By James Magsumbol (Guest Post)
It’s been almost a year when I moved in Singapore and my journey to financial freedom started here when my colleague brought me to a Financial Literacy seminar. At first, I thought I was a victim again of some sort of a illegitimate networking business, but fortunately I wasn’t. I just opened my mind and listened very well to the speaker in front while he was discussing the Steps to Financial Security.
What are these Steps to Financial Security?
- Improve cashflow
- Manage debts
- Create emergency fund
- Manage life’s risks (Health and Life Insurance)
When the speaker explained all of these, I said to myself, “I got 3 out of 5—not bad”. But the 3 of those that I didn’t have were the most critical and most important—the Healthcare, Life Insurance and Emergency Fund. I admit to myself that when it comes to financial literacy, my knowledge is just average, who put savings / hard earned money in the savings account for years and not knowing that the inflation eats the value of the money. Yes I’m one of the million Filipinos out there who didn’t know about the “inflation”—the erosion in the purchasing power of the money. Well, my reasons why I put my savings in the bank were: security, fund accessibility, and liquidity for in times of emergency.
Let me tell you my money experience way back in 2009. I put some of my money in a COOP (cooperative) and surprisingly the COOP earned more interest compared to my savings account in 1 year. So, I became curious and thought that there were really other investment instruments that you can put your money and can gain more interest compare to the normal savings account. “Curiosity made a big difference”.
One day, I went to the bank and asked if they can offer other types of account or investment that can give higher interest than the normal savings account. The account specialist asked my appetite in terms of investing. She evaluated me and came out that I was a medium risk type of investor and she recommended the Peso Money Market Fund (UITF product) to me. I had put all my savings in this fund and it earned 2-3 times interest compared to my previous savings account. I told myself that that was really good because my money in my savings account just earned almost 1% per annum in 4 years! But please do note that the minimum investment in that fund is Php 100,000.00. On the other hand, there are other types of UITFs also that will suit your budget and appetite, just ask your bank about it and I’m sure they are more willing to offer you their investment products.
There you have it guys, the Financial Foundations in the first part of my journey to financial freedom. Bear with me as I continue my journey and discuss about Financial Foundations that I didn’t have on the 2nd part.