
Proposed Formula:
This prioritizes saving by automatically setting aside money before spending, fostering discipline.
Inflation: The Hidden Danger
Inflation diminishes the purchasing power of money over time, making mere saving insufficient to grow wealth. Esteban uses the example of the increasing price of soft drinks to highlight how inflation goes unnoticed daily but accumulates significantly over time. Conclusion: Investing is essential to outpace inflation and protect the value of money.
Path to Becoming a Millionaire: Impact of Interest Rates & Discipline
| Monthly Savings | Annual Savings | Interest Rate | Time to Reach ₱1,000,000 |
|---|---|---|---|
| ₱1,000 | ₱12,000 | 0% | 83 Years |
| ₱1,000 | ₱12,000 | 2% | 49 Years |
| ₱1,000 | ₱12,000 | 4% | 37 Years |
| ₱1,000 | ₱12,000 | 6% | 30 Years |
| ₱2,000 | ₱24,000 | 6% | 20 Years |
- Compounding interest dramatically shortens the time to reach ₱1,000,000.
- Increasing monthly savings further accelerates wealth accumulation.
Risk in Investing
Definition: Risk is the possibility that expected returns will not materialize or the investment may incur losses. For instance, the stock market can yield high returns but experiences volatility. Investors must factor in risk tolerance when making choices.
Key Takeaways
- Wealth building necessitates disciplined investing to grow money and beat inflation.
- Reversing the savings formula (Income - Savings = Expenses) encourages consistent discipline.
- Compounding interest significantly reduces the time to accumulate wealth.
- Clear financial goals motivate and guide saving and investing strategies.
Episode 1: Money Tree
This episode explains the difference between simply saving money and strategically investing it to build long-term wealth. It emphasizes the importance of putting money to work, harnessing the power of compounding, and protecting purchasing power against inflation.
In this episode, Melvin Esteban explores various types of investments, emphasizing the importance of selecting the right investment tools to meet specific financial goals. The discussion provides a clear overview of the most common investment options, their characteristics, and guidance on building a diversified portfolio tailored to individual circumstances.
Key Investment Types Explained
| Investment Type | Description | Key Features | Risk/Return Profile |
|---|---|---|---|
| Equities (Stocks) | Part ownership in a company | Gains through share price appreciation and dividends | High risk and high potential return; price can rise or fall |
| Bonds (Debt Instruments) | Lending money to a company or government | Fixed interest payments, less volatility than stocks | Lower risk, stable income, lower returns |
| Real Estate | Ownership of physical property | High upfront cost, value appreciation over time | Moderate risk, potential for price increases or decreases |
| REITs (Real Estate Investment Trusts) | Pooled funds invested in real estate properties | Allows small investors to partake in real estate market | Similar risk to real estate, liquidity advantage |
Core Concepts
- Equities represent partial ownership in companies, generating returns via capital appreciation and dividends.
- Bonds function as loans to entities that pay interest; they are less volatile and provide stable returns, though typically lower than stocks.
- Real estate investing faces the challenge of high initial investment but provides tangible asset growth potential.
- REITs allow investors exposure to real estate through pooled funds, reducing individual capital required and enhancing liquidity but retain market price risks.
- All asset classes have the potential to go up or down in value.
Investment Strategy and Diversification
Melvin stresses the importance of diversification and aligning investments with one’s:
- Risk appetite: ability to withstand losses.
- Time horizon: period before funds are needed.
- Available resources: current financial capacity to invest.
Example portfolio allocation for different investor profiles:
| Investor Profile | Equities (%) | Bonds (%) | Cash (%) | Notes |
|---|---|---|---|---|
| Mr. Juan and Miss Maria (long horizon, 5-7 years) | 30-50% | ~35% | Remaining (~15-35%) | Willing to accept volatility due to long-term goals |
| Inexperienced or cautious investors | ~15% | ~50% | ~35% | Lower equity exposure, emphasizes stability and liquidity |
- Cash serves as a cushion for emergencies and short-term expenses, providing liquidity.
- A balanced portfolio distributes investments across short-, medium-, and long-term horizons to reduce risk.
Additional Investment Vehicle: Pooled Funds
For beginners uncertain about stock or bond selection, pooled funds such as UITFs (Unit Investment Trust Funds) and Mutual Funds (MFs) offer managed investment options by professional fund managers.
