According to Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno, the COVID-19 pandemic has actually helped improve Filipinos’ financial behavior. Diokno states that in the last couple of years, more Filipinos have been into saving, are availing of health and life insurance, and are preparing for their retirement. However, there is still a need to boost Filipinos’ financial literacy.
And in an episode of FUNDamentals on Plus Network, registered financial planner (US-based global certification) Edric Mendoza answered some common questions that Filipinos have about finances.
1. What does it look like to transition from an employee to a full-time entrepreneur?
According to Mendoza, before making the transition from an employee to an entrepreneur, you need to ask yourself some hard and practical questions. For the hard questions, you need to ask yourself: Do you have what it takes to be
- Do you have what it takes to be a full-time entrepreneur?
- Can you handle the risk?
- Can you handle the 24 hours of being liable and responsible for that business?
Once you have determined the answer to those questions, you then need to ask yourself some practical questions:
- Will the business provide enough for what you need?
- Do you have funding to kickstart that business venture?
- Is it a viable business that you will be going into full-time?
You need to make sure that the business you are planning to go into is something that people need and that you have a unique story, skills, or abilities that make your venture stand out from what everyone else is doing. Finally, Mendoza also recommends trying out the business first while working so that you can answer these questions before going into being a full-time entrepreneur.
2. What are some of the investment opportunities for teens?
Since they are younger when they get into investing, Mendoza says that teenagers can take bigger risks over a longer period of time. They can look at investment opportunities that have a higher return but return higher risks over a period of time such as stocks, equities, and the like. To better understand these opportunities and to receive better guidance, they can attend seminars or online webinars about investing. They can also go to their local banks to speak to them or ask them about the available investment products for them.
Parents, meanwhile, need to make sure that there’s a desire in their children to learn about investing. The last thing we want for our children is that we force them into doing investment that they don’t really want, because they won’t go ver far with it.
3. What’s the best way to start an investment?
There’s a saying that the first step is always the hardest, and the same can be said of investing. Mendoza says that the best way to get started is to start. You can ask yourself about how much you can set aside right now for an investment. Once you’ve set that amount, you can go to the nearest access point. For instance, if you get your salary from a bank, you can go to that bank and ask them about the investments that you can try. Examples include pooled funds, mutual funds or UITFs (Unit Investment Trust Funds) that will help you get started.
This is something that you can also do digitally and once you’ve started, you can now move on to bigger questions like, where that money will go and what your goals for that money will be. Once you have started moving your investments, it starts a continuing process and you can later on invest it toward your bigger goals.
4. I have many financial goals. How do I figure out which one to work towards first?
It’s understandable that people have several financial goals, such as the education of their children, traveling, getting a new car or house, and more. However, Mendoza says that in order to figure out which goals to prioritize, we need to make sure that each of the goals has a plan first.
Once you have tried and started making investments, you can start working towards your financial goals. After you have made plans to reach each of your financial goals, you can separate these goals into three main buckets:
1. Short Term Goals – 0-2 years
2. Medium Term Goals – 3-5 years
3. Long Term Goals – 5+ years
After you have sorted your financial goals into these main buckets, you need to ask yourself some important questions like: Which ones do I really need among these goals? Which ones are just nice to have? Once you have asked these questions, prioritize the financial goals according to the urgency and work towards the things you really need to have first.
5. What do you have to say about cryptocurrency?
Mendoza has also received a lot of questions about navigating the new world of investing called cryptocurrency. But he says that it is important that you look at and focus on your financial goals before trying out cryptocurrency, because investments like these are highly risky.
He adds that these are the types of investments that we don’t want to use for our financial goals, but instead is something that we can learn from and add to our investment portfolios. We can also look at it as an investment in education. Investing in cryptocurrency allows us to learn more about it, but the money that we put into it should be money that we’re willing to lose.
But aside from investing our finances, Mendoza also talked about eternal investing. He reminds us that none of the things we have in this life can be carried over to the next, and that while we work towards our financial goals, we should also give and help others, especially the less fortunate. While it is good to work towards our goals and invest our hard earned money, it is also important for us to open up our hands, so that we have an opportunity to receive. Because as the Bible says, the more we give, the more we receive.
For more financial tips, you can watch more episodes of FUNDamentals. For more stories for professionals, visit PLUS Network on Facebook, Instagram, Twitter, and YouTube.