Friday, September 20, 2013

Investing in Investments

            Even with the turmoil in the Mindanao area and amidst the Pork Barrel Scandal, the Philippines remains to be the brightest spot in the Asian and World market spotlight in investments. We are doing so good that foreigners invests in our country. However, how come, we, the Filipinos, don’t give a crap?
            One of the primary reasons why we are not investment savvy is the fact that when we were younger, we were groomed to save, not to invest. Let’s have simple comparisons between saving and investing:

Short term (emergency fund, grocery expenses, bill payments, etc.) goals you will accomplish within five (5) years necessitates that the money should fall in this pot.
Long term (retirement planning, education funding, setting aside for a business capital, down payment for a home) goals you aspire to obtain five (5) years and beyond  must be invested to fully enjoy the maximized returns necessary to accomplish the intended amount needed in the future.
Savings and deposit accounts, time deposits, special savings accounts, unit-investment trust funds
Mutual Funds, Stocks, Investment-linked Insurance, Whole Life/Limited Pay Traditional Insurance
Interest Rates
Very, very, low; ranging from .025% - 1.5/1.75% PER YEAR, less 20% withholding tax will get you nowhere if you intend to grow your funds for a future use.
Offers a potentially high return, ranging from as low (for traditional insurance policies) 4.40% per year or a mutable percentage for stocks, mutual funds and investment-linked insurance policies which can allow appreciation of your funds for its intended purpose in the long run to accumulate more than the capital you have set aside.
Easily accessed; withdrawing over and over again will always nail you back to the starting line, failing to move forward.
Meticulous process of fund withdrawal and penalization for accessing it early will discipline you set aside the given amount for the intention it was supposed to fulfill in the future.

            The beauty of saving is its ability to offer a haven for your short-term needs and expenses. Simply, you are safekeeping your money for a possible purpose it may be necessitated immediately. However, setting aside EVERYTHING in the bank will get you nowhere. We must learn to invest excess funds beyond what we normally save in order to make the hard-earned money we worked hard for work for us as hard as we worked hard for it so we can grow our finances for a future purpose we wish to be doable in the future. With reputable financial institutions, the money you earn can be grown to let you earn more so it can perform what it’s supposed to be utilized for in the future. We financial advisors can help you with it by designing a financial plan tailor-fit to your needs. Remember, a healthy financial state is the 70-10-10-10 rule: 70% goes to expenses, 10% goes individually to your savings, investments, and charitable causes or a pakimkim for our loved ones. Assuming your earn 10,000/month, your basic financial breakdown should look like:

70% = 7,000.00
10% = 1,000.00
10% = 1,000.00
10% = 1,000.00

            You'd better think and seek professional financial advice if you are far from the LEAST required of you. Maybe you have too much debts. Maybe you spend more that what you earn. Maybe you need to reconstruct your budget to do so; how about 80-10-5-5 or perhaps 90-5-4-1? Kung gusto, madaming paraan, kung ayaw, lahat dinadahilan. Start saving and investing early, consistently, and correctly by partnering with the right financial institutions to enjoy the fruits of your labor and accomplish your dreams and aspirations for the future.

For any questions, don’t hesitate to write comments below. I’d be more than happy to assist you with financial planning. You can PM me so we can talk about it in detail.

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