Should You Invest in Mutual Funds?

It’s been a while from con­tin­u­ing the series about finance. But don’t wor­ry, I asked a close friend who is an expert in mutu­al funds to share his knowl­edge and expe­ri­ence about it.

Should You Invest in Mutual Funds?

By Sevi­no Estil, Finan­cial Advo­cate and Founder of Beyond Build­ing Wealth

That’s the same ques­tion I get when I first start­ed learn­ing on how and where I should invest my mon­ey. And so, when I did my research, I found myself going back to the basics: Know­ing what invest­ments real­ly are and what invest­ment prod­ucts that fit my needs and goals. Let’s start with some of the basics.

What are Investments?

Invest­ments are assets that you acquire with the expec­ta­tion that it will appre­ci­ate val­ue over time in which can give you returns. These can vary from dif­fer­ent prod­ucts or vehi­cles that let’s your mon­ey grow. It can be mutu­al funds, stocks, forex, busi­ness­es, real estate and even VULs.

Keep in mind that invest­ments can NEVER give you guar­an­teed returns. Mean­ing invest­ment prod­ucts and vehi­cles have their dif­fer­ent RISKS and thus your asset can either lose mon­ey or gain prof­it. Just like busi­ness­es, right? That’s the idea to it.

So now that we got that set­tled, let’s look at Mutu­al Funds.

What are mutual funds?

Mutu­al funds are invest­ment instru­ments by which the mon­ey of the investors is com­bined or pooled togeth­er and that are invest­ed in the stock mar­ket or fixed income vehi­cles by pro­fes­sion­al fund man­agers.

The fund man­agers in turn makes the pro­fes­sion­al finan­cial deci­sions for us by buy­ing and trad­ing shares in the PSEi (Philip­pine Stock Exchange Index) using the pool of mon­ey of the investors.

The gains and prof­its will then be shared to the investors that is pro­por­tion­al to what they’ve invest­ed.

This also means that you no longer must learn how and when to buy and trade shares in the stock mar­ket. The long and com­pli­cat­ed efforts in study­ing finan­cial mar­kets and the skills need­ed to be a good trad­er will now be the fund manager’s respon­si­bil­i­ty.

While as the investors will only need to invest their mon­ey and wait to see their mon­ey grow until it reach­es their tar­get fund amount.

Let me now answer some of the com­mon ques­tions about Mutu­al Funds.

Are mutual funds guaranteed investments?

The answer would be no! All invest­ments have risks, and you would only hear guar­an­teed invest­ments when it is a scam. Read that again. Guar­an­teed invest­ments are SCAMS.

Be aware and dili­gent that ALL invest­ments have risks. And the only way to pre­vent los­ing mon­ey is by study­ing how the invest­ment works and man­ag­ing the risks that are involved. Much like before open­ing a busi­ness ven­ture, you study and man­age the fac­tors that will pre­vent your busi­ness from clos­ing.

It’s the same prin­ci­ple with Mutu­al Funds, you man­age your risks.

How can you manage risks?

You can man­age risks by invest­ing in fixed amounts on a reg­u­lar sched­ule let say month­ly basis or even more fre­quent­ly. This strat­e­gy is known as Cost Aver­ag­ing Method, by doing this, you buy more shares when the share price is low­er (in shop­ping terms, it’s on red hot sale).

The prin­ci­ple can be sim­ply sum­ma­rized that con­sis­tent month­ly invest­ing man­ages the risks involved in mutu­al funds.

What are the different kinds of mutual funds?

There are sev­er­al kinds of mutu­al funds and a lot more when you check the dif­fer­ent kinds of mutu­al fund prod­uct per Mutu­al Fund Com­pa­ny. As basics, I’ll share with you these:

1. Fixed Income Funds, this is also known as Bond Fund. This is invest­ed in trea­sury bills, and com­mer­cial papers. This is the best fit for those who have finan­cial goals of 6 months until 2 years time­line, also called Short Term Goals. This is less risky com­pared to the oth­er mutu­al fund types. The Rate of Return (ROR) varies from mutu­al fund com­pa­ny and can range from 1% to 4% annu­al­ly.

2. Stock Funds com­bined with Fixed Income fund, also known as Bal­anced Fund. This is a com­bi­na­tion of Bond Fund and the Equi­ty Fund where in it becomes riski­er with high­er return than Bond Fund, but less risky with low­er return than Equi­ty Fund. This is best fits peo­ple who have finan­cial goals of 2 years until 4 years time­line, also called Medi­um Term Goals. The ROR varies from mutu­al fund com­pa­ny and can range from 4% to 10% per annu­al­ly.

3. Last­ly, Stock Funds, also known us Equi­ty Fund is the high-risk type of mutu­al fund where­in the fund man­ag­er invests the mon­ey in the stock mar­ket. Usu­al­ly, the invest­ment relies on the top per­form­ing com­pa­nies in the PSEi, also called the Blue-Chip Com­pa­nies. This fits bet­ter with investors that have Long Term Goals where in their finan­cial goal time­line ranges from 4 years and above. The ROR ranges from 8% until 15% (some mutu­al fund com­pa­nies can per­form high­er than 15%, just do your research on it.)

What are the advantages of investing in mutual funds?

Based from my expe­ri­ence and com­par­ing it to oth­er kinds of invest­ment vehi­cle, I’ve come up with these list of advan­tages:

1. High Poten­tial Earn­ings, aver­age yields of 6–18% per year when you invest long-term and stay con­sis­tent in invest­ing.

