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  • Saan Ba Magandang Mag-Invest? A Financial Planner's Answer

    A financial planner asks parents to imagine investing like how you take a road trip.
    by Ana Gonzales .
Saan Ba Magandang Mag-Invest? A Financial Planner's Answer
To read this story in Tagalog, click here.
  • There is no secret formula to become instantly rich — unless, of course, you were born to a wealthy family. But even then, your parents and their parents had to work really hard to achieve financial success. Forbes says financial success is all about balance, perspective, knowledge, values, and how you define what is most important to your happiness.

    Registered financial planner Fitz Villafuerte said Filipinos ask the wrong questions when it comes to managing their finance. In his profession, he would often get asked: “Saan ba magandang mag-invest?” To which he would often reply: “What is your financial goal?” 

    According to Villafuerte, answering the question of where to invest will only matter if you have a clear, concrete, and realistic financial goal.

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    At the recent Smart Parenting's "Money Strategies for SmartMoms" held at Discovery Suites, in partnership with Insular Life, Villafuerte asked mom to imagine that investing is just like taking a road trip. Here’s what you need to do:

    Assess your financial situation

    Before you go on a road trip with your family, what’s the first thing you do? You assess if you can afford the trip. The same goes with investing. Can you afford it? 

    Villafuerte pointed out that the most important thing you need to have before you consider spending is healthy cash flow. “Focus on fixing your income first,” he said. “The worth of your assets should be higher than your liabilities.”

    Define your financial goals

    Once you know what you can afford, it’s time to define your goals clearly. Villafuerte says the key is to be specific. You also need to understand that although objectives can change over time, it’s good to have them today so you can make plans — a simple idea is better than no plan at all.

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    Explore your investment options 

    If you know how much you can spend to finance your plans, you can start looking for options. According to Villafuerte, there are three types of investments you can choose from low risk, moderate risk, and high risk. 

    LOW RISK (ideal for short-term goals)

    • Savings Account
    • Time Deposit
    • Treasury Bills
    • Low-risk Funds

    MODERATE RISK (Goals you wish to achieve in five years)

    • Company Bonds
    • Small Business
    • Moderate-risk Funds
    • Cooperatives

    HIGH RISK (ideal for long-term goals like a retirement fund)

    • Stock Market
    • Equity Funds
    • Franchise
    • Real Estate
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    Villafuerte also notes that for paper assets like commercial banks, insurance companies, mutual fund companies, and stockbrokers, you can start with as little as Php1,000 to make an investment. You can also check out retail treasury bonds, known as “rTB 21,” which starts for low as P5,000 as investment capital.

    Finance experts say investing in bonds with the government as the borrower is a safe and secure investment option, especially for medium-term plans. 

    For business and real estate investments like franchise associations and real estate companies, you can ask for sample computations and plan your budget around it. You can carefully go over your goals and funds to see how you can distribute your family’s money.

    Take action on an investment

    In investments, balancing of risks is essential. It’s also crucial that you never stop learning. You always have to be on the lookout for new knowledge about investments and the stock market. Putting plans on paper into action is perhaps the hardest bit in the whole process, but it’s one of the most critical parts. 

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    See investing as long-term

    Still true to Villafuerte’s words, investing is indeed very much like traveling. Once you’ve made plans, spent a budget, and drove to your destination, you can’t just back out. You have to stick with it, especially since you’ve already come a long way. 

    Don’t expect to get immediate results — everything worth keeping comes with a little (or a lot) of hard work and perseverance. Villafuerte says you need to make saving and investing a habit — you need to have the mindset that you will do it for the long run. Watch out for opportunities, too. Villafuerte (and successful investors like him) swear it’s worth it.

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