INVESTMENT PLANNING

Investment Planning is the process that individuals, families and bigger groups undertake to ensure that their financial resources can grow at considerably compounded and possibly faster rates than normal bank savings products OVER TIME in order to meet medium-to-long term goals that require big capital outlays.

Medium-term investment planning typically takes into account a 5-to-7 year time frame while long-term investment planning typically considers a time frame of 7 years and above.

Investment planning is an area of financial planning that Filipinos typically reserve for a later date.  Perhaps due to many Filipinos' preference for shorter-term money planning and liking for quick big returns at relatively short spans of time, investments that require 5 years or longer to produce returns are generally placed at the backburner.

However, investments should ideally be made as early as possible in order for individuals to potentially realize better gains over time.  Investing ought to be started early, if possible in tandem with saving and building an Emergency Fund.  But investors need to conduct research and understand their investments first before placing their hard-earned money into it.  And the investment should be compatible with the investor's risk profile.    
Almost all high-net worth individuals have investment collections called portfolios. These portfolios are typically composed of several investment instruments such as:

• Stocks - ownership shares of companies and corporations that are traded each trading day in the stock market. Investors gain mainly from stock price appreciation, as well as dividends distributed.

• Bonds - debt instruments of sovereign states, as well as companies and corporations. Investors gain mainly from the guaranteed interest pledged by these aforementioned borrowers in exchange for the money lent to them by the investors.
• Mutual Funds - pooled funds from different investors that are placed in financial instruments like stocks and bonds.  Investors gain mainly from the appreciation of the Funds' Net Asset Value over time. The minimum initial deposit for these funds can start as low as Php5,000.
• VUL (Variable Unit Linked) Life Insurance - protection products whose premiums are invested in pooled funds.
• Real Estate - real property like raw land, houses, lots, condominiums, farms and commercial/industrial property.  Investors gain mainly from the appreciation of the value of the real property. 

In investment planning, the medium to long term financial needs of an individual is considered and then matched with a mix of one or more of the instruments above.  The risk profile of the individual is also considered in the matching process.

The typical medium-term needs or goals of Filipinos include: 

• Having a car
• Having a house
• Having a business
• Going on an around-the-world vacation

Money saved for these purposes should be placed in an instrument that can provide potentially higher returns in a 5-to-7 year time frame such as a Mutual Fund or a VUL Life Insurance. Depending on your risk appetite, you can choose a fund that is conservative or aggressive.

The typical long-term needs or goals of Filipinos include:

• Providing for child's college education
• Providing for a retirement fund
• Providing for a legacy for the next generation

Money saved for these purposes can be placed in financial products like Mutual Funds, VUL Life Insurance, Stocks and Bonds.  Again, distribution of the funds should depend on whether the investor is risk-averse or risk-taker.

If the investor is risk-averse, his funds ought to be placed in such funds as Money Market Funds and Bond Funds.  These types of funds exhibit a "slow but sure" tendency in growing your money.  While it means that your money may not grow as fast as those in more risky instruments, it may also be unlikely to incur massive losses of capital if certain unforeseen events occur in the financial markets.

An investor with a moderate risk profile may place his money in a Balanced Fund which consist of "safer" assets like bonds and special deposit accounts and riskier assets like stocks.

Finally, an investor with a high risk tolerance may invest in an all Equity Fund.  This fund may provide high rates of growth but may also provide high likelihood of losses in case financial markets are rocked by certain economic, political and other environmental events that are deemed economic risks.

"Someone is sitting in the shade today because someone planted a tree a long time ago" 
~ Warren Buffett,
   Legendary American Investor 
   Chairman and CEO, Berkshire Hathaway

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Y O U R   P A R T N E R

Edwin T. Bartolome
Financial Advisor 
​and Certified Investment Solicitor
Authorized by the Insurance Commission to act as an Insurance Agent.
​
For inquiries and free assistance on Personal Finance, Investments, Estate Planning and other Money Matters, you can reach him at:

Mobile : 0908-863-4617

E-Mail : edwinbartolome.sunlife@gmail.com
​

Office Address:
Baobab New Business Office
Sun Life Financial
6/F BTTC Centre,
288 Ortigas Avenue
Greenhills, San Juan City
Philippines
Tel. No. 7-719-3958
Fax. No.7-719-3894

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Financial Planning Articles:

Why You Need To Maintain Both A Savings Account and an Investing Account

Why Filipinos Should Invest and Not Merely Save

Getting Rich Is Like Running A Marathon, Not A Sprint

Delay Your Gratification To Succeed Financially

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