WEALTH can be defined in terms of purchasing power. Money growth must eventually outpace the inflation rate to improve the state of wealth.
In 2018 the economy has witnessed rising prices brought about by different factors. Thus, saving money in the bank is not enough.
In the case of overseas Filipino workers, it is recommended that a certain proportion of the valuable remittances they send should be allocated for investment purposes. The good news is that there are a number of investing options for OFWs that are available.
The choice of what investment to take can be based on four factors. The first is the goal. Any investment should significantly help an OFW achieve a specific and ambitious goal. This goal can be a financial goal that delivers a better future.
The second factor is the time horizon. Some relevant time horizon discussions can revolve around the time every OFW would target to return to the country and the planned retirement time.
The third is the risk profile. Higher returns will definitely entail higher risks. Investment options can vary for those who are aggressive and for those who are conservative with respect to risk.
The fourth factor is purpose. Every investment chosen must ultimately help establish a well-lived legacy for the OFW.
One investing option would be pooled funds. Examples of these would include mutual funds, unit investment trust funds and variable unit-linked funds. These funds have dedicated professional fund managers who invest mainly in equities and bonds. In the case of variable unit-linked funds, these also provide insurance coverage. In choosing the right pooled fund, an OFW must review the profile and performance of the fund. To assess performance, both long-term and short-term figures matter to determine consistency.
One investing option would be direct investing in the stock market. Unlike pooled funds, the OFW would need to invest more time and effort in getting education on tools like fundamental analysis and technical analysis in order to make more informed decisions. The risk profile needed would be aggressive since volatility is a given in the stock market.
Different stocks have different strokes so diversification is important. A good stock portfolio can be one with both established companies and emerging companies.
One investing option would be real estate. This type of investment offers possible gains in terms of price appreciation and rental income. In choosing the type of real estate, an important consideration would be the location. Different areas have different development trends.
Those areas with dynamic plans for development will potentially yield higher returns. Another important consideration would be the choice of developer. There is no substitute for trust in business. Financing schemes must also be considered.
One investing option would be agriculture. Our economy can be stronger if we are able to accelerate the development of the countryside. Investing in agriculture can prove to be a viable investing alternative for OFWs if the products would cater to a growing market segment in the local landscape or global setting.
One investing option would be entrepreneurship. Our economy can be stronger if we are able to accelerate the development of the middle class.
One way to be an entrepreneur is to build a business from scratch. Another way to be an entrepreneur is to buy or invest in an existing profitable business. Conducting due diligence is key. Investing in a successful business might require more active involvement of an OFW whether in terms of setting-up the right foundation or in overseeing the daily operations.
OFWs must embrace a culture of continuous learning. A heightened level of financial literacy would help every OFW maximize as many opportunities as possible. No OFW becomes an OFW forever. Good investments can help OFWs eventually transition from being an OFW to being a successful balikbayan.
Gemmy Lontoc is a registered financial planner of RFP Philippines. To learn more about personal financial planning, attend the 74th RFP program this January 2019. To inquire, e-mail [email protected] or text <name><e-mail> <RFP>