2. Pro­fes­sion­al Fund Man­age­ment, mean­ing you have a full-time, skilled & pro­fes­sion­al fund man­ag­er that does all the research, selec­tion and mon­i­tor­ing of your invest­ments. The hard work is being done by the pro­fes­sion­als and all we need to do is to con­sis­tent­ly invest in our mutu­al fund accounts. That trans­lates to more time for me to focus on what’s impor­tant in my life: my wife, fam­i­ly, career, busi­ness and my min­istry to Christ.

3. Mutu­al fund invest­ments are spread across a wide range of com­pa­nies and indus­try sec­tors which low­ers your risk if a com­pa­ny or sec­tor per­forms bad­ly. This is anoth­er risk man­age­ment strat­e­gy that fund man­agers prac­tices to pre­vent and min­i­mize los­es of the investors’ mon­ey.

4. Afford­able, yes, it is afford­able to start your mutu­al fund invest­ment. The min­i­mum ini­tial amount is PHP 5,000 to open your account, and the min­i­mum addi­tion­al amount is PHP 1,000. You don’t need hun­dred thou­sand or mil­lions to start invest­ing.

5. Tax-Exemp­tion (based on R.A. 8424 or Tax Reform Act of 199, mutu­al fund earn­ings are not sub­ject to 20% with­hold­ing tax). Your earn­ings and gains in your mutu­al fund will not be sub­ject­ed to tax.

6. Liq­uid­i­ty, you can eas­i­ly with­draw your earn­ings from your mutu­al fund account. Investors can redeem their shares at the cur­rent net asset val­ue (NAV) of their invest­ment eas­i­ly and at any time. (Just check with your mutu­al fund com­pa­ny with regards to their pol­i­cy and pro­ce­dures in doing so, for it also varies per com­pa­ny.)

7. Safe­ty & secu­ri­ty. Mutu­al fund com­pa­nies are high­ly reg­u­lat­ed by Secu­ri­ties & Exchange Com­mis­sion & are audit­ed reg­u­lar­ly by exter­nal audi­tors. Couldn’t get any secured and safer than that.

What are the Disadvantages?

Now that we’ve learned about the advan­tages let’s now look at the dis­ad­van­tages, because there’s no such thing as a per­fect invest­ment vehi­cle. Let me share to you these:

  1. Uncer­tain­ty of returns, not guar­an­teed. Unlike fixed-income prod­ucts (such as time deposits), your invest­ment does not guar­an­tee a pos­i­tive return, you can lose mon­ey.
  2. Lack of con­trol. Investors can­not direct­ly influ­ence and make deci­sions on which secu­ri­ties the fund man­ag­er should invest in. Thus, you’re left just “sit­ting at home” and hop­ing that your port­fo­lio advis­er makes good invest­ment deci­sions. Every deci­sion will be made by the fund man­ag­er.
  3. Costs and fees, this includes sales com­mis­sions and redemp­tion fees that are applied to your invest­ment if you decide to redeem your mon­ey in your MF account. This can sig­nif­i­cant­ly affect your expect­ed returns. (This again var­ied per mutu­al fund com­pa­ny so make sure you check their poli­cies and reg­u­la­tions with regards to their fees.)

Are mutual funds the right investment for me?

We are back to our title top­ic. If you are still new to invest­ing and in the finan­cial mar­kets, mutu­al fund is a great and high­ly rec­om­mend­ed way for you to start. Since it’s pro­fes­sion­al­ly man­aged, you don’t have to learn macro eco­nom­ics, you just need to invest your mon­ey reg­u­lar­ly and give time for your mon­ey to grow. Think of it as train­ing wheels. Then even­tu­al­ly, as you learn and gain expe­ri­ence you can immerse your­self in oth­er types of invest­ments.

What to consider before investing in mutual funds?

The best way to con­sid­er is by cre­at­ing and review­ing your goals, time frame and your risk tol­er­ance. All these three will play a huge part in mak­ing your deci­sion and in choos­ing the right mutu­al fund com­pa­ny and mutu­al fund prod­uct that fits your needs and in achiev­ing your goals.

How to get started?

Once you know your goals, time frame and your risk tol­er­ance, all you need to start are:

  1. First and fore­most, fill out the mutu­al fund forms (check with the mutu­al fund com­pa­ny on how and where to get their appli­ca­tion forms). Make sure all your infor­ma­tion and spelling of your name is legal­ly cor­rect to pre­vent any prob­lems or dis­crep­an­cies along the way.
  2. Pre­pare the ini­tial invest­ment amount, most of the time the ini­tial min­i­mum invest­ment is 5,000 pesos. You can either deposit it to the mutu­al fund company’s offi­cial accounts, direct­ly deposit it via the company’s cashier, via deb­it card and/or cred­it card. (This varies per MF com­pa­ny.)
  3. Pho­to­copy one valid gov­ern­ment ID as proof of iden­ti­fi­ca­tion for your appli­ca­tion.

That’s it! If you think about it, it’s like open­ing a bank sav­ings account.

How to withdraw?

And since we are talk­ing about invest­ments and gains, we need to know how you can redeem your mon­ey. You can with­draw by con­tact­ing your invest­ment advi­sor to sell your shares and they’ll be the ones to guide you on how and when the mon­ey will be giv­en to you.

