I started investing in Mutual Funds in 2000
after our family went on a tailspin and experienced Asian Financial crisis in
1997. My mom was working in real estate brokerage
at that time and that was our main source of family’s income. We were not rich
to start with but my mother was really hardworking, diligent and dedicated to
lift us from poverty to an extremely well-off life. We had a nice, big house
and cars. My
brother had plans of studying abroad and I planned of becoming a doctor.
|What will you do when there is economic crisis? (photo: google)|
good life, so it seems, would never end. Then surprising twist of fate happened and all that we have are gone. We did not lose everything immediately, maybe
because we were in state of denial that we will overcome the crisis and we will
bounce back sooner than expected. But it did not happen. All our plans went down the drain. And we lost
everything – the cars, the endless allowance, the partying, road trips, all the
food that you can eat, stuff that you like to buy without thinking about the
cost. It then hit me that I need to be thinking
differently when it comes to finances. Making money is hard, keeping them is
harder. You work then you get paid. How hard can that be? You get paid then you
must have enough discipline to keep most of the money or make them grow and
multiply, well, you need skills, discipline and info analysis.
The Turning Point
controversial book that tackles finances and wealth: Rich Dad Poor Dad by
Robert Kiyosaki. I bought one and read it five times. Of all the asset classes
that were discussed, Mutual Fund is the easiest for me to get into. I
made my research regarding the topic and after half a year of reading
thoroughly about it, I made a few calls to some financial institutions that
offer Mutual Fund investment. I chose one and wrote the cheque for the initial
deposit (Php5,000) and few more cheques for the subsequent top-ups or
investments (back in 2002, the minimum was Php500).
I was able to work for 2
years in Saudi Arabia and when I came back, I added a new
investment instrument to where I put my money in (other than the Mutual Fund) I
also put-up a small peso and US dollar time deposits, Unit-linked investments or Variable Unit-linked funds. These are
insurance plans with investment component. Since the 3rd order of
investment is protection, Insurance is a must. The first 2 orders are knowledge
Then the 2008 US Subprime Mortgage Crisis
came. I was busy in my application for work in Singapore and, by habit and
discipline, kept on adding to my investments. It was only around the end of
that year where I found out that all of my investments from June to Oct lost
more than 55% of their value. 2009 was still a depressed year but old habits
are hard to break. I kept on adding to my funds, convincing myself that this
time, it is different. In the 1997-98 Asian Crisis, we were sitting ducks
because my mom was the only source of family income.
Now, I have myself to rely
on and after years of reading financial news, topics and theories, I know,
things will get better within 3-4 years. It is just the secular nature of
the beast. I even added real estate
properties to my holdings. And I was right. Things went pretty okay for
the past 2 years. I actually made a lot more in my net worth when I invested in
times the financial markets were in turmoil.
Looking back, I believe the real
asset here is knowledge and my job as well. Why my job? You take what you make
in your active income and allocate a big chunk of this to portfolio income. Your
primary job, other than your current employment, is to allocate wisely and
prudently your money into instruments that will increase in value over time.
The key words here are allocation and over time. You cannot allocate if you spend on things that losses value or will not
help you in the long run. Over time because you do not build wealth in a matter
of days, or weeks, months or even in a year. You do it over long period of
time. Periods that will test your resolve, discipline and vision. But times are
still volatile and no investment is immune to that volatility and loss. I just
keep myself informed, up-to-date and, with conviction to my long-term vision of
wealth creation and wealth preservation; muster enough discipline to move
forward and carry on.
I now have a family and 2 children aged 1 and
3 (who have their own Mutual Fund and VUL accounts). When people I know who are
aware that I invest a big chunk of my money in financial and real estate
instruments, ask me how much now is my net worth, I just smile and answer,
enough for my children to go to college in Manila, finish their studies and
maintain our lifestyle RIGHT NOW.
A lot of friends approach me to teach them
how to invest. They know that I also actively invest in the stock market via my
Citisec account (COL). I do that since I also want to enjoy a double-dip of benefits:
dividends. Be it stocks or cash. And most of my friends want to go straight to
that kind of investment activity. I always advised them to invest for a year
first in Mutual Funds, primarily Stock funds. They should expose themselves
first in the ups and downs of investing passively.
Recently, I am saving up for my next big project: my own
business. You see, investing teaches you how to value a company, be critical of
its products and operations in bringing value to the business owner and its
investors, things I learned for the past dozen of years. I suggest who plan to get in this route to start,
however small, invest in Mutual Funds first. While doing that, educate
yourself about investing and enterprise. Since a good knowledge in value
creation in enterprise gives you a good base as to how you will allocate your
money and to which company.
It took a while for me to convince my wife
to embrace investing and the mind-set needed to succeed in it. If you have the
same problem with your spouse, I understand. If you are starting out, the more
they are skeptical about it. I already have the proof that investing works, but
my wife was still skeptical, what more if you never opened an account. Now, she
has her own Mutual Fund accounts, VUL accounts and COL accounts. She likes to
discuss now with me anything about investing. And the years of reading,
research and experience help in answering her questions. I pass on to her what
I know since she will either go through the ups and downs alone or she will use
what I know to tackle the challenges in investing.
Experience is a painful
teacher but wise people learn from the experience of others. Hope my journey inspires you to take charge of your financial future
that you will start opening your Mutual Funds or VUL account as early as possible. I know, times are hard and
volatile, but as you can see, time will make everything alright.
In investing, time matters a lot and not timing. Happy investing! And may you be prosperous
and wealthy in the coming years.
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