Pregnancy and raising a child is no easy matter, especially when you’re talking about the money you’ll have to shell out from the moment you find out you’re expecting until your child is finally old enough to support himself.
During pregnancy, whether unexpected or planned, one of the many things that will cross your mind is: How are you going to manage your finances in order to be able to support the pregnancy and your child? This is where investing comes to mind. However, don’t be too quick to pull your cash out of your pockets yet.
Investment advocate Aya Laraya, M.B.A., who is also the founder and chairman of Pesos and Sense, an educational company that provides advice on personal finances and investments topics to people who want to manage and grow their money but don't know how to, shares his expert advice. Here's what you should cover first before jumping into investments.
1. Stick with financial products that you can easily liquidate. “I really wouldn’t commit my cash to any investment that would require a regular outflow just yet,” Laraya says. “Especially if it’s a surprise pregnancy, your expenses would just jump out from everywhere. So, until you get a handle of your finances, [the best financial product] is something that you can easily liquidate, such as a savings or time deposit account,” he explains. The money in these accounts can be handy for doctor checkups, lab tests, to childcare expenses such as diapers and clothes.
2. Invest first in a life insurance plan. If you’ve got the basics covered, the first investment you should make is a life insurance for you, the parent, “even if it has the simplest and most basic terms, because if something does happen to you, at least [there would be] something [for] your baby. Or, it can help in allowing your other assets to be transferred to your child,” he says. Laraya explains that life insurance is a big help in paying for your estate taxes if something happens to you, as money in your bank accounts cannot be transferred to your child unless you’ve settled your estate tax.
3. If you don’t have one yet, get a healthcare plan. Larayasays that if you can afford to pay for a life insurance and a healthcare plan at the same time, then go for it. However, these financial products require a high outflow, so he suggests prioritizing one first. “’Pag nakaluwag ka na, then you can begin thinking of other investment options. Again this will depend on you capacity to shell out money on top of your regular expenses,” he notes.
ADVERTISEMENT - CONTINUE READING BELOW
4. Explore investing options with care. After covering the abovementioned financial products, investing is a good way to grow your money, which, over time, is the money you can use for raising your child or something your child can start with then he’s old enough to handle his own finances. Laraya suggests buying stocks in the name of your child as soon as your child has a birth certificate, and to do that, you'll need the help of a licensed PRC broker.
He explains, “a live broker, a person, is more expensive in terms of the amount of money you need to invest. Now the good thing is, through technology and the Internet, you have online brokers. Instead of shelling out six or seven million for investments, we’re talking as low as P5,000.” If you’re starting out, go with banking institutions you trust, such as BPI, BDO, Metrobank, COL Financials. “This way, you’re putting your money -- and your trust -- in an institution, not a single person. Whichever one you pick, 10 or 20 percent of the money you’ll save for your child’s savings account, ibili mo siya ng share ng bangko niya,” he says.
Again, investing should only come in when you’ve got your daily and major expenses covered. In investing your money, you have to be prepared to lose a little. “Examine first why you’re doing it. If it’s for the future, then you shouldn’t be so worried if your numbers dip a little today. You can’t really tell if businesses are going to succeed. Wala namang negosyo na siguradong kikita all of the time,” Laraya stresses.
If you’re really set on investing, before you pick stocks to buy, you and your partner would have to agree on a strategy. Laraya says, “In the same way that a couple has to be physically, emotionally, and intellectually compatible, to an extent they also have to be financially compatible. They have to agree on finance in a certain way.” It could spell trouble when you’re conservative and your partner is into taking financial risks.
Remember: it’s not just about how much money you can invest, it’s about a person’s maturity and his knowledge. “Kahit marami kang pera pero you don’t have knowledge of how stocks or mutual funds work, then don’t do it. But even if you don’t have a lot of money to invest, yet you know how the different investment products work, then [go ahead],” he says. Start small. Go with businesses you’re familiar with. Be sensitive to what businesses thrive. “As your assets hopefully increase, then that’s when you can start exploring other options,” Laraya notes.