I’ve been an investor for more than 5 years now and I’m still learn­ing as of this moment. With this arti­cle that I’ve shared to you, I hope you’ll not just stop learn­ing here but read oth­er resources and even attend sem­i­nars on finance and invest­ments. Most impor­tant­ly get a men­tor that will help you and guide you in becom­ing a suc­cess­ful investor. Whether it be via mutu­al funds or oth­er types of invest­ment, make sure that by the end of this arti­cle, you’ve decid­ed to start invest­ing, because the great­est guar­an­teed loss that you’ll ever have in your life is invest­ing when it’s too late.

What’s next? Stay tuned!

Should I Invest in VUL?

VUL sim­ply stands for Vari­able Uni­ver­sal Life. Last week I wrote a quick overview of how it works and you can find it here: How and Where To Invest Your Mon­ey

But the ques­tion is — should I invest my mon­ey in it?

We have friends, col­leagues, and even rel­a­tives who are finan­cial advi­sors offer­ing this kind of invest­ment.

Some finan­cial men­tors rec­om­mend it. But how do I know if this is the right invest­ment for me?

I said before that I was once a Licensed Finan­cial Advi­sor. In fact, if by chance you’ve met a good finan­cial advi­sor; you’re in good hands!

On the oth­er hand, oth­ers will trick you to put your mon­ey on it with­out inform­ing you what are the advan­tages and dis­ad­van­tages of this invest­ment.

I also shared before that I stopped pay­ing my VUL and with­drawn all the remain­ing accu­mu­lat­ed cash val­ue it has because I felt it wasn’t aligned with my goals.I think that I got tricked because when the time came that I asked if I could add an add-on for it (crit­i­cal ill­ness, dis­abil­i­ty, etc,) he asked me instead to buy a new pol­i­cy.

And I don’t like to buy a new pol­i­cy because I have oth­er invest­ment in mind that I would like to put my mon­ey in it.

That start­ed my jour­ney in increas­ing my finan­cial knowl­edge and even­tu­al­ly led me to anoth­er invest­ment strat­e­gy that fits me well — BTID (Buy Term Insur­ance, Invest the Dif­fer­ence).

But which should I choose? VUL or BTID?

Today I have a close friend of mine who is also a Licensed Finan­cial Advi­sor wrote some­thing about it.


Which is better: BTID or VUL?

By Jennifer Yang-Estil, Licensed Financial Adviser / Co-Founder of Beyond Building Wealth


First things, first. What are BTID and VUL?

Let’s get famil­iar with the terms first.

BTID is the acronym of Buy Term Invest The Dif­fer­ence. It’s a finan­cial strat­e­gy that uses the con­cept of buy­ing a Tra­di­tion­al Term Life Insur­ance and then invest­ing the rest of your cash flow or bud­get in a sep­a­rate invest­ment product/vehicle.

VUL is the acronym of Vari­able Uni­ver­sal Life Insur­ance. VUL is a non-tra­di­tion­al life insur­ance prod­uct where­in it com­bines life insur­ance with mutu­al funds (a type of
invest­ment product/vehicle).

It’s The Wrong Question

Going back to my point: the ques­tion whether “which from BTID or VUL is bet­ter” is wrong.

Why? Because BTID and VUL are both strate­gies that solve spe­cif­ic prob­lems.

It’s the same as ask­ing which is the bet­ter fruit, apples or oranges? Both fruits are great, but it’s your pref­er­ence and pur­pose that’ll deter­mine which is bet­ter for you. Like if you’re mak­ing apple strudels for your family’s dessert, then using oranges would be a bad idea,

Sim­i­lar­ly ask­ing is whether which is the bet­ter med­i­cine between Parac­eta­mol or Guaife­n­esin.

With this anal­o­gy in mind, nei­ther which is the bet­ter med­i­cine between Parac­eta­mol and Guaife­n­esin. Both are effec­tive as med­i­cines, but with dif­fer­ent pur­pos­es. Parac­eta­mol treats fevers and pains, while as Guaife­n­esin treats coughs and used as an expec­to­rant.

It’s the same with BTID and VUL.


Asking The Right Question

Now, the right ques­tion to ask is: What’s the best finan­cial solu­tion for my needs and goals?

Your finan­cial needs and goals will then deter­mine what finan­cial strate­gies and solu­tions are best for you. And based on my expe­ri­ence, it is nev­er the exact same solu­tion and strat­e­gy for every­one.

Finan­cial solu­tions should indi­vid­u­al­ize, cus­tomize and spe­cif­ic based on what the per­son needs and based on what the finan­cial assess­ment reveals. It is very sim­i­lar to what physician’s do to their patients.

So to answer the right ques­tion, get in touch with your trust­ed finan­cial advis­er and have a com­plete finan­cial assess­ment from them.

Your finan­cial advis­er should give you rec­om­men­da­tions depend­ing on what will be the result of your assess­ment and then work with you in build­ing your finan­cial plan and in achiev­ing your mile­stones.

I’m say­ing this because not all finan­cial advis­ers are client-cen­tric but instead sales-cen­tric. They play the sales agent role instead of the finan­cial advis­ers’ role in guid­ing clients achiev­ing break­throughs and meet­ing the client’s needs.

As a Finan­cial Advis­er, I make it to a point that I make a com­plete Finan­cial Assess­ment to every client that comes my way, and I also take into con­sid­er­a­tion their pref­er­ences, bud­get, and per­son­al­i­ty as an investor and as an indi­vid­ual before mak­ing any finan­cial solu­tions and rec­om­men­da­tions.


