That Investment is Non-Investment

The "Wolf of Wall Street", Jordan Belfort, was blatant in saying that people mostly in the Asian region base their decisions on emotional reasons rather than the logical ones. We first decide based on what we feel then we try to convince ourselves and others by finding logic on that choice we make.

Same thing with our finance management. You could meet a lot of people "investing" on different things. It could be on expensive gadgets, new real estate properties, expensive shoes or clothes, new cars, etc. At a quick glance, you can say that these are all but expenses. But try to ask the person who bought them. For sure, they have a list of reasons why they purchased these things and why they consider these as investments. It really depends on their circumstances and what they are saying could be true.

I hope they earn dividends

But some people, when you ask if other than these "investments" if they have also put money in the stock market, mutual funds, insurance, VUL, UITF or heck even on a savings account for their emergency fund, a lot of them will answer "NO". And they will have reasons for not doing so like saying it's not their priority right now. Shoes, gadgets, clothes over real investments? Sure. It's our freedom to use our hard earned money in any way we want to. But fooling ourselves to believe that what we are doing is "investing" is what could hurt us later in our lives. Are you like one of these people? I hope it will never be too late for us to realize and learn what a real investment is from what is not.

Financial Freedom Is Not The End Of It

The reason why a lot of people can't reach financial freedom they are dreaming of is because of their wrong concept of it. A lot of us think that it is about us having money to buy all the things we want. That feeling that "we made it". This is partially true but the harsh reality is most of us won't be able to reach that point.

The question that you must be asking yourself first is why do you want to have that financial freedom? Is it about the money, the cars, the big houses, the gadgets, jewelries, travels? Or is it about how you could get more time doing things you like and spending more moments with those you love? The usual reason why we can't do the latter is because of the idea that we are trapped in our daily duties to earn for our primary necessities. And thinking that to earn more, you work harder and longer times. Then to reward yourself, you buy things that you don't really need but which you think you deserve for all the hard work you have done. Fair enough. But the danger on this one is on that mentality that financial freedom equates to material things. That's probably the reason why most people who get scammed easily is swayed by the promise of luxurious things that he can buy upon joining them.

Fact is you don't really need a drastic change on your money status to achieve financial freedom. A simple change in mindset towards your priority management, starting small in your savings and investment, a little review and of your current situation and looking at all the other options will get you a long way.

Live With The Risk

There is always risk in everything. Not one outcome is 100% sure. Same goes in all types of investment. One must accept that risk is always present no matter how knowledgeable a person is or how stable a business looks like. Acknowledging this fact is the first step in succeeding or avoiding total failure. The next one is is to create a backup plan. And the third is to create another backup plan. And so on. Risk will always be there and we need to learn how to live with it and not paralyzed by it. The only sure risk of failure happening is when you don't do anything at all.

Do You Act On Love?

Love is not just a feeling. Love is an action word. Show it. Act on it. Do it. Like they say, put your money where your mouth is. 

Beating Inflation Black and Blue

It feels bad when you lose money. What’s worse is when you are not aware that you are losing some of it. And what's harder to realize here is the fact that you can't fight something you do not know about.  Majority of Filipinos lose money without even noticing it. They are sleeping soundly at night while their money is kept in their savings account thinking that everything is safe only to find out later that they already lost significant value without even them touching their hard earned moolah. The culprit is sneaky. It will hurt you without seeing how. And his name is INFLATION.

In the 90s, your 500 pesos can buy you a bag of goods and several kilos of rice from the grocery store. But now, you can just hand carry what you purchase with that amount. That’s inflation in action. It is what’s happening when the buying power of your money decreases by time affected by several factors of the economy. And most of the time, inflation beats the interest given by banks on your savings account. Meaning, if you don’t do anything with the money you keep in your bank accounts, you’re assured to lose money in the long run.

If you think that sitting on your savings account is a smart thing, then think again. Savings account is good for the sole reason that it is where you can put your contingency and emergency funds being the most liquid type of investment vehicle. Liquid means your money is accessible and ready for the taking any time the need to use it arises. So having a savings account is a necessity. But if you want to grow your financial wealth, putting all your money in it won’t help you that much. It might look less risky but the truth is it’s the surest way of losing your money without doing anything due to inflation. 

