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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