A.You saved some of it.
B.You spent all of it.
C. You spent even before you got it.
At this time of the year, do yourself a favor by having an honest check:
Am I financially better off now than the previous year?
I love time-offs like this.
It gives us the chance to reflect on the past whole year and pick up the lessons we can use for a new beginning.
So I offer this blogpost for those who are just starting now and are motivated to change their financial life forever, starting this year.
Below are some initial practical points I want to share with you so you can start right away and kick-off your financial journey this coming year!
Saving doesn’t make one a winner
One of the group of people I pity but who nonetheless aim for financial freedom are the SAVERS. This bunch of people are willing to make the sacrifice of delaying their gratification to prepare for their dreams but unfortunately are not aware that they have invisible enemies around.
Saving is a good habit (and a must at that), but that doesn’t make one a winner in the financial arena.
At some point in your life, you’d need to learn not only how to save, but more importantly how to let your money grow over time.
And that’s where investing comes into the picture.
Until you take your money out of your savings and put it into an instrument that can offer much more returns if you’re willing to take the associated risk, then your money becomes an investment waiting its right time to grow. All that’s left for you is to take that decision and commitment that next year will be much better financially for yourself and for your loved ones. (Also read related post – The Key to Your Great Wealth: Money Machines)
Investing helps you win over enemies of wealth
There are various reasons why it’s important to start investing your money as soon as you can.
1.First is to beat inflation.
If your money parked in the bank earns an annual interest of less than one percent, but its purchasing power decreases by five percent due to the effect of inflation, that immediately makes you an automatic loser. There’s just no way of growing your money’s worth if you only stick to saving (Find out here how inflation makes you an automatic loser … and what you can do about it).
Hey, it’s not bad to put money in the bank.
But if your goal is to increase its value over time (for your long-term purposes), banks is certainly not a good place to put your money in. Better buy banks (by investing) in that case.
|The effect of inflation|
2. Take advantage of compounding.
Second reason why you’d want to invest is to take advantage of compounding.
Compounding happens when earnings from your investments start generation more earnings itself. Time is your best ally when it comes to investing so it’s better to start as early as you can.
Still have excuses of delaying?
Then when do you think is the right time? Choose one again.
Age 18 to 25
“Me invest? Are you kidding?I’m just getting my education. You can’t expect me to be able to invest now.I’m young and I want to have a good time. After all, I’ll be in college for a year or so. If and when I get out of college, I’ll start investing.”
Age 25 to 35
You don’t expect me to invest now, do you? Remember I’ve only been working a few years. Things will be looking up soon and then I’ll be able to invest. Right now, I have to dress well in order to make a good impression. Wait till I’m a little older. There’s a plenty of time.” Age 35 to 45
“How can I Invest now? I am married, have children to care for, I have so many expenses in my life. When the children are a little older, I can start thinking about investing.”
Age 45 to 55
“I wish I could invest now, but I just can’t do it. I have two children in college and it’s taking every cent and more to keep them there. I’ve had to go into debt the last few years to meet the college bills. But that won’t last forever, and then I can start investing.
Age 55 to 65
“I know I should be investing now, but money is tight. It’s not so easy for a man my age to better himself. About all I can do is hang on. Why didn’t I start to invest 20 years ago? Well, maybe something will turn up.”
Age over 65
“Yes, it’s too late now. We are living with our eldest son. It isn’t so nice, but what else can we do? We have Social Security, but who can live on that? If only I had invested when I had the money. You can’t invest when there is no income.”
Will you start now, or will you procrastinate?
In investing, TIME is more important that TIMING.
3. Make your money work for you.
The third reason why you would want to start investing is to make your money work for you.
What you’re most probably doing now is you working for money. Whether through an employment, self-employment or a small business, a part (or a lot) of you is working for money.
But time will surely come when you can no longer afford to do it, but your NEEDS will remain (and probably would be even bigger). Having enough investments which you can use for your retirement will certainly give you that financial peace even at your old age.
Even household maids can start investing
Trying to come up with hundreds of thousands of pesos of starting capital for an investment is the major reason why people keep away from starting their investments. In the past, investing in a vehicle that offers a much higher yield was usually available only to rich. But those days are gone, and that reasoning is now just a lame excuse.
Today, equipped with the right guidance and financial education, one doesn’t have to have big chunks of cash to start investing (both in mutual funds as well as in the stock market). In fact, for as low as Php 5000, one can readily buy shares (or stocks) of the biggest local companies we have in the country (Jollibee, SM, BPI, Ayala Corp. Meralco, etc). You can read here a short account of the first time I invested and why I liked it!
You can also read this free ebook by Bo Sanchez – My Maid Invests in the Stock Market… and Why You Should, Too! – about his maids being investors in the Philippine Stock Market. If household helpers can do it, there is no more reason for you, who probably earn much more, not to start investing your money. Also read this big news – Bo’s Maid is Now A Millionaire!.
Choose the investment option right for you.
