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Culture Spotlight

How to spend your Christmas bonus like a winner

So your Christmas bonus has popped up in your bank account and your first impulse is to spring on that Oyster Perpetual. Don’t.
Warren de Guzman | Nov 15 2018

It is the Christmas season once again and more and more retailers are dreaming up new ways to get your hard-earned money. Take Single’s day or November 11 for example. This is a Chinese retail event brought to the Philippines only recently, but online sales have already shot through the roof! Lazada Philippines says it doubled its sales target this year from 2017. Sure, it is a smart way to buy Christmas gifts at great discounts.  But you don’t want to overdo it. Christmas bonuses, after all, aren’t just for shopping. They should be seen as opportunities for saving and investing.

Want to know what investment bankers and brokers do with their Christmas bonuses? ATR Asset Management conducted a little informal survey and here is what they found.  

•They set aside funds for investment

•They pay for the tuition/education of their children

•They pay for financial exam fees such as Chartered Financial Analysts (CFA) Tests

•They set aside funds for dinner celebrations, Christmas shopping, gifts and “aguinaldos.”

•They save for their next vacation or family trip

•They reward themselves with extra funds for hobbies and interests like watches, or art.

Notice they don’t completely starve themselves of the opportunity to enjoy their bonuses. They reward themselves for all the work that went into the year. Everyone who works hard for themselves and their loved ones deserves some reward in any shape or form. This list of what brokers do with their bonuses also reveals they don’t skimp on giving. Christmas is the season for giving, and the ‘haves’ share what they have. Most importantly, there are a lot of items on the list involving the setting aside of money for future needs. Saving and investing in financial assets that offer passive income opportunities is on the list. Funding for self-improvement through education and accreditation is another item that is important. Funding for the tuition and education of loved ones is also there. The phrase “the gift that keeps on giving” comes to mind. Yes, this is slang for STDs, but the essence of the phrase, something given with continuing circumstances or consequences, is appropriate. Savings, investments and education are all gifts that keep on giving.

Looking at this list I realize I have some of the same items on my Christmas Bonus to do list. Some of the items however are absent. I am not proud of it, but I do not have self- improvement through education or accreditation on my list of things to spend my bonus on. I do have listed-down plans to save or invest for my family and my son’s future needs including education. I have also set aside funds for Christmas celebrations and gifts, and for my family’s next trip. I don’t reward myself because I consider travelling with family as reward enough.

Admittedly though, I feel like my Christmas bonus spending habits are lacking in discipline and foresight.  When the bonus pops up in my bank account, I tend to fall into that trap of impulse buying. I feel invincible at the cash register.  I feel magnanimous on nights out with colleagues or friends. Only when it is too late do I realize the lost opportunity to save or invest. More often than not I feel like it would be great to have someone help me capture that opportunity. If only there was some kind of professional whose job description is to analyze various investment products and opportunities available in the market and maximize the return of investors like myself.

Well, there ARE professionals with that job description. They are fund managers, investment bankers and brokers.  High net worth individuals can hire them directly to manage personal wealth. More savvy investors can hire brokers to handle the paperwork for daily transactions at the stock or bond market. Less experienced investors or people of more modest means can avail of the services of fund managers through Mutual Funds or Unit Investment Trust Funds. Nearly all the big banks in the Philippines offer some form of investment opportunity through a Mutual Fund or UITF. Mutual funds are investment companies which manage a pool of money on behalf of individual and/or institutional investors in accordance with the fund’s stated objectives and strategies. These are similar to Unit Investment Trust Funds as both are pooled investment vehicles combining money of various investors. UITFs are open-ended pooled trust funds which are also governed by investment objectives. Usually these invest in a mix of securities, typically stocks, bonds or a combination of both. Lists of licensed investment houses and brokers can be found at the Securities and Exchange Commission and Philippine Stock Exchange. ATR Asset Management’s services can be accessed via its online platform Seedbox at www.seedbox.ph.  

These people know how to invest, but it is also important for everyone to understand how these people invest, including their goals and investment strategies. What I am trying to say is investing without understanding, even with the help of investment professionals, is not a good idea.    

Investing is unique and personal, and it can be just as complex as gift giving. Buying a yellow jacket in the style of Freddie Mercury’s Wembley performance ensemble could be the gift of the year for a Queen fan, but it would be meaningless to someone who has never heard of Bohemian Rhapsody. Investing money with a fund which targets new financial technology opportunities via extremely volatile coin or cryptocurrency offerings could be a home run for a millennial interested in finding the next Bitcoin, but it would scare someone who is simply looking to store money in a safe place, with zero possibility of losses and a little opportunity for gains. Investment professionals make this easier, but the world of investment is massive. Reading up on the basics, and understanding who you are trusting your money with can go a long way. It could spell the difference between receiving “a gift that keeps on giving” and a lump of coal. I’ve said my piece, now what are you doing with your Christmas bonus?