Straight From The Expert: Why Investing Early Matters Part 1

GMA Network

Start building your wealth now and see the importance of investing early to achieve financial security. Learn more about investments and financial management in this episode of Straight from the Expert with Billie Hakenson and financial expert Fitz Villafuerte.

Transcript

00:00Do you want to get rich? Have your first million? Or go from zero to hero of your future?

00:07If yes, then I have another question for you.

00:10Open-minded ka ba?

00:12Because in this episode, we are going to open your minds to the world of investments.

00:18And how to maximize your budget, especially the one that you have in your wallet right now.

00:23Hi guys, welcome to another episode of Straight From The Expert.

00:27I am Billie Hackinson, your host.

00:30Now, when talking about money matters.

00:38Sadly, a lot of people don't have any idea on how to manage their money.

00:43Now, financial literacy is very important, especially if you want to manage your money properly.

00:49If you want to grow that money, you need to know how to invest.

00:54A lot of financial experts say that starting early is the best way to build your wealth.

00:59Fortunately for us, we have Fitz Villafuerte, the founder of Wealtharchy,

01:04who will teach us how to grow your wealth, our wealth, and possibly get rich.

01:10Hi Sir Fitz, and welcome to our show. Thank you for being our expert for today.

01:15And thank you for inviting me, and I'm very excited to be here.

01:18Now, let's begin talking about investing and in its most basic definition.

01:25What is investing?

01:26For me, investing is about protecting your money.

01:30We all know that inflation exists, and inflation is part of a healthy economy.

01:37So, if the prices of things increase in value every year, but we're not investing our money,

01:46we're actually losing the value of our cash.

01:49And the only way to beat inflation is to invest our money.

01:54Plus, if you just save your money, it will take many years before you can buy the things you want to buy.

02:01So, when you invest your money, there's a financial product, like an investment,

02:07that helps you grow your money so that you can afford the things you want to buy in the future

02:13without you just saving money.

02:15Because it takes too long if you're just saving money.

02:19You should have an investment that helps you grow your money.

02:22It's money working for you.

02:24I'm a little surprised to hear inflation in such phrasing.

02:29Because usually, we blame everything on inflation.

02:32We buy something expensive, and then we justify it as inflation.

02:36But that's another nice way to look at it.

02:39Inflation is part of a healthy economy.

02:41The thing is, it shouldn't be too high.

02:44In fact, 2-3% per year increase in prices is part of a healthy economy.

02:50But how much does your money grow in a savings account?

02:54It's less than 2-3%.

02:56That's why you need an investment so that your money can grow more than 3%,

03:01which means you're not losing the purchasing power of your money.

03:05Now, we'll talk about different types of investments.

03:09In general, you can categorize them into three.

03:12Short-term investments, medium-term investments, and long-term investments.

03:18When we say, it depends on how long the investment is,

03:22it's also asking yourself,

03:25when are you going to use the money you're investing in?

03:29Because once you know when the target date is when you're going to use the money,

03:34it's easier to decide on what specific type of investment you will put your money in.

03:40For example, if you have money that you're planning to use for your overseas vacation next year,

03:46for your travel fund next year,

03:48that's a short-term investment.

03:51It can be 2 years or less.

03:53Now, what are short-term investments?

03:56There are time deposits, high-interest savings in digital banks,

04:02and money market funds.

04:05Since this money is for a short-term goal,

04:09I will put it in a short-term investment.

04:11It's up to me what I want or what's accessible to me,

04:15whether it's a time deposit, digital bank, or money market fund.

04:19So, for medium-term investments,

04:21if you're planning to use the money in 2 to up to 7 years,

04:25you can go for moderate or medium-term investments that have moderate risk,

04:30such as bonds, balance funds,

04:34EBIT MP2 is very popular among OFWs.

04:39Then, for long-term investments,

04:42usually, this is the type of money you save for your retirement

04:46or for buying a house 10 years from now.

