Why do you save?
Why do you invest?
...whether the reason why you save and invest is either for the educational fund of your kids or just simply preparing for the rainy days, it is important that one must understand the value of saving and the importance of placing your hard-earned funds into the right investment.
Recently, I realized that with the three kids in tow, I know that soon when they reach college years, it would be difficult for us to sustain their college funds should we not prepare for it today. There are a number of ways on saving money and investing your funds. However, before doing so, one must know why they are saving or investing. It should start with a goal setting to ensure that everything will be successful.
Here are some ways on how to save and invest your money:
I. ITF (In-Trust-For)
This is actually a bank savings account in which the owner of the account serves as the trustee of the funds and transfers to the beneficiary of the funds should the owner dies. The account name will look like this, "Juan dela Cruz ITF name of the child". So, when Juan dela Cruz dies, the amount in the account will automatically goes to the child whom the funds have been intrusted for.
However, this type of investment has low investment growth. My ITF account for my kids only yields 0.025% interest per annum less withholding tax. Minimal growth yet lesser risk and higher liquidity rate - meaning, you can withdraw your money anytime.
2. LIFE Insurances
Lately, a number of insurance companies strategically linked with known commercial banks in the country have introduced various life insurances that would perfectly suit to the varying needs of the investor. Life insurances are good for those having long-term goals- such as college funds for your kids. There are actually two types of life insurances - the traditional plan in which a fixed amount is required to invest, with specific term and with specific return of investment. Say, if you are investing P30,000.00 annually for a life insurance for 5 years, your total withdrawable fund will become P300,000 (estimate) after 8 years. Plus, in case of death of the payor, the beneficiary will receive a guaranteed death benefit which could go as high as 500% of the annual premium.
The second type of life insurance is what they call the diversified insurance in which the amount paid as a premium by the payor will be invested by fund managers in the stock market. This type of investment posed a higher risk yet providing a possible higher return. Fixed death benefit amount is also offered in this type of investment. Payment period ranges from 5 to 10 years.
The premium for these insurances vary depending on the age of the policy owner. For the age of 37 (which is actually my age, sssshhhhh), monthly premium payment ranges from P2,500- 3,000 with a living benefit of P3.2M and death benefit of P3.4M.
3. UITF (Unit Investment Trust Fund)
This product is also one of the highly marketed bank products these days. UITF means the pooling of funds from various investors in which these funds will be invested in the stock market by the fund manager/bank. It has higher returns yet are not risk free. You can actually start an initial investment of P10,000 and can be increased anytime.
4. Stock Market
If you are familiar on how the market works, then investing your funds in the stock market is one of the lucrative ways to make your money grow. Before, an investor needs a trader to do all the trading transactions; however, nowadays, one can actually perform the actual trading (buying & selling) of stocks. What one needs is to get an account from CitiSec Online (COL) or BPI Trade. Minimum investment amount required is only P10,000.00. Sounds cool, right? Yes, it is but before you get yourself indulged into the stock market, you should perfectly understand how the trading works, the various risks involved and of course, you must learn how to speculate.
These are just some of the ways on making your money grow. One may also engaged into entrepreneurial activities to earn more.
To save and invest, there are only two points to remember, (1) set a realistic goal and pursue it, and (2) never invest into something which you don't understand.
Save. Invest. Make your money grow.
Everything is possible.