Characteristics of BTID and VUL

Now that we’re all on the same page, let’s look at the char­ac­ter­is­tics and spec­i­fi­ca­tions of BTID and VUL. Here’s a list for you to bet­ter grasp the sim­i­lar­i­ty and dif­fer­ence between the two.


Cost of Insur­anceLow-cost tra­di­tion­al term insur­ance pre­mi­um on the onset of appli­ca­tion.  Term insur­ance pre­mi­ums increase in cost every 5 yearsHigh­er cost of VUL insur­ance pre­mi­um on the onset of appli­ca­tion since insur­ance and invest­ments are com­bined VUL pre­mi­ums are con­stant and do not change from
the onset of appli­ca­tion
Dura­tion of Pro­tec­tionShort term pro­tec­tion of 5 years or 1 year (varies from insur­ance com­pa­nies)Long-term pro­tec­tion until age 88 or 100 (varies from insur­ance com­pa­nies)
Renewa­bil­i­tyNeeds to be renewed every 5 years or annu­al­ly (varies from insur­ance com­pa­nies)No need to renew VUL pol­i­cy is on-going from
approval of pol­i­cy until matu­ri­ty age or until
pre­mi­ums are still paid.
Insur­a­bil­i­tyProtection/insurability is not guar­an­teed with Term Insur­ance since there are instances that your insur­ance com­pa­ny will require you to
under­go a med­ical exam once the renew­al peri­od of 5 years or 1 year is over.You may be denied insur­ance pro­tec­tion if you’re declared med­ical­ly unfit, or a much
high­er pre­mi­um will be charged to your term
insur­ance based on the med­ical results.
Protection/insurability is guar­an­teed until the stat­ed age on your VUL insur­ance con­tact.
Con­ve­nienceYou can pay Insur­ance pre­mi­ums can via auto deb­it and bills pay­ment online.

Invest­ments are sep­a­rate and there are no bills noti­fi­ca­tion for you to add to your

You need to man­u­al­ly add/deposit to your invest­ments for you to invest reg­u­lar­ly.

Insur­ance and invest­ments are linked togeth­er thus both are paid and invest­ed to reg­u­lar­ly (via auto deb­it and bills pay­ment online) in just
one account.
Acces­si­bil­i­tyInsur­ance can be mon­i­tored and checked reg­u­lar­ly online (varies from insur­ance
com­pa­nies). Invest­ments are mon­i­tor sep­a­rate­ly via online or offline since it is a dif­fer­ent prod­uct.
Insur­ance and invest­ments can be both mon­i­tor at the same online por­tal (varies from insur­ance com­pa­nies)-

Finan­cial Advis­ers can reg­u­lar­ly mon­i­tor and
man­age your invest­ments for you and noti­fy you of due dates, mar­ket updates and
oth­er prod­uct relat­ed needs.

Com­mit­ment & Dis­ci­pline
High com­mit­ment and dis­ci­pline need­ed since you’ll han­dle and man­age your
invest­ments manually.No one will remind you of your due dates, insur­ance expi­ra­tions dates nor give you mar­ket updates. It’s your mon­ey any­way, you have the total con­trol of it.
High com­mit­ment but low dis­ci­pline since your Finan­cial Advis­er will man­age your pol­i­cy and port­fo­lio for you.

Your Finan­cial Advis­er will remind you and noti­fy you of your pol­i­cy due dates and
invest­ment updates as need­ed.

Fit Finan­cial NeedsShort term insur­ance pro­tec­tion.
Man­u­al man­ag­ing of invest­ments.
Long-term insur­ance pro­tec­tion.

Clien­tele expe­ri­ence with your Finan­cial Advis­er han­dling your account and

Fit to Per­son­al­i­ty TypeDis­ci­plined and com­mit­ted with a strong habit of sav­ing and invest­ing reg­u­lar­lyNew­bies and are just get­ting the habit of sav­ing and invest­ing

Is BTID or VUL bet­ter for me?

Now, that’s a bet­ter ques­tion. And all I can say is, it depends. Let’s talk about it and let me assess you finan­cial­ly to see which is bet­ter for you to achieve your finan­cial mile­stones, goals, and needs.

For now, you can list your finan­cial goals and needs to get you start­ed. Click here to get start­ed with your goals.

Either way, whichev­er you choose BTID or VUL is great. As long as you START NOW!

What’s most impor­tant is that you start in build­ing your wealth, pro­tec­tion and roadmap as ear­ly as today, because in the long run your future self and your fam­i­ly will thank you for it.


Now to answer the question: Should I Invest in VUL?


It’s me again — Dhenn. My answer: It depends. For me, BTID works best, for oth­ers VUL works best. In my own per­son­al expe­ri­ence and opin­ion, you will only buy VUL if you fall into these type of per­son:

1. You’re “too lazy” to look for bet­ter invest­ments or you are a new­bie.
2. You already have enough funds and stock invest­ments and look­ing for sec­ondary invest­ment to pro­tect those assets.
3. You want to help a friend who’s sell­ing you that type of insur­ance.

Over­all, one of the many rea­sons why I did not con­tin­ue my VUL pol­i­cy is this:

1. I want total con­trol over my invest­ments.
2. I learned that the first three years of the pol­i­cy (depends on the com­pa­ny), most pay­ments will go to insur­ance first and a small frac­tion of the invest­ment which is rea­son­able as you also bought an insur­ance.
3. BTID just works best for me now.

