Question: Hi Randell! Good morning! After browsing the net for Filipino personal finance tips, I learned about you. And after reading your articles, I’m very much driven to start investing. I’m already in my 30s and wishing I started earlier. But I can’t dwell on that anymore, so I’m ready to start now. As you keep saying, “the best time to invest was Tuesday, the next best time to invest is today.” With that, I know I should start investing, but where? With the multiple investments available, I don’t know where to start. It’d be great if you could help me on this. Thank you very much and God bless! —Carlo via Facebook

Answer: Hi Carlo! Thank you for messaging me. I’m sharing your query here in my column because I’m sure many Filipinos can relate to your situation. Many hold off saving for retirement because of the mentality that there are still many years left to save, but as you learned, the best time to invest was Tuesday, and the next best time is now. Don’t wait until you’re nearing retirement because investments are meant to be long-term. With that in mind, now we know that we should go for investment vehicles that are more for the long term. So what are these investments?

Property

Real estate is probably the favorite investment of Filipinos. While less than 1 percent of the Philippine population invests in stocks, bonds, and mutual funds, 7 in 10 Filipinos own their homes, according to the Bangko Sentral ng Pilipinas’ (BSP) 2012 Consumer Finance Survey.

Real estate is an advisable investment for retirement because the value of property appreciates through the years. Real estate property isn’t like a time deposit which gives you interest after a year (or less). You won’t make much by selling your property just after 6 or 12 months.

Stocks

Another investment vehicle is stock investing. Stocks are advisable for the long-term because they are risky. This means that the prices of stocks go up and down over a set time period, and you can lose money. One way to decrease your risk and avoid losses is to hold your stocks for the long-term, which makes stocks perfect for retirement. I recommend people to keep their stocks for a minimum of 10 years.

Seeing as you are in your 30s, you have about another 25 more years before you reach retirement age. That’s 20 years more than my suggested 10 years to spread your risk.

Pooled funds

I purposely put ‘pooled funds’ after ‘stocks’ because they are closely related. If you want to buy stocks of SM, Ayala, or Jollibee, you would have to buy them individually through a stock broker or your online trading platform. With pooled funds, be it a mutual fund or a UITF, you get a group of stocks in one basket or fund. The pooled fund can have SM, Ayala, and Jollibee stocks, depending which equities the fund manager buys. The fund manager does the investing for you.

He picks what stocks go into the pooled fund; all you have to do is make an investment deposit and keep track of your investments once or twice a year. It’s also important to know that there are different kinds of pooled funds, there are funds consisted entirely of stocks, others of bonds, while some funds offer a combination of different securities. For the purpose of retirement, and for Carlo who has about 25 years until retirement, a stock or equity-based pooled fund is best for a retirement which is still far away.

With three investments to choose from, you have a clearer idea of where to put your money for retirement. Now the only thing that’s left is to head to the bank (for UITF pooled funds) or a brokerage firm (for stocks and mutual funds) to fill out your application and open an investment account.

Variable Universal Life Insurance

A VUL is very similar to pooled funds but it has a life insurance component and therefore, there is cost of insurance imbedded in the policy. However, if you are in need of financial protection and also want to prepare for retirement at the same time, a VUL will come in handy.

With four investments to choose from, you have a clearer idea of where to put your money for retirement. Now the only thing that’s left is to head to the bank (for UITF pooled funds), a brokerage firm (for stocks) or a financial adviser (for mutual funds and VUL) to fill out your application and open an investment account.

Always remember that there is no such thing as a best investment. Remember to do your assignment well and do not forget to diversify and the key to a comfortable retirement is to start preparing early.

Read my books for practical finance and investments! Email michael@randelltiongson.com or visit National Bookstores to get my books!

Due to many requests, my book bundle promo is back!

You can now get all my 3 books at an amazing discounted price. All 3 books have an SRP of P1,700.00 but for a limited period, you can get all those books for only P1,000.00 and save P700.00! This promo will run until October 23, 2016 (Monday) only.

Here’s more, I’m throwing in free shipping for all Metro Manila orders. For provincial orders, please add P100.00 for shipping.

To avail the offer, follow these easy steps:

1. Deposit the amount to BDO #006440069496 or BPI 0249-1113-09 under John Randell Tiongson
2. E-Mail a photo of your deposit slip or transaction notice to michael@randelltiongson.com along your complete address and contact numbers to michael@randelltiongson.com; indicate in the email if you want the books dedicated.
3. Wait for your books in a few days and be on your way to achieve financial freedom!

Hurry, this offer is only until October 23, 2016, Monday.

Question: I’m just about to turn 25 and I’ve always been a little on the responsible side financially. I’ve read your advice on investing and I’ve already put away a substantial amount on a mutual fund. However, there are times I find myself spending more than what I should. It usually happens when I’m around other people. Help?—Ken S. via Facebook

Answer: You seem to be on the right track. However, remember that having an investment doesn’t mean you shouldn’t diversity.

If you’re spending more money when you’re out with friends, you’re responding to an unspoken need to keep up. People call it “keeping up with the Joneses” or “being trendy.” It is peer pressure, plain and simple.

Financial peer pressure manifests in spending hard-earned cash to make sure you get the latest items or the kinds of things bought by your friends who either can afford to spend more, or are living beyond their means. Perhaps, you can aspire to become like the first group of friends for they seem to have their financial house in order. This can mean they have enough money in savings and investments, and extra funds for a few “treat” expenses.

You definitely don’t want to be the friends who live beyond their means because their spending habits create financial problems.

Financial peer pressure can affect you. Many young adults may look to the spending habits of people near them to form their own.

I’m not saying that you cut your ties with these friends but you need to understand that saying yes to them can hurt your financial future.

Here’s how you can break the cycle of peer pressure, but still keep your friends:

Don’t let them get to you. Everyone has different circumstances in life. They might be well-off or don’t pay the bills themselves, while you’re the main breadwinner of the house. You shouldn’t overspend to keep up with them.

Shopping trips are dangerous because your friends put pressure when they see you look longingly at something. In such situations, it is a good idea to bring a fixed amount when you go out.

Keep your eyes on the ‘prize.’ The ‘prize’ here being your goal. Know that if you give into your friends constantly, it will take you longer to reach your goal. Saying ‘no’ or ‘maybe next time’ to constant badgering will be your best weapon against the pressure.

Suggest alternatives to having to spend. Your friends wouldn’t be your friends if they didn’t share interests with you. Instead of planning a night out, suggest staying in. Organize your friends every month for house parties.

You have limits, and we all have at least one friend who can’t seem to stop themselves from being trendy all the time. Having limitations and goals in life doesn’t mean you’re a lesser person. It only means you know what you want and you’re doing everything to reach it.

Here’s a brotherly tip: If your friends are pressuring you into flawed habits or worse, preventing you from breaking bad habits, it’s time to look for new friends. Wisdom is key.