04:50Beyond 7 to 10 years or more,

04:53it's already a long-term investment,

04:55and the best choice there is stock market, equity funds, etc.

05:01But in general,

05:02all investments can be categorized into 3,

05:06short-term, medium-term, and long-term.

05:08But it's hard to decide what's a good investment

05:12if you don't know your goal.

05:14So, you have to know what the purpose of the money is,

05:17specifically, when you will use it.

05:19So, I hope that's clear to all you guys.

05:22I know this is a little intimidating at first.

05:25I personally feel like investments are, I don't know, jargon for me,

05:29and we all know that we need to have it,

05:31but we're intimidated to try and understand it and to dive into it.

05:35But today is the chance because Sir Fitz is here.

05:38Sir Fitz, is there a type of investment

05:41that you highly recommend for young professionals,

05:44especially to those who are just starting their careers,

05:48who are just starting in life?

05:50For me, if you're just a beginner,

05:53a low-risk investment is good

05:56so that you won't be nervous if the investment is too risky.

06:02And number two is go to where it is accessible.

06:06Because if you're still going to the office,

06:09you have a lot of things to submit,

06:11it will make you lazy.

06:13It discourages you from investing.

06:15So, number one, go for a low-risk investment.

06:17Number two, go where it is accessible.

06:20And what's accessible now is with your own bank.

06:25For example, where is your bank's salary account?

06:29You go to your bank, to your branch,

06:31you'll probably end up going there.

06:34Ask the bank staff,

06:36what are the investments that you have?

06:39Usually, they'll offer you the unit investment trust funds.

06:43So, these are investment funds.

06:45And the UITF has low-risk type of investments,

06:50like the money market funds.

06:52Now, next topic, emergency funds and retirement plans.

06:56So, what can you say about when to start

07:00trying to build your emergency funds

07:02and, of course, your retirement funds?

07:04Because I don't know for other people,

07:06but majority of the people that I know

07:09don't start planning for their retirement

07:11until they're really old.

07:13So, when should we start thinking about those things?

07:16The emergency fund, that's as soon as possible.

07:20And then, once you are able to secure

07:23the financial protection,

07:25you start investing for your retirement.

07:28So, let's start with the emergency fund.

07:30It's important to build your emergency fund

07:33because life is unpredictable.

07:35You don't know when you'll have an accident,

07:38you'll get sick,

07:39or sometimes our family member needs money.

07:45There's an appliance in the house that suddenly broke down.

07:49So, you need an emergency fund

07:51so that you don't have to borrow money.

07:53You don't have to apply for an online loan

07:56or swipe a credit card.

07:58In our budget, when it comes to income,

08:00make sure that we save a portion of it.

08:03So, what we save every month

08:05that goes towards building your emergency fund,

08:08which I recommend is

08:10you start with six months' worth of your expenses.

08:14Not income because income is too big.

08:17So, it's important for you to know

08:19how much are your monthly expenses.

08:22Multiply that by six.

08:24That should be your emergency fund.

08:26For example, if you're spending Php 20,000 a month

08:30times six,

08:31your emergency fund should be Php 120,000.

08:35Now, if you are able to build that emergency fund,

08:38because you've already learned the habit of saving,

08:43what you can save after building the emergency fund,

08:48it can now go towards building your retirement fund.

08:52It's important to start investing for your retirement

08:57as early as possible

08:58because the earlier you start,

09:00the smaller amount you need to build a big retirement fund.

09:04So far, this has been very insightful,

09:07inspirational even, and motivational for me.

09:09And I hope it's the same for you.

09:12Good thing we have Sir Fitz with us.

09:14But we are not done yet.

09:16And if in case you want to learn more about investing,

09:19don't you worry because in the second part of this episode,

09:23we will teach you how to manage your money.

09:26Let's talk about that in the next part of

09:28Straight From The Expert.

09:30Transcribed by https://otter.ai

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