- UITFs are commonly offered through banks.
- Mutual funds are similar financial products.
- These funds may invest in equities, bonds, REITs, or a mix (balanced or multi-asset).
- Important to understand the composition and where pooled funds invest before committing.
Key Insights
- Investing requires choosing the right tools to fit financial goals, not just "putting money somewhere."
- Every investment type carries risk; diversification helps manage this risk.
- Time horizon influences risk tolerance, allowing more exposure to higher-risk assets over longer periods.
- Cash holdings are crucial for liquidity and unforeseen expenses.
- Pooled funds provide a simplified investment avenue with professional management, ideal for those starting or wanting convenience.
Episode 2: Investing Toolkit
This episode introduces the main investment vehicles, including stocks, bonds, and real estate through REITs, and explains how investors can choose the right mix of assets based on their goals, risk tolerance, and investment horizon.
Video Summary: Equities & Stocks for Wealth Creation
This video provides a detailed explanation of equities (stocks) as fundamental investment tools for wealth creation, emphasizing the necessity of aligning stock choices with one’s financial goals, risk appetite, and investment timeline. It highlights the different types of stocks and methods of earning returns, along with the hierarchy of claims during company performance fluctuations. The discussion also introduces investment techniques and alternative equity-related instruments such as preferred shares and exchange-traded funds (ETFs).
💡 Core Concepts: What are Stocks?
- Ownership: Stocks represent ownership in a corporation. Owning shares means being a part-owner of the company, which constitutes its permanent capital.
- Two Ways to Earn:
- Capital Appreciation: The increase in stock price over time allowing sales at a profit.
- Dividends: Direct earnings shared from the company’s profits to shareholders.
📈 Capital Appreciation Example
Purchase price of a share = Php 1
Future value of share after company growth = Php 150
Capital gain = 50% increase (profit realized if selling at Php 150)
💰 Dividends Deep Dive
Company profits can be either retained for business expansion (e.g., opening new branches) or distributed to shareholders as dividends. It is also possible for companies to split profits by distributing part as dividends while retaining the rest for expansion.
| Dividend Type | Description | Example |
|---|---|---|
| Cash dividends | Company distributes cash | Php 1,000,000 profit shared among 100 shareholders → Php 10,000 each |
| Stock dividends | Company issues additional shares | Additional shares given instead of cash |
Types of Companies Favoring Dividends: Well-established firms with stable and continuous income streams tend to distribute dividends regularly. These companies prioritize rewarding shareholders but come after bondholders in the payment hierarchy.
⚖️ Payment Hierarchy in Corporate Earnings
Common stockholders bear the highest risk and reward, as they are residual claimants who are last to be compensated but benefit the most when companies do well. Conversely, poor management or business losses impact common shareholders first.
| Priority Rank | Position | Details |
|---|---|---|
| 1 | Bondholders | Receive interest payments first, as lenders |
| 2 | Preferred shareholders | Receive fixed dividends with less risk than common stockholders |
| 3 | Common shareholders | Residual claimants who gain when company performs well but bear the highest risk |
🛠️ Ways to Buy Stocks & Market Positions
Stocks must be bought through a broker who acts as an intermediary in executing trades. Investment positions include:
- Long position: Buy now and sell when price appreciates; expect prices to rise.
- Short position: Sell shares first expecting price to fall, then repurchase later at a lower price; noted as highly risky and generally discouraged for beginners.
📊 Comparing Equity Asset Classes
| Stock Type | Ownership Rights | Risk Level | Return Characteristics |
|---|---|---|---|
| Common Stocks | Full ownership, voting rights | Highest | Capital gains + variable dividends |
| Preferred Shares | Ownership with bond-like features | Moderate | Fixed/dividend income priority over common shares (bondholders still have priority) |
📦 Exchange-Traded Funds (ETFs)
- ETFs are pooled investment vehicles holding baskets of assets like stocks, bonds, real estate investment trusts (REITs), and more.
- Buying ETFs grants exposure to multiple assets with just one share.
- ETFs allow for dynamic diversification and significantly reduced individual stock risk.
📌 Key Insights
- Equities are integral to wealth creation, but require alignment with one’s financial objectives and risk tolerance.
- Understanding the types of stocks, earning mechanisms, and hierarchy of claims in companies is crucial.
- Capital appreciation and dividends serve different investor goals: growth vs. income.
