It's Time!

It just occurred to me that as we grow older, the topic of death slowly permeates into casual conversation. Sure, it’s painful to comprehend, but it drives home the invaluable lesson of losing and gaining, of stumbling and of recovering. Read the rest of this entry »

I’m clueless. Alicia Silverstone-type-of-clueless, that is.

Way past fresh grad phase, one would think that I have made my way into finding out about studying finances, poring over Excel sheets and maintaining books. But I’m nowhere near anything that requires computations. Read the rest of this entry »

The past week has been more than a rude awakening, not just for me but of a whole nation as well. As typhoons Ondoy and Pepeng wreaked havoc in Northern Luzon, Manila and nearby provinces, past mistakes and shortcomings all came rushing in, like the uncontrollable currents of the September 26 flood.

Everyone has an Ondoy or Pepeng story to tell, including me, but I choose to be forward-looking. As we slowly recover from the trauma, physical exhaustion and material loss, lessons and realizations are now being uncovered.

Rude awakening: How prepared are we in the face of calamities and similar emergencies?

Sure, natural disasters and crises contain a potent factor that leaves many of us dumbfounded. More than the soaked gadgets and shoes buried in melted Cadbury-like mud and murk, most of the damage is emotional.

Whether you are in the middle of things or from the outside looking in, helplessness is enough to dampen the spirit.

Not-so-rude-awakening: The three P’s – Primed, Prepared, and Protected — are not impossibilities.

Let’s face it: nothing can prevent nor pre-empt the negative effects of shock. But once we regain our bearings, what I like to call the three P’s can immediately help us spring back into action.

1. PRIMED means to be informed and knowledgeable of the situation. Someone from PAG-ASA summed it perfectly: Instead of watching telenovelas, watch the news. Indeed, knowledge is power. Being in the know alleviates and somehow relieves the tension that we feel when caught off guard. Also, the right information can help guide us on what to do next.

2. PREPARED pertains to all the measures you could have done beforehand. Included are emergency kits (clothes, transistor radio, ready-to-eat food, water, fully-charged and loaded mobile phones, jacket, blanket, medicines and cash), list of important addresses and contact numbers, as well as a drawn-up plan for responding to emergencies.

3. PROTECTION gives you the ability to recuperate and return to your life before its unfortunate disruption. These are the intangibles: insurance (life, non-life, pre-need), savings, and investments that you can easily convert to hard cash and fuel your new beginning.

However, the most pressing issue transcends our personal recovery. While many of us pick up the pieces after the storm, some don’t have pieces to pick up at all, literally. Thus, donations, in the form of relief goods or one’s own time spent volunteering, are urgently needed. The Philippine National Red Cross (www.redcross.org.ph), Citizens’ Disaster Response Center (http://www.cdrc-phil.org/program.HTM) and World Vision (www.worldvision.org.ph) are just several examples of groups that give assistance to victims and opportunities to those who want to lend a helping hand.

Yes, it’s important to be primed, prepared, and protected. But to be able to contribute to rebuilding efforts can also make the greatest difference in the face of such destruction.

Savings or Investments? Where do you put your money?

One of the more embarrassing questions I’m often asked by friends, family and colleagues is where do investment managers like us, put our money. Like most people, our hard-earned money is generally allocated between our savings/checking account, and whenever there’s some left over, our investment account. From someone whose job is making sure the company makes the right investment decisions, these two accounts can serve very different needs and can be very specific to each individual. There is no hard and fast rule in  allocating money for savings and investments

However, there are some general guidelines from which one can begin to develop their own allocation.

In a nutshell, savings is a source of instant and assured liquidity, where one can draw from anytime for any emergency or need. My first step in determining the size of my savings account is to figure out, how much money I need for certain short-term emergencies or needs I might face. Am I going on a holiday this coming weekend? Am I expecting some visitors in the household? Do I foresee spending for my car requirements this month? How much do I usually spend when I get sick?

Since I require liquidity, it shouldn’t come as a surprise that I also expect a much lower rate of return for my savings/checking account. The lower rate is the price I need to pay for having near-instant access to my cash. It’s also the price I pay for the assurance that I’ll get my money back. So this provides me short-term assets (cash), for short-term needs.

Investments, on the other hand, is there to provide some return in exchange for less liquidity (and sometimes even no liquidity) for a fairly long period of time and at a higher risk.It generally provides less assurance of getting your money back. When thinking of investments, the money I allot for this is the money I don’t need as urgently  as I would with my savings.  In exchange for less or even no liquidity and less certainty, I expect to get paid a higher return.

In contrast to savings, investments provide me long-term assets, for my long-term needs such as retirement, to travel if I want to in say, 5 years, for my kids’ schooling or if I just want to buy a big-ticket item in a few years’ time . One very critical dimension of an investment account is, it must always be well diversified. This helps spread-out the risk and increases the chances of favorable returns or at least getting a portion of your money back

Within each account lies a myriad of different options to suit every individual’s needs. However, knowing the difference between the two is an excellent first step to planning one’s financial future.

My journey in the financial industry is a bit unexpected. Since I majored in Public Relations, I saw myself working in PR agencies or even advertising. And more than a year into my present job, I realize that I’ve matured in so many ways, especially on how I handle my finances.

I want to share my experiences and learning, Read the rest of this entry »