There are different vehicles you can choose from where you can invest. But the most common and easiest way to start is investing in paper assets – either investing directly in the stock market, or indirectly via Philippine pooled funds like mutual funds and UITF’s.
1.Philippine Stock Market
To start investing in the Philippine stock market, you’d just have to open a stockbroker account. Whoa! Nosebleed na ba? Well, this is very similar to opening a bank deposit account.(Think of your payroll account.) What’s better news is that there are now online stockbrokers which allow you to manage your stock investments via the web (yes, internet). That means you don’t have to be in the Philippines to be investing! (Even OFWs can invest!) And do you know that you can open a stockbroker account even with zero capital?
Popular options for online stockbrokers here in the Philippines are COL Financial, BPI Trade and First Metro Securities. This is just a one-time application process after which all your subsequent transaction can be all online. Just submit the required forms and documents to their office (or submit it via courier) and wait for your account details (log-in username and password) to be emailed to you in at most three days.(You can check this comparison for some tips in choosing your online stockbroker in the Philippines)
Once you have an online stockbroker account and enough cash,you can now start buying your first company. But since you’re doing this directly, you’d also need the time and knowledge to monitor your investments personally.Below are some dedicated pages for click-by-click tutorial that can help you start investing:
If you’re just starting, investing in mutual funds can be your initial option so you’d know how investing works while letting someone do the hard work for you. (You can also join us in our How to Win in Stock Market Seminar this coming June 28 so you get answers to all your other questions personally and meet other investors.)
2. Mutual Fund in the Philippines
If you don’t have time to actively monitor your investments as in the case of stock market, you can then just let a fund manager do it for you in a mutual fund.
Briefly, in a mutual fund, money from several individual and institutional investors are pooled and a professional fund manager manages it for everyone.
All you need to do is to invest your money in the mutual fund company and let the manager do his job of growing the money. You can then monitor its performance from time to time, which is also now possible online. You can get more information on mutual fund option in the Philippines as well as the historical performance of each fund of each fund of all mutual fund companies available here.
Some reminders 🙂
The above points are just some of the key ideas to consider for your starting point and do not cover the intricate details of each investment . In any case, make sure that you have your solid financial foundation first (protection/insurance/healthcare, emergency funds, no debts) before making your money grow. This will make sure that you’re at peace with your financial life no matter what happens.
Please also bear in mind some basic foundational tips:
- High-yield = High-risk
- In relation to the first, just because you earn in an investment doesn’t mean it’s already safe.
- Only invest an amount that you can afford.
- Don’t be greedy and learn to diversify (You’ll learn more about this down the road!)
The key to success in investments is (right) persistence. Don’t give up too soon. Investing is not a get-rich-quick scheme, and will never be. Please don’t attempt to be millionaire in days playing stocks.
One thing you should remember once you have started investing your money is not to expect immediate results. I’ve seen so many people in our facebook group – Investing in the Philippine Stock Market – Tips & Tricks, who seem to be trading rather than investing and, worse, NOT knowing about it. They want quick bucks not knowing what they’re really into and how stock market really works. They seem to forget that RISK is always present in any investment, much more in stock market. That’s the common mistake most people have. They are impatient. Soon enough, they sabotage their plans and resort to their poor old ways of thinking and action. If you want to be very clear in this important aspect cof differentiating investing versus trading, you can watch this short free interview of Edward Lee, COL Financial Chairman, and learn lots of practical insights from it.
There you go!
One last thing – the importance of your DREAMS. Sa tagalog, PANGARAP.
Envision yourself that you have enough money to live on your chosen lifestyle. Or enough money so you’d have enough time for your family and loved ones, you being with them at this season of the year. Maybe right now, a majority of your time is allotted in working to make money, but just be patient, keep educating yourself and be faithful to your investments, and you’ll eventually reach that point where you’ll never have to work again unless you choose to, while nurturing and seeing your family grow.
Yun na! ‘Twas like I summarized this whole blog.
I pray and wish you and your loved ones an abundant new year.
Thank you so much for blessing my year with your presence!
Happy investing (in what truly matters)!
PS: Want to learn more?
Attend a free Personal Finance Literacy Seminar for Filipinos and learn more about PROPER personal finance and best practices.
“Becoming rich isn’t as much about getting rich financially as about whom you become, in character and mind, to get rich. I want to share a secret with you that few people know: the fastest way to get rich and stay rich is to work on developing you! The idea is to grow yourself into a successful person. Again, your outer world is merely a reflection of your inner world. You are the root; your results are the fruits. “ – T. Harv Eker
PS2: Have a SUPPORT system for your investment journey, and be guided in every step of the way with Truly Rich Club.
Truly Rich Club is a membership club that Bo Sanchez had created to help people achieve Financial Wealth and Spiritual Abundance. It provides its private members with the right tools, principles, and strategies to grow their mindset and thinking and, in turn, their financial and spiritual life.To get to know more about the club, its current recommendations and other wealth-building lessons, click here – Easy Investing the Truly Rich Club way!
Author: Omeng Tawid
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