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Do you have money sleeping in the bank?
I believe many Pinoy’s, despite the still huge gap in financial literacy, have that genuine desire to prepare for their financial future.
After all, nobody wants to see their family and children carrying the heavy burden of huge financial loss or lack.
I myself, during my college years, once had to face the serious not-so-good consequences of a family not being ready when faced with a financial challenge such as death of a breadwinner or a family member getting sick.
The problem is, we’re not really taught how to prepare for it and secure our financial future properly.
At least I don’t remember it being taught in schools or discussed in dining tables. Kaw ba?
For instance, do you know that your money grows in the bank much lower than how inflation eats up its buying power?
That means it’s never good to let your money park or "sleep" in the banks if you know they are for your long term needs.
That’s always one of those starting points when we talk about proper saving.
"Ok lang ikaw matulog, pero wag ang pera mo."
Now with basic financial insights such as this, you can now make your money work harder for you.
Serious Omeng, kahit pandemic tayo?
True… the present COVID-19 crisis has been devastating if not life-altering to many.
People lost jobs, closed businesses, and my heart goes to those who would no longer see their family members and close relatives even when the world is COVID-free.
However, these times also provide great opportunities to make your money sleeping in the bank and make it work harder for you.
And I see two big reasons why it’s good to start one at the soonest time you can.
Reason 1. We are coming out of a market crash.
I’d say this is one of those once in a lifetime opportunities you will ever have in terms of maximizing your money sleeping in your bank.
The reality is that as economies follow a certain cycle over time, stock market also undergoes alternating bull(up) and bear(down) market trends. See below.
Every period of recession (red bar) is followed by a period of spectacular returns (blue bar).
And right now, we may have reached the worst and we’re gearing up to begin the next bull run we’ll ever have.
Short-term traders will be wary of market conditions now, but for value investors with a long time horizon (at least five to ten years), this is something very beneficial for their long term goals.
I’ve been investing since 2010 where I saw a lot of similar downturns, and I’d say those starting sooner today than later will be in for a great treat many years from now.
In fact, I’ve seen people who started investing near or after the 2008 financial crisis and had enjoyed the long bull run we had since then until 2019.
With this perspective, one can do buy and hold or strategic cost averaging with good companies.
Now on to the second reason why it’s good to start now…
REASON 2: Investments & insurance (income replacement) can now be availed EASILY online.
That means you can get one for yourself or your children at the comfort of your home.
Stock market has been available to public online ever since I started in 2010.
But purchase of insurance and similar products, prior to the ECQ, have predominantly been done face-to-face with the assistance of financial advisors.
Thankfully, our regulating govrnment Insurance Commission (IC) pivoted and recently allowed financial advisors to conduct virtual face-to-face transactions.
No more time-intensive and hassle multiple meet-ups at night since everything can now be done online including financial coaching.
This development now allows a wider range of financial solutions to be accessible to Filipinos at this time when sickness is a constant threat and when they need it the most.
How to start your financial journey
Getting life insurance is one basic foundation to proper solid financial foundation and is clearly a very beneficial product to have at this time.
There are two ways to do this.
1. You can get the basic term insurance which covers you at a limited time with no investment component (fund value) and do invest extra money separately in the market all at your own **that means you’ll do all transactions and monitoring and rebalancing tasks**; OR
2. You can avail the two in one (insurance + investment) product also called VUL – Variable Unit Linked), get both the benefits in one and leave the stress away so you can focus on your other high-priority items.
The two approaches both have pros and cons, but ultimately they should both help you get started.
Bur for starters,
Option 1 saves you some fees since you get pure protection with a lower premium. The cons is this needs more active involvement and commitment from the person when it comes to constantly saving and investing to achieve optimal returns on your money.
But if you’re the busy (or lazy) type of person who has a serious challenge of discipline in saving, doesn’t want to check markets on a constant basis, and simply wanna prepare for the future without spending too much time, option 2 is a common easy approach. Here you must only make sure that you cover your regular premium (payment) which should cover both the insurance expense and investment.
I’ll share more about it in my future updates but in my experience, the nice thing about getting into VUL is Here you enter a formal contract with well-defined terms so you are in effect "forcing" yourself to save and invest and be really committed for your own financial future.
Years of observing people struggling with their financial preparation, I’ve seen how it is important to set-up an environment that will help you just do that. More like a no-choice environment,… but for a better cause. As they say, you don’t know how strong you can be where there’s no opportunity that will force you to be one.
The constant nudge of your financial advisor would help you do those little acts of savings in the present that will compound over time for your future.
Your financial advisor is also available many years even after the sale to remind you of your commitment to yourself and help you and give insights as to what to do in uncertain times like what we have now.
So this is ideal for those who are just starting, have other priorities in life but want to secure their financial future (Just make sure to choose a trusted, trained and professional advisor who will be there for you.)
This is just the most basic of ideas, and I hope you will take time to study this further and make actions your future self will thank you for.
As I said at the start, people today don’t realize we’re in a great place to begin preparing for our future. With the two reasons above, this is a great opportunity for those looking to get something from their money more than what the banks can give.
My Actual Experience
Few years after I started working, I got my first VUL in 2012 with a quarterly payment(premium) of less than 4,600+ (1,500+ a month, yes you can start that small).
Looking back I’m thankful I started early.
I could have spent that money somewhere else being bombarded with all temptations to spend, but with automatic debit payment in place, I reap the benefit of automating how I do my finances without me thinking of it. And I’m happy This policy will be finished soon in less than two-years time.
Last year, as my income grew, I also got my second VUL.
This one in turn is designed for my family.
And I’m happy seeing my money going to proper places while I continue to enjoy my life.
You can also do the same. Or you can modify it a bit.
Every plan can be designed to make it perfect for you.
More often, It doesn’t have to be big.
It just needs to be started.
The truth is Time flies very fast, and with proper foundation, this time passing by can be your best ally in securing your financial future.
If you’re interested to have one, just reply to this email and I’ll be happy to work with you hand in hand. Time is of the essence because every year you delay means an increase in cost on your end. Let’s discuss and prepare for your future.
The reality is there’s no perfect investment for anyone, and it’s only until your exact needs and goals are well-defined that an investment product can be made "perfect" for you.
I long to see OFW’s returning home with financial peace and I’m excited seeing every hardworking Pinoy to get started.
I hope this has helped you in any way.
If you’ve got any questions, just click reply share your thoughts and I’ll be happy to share mine too.
Stay healthy, keep safe & happy investing.
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