By the way, Jen is offer­ing free coach­ing and Finan­cial Blue­print Ses­sion so you can bet­ter rec­om­mend the right finan­cial strat­e­gy and prod­uct for you. Con­tact Jen below for an appoint­ment if you want to avail the VUL.

[email protected]
[email protected]

+63 916 349 3172

How and Where to Invest Your Money

When I was a fresh grad­u­ate, I nev­er thought about how to invest my mon­ey. I am a good saver but nev­er an investor.

Things have changed when I became buried in debt when I was 23. A friend who was a finan­cial advi­sor talked and offered me an invest­ment in which I almost put all of my sav­ings on that instru­ment. Lat­er on, I regret­ted my deci­sion because that invest­ment wasn’t fit with my goals and aspi­ra­tions.

Though it helped me a lot to open my eyes to the pos­si­bil­i­ty that there are more invest­ment instru­ments out there, but which one should I choose?

What is Investing?


But before that, what is invest­ing?

For some peo­ple, they thought that invest­ing is a gam­ble, but says, invest­ing is the act of com­mit­ting mon­ey or cap­i­tal to an endeav­or (a busi­ness project, real estate, etc.), expect­ing of get­ting an addi­tion­al income or prof­it.

Peo­ple who invest their mon­ey have two pri­ma­ry rea­sons; to grow their mon­ey and to have an addi­tion­al income.

To grow your mon­ey, you have to make it work hard for you and putting your mon­ey into a sav­ings account couldn’t do that because our tax­es are increas­ing thus instead it will grow over time, its val­ue will decrease.

Before you invest, con­sid­er the tips below:


Before You Invest


Before you invest, you should set a goal first and com­mit to achiev­ing it. If you haven’t set your goals, please read this first.

And also, do not invest in some­thing you do not know.

Then, you should save by now. 3 to 6 months worth of your salary will go into your sav­ings account. Nev­er put all your mon­ey into an invest­ment. If you don’t know how to save yet, this is how to save mon­ey.

Why do you need to have sav­ings first before invest­ing? Because invest­ing has a lot of risks. You will either lose your mon­ey or grow it. In such an event you will lose it because of sev­er­al fac­tors; you don’t have to wor­ry about it and pulled it out like most peo­ple do.

Now, giv­en that you have sav­ings for emer­gency and have a goal already, then you need to deter­mine what kind of investor you should be.


What Kind of Investor are You?


There are four kinds of investors; the con­ser­v­a­tive, the bal­anced, the mod­er­ate, and the aggres­sive one. Which one are you? Here is a sim­ple test:

Once you have the result, you can now invest depend­ing on the risk you can han­dle and the goal you have for your finances. Now, where to invest and how to invest my mon­ey?


Where to Invest?


There are dif­fer­ent invest­ment instru­ments where you can put your mon­ey to make it work hard for you.

1. Invest­ment-linked Insur­ance.

Some peo­ple called it as VUL (Vari­able Uni­ver­sal Life). It is also as an invest­ment but known as an insur­ance pol­i­cy. It has the com­po­nent of sav­ings, invest­ment, and life insur­ance. Most finan­cial advi­sors offered this prod­uct as an invest­ment.

There are also pros and cons for this one and will invite a friend to write it on the next blog.

2. Mutu­al Funds. 

Mutu­al funds are a great way to grow your mon­ey as you don’t have to study or pick a com­pa­ny where you should put your mon­ey. It can also be a com­bi­na­tion of stocks, bonds, and mon­ey mar­ket.

It is a pool of mon­ey col­lect­ed from investors for the pur­pose of invest­ing it into dif­fer­ent instru­ments like bonds, secu­ri­ties, mon­ey mar­kets, and stocks.

And then there is a fund man­ag­er who will man­age the fund and do the work for you.


3. Bond/s.

A bond is a form of a fixed-income invest­ment where­in your mon­ey will fund an enti­ty or a com­pa­ny project or gov­ern­ment for a def­i­nite peri­od with an inter­est rate.

For exam­ple, a gov­ern­ment has a project and they need to tap investors for fund­ing. As an investor, I will lend my mon­ey to the gov­ern­ment and put an inter­est rate on it. The inter­est will return togeth­er with the cap­i­tal after a peri­od.

I have this kind of invest­ment already where­in I will expect my mon­ey to return with the inter­est rate after 10 years. So far this is a low-risk invest­ment but also low returns.


4. Stocks.

A stock is a secu­ri­ty that sig­ni­fies own­er­ship in a cor­po­ra­tion and rep­re­sents a claim on part of the corporation’s assets and earn­ings.

A stock will earn you the right to become a share­hold­er of the com­pa­ny, thus you also earn a frac­tion of the com­pa­ny earn­ings.

For me, invest­ing in the stock mar­ket is a great way to make your mon­ey work hard for you. The stock mar­ket is a place where­in investors can buy stocks/shares of a com­pa­ny. Once you become an investor in a com­pa­ny, the way you think about the com­pa­ny will nev­er be the same.

And last­ly, I know you heard about it already:


5. Cryp­tocur­ren­cies.

If you have heard about Bit­coin, Ethereum, Rip­ple and oth­er alt­coins, you may won­der where it came from? Watch this video first:

Cryp­tocur­ren­cy works like a dig­i­tal cur­ren­cy and unlike any oth­er invest­ment, Cryp­tocur­ren­cy can only be acces­si­ble on the inter­net. It works as a medi­um of exchange with a pur­pose of decen­tral­iz­ing mon­ey so the banks can­not even man­age it.

