In the time of social media and technological advancements, it is easier to be creative in making new ways and unique platforms to earn money. Filipinos are more open to side-hustle incomes, freelance jobs and small businesses.
But once we earn this money, are we knowledgeable enough in terms of how to practically make our hard-earned money grow even more? Being educated in terms of investment is the key to managing your hard-earned money well. That’s how investment literacy comes into the picture.
What is investing anyway? Investing is the proactive use of your money to make more money or, so to say, your money working for you. It is different from saving. Saving is a passive activity, even though it uses the same principle of compounding.
Saving is more focused on safety of principal (the amount you start out with) and less concerned with return. Your focus in investing is on return and can run the spectrum, from conservative to very aggressive, in terms of risk.
One way you measure results is by the expected return weighed against your anticipated risks.
Unfortunately, investing carries a certain amount of risk and with that can come some pain, but also some gain. You must weigh the potential reward against the risk of an investment to decide if the pain is worth the potential gain.
Understanding the relationship between risk and reward is a key piece in building your personal investment philosophy and strategies. After all, it’s a No Pain, No Gain business.
So, you have your money and are ready to invest. You’ve determined how much you will put aside, when you will need your money, you took care of your debt and determined your goals. Now it’s time for you to find out what investment is for you and your goals, and how investment literacy is your key to financial freedom.
Financial-planning seminars
There are many institutions today that offer money-management sessions.
The Philam SAVES organizes financial planning for parents and teachers and aims to promote the value of saving and being thrifty to children and their parents. The program is unique in its approach, engaging students, parents and teachers directly at the grassroots level.
“Being financially literate is the first step in achieving financial wellness, and this is why SAVES is very important to us. It allows us to address a very basic problem that, if given attention, can make a difference in the lives of so many people,” said Aibee Cantos, chief executive officer of Philam Life and chairman of Philam Foundation.
Be open to seminars like this to educate yourself about the importance of saving and investing money.
Learning the science of equity investment
Stocks are shares of ownership in a corporation. When you become a stockholder or shareholder of a company, you become part-owner of that company. Depending on how many stocks you own of a particular company, you will have little or great financial dependency on the fate of the stock value.
There are many technical processes that go with managing stocks, but luckily there are many companies today that not only educate you about investing in stock market, but also helping you be equipped with doing it. From financial managers, investment plans to mobile apps, you can monitor the money you invested in stocks anytime you want, and you could make your money work for you.
An equity fund is designed to generate long-term capital appreciation by investing in high-quality equities diversified across sectors.
Sun Life Financial offers life-insurance plans that already come with equity-bond plans. By availing of this kind of insurance package, not only could you enjoy an insurance for your family, but also the fruits of stock investment for yourself.
An equity fund is offered as a fund option in exclusive packages, in investment-linked life-insurance products, like Sun FlexiLink. Once you avail yourself of this, a financial manager would be assigned to look after your stock investments, updating you of what is happening in the Philippine stocks landscape and how it can work for your money. Your financial advisor will even teach you how to monitor your money through SunLife’s exclusive mobile app for equity investments.
One you have the package, the results of growing your money are better when you put in a fixed amount of money at regular intervals. How to do this? You may pay at any SM payment center to pay topup fees.
Financial-planning calculator
With the fickle performance of the peso today, it is smart to look at the possibilities of growing your dollars.
The Insular Dollar Wealth Builder is a one-time premium investment-linked life-insurance plan that allows you to participate in the performance of the US dollar-denominated bonds and stock.
With this platform, the Insurance Life lets your money grow more than the usual savings instruments. It gives you the flexibility to add to your investment for bigger funds or even make partial withdrawals.
Through Insular Life’s financial-planning calculator on its web site and mobile app, you can also see how your dollar investment is performing and be educated on global finance along the way. Aside from this dollar-making opportunity, you can still have financial protection for your loved ones through life insurance with Insular Life.
Doing your own research and being literate in financial are the best kind of investment you can do for yourself, because it saves you from money losses and investment failures.
Real estate: Basic know-how
Real estate is familiar to us, since house and lot are often one of the first things we save up for. It is a sound investment—much better than renting a place where a family can stay.
Real estate, however, is an even more attractive form of investment through getting tenants. Not only you are secured with a sole property in the future, but you can also have a passive income in such a way.
However, investing in real estate is not simple. Real estate is a more time-consuming process, from finding the right assets to managing them properly to keeping good financial records. Success in real estate depends on a few critical factors; you must have the time and interest to find good properties and then keep these on track.
If you’re committed to trying your hand at real estate, then you need to make sure you have the right team of people around you to be educated about the basic know-how. Due to even stricter policies today imposed by the government, you must have a trusted licensed broker to assist you from the point you decide to buy your own property for business purposes.
Fortunately, one real-estate professional knows another, and it is more than likely that your real-estate agent or landlord will be able to recommend other real-estate professionals you should talk to. Be sure to check a professional’s real-estate credentials.
The second critical factor for success in real estate is much more property-specific: Cash flows. Crunch the numbers and think of everything, plus will you be able to raise rent when you buy the property or soon thereafter? And on the expense side, make sure you’ve calculated your mortgage payments, insurance and utilities, and included a reserve for repairs and maintenance.
For carefully evaluating the numbers side of the equation, your appraiser is your best friend. A formal appraisal of a property is almost always required by your financing source (mortgage broker). Get your hands on this appraisal. It will include details of comparable rental properties in your neighborhood—sales prices, charged rental rates and cost to build from scratch. It may also include a cash-flow analysis, showing monthly revenues and expenses, which will crunch the numbers for you. An appraisal is invaluable, and you should carefully study yours.
After you’re satisfied with your potential cash flows from the property, your main concern should be avoiding headaches that will eat up your time and sap your energy for the real-estate business. And that means you simply must avoid tenants who will give you a headache.
The first step is to background-check your applicants carefully. You can also avail yourself of online web seminars on customer satisfaction for real estate to be updated of the ways you can secure your tenant’s satisfaction.
Armed with these tips for building a real estate network, understanding cash flows and getting good tenants, you’re well on your way to starting or improving your returns—in terms of both money and peace of mind—on your ownership of rental real estate.
1 comment
It is a nice blog, everything in the blog is self-explanatory