GCash IPO: Should I invest?

GCash IPO: Should I invest? | Daily Tribune

Now many Filipinos may feel the same way about GCash as its parent company, Mynt, prepares for an IPO. You may be asking: “Should I invest?”

Before you get excited, remember this: A good company is not automatically a good investment at any price.

Here are five questions to ask first.

Do I understand the business?

Imagine Carlo, a professional who uses GCash to pay his bills, send money, and buy things online. He might say, “I use it all the time, so I know the company.” Not exactly.

Using the product is different from understanding the business. Before investing, ask: How does the company make money? Is it profitable? What are its risks? Who are its competitors?

Is the price reasonable?

Suppose someone offers you a beautiful house worth P5 million — but asks you to pay P50 million. Is it still a beautiful house? Yes. Is it a good deal? Probably not.

The same principle applies to stocks. Don’t only ask, “Is this a good company?” Ask, “Is it a good company at this price?”

Have I read the prospectus?

Think of the prospectus as your guide before buying. You don’t need to be an accountant. Start with the basics: revenue, profit, debt, cash flow, growth, risks, and how the company plans to use the money it raises.

We research hotels before booking a P10,000 vacation. Why wouldn’t we research a company before investing P50,000 or P100,000?

What if the price goes down?

Imagine investing P100,000 and seeing it become P85,000. Would you panic?

That is why you should never invest your emergency fund or borrow money just because you fear missing an opportunity. Invest only what fits your financial plan.

Am I investing — or following the hype?

Here is my favorite test: If the company had a different name, would you still want to invest?

Same business. Same numbers. Same risks. But no famous brand. Would you still buy?

If not, you may be buying because of familiarity or FOMO. So, should you invest in the GCash IPO?

Don’t start with yes or no. Start by understanding what you are buying. There will always be exciting opportunities. But you worked hard for your money.

Before you invest your money, invest first in understanding where your money is going.

(Chinkee Tan is a motivational speaker, financial literacy advocate, and author. Follow him on Facebook, Instagram, TikTok and YouTube for more practical money tips.)