- Different stocks carry distinct risk-return profiles; preferred shares offer a middle ground between bonds and common stocks.
- ETFs provide a diversified, single-investment exposure to various asset classes.
- The long position investing strategy is the standard approach; short selling is risky and generally avoided by beginners.
🔍 Uncertainties
- Specific stock market examples and detailed numerical performance metrics beyond the ones described (Php 1 to Php 150 stock price example and Php 1M profit sharing) were Not specified/Uncertain.
- Exact dividend yields, risk percentages, or performance forecasts were not provided.
Episode 3: Equities 101
This episode explores what it means to become a shareholder and part-owner of a company. It discusses capital appreciation, dividends, common and preferred shares, and ETFs as different ways to participate in the equity market.
Video Summary: Constructing Your Personalized Portfolio
This video episode focuses on constructing a personalized investment portfolio that aligns with an individual's risk profile and financial goals. The host guides viewers through a practical approach involving self-assessment, goal setting, and portfolio allocation, underscored by risk management and diversification principles.
📋 Key Insights
- Self-Understanding via Risk Profiling: A core starting point is identifying one’s risk tolerance using a simple questionnaire of seven questions available on Sharefield’s website. Responses range from Strongly Agree (5 points) to Strongly Disagree (1 point). The numerical sum divided by seven gives an average risk score. Close to 5 means a High risk taker, while close to 1 means a Low risk taker. This objective measure helps correct common misconceptions between perceived and actual risk tolerance by showing potential downside risk explicitly.
- SMART Goals to Define Investment Objectives: The episode emphasizes using the SMART criteria for setting retirement or investment goals:
- Specific: Define exactly what you want (e.g., retirement age, lifestyle, monthly spending).
- Measurable: Quantify your goals (e.g., monthly spending of ₱50,000).
- Attainable: Goals should be realistic to prevent burnout or unachievability.
- Relevant: Goals must align with your lifestyle and values.
- Time-bound: Set deadlines to maintain focus and discipline.
- Asset Allocation Based on Risk Profile: Portfolio allocation significantly depends on risk tolerance. High risk profiles favor equities with higher volatility and potential returns, whereas low risk profiles lean towards bonds and cash to reduce volatility.
- Risk Types and Diversification: Two main risk categories affect investments:
- Systematic Risk (Non-diversifiable): Affects the entire market or economy (e.g., inflation risk, currency devaluation) and is impossible to eliminate entirely.
- Unsystematic Risk (Diversifiable / Firm-Specific): Risk unique to a company or industry (e.g., Nokia’s decline with the rise of smartphones) that can be mitigated by diversifying across sectors and asset classes.
- Importance of Diversification: Designed to enhance returns and reduce risk, but not eliminate it entirely. Portfolio diversification across asset classes (stocks, bonds, real estate, cash) protects against firm-specific downturns, while time diversification (short-, medium-, and long-term targets) helps balance volatility.
- Continuous Review and Alignment: Knowing your current financial position, desired goals, and how to achieve them is essential on the investment journey. Adapting portfolio allocations as risk tolerance or goals change over time is necessary.
- Time as a Risk Mitigator: While risk cannot be eliminated, utilizing time as an ally helps reduce its impact through compounding and long-term recovery market potential.
📊 Portfolio Allocation Targets
| Risk Profile Target | Equities (%) | Bonds (%) | Cash (%) |
|---|---|---|---|
| High Risk Profile (Score ~5) | 70% – 80% | 20% | 0% – 10% |
| Low Risk Profile (Score ~1) | 10% – 15% | 60% – 65% | 25% – 30% |
⏱️ Timeline of Concepts Covered
| Time Frame | Topic | Key Points |
|---|---|---|
| 00:00 – 01:36 | Risk Profiling Tool | 7 questions, 5-point scale, average risk score determines profile |
| 01:45 – 03:29 | SMART Goal Setting | Specific, Measurable, Attainable, Relevant, Time-bound goals |
| 03:30 – 05:10 | Asset Allocation Based on Risk | High risk = more equities; Low risk = more bonds and cash |
| 05:10 – 07:22 | Understanding Risk Types | Systematic vs. Unsystematic risk; examples and implications |
| 07:23 – 09:54 | Diversification Strategies | Benefits of diversification to reduce firm-specific risk |
| 09:55 – 10:53 | Summary of Investment Journey | Know goals, understand risk, diversify asset classes and time |
🧮 Summary of Quantitative Formulas
Risk Profile Average Score calculation:
⚙️ Core Financial Concepts Glossary
| Term | Definition / Explanation |
|---|---|
| Risk Profile | An individual's willingness and ability to endure investment losses. |
| SMART Goal | A framework for setting clear, actionable, and achievable financial goals. |
| Asset Allocation | The strategic distribution of investments among equities, bonds, cash, etc. |
| Systematic Risk | Market-wide risks affecting all assets simultaneously (e.g., inflation, currency shifts). |
| Unsystematic Risk | Risk specific to a company or industry which can be managed via diversification. |
| Diversification | Investing across multiple assets to spread and reduce overall firm-specific risk. |
| Volatility | The historical degree of variation in investment pricing and market returns. |
Episode 4: Planning for Success
This episode outlines the practical steps to building a personalized investment portfolio. It highlights the importance of understanding one’s risk profile, setting S.M.A.R.T. financial goals, and using diversification to manage risk.
