Askhello Fitz, i just saw your blog by accident while looking for ways to make proper investments. I work abroad and currently earning a fairly handsome salary with some perks like bonuses and commissions. I have long resigned (for a while maybe) from shopping and fancy dinners and started to think how to put my money in good use.. (that’s when i gave birth to my adorable son who is now the reason why i suddenly thought of doin investments).
aplogies in advance as this could be a li’l lenghty.
my monthly salary goes like this.
70% – Remittance to my mom, credit card and loan payments, groceries and utilities – other expenses i.e. car petrol, phone bills etc.
12% – downpaymeny for my 2 condo units (2 years)
3% – medical insurance
15% – savings
I currently have US$ 1400.00 in government bonds, P100,000 in FAMI which i intend to keep or top up P20K per month once the percentage of my 70% expenses gets lower (will be 25% lower in 12 mos). I also plan to have my FAMI investment for my son’s college education in 16 yrs and of course my retirement too.
Now i have US$ 14000 on hand and i quite dont know how to make use of it. Im planning to put 50% of it in Fixed Deposit, 25% as emergency fund and 25% to?????
aside from my monthly salary, i regularly receive a monthly commission of US$550 and instead of buying an LV or clothes, i just wana put it somewhere that i could get passive income.
My portfolio is quite a mess now but im managing to keep it wisely.
My obejctives in 15 years.
1. Save at least P25M cash (meaning,
2. Own at least 5 condominiums for renting purposes
3. Secure my son’s college educ for another 2 – 3M maybe?
4. Enjoy life, set-up a small business (maybe catering and baking business), travel.
Now, that’s pretty agressive. and i wil only be able to achieve them if i would learn how to make my current (and incoming) funds work for me without actually sacrificing my own leisures (fancy dnners once in a while and shopping).
Please advise.
Thanks in advance.
3 Responses to “What is the right way to invest?”
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First of all, you should probably establish an emergency fund, if you don’t have one already. Fritz has an article on that here. As well as articels on investing for beginners. After that…
Hmm… that P25M is a pretty agressive target indeed.
I have no idea how much $ you earn per month, or how many more years you will be working, but it seems like equity funds are the most likely investment to get you to your goals.
There are “retirement calculators” that you can google. They’ll let you play around with the numbers so you can better understand how much capital you need to start with and how much you need to save each month to achieve that.
For condominiums… I have no experience in having them rented. And what little i know amounts to:
1. you need to make sure you can actualy afford to buy the property and not count on someone renting it quickly (a friend of mine “misjudged” this situation)
2. finding a “good” tenant might be almost as important as having a tenant.
3. condos (i’ve heard) have a lifespan of 25 years. I have no ida what happens after 25 years. my impression is that it’s condemned / demolished. You may wish to also consider selling (if you’ve acquired one) aside from renting.
4. being a landlord is a real job. You need to know the laws about it, and how to enforce them (ex: for evictions).
For securing a college education, i would suggest an education plan. since tuiton fees rise dramatically, this might be a more realistic option than counting on having saved enough funds for it. Of course, the plan might not cover 100% of the costs, so you should still save.
I would suggest starting that small business now. catering and baking actually aren’t that “small” – a lot of the equipment is expensive (at least for baking i know it is). You can determine the capital needed to start up such a business. as well as drafting a business plan and conducting market research. You can do all of those without necessarily marginalizing your leisure time. However, any business will take a lot of your time once you decide to go for it – unless you’re wiling to gamble your capital that your hired employee will somehow take care of it like it’s their ticket to freedom.
On a sidenote the easiest way to passively make your money work for you is through investing in mutual funds or UITFs. they don’t take up any time at all. and if you chose a fund connected to a bank, you can even do it online.
Technically you can also invest in the stock market, but i would not suggest that unless you already have knowledge on stock trading.
You couls also try Foreign Exchange.
Thanks Forsaken One for the insights.
I’ve pretty much followed the basic division of funds.
Ive got a savings acocunt which i dont touch at all.
The savings account is divided into 4 parts: Emergency – 50%, My son’s future trust – 20%, travel and leisure (ultimate travel plan), 10% and for condo payment – 20%
Because i do no want the balance of my condo TCP be loaned from the bank, im saving up some cash that will lessen a bit of my future mortgage amount.
My monthly income is pretty okay naman. That covers all my expenses plus monthly savings and investments.
I guess im in the right track so far with my finances. I just need to streamline it a little bit more to achieve my goals. like paying off my credit card in full and use instead the montly fees to MF’s.
Im planning to sign-up with citisec and also truly rich club. maybe that would help in all aspects of what im doing right now.
Note that all the above ventures are as per my sole income so far. that doesnt include my husband’s share yet since he doesnt trust MF’s right now, but he does have his own condo unit being paid for at the moment.
As per renting out the condo, i have the option of selling it out if renting out wont be as good as expected. lifespan of condo is 50 yrs. could be longer if managed properly. owners also now what they call infinite ownership as mandated by law though i have yet to research on that.
for education plan,hmm, thats something maybe i wont do. all big providers i know in the past are a no-go at the moment. so im just saving and investing for my son’s future.
im still abroad and still no plan to go home just yet. maybe when i reach 45 as early retirement. thats 13 yrs from now. š
thanks for your thoughts. lets see how my FAMI will work in the next 20 yrs š
have a great day and be blessed.
You may try investing in mutual funds. I know a representative that can help you achieve your desired amount. God bless!