I have always mentioned that goal-setting is important in personal finance. And part of having a goal is being specific about it. You must be specific and set timelines on the time when you plan to realize your goals.
Depending on your timelines, below are the investment vehicles you should consider.
If there is one thing we can all share, it is the fact that the longer the time the money is not returned to us, the possibility of non-collection increases.
Yung tipong nabaon na sa limot. Ganun din sa investing. Pag mas matagal, mas malaki ang posibilidad na hindi maisoli sa atin yung pera natin. At dahil sa ganun kadahilanan, mas mataas ang potential na kumita ng mas malaki ang pera natin dahil kailangan me kapalit yung risk natin.
Gets? Think about lending a money. If someone borrows money from you and tells you that he/she will return it to you tomorrow, then the risk is low. However, if that person promises to return it a month after, then the possibility of him/her not returning the money is higher thus we might consider not lending the money. The person then might encourage you to lend him the money by saying that he/she will return the money a month after plus interest. Suddenly, you might consider lending again because of the interest factor.
Ganun na ganun sa investing. The longer time we are parting with our money, it must be compensated by a higher potential to earn. The keyword is potential. Stocks and mutual funds has the higher potential to give you higher returns but it is never guaranteed.
Because you will need the money soon, you must put your money in an investment vehicle that will give you the protection of your money plus returns if possible. Kagaya nung nabanggit kanina, dahil short-term lang, yung potential na kumita ng pera mo e mas maliit.
For short term goals, it is recommended to put your money in time deposits or money market account. These are the conservative type of investments.
Naalala ko tuloy yung tip ng lecturer. He shares that for our savings account that we as petty cash to buy groceries or that day to day expenses, we should opt for banks with more ATM Machines. Huwag na natin isipin yung 0.025% interest at ikumpara sa iba pang bangko. Maliit lang yung interest tapos pag nagwithdraw ka pa e me interbank charge pa na P11.
Bakit pa natin hahabulin yung maliit na interest. Ang hanapin natin yung bangko na maraming ATM o yung bangko na maraming ATM sa mga lugar na madalas nating puntahan. Kaya nga petty cash. We need quick access to our money so the interest rate should not be a significant factor in choosing our bank for our savings account.
Ano ba yung risk appetite? Yun yung gaano ba kalakas ang loob mo. If you are conservative, then go for a bond fund. If you are willing to entertain the idea that you might lose a part of your money in exchange for a higher return, then you should go for balanced funds.
Ano ba yung bond fund at balanced fund? Bond funds are funds that invests in debt instruments. Debt instruments are issued by government or corporation to raise funds. Simply put, these are loans to be paid by the government or corporation. Balanced fund on the other hand are investments that consists of debt instruments and stocks.
Since we have the luxury of time for these goals, the suggestion is to place your money in growth-oriented investments. Growth-oriented means on the higher investment risk but with a higher earning potential as well.
You can invest in stocks (equities) and/or stock-based mutual funds.
Depending on your timelines, below are the investment vehicles you should consider.
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| Short Term vs Long Term |
Short Term versus Long Term
Have you tried lending money to a friend or a family member? I am sure you have. Most of us have experienced that.If there is one thing we can all share, it is the fact that the longer the time the money is not returned to us, the possibility of non-collection increases.
Yung tipong nabaon na sa limot. Ganun din sa investing. Pag mas matagal, mas malaki ang posibilidad na hindi maisoli sa atin yung pera natin. At dahil sa ganun kadahilanan, mas mataas ang potential na kumita ng mas malaki ang pera natin dahil kailangan me kapalit yung risk natin.
Gets? Think about lending a money. If someone borrows money from you and tells you that he/she will return it to you tomorrow, then the risk is low. However, if that person promises to return it a month after, then the possibility of him/her not returning the money is higher thus we might consider not lending the money. The person then might encourage you to lend him the money by saying that he/she will return the money a month after plus interest. Suddenly, you might consider lending again because of the interest factor.
Ganun na ganun sa investing. The longer time we are parting with our money, it must be compensated by a higher potential to earn. The keyword is potential. Stocks and mutual funds has the higher potential to give you higher returns but it is never guaranteed.
Short Term Goals (Less Than Two Years)
Short term goals means you will need the money in the next few months up to two years. Not a definite rule but I hope you get what I mean. A short term goal is something you want to do in the very very near future. Maybe in the next six months or a year.Because you will need the money soon, you must put your money in an investment vehicle that will give you the protection of your money plus returns if possible. Kagaya nung nabanggit kanina, dahil short-term lang, yung potential na kumita ng pera mo e mas maliit.
For short term goals, it is recommended to put your money in time deposits or money market account. These are the conservative type of investments.
Naalala ko tuloy yung tip ng lecturer. He shares that for our savings account that we as petty cash to buy groceries or that day to day expenses, we should opt for banks with more ATM Machines. Huwag na natin isipin yung 0.025% interest at ikumpara sa iba pang bangko. Maliit lang yung interest tapos pag nagwithdraw ka pa e me interbank charge pa na P11.
Bakit pa natin hahabulin yung maliit na interest. Ang hanapin natin yung bangko na maraming ATM o yung bangko na maraming ATM sa mga lugar na madalas nating puntahan. Kaya nga petty cash. We need quick access to our money so the interest rate should not be a significant factor in choosing our bank for our savings account.
Medium Term Goals (Two to Four Years)
For your dreams that you will achieve in the next two to four years, the recommendations are to place your money in bond funds or balanced funds depending on your risk appetite.Ano ba yung risk appetite? Yun yung gaano ba kalakas ang loob mo. If you are conservative, then go for a bond fund. If you are willing to entertain the idea that you might lose a part of your money in exchange for a higher return, then you should go for balanced funds.
Ano ba yung bond fund at balanced fund? Bond funds are funds that invests in debt instruments. Debt instruments are issued by government or corporation to raise funds. Simply put, these are loans to be paid by the government or corporation. Balanced fund on the other hand are investments that consists of debt instruments and stocks.
Long Term Goals (Four to Ten Year or More)
We all have goals or dreams that we want to achieve in the future. These dreams will require money and it is necessary that we start saving money now so that we have the required resources when the time comes.Since we have the luxury of time for these goals, the suggestion is to place your money in growth-oriented investments. Growth-oriented means on the higher investment risk but with a higher earning potential as well.
You can invest in stocks (equities) and/or stock-based mutual funds.
Take Aways
To quickly summarize, here are the action points for you.- List down your goals
- Match your investment with your goals
- Monitor and Adjust
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