Most econ­o­mist and investors are against it. There were no guar­an­teed returns in this kind of instru­ment. You can­not invest in this one for the long-term for now.

As an investor, I am not against with this instru­ment. To be hon­est, I am also invest­ing in this, not by buy­ing the coins using my cash but invest­ing in machines that can mine a coin. But that’s enough for now, I will write a sep­a­rate arti­cle how to do it at least on my own expe­ri­ence.

Now, how to put your mon­ey in this invest­ment? That will be a long lec­ture and I promise to write how to invest on that instru­ments one by one on my next arti­cle.

Dis­claimer: If you own the pho­tos, please leave a mes­sage and will cred­it it to you. 

How to Save Money Effectively

I’ve been receiv­ing a lot of mes­sages ask­ing me to write how to invest in the stock mar­ket (in my case Philip­pine Stock Exchange), how to start, and what are the pro­ce­dures.

But with­out prop­er mind­set and guid­ance, invest­ing will be a gam­ble for some­one who doesn’t have the prop­er mind­set on why we do it. Thus, before I write some­thing about it, I will tell you first, how to save mon­ey.

Sav­ing mon­ey is impor­tant for some­one who wants to become an investor. I remem­ber a for­mer col­league who was so eager to invest. He admit­ted that he doesn’t have sav­ings as he spends it on buy­ing new gad­gets. He knows how to save mon­ey, and then he spends it. When he became an investor, he put all his mon­ey in the stock mar­ket, and then after hav­ing a prof­it on it, he will spend it again to pur­chase a more expen­sive gad­get.

Ilang taon na akong nag-tatra­ba­ho pero wala pa rin akong ipon.” (I’ve been work­ing for years, and yet I don’t have sav­ings) I remem­ber as he rants.

I know some of us have been com­plain­ing about it. That after years of work­ing so hard, we won­der why we don’t have sav­ings at all. Sav­ing mon­ey is dif­fi­cult until we learned why we do it.

Why saving money is important and why should I?

Sav­ing mon­ey is impor­tant just in case you will need the mon­ey. “Well, Dhenn I don’t think I need mon­ey. I have a cred­it card for that.”

Hav­ing a cred­it card is good as it gives you the pow­er to pur­chase when you don’t have the mon­ey. When I received my first cred­it card, it was Jan­u­ary 2014, and since I can­not afford a DSLR Cam­era, I pur­chased a Canon 1100D using my cred­it card. I asked then the salesla­dy if I can ask for a dis­count. She said that if I will pay it in cash, I will only pay 16,000 pesos (orig­i­nal SRP was 19,999.00)

That’s a whop­ping 20% dis­count that I could nev­er get in the bank.

I learned a les­son that year; do not use your cred­it card to pur­chase some­thing expen­sive. If you can’t pay it in cash, it means you can­not afford it.

Sav­ing is not just impor­tant in case you need the mon­ey. You can save because you need an emer­gency fund for emer­gency sit­u­a­tions. You save for retire­ment, a down pay­ment for a house or car, for your future wed­ding, or edu­ca­tion. There are also a lot of ben­e­fits of sav­ing your mon­ey in which I will men­tion below:

Benefits of Saving Money

When I saved mon­ey with prop­er mind­set and guid­ance, it brought a lot of ben­e­fits in my life. I no longer save just to spend, but rather I save mon­ey to invest it lat­er.

For me the ben­e­fits are the fol­low­ing:

1. Increase in income, for a mon­ey not spent is mon­ey earned.

2. Stress-free life.

Accord­ing to a sur­vey made in Aus­tralia, 80% of the work­ing pop­u­la­tion expe­ri­enc­ing stress over mon­ey.

Why? Even though our employ­ers pushed us to have a work-life bal­ance, if we have a lot of finan­cial respon­si­bil­i­ties, we will work and get the pro­mo­tion instead.

Know­ing that you have saved mon­ey, cre­ates a healthy lifestyle as you need not wor­ry about it.

3. Spend with­out guilt.

Have you tried buy­ing an item with your cred­it card? You swipe and sign, there’s no emo­tion and a lot of think­ing involved. After that, you won­der why your bills are that high.

Unlike pay­ing in cash, you will think twice whether you need it. And every time you make large pur­chas­es, it’s painful, but worth it because you work hard for it.

Now you know why you should save and the ben­e­fits of it, I know you will ask how much should you save.

How much should I save?

My answer is; it depends. There are a lot of for­mu­las out there that you can Google it out. For­mu­las may not work for every­one else as we have dif­fer­ent lifestyles and dif­fer­ent back­grounds.

As for the for­mu­la that works for me is this:

Expens­es = Income — Sav­ings

In this sim­pli­fied for­mu­la, you will minus your sav­ings from the income and the rest will be for your expens­es.

Then how can I deter­mine how much will I save? This per­cent­age works for me as well:

10% = Tithes

20% = Sav­ings

70% = Expens­es

Now the last ques­tion is, where should I save?

There’s a lot of medi­um you can use to save mon­ey and these are:

1. Pig­gy bank. But this is not wise these days because your mon­ey could be at risk.

2. Banks. Thru sav­ings account or time deposits. the safest, but has the low-inter­est rate.

3. UITFs or Mutu­al Funds with low risk. Don’t put your sav­ings to a high-risk medi­um.

4. Coop­er­a­tives.  Safe and most prof­itable of them all but also with risk. Research about the coop­er­a­tive first. Some part of my sav­ings is in AFPSLAI and some on my company’s coop­er­a­tive.

