If you’re like 8 out of 10 Filipinos, you turn to family and friends for money advice. Nothing wrong with that when you are just shopping for options, say what kind of insurance they own, where they bank, or what are the good investments they made these days.
But it is not 100 percent right either because whether they are your super best friends or loyal family members, they are not subject matter experts. Their advice is always colored by what they know (their own trusted brands), who they know (the agents and bankers who may be their own relatives and friends) and how they prefer to do things (are they conservative or aggressive investors).
When it comes to your money, the decision on what to do with it should rest with you. I remember a sad story of a friend who read in the news about a bank having financial troubles. So he asked a friend who works there, and was assured that it was just a rumor and ignore it. Two days later, the Bangko Sentral ng Pilipinas shut the bank down and placed it under receivership.
There is no fail-proof formula when it comes to money. You could lose it by lending it a good friend who will not pay you back. Or a sound investment referred by a relative that later unravels as a pyramid scam. But the best thing you can do to protect yourself is to make sure you do your research and arrive at an informed decision.
With threats of war brewing elsewhere in the world, oil prices expected to hit the roof, threat of inflation in global economies, it’s tempting to hide money under our mattresses. So we turned to money experts for what they plan to do with theirs. Meet the country’s bankers and financial advisers for the wealthy, as they share their money bets for 2020.
BDO Private Bank Executive Vice President
“Last year, I finally saw the fruits of my 20-year plan become a reality. You see, the last 2 decades, I started accumulating life insurance policies with 10-year guaranteed pay. The strategy was to keep on adding a policy yearly as the capacity to pay grew. I timed the maturities in such a way that almost all policies are fully paid by 2019 so that the excess funds I will have can be invested in other new investments. The timing was also done in preparation for retirement 5 years from now when I will no longer need to pay for annual premiums, have the peace of mind that my heirs are protected as well as the flexibility to cash out if needed.
As I prepare for retirement a few years from now, and when I will not have any medical coverage or corporate benefits, my next plan is to avail of a medical insurance 3 years before my retirement. Why 3 years? Because most health insurance policies have a prescription period of 3 years. Those 3 years though will still be covered by my company's medical insurance. It's my way of filling the gap.
So you see, foresight, planning and timely execution are the keys to a better planned future.”
Insular Life Senior Vice President and Chief Strategy Officer
“My personal advice for managing one’s wealth or one’s financial needs for that matter is to buy insurance. One can never going wrong by buying insurance as it is both an investment and a protection for potential future needs. No one can ever be considered over-insured.
For 2020, my money resolution is to continue to be prudent in my spending. I believe that the enjoyment of our present lives has to be tempered with providing for the future. While my wife and I like to include travel in our plans, we also have to make sure, however, that we set aside a nest egg to cover retirement. So there has to be some balance between the present and the future.”
Security Bank Wealth Management Head
“My advise is to always diversify, a practice by which we spread our investible funds among different kinds of investments to help reduce our risk exposure. It reduces the uncertainty of investing as financial markets can become volatile. One way is to consider investing in a mutual fund - a basket of different securities (can be purely stocks or bonds or combination of both) that is managed by a professional fund manager. If you want to invest in direct stocks, consider investing in different stocks in different sectors. For fixed income, consider credit quality, duration and maturities.
Rebalancing or adjusting your portfolio on a regular basis is also very important to ensure that the risk level is still consistent with your financial goals. This is modifying your asset allocation as the market value of your investments fluctuates with the constantly changing market. Which investment got bigger and which need some “pruning”?
Finally, taking profits and enjoying the fruits of your hard-earned money especially when the investment is performing really well. Sometimes, we get trapped with the idea that the investment will still go higher and still too early to realize some profits.”
President and CEO of BPI Asset Management and Trust Corp.
“This 2020, I will continue to invest sensibly and save more money in order to live a comfortable life. This will lead towards greater financial security. There is no right time to invest but now.
With a slowing global economy and geopolitical uncertainty, investors are always tempted to allocate more to cash. One must remember that holding cash is costly in terms of opportunity loss and erosion of cash to inflation. Our firm believes in staying invested and diversifying across asset classes, geographic regions, currency exposure as well as investing over the medium to long term horizon in order to reduce investment risk.”
Disclaimer: The views in this blog are those of the blogger and do not necessarily reflect the views of ABS-CBN Corp.