Since I finished college, I have ever since wondered how to be able to effectively save money. But throughout my first 6 years working, I have constantly procrastinated on saving for my future because I was too distracted on other material things that I know I was capable of buying that time.
Until it finally hit me hard when I was finally starting to feel my responsibilities not just towards myself but also to my family. I suddenly felt that the money I earn was just enough to sustain me and my family and I was not able to set aside enough savings for my family's future.
Luckily I have bumped into a financial organization who taught me the need to be able to zero down on my responsibilities as soon as I possibly can. They have opened my eyes and showed me that there are lots of investment vehicles out there in the market that I was just not aware of.
Knowing these investment vehicles now then leaves me no excuse not to start saving for my goals, may it be short-, mid- or long-term, there is one vehicle out there to suit every need. Just to show the basics, below is the breakdown of where we should put our funds to effectively leverage our money.
1. Bank Deposits for our daily allowance and for our emergency fund. At least 3x of your monthly salary should be readily available in your bank, anything more than that is like letting your money just sleep in the bank.
They are safe since the Philippine Deposit Insurance Corporation (PDIC) insures deposits up to P500,000 per depositor. They provide steady interest income. They are also easily accessible. A savings and current account can help you manage your day-to-day expenses. However, banks' interest on savings and current accounts are minimal. Interest rate nowadays range from 0.25% to 1.00% only.
Click here to check out several bank account comparison available in the Philippines
2. Variable Life (VL) Insurance as your long-term fund. VL's interest range starts from 8% above depending on the fund performance. Policy holder usually pays a premium for 5-10 years. This is a good investment because:
(a) insurance companies don't easily close down. They are being monitored by the Insurance Commission of the Philippines (http://www.insurance.gov.ph/).
(b) it is tax-free
Long-term funds are usually intended for children's education and for retirement.
Click here to learn the basics of insurance
3. Mutual Fund for your mid-term fund. Investing in mutual funds is one of the safest way to earn. It is where your money will be invested into different sources such as real estate, forex, stocks and bonds together with other mutual funds investors. The money is handled by a professional financial manager. The good thing is that you can start slow and with little money.
Mid-term funds are usually intended for buying a house, car or perhaps for a wedding.
4. Stock Trading for your short-term fund. It is where you buy a share of a company or a stock. Being a stock holder allows you to be a part owner of the company. Part owner of its profits and its liabilities as well.
However, there is a big risk of losing your capital as market prices change daily.
Tip: Invest only what you can afford to lose (spare money only). Hold your stock investment for the long term to ride out market price fluctuations. You may also invest in stocks via a mutual fund or a unit investment trust fund.
I will be discussing each item on my next posts. Make sure to subscribe to my blog to not miss upcoming posts.
If you want to learn more about financial management, fill up below form.
Happy saving everyone!
Article References:
Where is the best place to put my money? - http://investmentvehiclesforfilipinos.blogspot.com/2010/03/where-is-best-place-to-put-my-money.html
Until it finally hit me hard when I was finally starting to feel my responsibilities not just towards myself but also to my family. I suddenly felt that the money I earn was just enough to sustain me and my family and I was not able to set aside enough savings for my family's future.
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| Image courtesy of Stuart Miles / FreeDigitalPhotos.net |
Luckily I have bumped into a financial organization who taught me the need to be able to zero down on my responsibilities as soon as I possibly can. They have opened my eyes and showed me that there are lots of investment vehicles out there in the market that I was just not aware of.
Knowing these investment vehicles now then leaves me no excuse not to start saving for my goals, may it be short-, mid- or long-term, there is one vehicle out there to suit every need. Just to show the basics, below is the breakdown of where we should put our funds to effectively leverage our money.
1. Bank Deposits for our daily allowance and for our emergency fund. At least 3x of your monthly salary should be readily available in your bank, anything more than that is like letting your money just sleep in the bank.
They are safe since the Philippine Deposit Insurance Corporation (PDIC) insures deposits up to P500,000 per depositor. They provide steady interest income. They are also easily accessible. A savings and current account can help you manage your day-to-day expenses. However, banks' interest on savings and current accounts are minimal. Interest rate nowadays range from 0.25% to 1.00% only.
Click here to check out several bank account comparison available in the Philippines
2. Variable Life (VL) Insurance as your long-term fund. VL's interest range starts from 8% above depending on the fund performance. Policy holder usually pays a premium for 5-10 years. This is a good investment because:
(a) insurance companies don't easily close down. They are being monitored by the Insurance Commission of the Philippines (http://www.insurance.gov.ph/).
(b) it is tax-free
Long-term funds are usually intended for children's education and for retirement.
Click here to learn the basics of insurance
3. Mutual Fund for your mid-term fund. Investing in mutual funds is one of the safest way to earn. It is where your money will be invested into different sources such as real estate, forex, stocks and bonds together with other mutual funds investors. The money is handled by a professional financial manager. The good thing is that you can start slow and with little money.
Mid-term funds are usually intended for buying a house, car or perhaps for a wedding.
4. Stock Trading for your short-term fund. It is where you buy a share of a company or a stock. Being a stock holder allows you to be a part owner of the company. Part owner of its profits and its liabilities as well.
However, there is a big risk of losing your capital as market prices change daily.
Tip: Invest only what you can afford to lose (spare money only). Hold your stock investment for the long term to ride out market price fluctuations. You may also invest in stocks via a mutual fund or a unit investment trust fund.
I will be discussing each item on my next posts. Make sure to subscribe to my blog to not miss upcoming posts.
If you want to learn more about financial management, fill up below form.
Happy saving everyone!
Article References:
Where is the best place to put my money? - http://investmentvehiclesforfilipinos.blogspot.com/2010/03/where-is-best-place-to-put-my-money.html
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