Most articles on investment and making financial decisions follow the same outline. First, save for a rainy day. Second, invest wisely. Then, there’s a short discussion on interest rates and inflation.
Reality, though, has a way of changing its course. Here, we list down some common financial situations, and how best to respond.
Real Life Situation No. 1: “I want to save and invest but after paying the bills, I don’t have much left.”
Saving is not always part of the typical Filipino household’s budget. In fact, based on Bangko Sentral ng Pilipinas’ first quarter 2017 Consumer Expectations Survey, 45.1 percent of families said that they had some savings kept away.
In the Philippine Daily Inquirer column Money Matters, author and financial expert Randell Tiongson writes about the importance of increasing cash flow. He writes, “As your cash flow improves, you will begin to generate more savings.”
There are many practical ways to do this. The simplest one is finding ways to reduce expenses, so you have more money left for savings. The most effective long-term method is to find ways to increase income.
Invest in your career, either through experience or further education, to make yourself more valuable. Pay generally increases for those who have the proper credentials.
Adding to your income stream is also another way to improve your financial position, like taking advantage of freelancing opportunities. Even hobbies, such as baking or blogging, can be made into money-making endeavors.
Real Life Situation No. 2: “I don’t want to work until I’m 80. What should I do?”
In an article for Entrepreneur Philippines, Henry Ong, president of Business Financial Advisors, writes, “In order to achieve your financial goals, you need to create a strategic plan that will provide you a roadmap to financial freedom.”
The University of Missouri suggests these steps in creating a personal financial plan. First, think about your current financial position. Then make a list of your assets (the things you own) and your liabilities (the things you owe). When your list is complete, think about your financial goals. How do you envision your future? What are some of the expenses you foresee? In this stage, it is important to know the difference between needs and wants. The goals you set must be realistic.
Having points that are doable is the difference between having a plan and a dream. For example, if your plan is to set aside a certain percentage of income each month for savings, that amount must not dip into the food or rental (or mortgage) budget. You will always need to eat and have a roof over your head, but you can reduce expenses for leisure or clothing.
Having a specific plan will make it easy for you to see and evaluate your financial state, and whether or not you are achieving your goals.
Real Life Situation No. 3: “There are so many investment opportunities. I don’t know where to start.”
The strange thing about information is that too much and too little can both be confusing. This is also true when it comes to investment opportunities. There are many investment options available: stocks, bonds, businesses, and time deposits are just the tip of the iceberg.
So invest only in things that you are confident you can handle. For example, if you are unsure if you can handle day-to-day operations and decision-making, then a business is not right for you.
A feasible option for most people is to invest in real estate. In the column Broker’s Report, Christina S. Avendano writes, “The positive thing about real estate is that, even in a bad economy, it is still better than other forms of investment…basic accounting states that you do not depreciate land, and its valuation will just be a matter of supply and demand.”
When it comes to real estate investment, focus your resources on property that has the largest potential for growth. Where the property is located, how secure it is, and the amenities it provides are usually major considerations for investors.
Alveo Land, one of the best housing developers in the Philippines, offers a wide range of options. Properties are located all over the Philippines–from Makati, BGC, and Quezon City, to Laguna, Davao, Cavite, and many other locations in between. When investing, choose the right developer with a proven track record for real estate in the Philippines.
Learn more about Alveo Land’s properties here.