Video Summary: Understanding Pooled Funds and Their Benefits
The video explains the concept of pooled funds, a collective investment vehicle where money from multiple investors is combined to invest in various securities like stocks, bonds, and money market instruments. The main goal of pooled funds is to spread investment risk through diversification while giving investors access to professionally managed portfolios.
📋 Core Concepts of Pooled Funds
Definition: Pooled funds gather resources from many investors, forming a large capital base that allows investment in a diversified portfolio of assets.
| Fund Type | Description | Management | Trading Venue | Typical Provider |
|---|---|---|---|---|
| Mutual Funds | Collective investment with active or passive management | Professional fund managers | Not traded on stock exchange | Investment fund companies |
| UITFs (Unit Investment Trust Funds) |
Trust-based pooled funds | Investment houses | Not traded on stock exchange | Banks or investment houses |
| ETFs (Exchange-Traded Funds) |
Traded like stocks on exchange | Typically passive management | Stock exchanges | Investment houses |
💡 Key Benefits of Investing in Pooled Funds
- Diversification: By pooling money, the fund can buy various assets, reducing the risk compared to holding a single stock or asset. For example, ₱10,000 invested individually might buy only one stock, greatly increasing risk.
- Record Keeping Simplification: Investors only monitor the fund’s overall performance rather than individual underlying company holdings.
- Mark-to-Market Pricing: Daily pricing ensures that the value of investments reflects current market conditions, making it easy to see performance and transact at fair value.
- Professional Management: Fund managers with expertise actively manage investments, enabling investors to benefit from specialized knowledge without doing the heavy research themselves.
- Lower Minimum Investment Requirements: Many pooled funds accept minimum investments as low as ₱5,000, making them highly accessible for beginner investors.
🎯 Investment Philosophy and Fund Selection
It is critical to understand the investment philosophy of the pooled fund—this is the "content of the vehicle" rather than the vehicle itself. Always review the fund's prospectus, which provides details such as:
- Investment focus: Equities, bonds, or specific multi-asset structures.
- Management style: Whether the fund is actively managed (aiming to outperform the market through active trading) or passively managed (tracking a benchmark index).
- Geographic exposure: Local vs. global markets (e.g., U.S., Asia, Europe).
- Thematic focus: Targeted trends, such as technology sector funds including AI-related companies.
📊 Evaluating Fund Performance
Performance evaluation should not rely solely on absolute returns (e.g., a simple 10% gain statement). It is essential to compare fund returns against a relevant benchmark or peer group:
- A fund earning 10% when its benchmark yields 20% is underperforming.
- Conversely, a fund losing only 5% while the benchmark drops by 20% shows excellent relative outperformance and risk management.
- Use performance comparisons to properly gauge fund quality, underlying risk, and manager skill.
📌 Summary of Key Insights
- Pooled funds provide an efficient way for investors to gain diversification and professional management at lower costs.
- Understanding the fund’s investment philosophy, geography, and management style is crucial for aligning an investment with one’s personal goals and risk tolerance.
- Performance assessment requires benchmarking against similar funds or market indices to determine the real value of fund returns.
- Low fund minimums make pooled funds highly inclusive for small investors, offering a structured entry point to capital markets.