The returns are not that much high, but I earned 4,000 to 5,000 per year, and that is not bad rather than putting it in the bank.

Now at least you know how to save. Share this if it helps you. See you in the next series.

Tips on Reaching Your Financial Goals This Year

Wel­come aboard, 2018!”
“2018, please be good.”
“Sana suw­er­ti­hin ako ngay­ong taon.”
“This year, sana mag­ka-love life na ako.”
“This year, mag-iipon na tala­ga ako.”
“This year mag-da-diet na tala­ga ako.”

You can hear all these hope­ful say­ings when­ev­er a new year comes. A new year that some­how builds our once bro­ken hopes and dreams.

And then we did our buck­et list, trav­el goals, fit­ness goals, and finan­cial goals.

But then, real­i­ty kicks in. Accord­ing to a sur­vey made in the U.S, all the new year’s res­o­lu­tions end­ed in Jan­u­ary.

Moti­vat­ed ka sa una, pero hin­di mo pala kayang mag-com­mit.

Just a dis­claimer, I’m not a finan­cial expert or guru. I was “once” a finan­cial advi­sor but don’t ask me for any specifics, and in these finan­cial blog series, I will talk only about my expe­ri­ences, what I also learned from the gurus, and also what I am doing.

And before we are going deep­er, let me start this series on how to reach your finan­cial goals this year.

Ang hirap mag­ing adult! Sana estudyante na lang ulit ako!” I once heard this from a young pro­fes­sion­al who mum­bled because of his finan­cial respon­si­bil­i­ties.

Some veered away when his friends talked about mon­ey. That’s one way of escap­ing from real­i­ty. And a lot of Fil­ipinos doesn’t want to talk about it as it is a “taboo” top­ic.

While in some Chi­nese fam­i­lies, they often talk about it. Where to do busi­ness, where they will put their hard-earned mon­ey, etc.

Do you want to reach your finan­cial goals this year? Here are some tips;


1. Set a goal first! Be spe­cif­ic.

Zig Ziglar, a moti­va­tion­al speak­er said, “If you aim at noth­ing, you will hit it every time.”

Buy a jour­nal note­book or plan­ner and write down your finan­cial goals there. For exam­ple:

This 2018, my aim is to achieve 100k pesos worth of sav­ings and invest­ments.”

Now I know you will ask “how”, but just leave your goal writ­ten there.


2. Don’t Announce it.

If you want to suc­ceed, don’t announce it.  There’s a study that peo­ple who announced their goals to the pub­lic often accom­plish less.

Yes­ter­day, I post­ed some things I’ve accom­plished last year and what I want­ed to “look for­ward” this year on my Face­book account. It was not a goal but rather list of things I’m look­ing for­ward.


3. Com­mit your­self to it.

Now here’s the hard­est part. Wag mo iwanan sa ere yung goals mo kat­u­lad ng ginawa mo sa ex mo.

Here’s how I com­mit myself to my goals:

  • Divide your spe­cif­ic goals to 12 months.

For exam­ple, my goal this year is to save a hun­dred thou­sand pesos. So my month­ly goal is to save 8,333 pesos per month. Write it down:

This month I will save 8,333 pesos. I will deposit or invest that amount before spend­ing.”

Again the rule should be: Expens­es = Income — Sav­ings

  • What are my action plans?

Here comes anoth­er chal­lenge. What actions should I take to achieve this goal? Be thrifty, spend less, find anoth­er income stream, buy an invest­ment prod­uct, open account, that is your call.

For instance, buy­ing invest­ment instru­ments or prod­ucts will help you a lot in build­ing the habit of sav­ing. But just make sure it is a legal com­pa­ny.

Stay away from Ponzi schemes, mul­ti-lev­el mar­ket­ing that promis­es high returns when you recruit peo­ple. If it is good to be true, then it is not good, beware!


4. Edu­cate your­self.

You are here because you want to know more. Con­grat­u­la­tions! Don’t stop, buy books that will help you achieve your goals.

It was 5 years ago when I jumped-off from being a hard-core gamer to a read­er. Up to this day, I owned and read more than 200 books and I love it!

I also attend­ed a lot of sem­i­nars makes me eli­gi­ble to be called “sem­i­nar­ista”. Don’t be afraid to spend a lot on edu­ca­tion. Wis­dom is proven the most expen­sive. It has no guar­an­teed returns, but it can make you wise and rich.

Cur­rent­ly, I’m now explor­ing and study­ing in the pos­si­bil­i­ty of invest­ing on cryp­tocur­ren­cies like Bit­coin, Ether, etc. Wel­come to the dig­i­tal era of cur­ren­cy!

If you con­stant­ly ask “how”, then prob­a­bly like me, you need to study more. Again, do not spend either invest on some­thing you do not know.


5. Com­mit your plans to God.

Do you want to be suc­cess­ful? then com­mit your goals to God. The Bible says in Proverbs 16:3 – “Com­mit to the LORD what­ev­er you do, and your plans will suc­ceed.”

If He pros­pers it then it is not against His will. And blessed are the peo­ple who com­mit their ways to God.

So can we please stop telling 2018 to be good to us? Because 2018 will nev­er be good to us if we don’t start it from our­selves.

