Most people I seen when they visiting any commercial banks in the Philippines, keep asking on where to invest their money to earn more profit. As I frequently asks, “What are your goal in investing?”, “Any investment tools you ever tried?”, and “How long do you wanted to stay your funds in this investment?”.
My superior mostly scoffs me the way I interview potential investors to our bank products. Because it may turned-off some potential clients. Other clients just wanted to do what they know, avoiding some essential financial planning approach.
Proper Ways in Investing: Determine Your Risk Appetite
As I always do. When everyone ask me on where to invest, I always replied and ask, “On your self first! What are your goal in investment?” These will show to the potential investor the best investment for him. Every people have different investment appetite and goal.
Proper Ways in Investing: Use the Three Test Rule
The most expensive investment for me, is having an investment you do not know exactly know how it works. Most investors still doesn’t know how to liquidate their investments. They were just listened to the advise of single bank employee, on which the purpose of their advice is to achieve their quotas for the month.
Education in money management is essential in having financial independence. Here below some important questions you have to answer before placing your money in certain investments:
- What kind of company I’m willing to risk my money? (industry affiliated, owners and directors, etc)
- How do I able to earn? (Dividends, capital appreciation, commissions, profit)
- How do I liquidate my investment? (quitting!)
Proper Ways in Investing: Get Life Insurance First
This one is not famous advise, yet. The main reason why getting a life insurance first is like having warm-up exercises before playing physical sports. This analogy is very simple, what if you already pouring your money in chosen investment then a fortuitous event struck your life hard. Will you sell your investment? What if the prevailing market value of your shares is lower than your average capital price?
Coverage first before investing. Life insurance nowadays, have investments attached. It’s like having a mutual fund and life insurance (critical illness, permanent disability, and personal accidents) in one.
Proper Ways in Investing: Start as Early as Today.
The best time to save and invest is today, not tomorrow. Procrastination is very lethal, it can kill your dream.
The main difference of poor and rich people is poor people spend more, while the rich spend less but invest more.