“Anong gagawin mo sa una mong sweldo?”
“Libre ka naman sa unang mong sweldo!”
“Wow, yaman, unang sahod na!”
“Saan mo ilalagay una mong sweldo?”
In this time of your life, in your 20’s, you’d probably hear these lines dwell in your ears like bats in a cave.
But you got to wonder, what is really the right answer? Or should I say, what is the right question?
For me, it should be somewhat like the fourth question. Where would you put your money?
I am now 24 years old. I started working at 22. I have to say that I have almost wasted two years of what-could-have-been my life savings. Fortunately, my investing mentor (Karla Tuason) influenced me to save up and gear up for the future. Now here I am, trying to open your mind towards financial literacy, my few but lovely readers. The keyword here is, INVEST. That’s what you should do with your hard earned money.
You have to channel your money right:
- EMERGENCY FUND
It is always good to have what I call “Gipit Money“. It means that you will only use this money if you already have your back against the wall. That is why it good to work for a company that has good HMO programs. At least, your health is covered. Anyway, for the emergency fund, it should be enough to cover at least a few months of your salary just in case you get terminated from work or some unfortunate accident happens. It always good to have your back covered. That is the sole purpose of this fund.
- LIFE INSURANCE
When I tell my friends that I am planning to apply for a life insurance they always tell me, “Ha? Eh ang bata mo pa ah?” I tell you my brothers and sisters, that is the whole point! Life insurance does not get any cheaper when you are still young. Insurance companies bet that you won’t die at such an early age and voilà, cheaper insurance rates. BPI – PhilAm Life offers their basic life insurance package at ~1,800PHP per month for a 500,000PHP coverage. See? Where is your excuse now? Even if you’re getting a 20,000PHP-ish monthly salary, that would still be feasible for you.
Whether it be a *variable or *traditional life insurance, this fund will be for your beneficiaries. Don’t give your future families any burden when you pass away. I assure you, you’ll thank me in about 50 years from now.
- RETIREMENT FUND
In your first day of employment, you have to immediately think about your retirement. Make sure that you WON’T work for the rest of your awesome lives. My target retirement age is 40 years old. It seems a bit early and would I really be able to save up that much money in just 16 years? The answer is an unbelievable yes. One thing you could do is to put a percentage of your salary in *mutual funds. A lot of banks offer this kind of investment and they will act as your fund managers. Sounds fancy right? But it is as simple as A,B,C. You give them money, and they will invest it for you with a fixed return/interest. This is a low risk, low reward type of investment and perfect for long term savings. Instead of putting your savings in a piggy bank, put them in a place where they can grow. Hence, mutual funds. There are a lot of types of mutual funds out there and some are better than the others. They have their own pros and cons. We can talk about it over coffee or something. Coffee’s on you! Ha!
- INVEST IN THE STOCK MARKET
So far, this was the best decision I have made in my corporate life. At first, I thought that the stock market was for the rich players only. I was completely wrong. COL Financial Group (Citisec On Line) conducted a seminar in our university when I was still in college. I didn’t pay enough attention to it because I was still a fool back then. Yes, I am a fool for not starting that early. I was a fool for letting opportunity walk away right in from of me. Anyway, moving forward, now that I am no longer a fool, I started investing in the stock market last April 2014. Ito lang masasabi ko. “BAKIT HINDI KO PA TO SINIMULAN DATI PA!?“ The stock market is a bittersweet eureka moment of my life. It’s sweet because I already started. It’s bitter because I did not start earlier.
I am what they call a long term investor (turtle investor). I buy shares of valuable and financially stable companies or what they call, *Blue Chip Companies. It’s simple, for example, I buy a share from Ayala Land Inc. today for 1.00PHP/share. Then, I will wait for it to grow to 2.00PHP/share, so on and so forth. And eventually, when it reaches a certain price for a certain time period, I will now be able to sell it at a higher price per share. It is just like a simple buy-and-sell business.
The stock market is not something to be afraid of. It is not a gamble. It is not for the rich only. It is something that could save us from poverty. You just have to invest in the right companies and buy at the right time. In long term investing, the margin of error is thin. That’s why for beginner investors like me, this is recommendable.
However, there is a way to earn money from the stock market twice as fast. But, it takes a lot of knowledge, reading, learning and experience. My stock market mentor, Harley S. Wong (Stock Broker/Senior Product Specialist of our team at FactSet Research Systems Inc.), would be able to shed more light with regards to this investing method. This involves a lot of *chart reading and technical stock market jargons that I should leave to the experts to discuss. For now, long term investing in the stock market is already more than enough.
So, don’t let opportunity walk away from you like I did.
Start now! Start early! Don’t be afraid. Instead, understand.
“We’re afraid of things we don’t understand.” So, understand.
Read and you shall learn.
Ask and you shall be taught.
What is the purpose of wealth if you won’t share it? What would you do with all the money in the world if it’s just for yourself? That would be pointless.
Help your family and help your loved ones. I am guilty for not being able to help out that much but I believe that I should first help myself before I could help others. I should be stable on my own before I help someone to be stable. That is the responsible way of helping.
Share your wealth in any way you can. Donate, offer, etc. In any way you can. There’s no point in having everything, if you can’t share it with anyone.
Money is not happiness. It is just a tool towards happiness. Do not get rich for the wrong reasons. Be rich so that you can be an inspiration to others.
Finally, you still have to enjoy your worth. What is the point of saving up for the future if you cannot enjoy your present life? Always reward yourself to get you motivated. Believe me, you can save and enjoy at the same time. You just have to adjust your life style. You could bond with your family over an affordable lunch out. Hang out with your friends over affordable beers. Spend quality time with your partner over coffee. It doesn’t have to be expensive. It only should be extravagant in terms of the quality of your moments together. That is happiness.
In life, time is your greatest friend and your worst enemy. The way for it to be your greatest ally is to start early. Invest now while you are still young. Invest your signing bonus. Invest with your first salary. I don’t want you to have the same regret as I did. Start now and thank yourself later. Trust me. It wouldn’t hurt to save up. It would actually make your life better. This is the era in which financial literacy would be as easy as 1,2,3.
Save early, retire early.
Disclaimer: I am NOT in any way, affiliated with the investment firms mentioned above. I am merely an investor myself who wants to help others to invest too. If you want to learn more about investing, please do not hesitate to ask. I’d be more than willing to help you out.
* – If you have questions for certain terms/jargons, hit me up with a comment below ®
Credit to the owner of the image used