On Money: What I Wish I Knew

It’s been a long time since the last the I wrote on my blog. But I’m hap­py that I still have you my loy­al read­ers and fol­low­ers of this blog. The rea­son I have pub­lished noth­ing yet is that there’s a lot of events hap­pened for the past few weeks and I am not sur­prised there will be more next month! I came from a mis­sion trip, attend­ed a seminar/workshop of John Maxwell etc. How isn’t a busy life it?

Being busy does not trans­late to being pro­duc­tive. Some­times we are get­ting busy because of unim­por­tant things. And as the old say­ing, “time is gold.”

Today, let me share some­thing I learned over the past few years when I start­ed my jour­ney to becom­ing finan­cial­ly lit­er­ate, and respon­si­ble.

I remem­ber when I was a fresh grad­u­ate, all I ever want­ed is to earn my mon­ey. Then my first salary came, then I received my salary increase the next year, but instead of being hap­py about it, mon­ey became a bur­den. I want­ed to jump from one com­pa­ny to anoth­er for one goal — to increase my salary.

But I noticed that even though we as mil­len­ni­als con­tin­ue to do that, I know peo­ple who are earn­ing more than I can­not save mon­ey. Why is that hap­pen­ing? It’s because:


1. It is not how much you make but how much you keep. A mon­ey not spent is a mon­ey earned.

Have you ever com­pare your­self to oth­ers before? Com­par­ing can get you nowhere. It’s like want­i­ng what oth­ers have.

Have you expe­ri­enced frus­tra­tions because oth­ers often com­pare to your sib­lings or cousins when you were young? That’s unfair! You are not them and they are not you.

The only best way to be con­tent and keep grow­ing is:


2. Com­pare your­self to your­self.

Com­pare how much mon­ey you saved last year ver­sus this year. Did it increase? My invest­ment port­fo­lio was around 70k last year, and it became 155k this year. It could have been 400k if I didn’t pur­chase a car and a piece of land.

The goal of com­par­ing your­self to your­self is to be bet­ter. In any area, may it be a career, rela­tion­ship, char­ac­ter, and wis­dom, it would be healthy to prac­tice self-eval­u­a­tion as Socrates a famous Philoso­pher once said; “An unex­am­ined life is not worth liv­ing.”


3. Good days are always ahead of us.

Have you ever expe­ri­enced time in your life that phe­nom­e­non called “when it rain, it pours?’” Yung nakaranas ka lang ng isang bad vibes, tapos tuloy tuloy na?

Ang sak­it bes! But don’t wor­ry, believe that good days are always ahead of us. Every pain and tri­als will pass, there is no tem­po­rary here in this world. As C. S. Lewis once said, “Isn’t it fun­ny how day by day noth­ing changes, but when you look back, every­thing is dif­fer­ent…”

4. Income — Sav­ings = Expens­es.

How I wish I knew this before I start­ed my first job. Often, I saved what is left when it should be I will spend what is left after tak­ing out my sav­ings from it.

The time I applied this prin­ci­ple to my finances, I did not com­plain that I was earn­ing too lit­tle. And if I exceed, there’s no one to blame but myself.


5. Invest in your­self first.

This is a must. Do not invest in what you do not know. I’ve made a painful mis­take of invest­ing with­out real­ly know­ing how it works. I lost thou­sands of mon­ey in invest­ing in stocks and VUL.

I am noth­ing against VUL here, but I made a mis­take of agree­ing on the agent unknow­ing­ly that I can invest on oth­er invest­ment instru­ments or he should edu­cate me more about it than mak­ing a sale.


6. Finan­cial sta­bil­i­ty is an illu­sion. It’s a mov­ing num­ber.

Num­bers are mov­ing. Did you notice it? The price of goods is steadi­ly increas­ing each year, so our needs also.

No one can ever be finan­cial­ly sta­ble or finan­cial­ly free unless he or she learns how to han­dle his or her finances respon­si­bly.

Be finan­cial­ly respon­si­ble.


7. Nev­er kill the goose that lays the gold­en eggs.

Some­times not because you are earn­ing more than the oth­er, you should leave the oth­er one and make more mon­ey with it. Would it be great if you have mul­ti­ple sources of income isn’t it?


8. Nev­er put your eggs in one bas­ket.

Diver­si­fy. Diver­si­fy. Diver­si­fy. The wis­est king on earth who ever lived, King Solomon once said, “Divide your invest­ments among many places, for you do not know what risks might lie ahead.”


9. The mon­ey will not make mon­ey. Idea is.

Don’t fall into the trap of what oth­ers are say­ing. You don’t need mon­ey to make mon­ey. Yes, you need a cap­i­tal to start a busi­ness, but it doesn’t mean all you need is mon­ey.

Your­self is still the best asset. Your ideas can change the world. Make it a habit to invest in your­self by edu­ca­tion, read books, learn from oth­ers. Gain more expe­ri­ence.

Still not con­vinced?

Did you remem­ber the first time you were apply­ing for a job? Did the HR ask you mon­ey? No. They asked you what tal­ents and skills can you bring to the com­pa­ny right? Then they will pay you for it.

Skills, knowl­edge and, tal­ents make mon­ey.

And last­ly,


10. The inten­tion will nev­er bring you to the des­ti­na­tion but the inten­tion with the right deci­sion with right infor­ma­tion will.

The inten­tion will nev­er bring you to the des­ti­na­tion. You can make plans, you can make goals, you can aim but achieve noth­ing.