Episode 5: Pooled Funds – Mutual Funds, UITFs, and ETFs
This episode introduces pooled investment vehicles as an accessible entry point for beginners. It explains how professional management, diversification, and different fund strategies can help investors participate in the market with relatively modest capital.
Video Summary: Portfolio Monitoring and Management
This video discusses the importance of regularly monitoring and managing your investment portfolio with a long-term perspective. It emphasizes active adjustment based on changes in market conditions, the economic environment, and personal life circumstances.
📋 Key Concepts and Recommendations
- Annual Portfolio Review: Conduct a thorough review of your portfolio at the end of each year to ensure your asset allocation remains fully aligned with your strategic goals.
- Strategic vs. Tactical Asset Allocation:
- Strategic Asset Allocation: The overall, long-term target mix of assets in the portfolio (e.g., 60% equities, 40% bonds).
- Tactical Asset Allocation: Short-term, intentional deviations from the strategic allocation used to capitalize on temporary market opportunities.
- Portfolio Rebalancing: When market movements cause asset values to shift away from targets (e.g., a sharp rise in stocks makes equities 75% of your portfolio), rebalance by selling some equities and buying bonds to restore the strategic allocation (e.g., returning to the 60/40 split). This maintains the intended risk/return profile.
- Consideration of Economic Cycles: Different assets perform better at various points in the economic cycle. For example, equities tend to underperform during recessions. Ongoing portfolio adjustments should incorporate a macro assessment of the economy.
- Personal Life Stage and Cash Flow Needs: Your portfolio should reflect your current life stage, which heavily dictates risk tolerance and liquidity requirements:
- Young adults: Focus on wealth accumulation via aggressive allocations to equities for long-term growth.
- Mid-life with family: Require more income-producing assets and may need accessible funds for education or home acquisition.
- Older / retirement age: Shift towards bonds and stable, low-volatility income investments to meet consistent monthly cash flow needs.
- Investment Horizon Alignment: Long-term goals like children's future education or home acquisition should be matched with appropriate long-term investments rather than short-term instruments.
💡 Important Insights on Portfolio Components
- Company and Industry Relevance: Continually assess the business prospects of individual equity holdings. For instance, Kodak, despite inventing the digital camera, failed to capitalize due to a reluctance to cannibalize its existing film business. Outdated or non-innovative companies should be replaced by those with sustainable futures.
- Reinvestment of Portfolio "Fruits": Profits, interest payments, or dividends (the "fruits" of your investment "tree") should be actively reinvested to maximize portfolio growth and compounding effect. Revisit geographic or sector allocations as personal circumstances and global market opportunities evolve (e.g., diversifying from Asia to U.S. or European markets).
📊 Portfolio Monitoring Strategy Overview
| Aspect | Description |
|---|---|
| Annual Review | Check performance and alignment with strategic asset allocation. |
| Strategic Allocation | Long-term target asset ratio (e.g., 60% equities / 40% bonds). |
| Tactical Allocation | Short-term opportunistic trades to exploit macro market conditions. |
| Rebalancing | Restore the original target asset allocation after organic market fluctuations. |
| Economic Cycle Consideration | Adjust asset exposure for performance variations during recession, growth, or inflation periods. |
| Life Stage Adaptation | Adjust portfolio structure based on accumulation phase vs. income phase vs. retirement safety. |
| Company Health Check | Monitor fundamentals; remove and replace underperforming or obsolete companies. |
| Profit Reinvestment | Reallocate gains back into the investment pool to optimize portfolio diversification and risk balance. |
📌 Key Takeaways
- Regular portfolio review and rebalancing are critical to maintaining your chosen risk tolerance and meeting financial objectives.
- Understanding economic cycles helps optimize asset allocation for better overall risk-adjusted returns.
- Personal circumstances deeply influence portfolio structure, emphasizing the necessity of a continuously tailored investment plan.
- Company fundamentals matter; exit outdated, rigid, or non-innovative corporate holdings early.
- Reinvesting portfolio gains strategically accelerates long-term wealth creation.
- Partnering with professionals or utilizing pooled funds can simplify portfolio management without sacrificing growth potential if direct management becomes too complex.
Episode 6: Monitoring Investment Performance
This episode emphasizes that investing is an ongoing process rather than a one-time activity. It explains how to review and rebalance a portfolio, distinguish between strategic and tactical allocation, and adapt investment strategies as personal circumstances evolve.