For us to understand it better, let's put in some numbers. 

The inflation rate in the Philippines as of this writing is 2.3%. Meaning, that's how much the value of money is lessened. How about the deposit rates? It's around 1 to 1.2%. At a glance, it's easy to see that you are losing your money to inflation compared to what your money earns in a savings account. So to make your money earn, you have to beat the inflation rate with a higher interest rate. 

There are finance companies or banks that provide options to invest part of your savings to other funds that can give you possible higher return rates than your usual savings interest (i.e. UITFs, EIPs, Bonds).  Though most have lock in period where you will be charged if take out your money earlier than the contract. There are also minimum amount for the initial investment on some of them. You can check it out at the banks, ask their employees, grab some leaflets or go to their websites to see your options.

Then there are also Mutual Funds like what we have with Sun Life Financial where you can start investing for as low as 5000 pesos and can add a subsequent minimum of 1000 pesos to your fund any time. You will also be able to choose the fund on where your money will be invested depending on your risk appetite. Then our professional fund managers will be the one taking care of it's growth. And you can pull out your money whenever you want it. 

And there are many other types of investment you can look at. What’s important now is you understand that inflation is a huge consideration when planning your finances and investments. You can’t ignore it because it is real and it will hurt you whether you are aware of its existence or not. No one can avoid it. But the good news is anyone, with the proper knowledge, can definitely beat inflation black and blue.

Happiness Value of Money

People often say that money cannot buy you happiness. There is much truth to that. Undeniably though, money can purchase the important things for your loved ones, for other people and for yourself. It is more about the value it can bring you like putting food on the table, having to spend more time with the people you care for, providing security for your loved ones in terms of health and other basic needs and having the opportunity to share with others. 

It's not money per se that will bring happiness to your life. But trust me. Losing lots of it can make you feel miserable. It’s always easy to dismiss the value of money until you experience hitting rock bottom. It's always more fun to be the giver than the receiver. But of course, giving is not always in monetary terms. But a lot of time, it is. And still, the value you are giving off is not the money itself but your effort exerted in acquiring it.

Earn smart, spend wise and always be a blessing for others.

Ignorance is Expensive, Cut Your Budget On It

Money has been the common stumbling block for people who want to start investing. Ironically, it’s their money problem that they want to solve with the idea of investing. Almost everyone would say they want to prepare for their families’ future by investing and getting a protection for emergency needs. But still a lot of Filipinos even at their middle age are not doing anything about it. The usual reason is because it’s expensive, they think. 

But if you look at some people’s lifestyle, even some minimum wage earners have that excess money to buy items which they call “investment to self”. They buy gadgets, they dine out, buy expensive coffee, watch movies, have “gimik” with friends, go out of town and a lot more. You know what I’m saying. You see them being shared in social networking sites. Though it’s every person’s right to choose where to spend their hard earned money, there are those occasions that these people who spend their salaries on these luxuries are the ones not giving other people their rights to spend elsewhere. When these people who do not spend and save their earnings wisely meet an urgent need for their family (i.e. accidents, hospitalization, calamities, illness, death), they have no choice but to ask help from others who they know have saved some. 

Of course, not all who ask for help are irresponsible. Sometimes, no matter how prepared we think we are, the worst things happen and surprise us. And it’s always good to help others. But talking about those who don’t help themselves first and run to other people for their emergency needs, I think it’s unfair for those responsible people who earn the same as they are yet try harder in saving for their own families’ sake.

The fact is if you really want to invest, you can start for as low as 50 pesos per day to get as much as Php 700,000 pesos in protection for your family and possibly Php 1,000,000 (yes, that’s 1 Million) for your retirement fund. That’s cheap, right? You just have to give up some of these “investment to self” that you really don’t need. Or if you can’t give them all up, you can at least downgrade some of them. Downsize your coffee, fewer 3D movies, drink only water when you dine out, travel in budget, cut on your beer bottles, etc. To start on your investment, all you need to do is prioritizing your spending then ask the right people. Then act. 

Truth is protection and investment are not expensive, irresponsibility and ignorance are.


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