Investors guide in getting the right product for 2023
by: King San Josè-Santos, RFP,CFC,LFA,CTA
If you are investing in the Philippines, there are several investment vehicles available every Filipino might consider. However, even though we have diversified investment products, mismatched investment vehicles are mostly the cause of stress to clients that causes stress to the ordinary investor.
I. Preparing your investment. How to plan your investment.
Honesty is the best policy
Being transparent with your Licensed Financial Advisor can help you plan better. Your consultant must understand your current condition, and objectives. Most Filipinos are not comfortable disclosing fully their financial status. This might give you a bigger risk of giving the wrong product, which may affect your cash flow and the continuity of your investment. Most certified consultants offer DPA ( Data Privacy Act ) agreement that protects your data from leaking. You may ask your consultant to give you an agreement to help protect your information.
Get the right advisor
Not all advisors are the same. Like any profession, getting the right advisor can impact your financial goals. Getting well-trained, internationally board passers and licensed consultants that have a long track record of experience in regards to the specific topic can be a big help in creating the solution for you. There is a big difference between an agent ( a person who focuses on selling you the product ) and a real consultant ( a professional who finds the best solution for your current financial condition).
How to get a real Consultant?
There's a small rule of thumb. If he/ she can give you financial advice without buying a product from him, and charges you a consultation fee, more or less you are talking to a professional consultant. There is no such thing as free lunch! Getting the fee model, even though looks expensive at first, in the long run, offers bigger value to your portfolio as it takes out the conflict of interest.
Set a realistic budget and timetable
Some people think of investments like casinos, expecting fast rewards. Remember to consider investment like a business. Investments are invested also in government securities and business, it takes time for businesses to give you the desired rate of return you want. It is best to discuss with your consultant regarding this as it may affect your cash flow and quality of life should you overinvest or underinvest in a specific financial goal.
II. Know your investment
Understanding MP2 SSS, Time Deposit, and JP Morgan Fund.
Bank Time Deposit. A losing investment.
Some people will be surprised. A bank time deposit is a losing investment? Isn't the funds insured and protected with interest?
Let's consider the following details:
Bank rates don't outperform the *inflation
Time deposits are locked in for a specific time.
It is harder for you to compound the earnings.
Risk of Default: If a bank fails you are insured only up to Php 500,000
Risk exposure: 100% in 1 bank. You are betting in 1 company alone.
No capital appreciation
No Added perks and other financial materials attachments
Tons of requirements and taxes before you can transfer to your beneficiary. It includes their bonds, taxes, and documents.
In summary, Bank time deposits are only good for parking the funds for short time. It is not advisable to put funds for a longer period as *inflation eats the actual value of the funds.
The average rate of banks: is 0.2% to 3%. ( rates of well-established banks) the riskier the bank, the higher the rate they will give.
MP2 Pag ibig Savings. An investment alternative.
Based on Pag big website, MP2 Savings Program is a special voluntary savings facility with a 5-year maturity. Pag-IBIG Fund sets aside at least seventy percent (70%) of its annual net income and credits it proportionately to its members’ Pag-IBIG Savings as dividends.
Let's consider the following details:
1. Compare to bank rates, MP2 gets the average rate for 11 years, and the fund gives around 6.019 % ( Rate update from 2011 to 2021)
2. Like the banks, it is locked in for 5 years.
3. Should you require reinvestment, you need to open several accounts to add more investments. Gives more hassle by maintaining several accounts. It also extends the locked-in period for new fresh funds.
4. The fund is based on the interest rate. No *Capital Appreciation
5. No Added Perks and other financial materials attachments
6. Harder to transfer to your beneficiary should there be any problem happening to you.
7. Risk exposure 100% to pag ibig.
In summary, Managed by the Government, MP2 is good for capital preservation as it gives only interest to your funds. It offers a better rate vs. the banks however the perks are limited and the funds are locked in for 5 years.
J.P Morgan Multi-Asset Fund. The combination of everything except the hassle!
Let's consider the following details:
Compare to Banks and MP2, JP Morgan fund offers a higher annual dividend rate which offers around 5% to 8% ( Depending on market conditions) given monthly.
Compare to Banks and MP2, there is no lock-in period for the JP Morgan fund. Should you require your funds, you can withdraw the funds with some small charges ( 4% the first year, 3% the second year, 2% third year 1% in the fourth year) There are no charges should you allow the fund to stay for 5 years or more.
Easy Reinvestment: You can top up the fund easily by adding additional funds under 1 (one) account.
The fund also offers * Capital appreciation. With an average rate of return of 5% to 8% per annum ( Depending on market conditions). Your capital grows while receiving dividends.
Your earnings are deposited directly to your UNION BANK Account for Free. Hassle-free deposit and credit to your account.
Well-diversified 120 ++ countries and 80 strategies around the world. Your funds are invested in REITs and high Dividend payout companies that focus on giving monthly dividends to clients in different countries and strategies giving the lowest risk compared to investing in 1 (one) institution or business.
There is a Life Insurance component as well! It offers around 125% of the total premium guaranteed. ( For example: For every Php 1 Million investment, your beneficiary gets Php 250,000 benefit )
Easy transfer of funds tax-free to your beneficiary. Your funds can be easily transferred to your beneficiary should there any unexpected scenario happen to you.
Benefit summary: Dividend payout is 5% to 8% on average net per annum given monthly + 4% to 8% average capital appreciation plus life insurance benefit. It mirrors the performance of real estate in a more diversified approach.
To know more about the J.P Morgan Multi-asset fund, click here for more details >
In Summary, the JP Morgan Multi Asset fund is managed by the biggest Investment Bank in the World, J.P Morgan Asset management. It offers better Rates, Capital appreciation, other benefits, and perks that are not available in both products. Your funds are also not locked in, easy to add more funds, and easy to transfer to your beneficiary should you want to compound your earnings. A better alternative than our local banks.
J.P Morgan Multi Asset fund is now available in the Philippines and exclusive only with Inlife and given to you by SJ&P Licensed and Certified Consultants.
III. In conclusion
All investments serve their purpose. It all ends up with your financial goals. Always complement your financial goals with the right product to minimize financial stress and burden. Conduct proper due diligence and always transact with licensed individuals governed by our financial institutions. Treat each investment like medicine. If in doubt, consult your licensed Financial consultant.
You may contact us anytime via our helpdesk at (02) 8790.4111 | or schedule a meeting
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* Inflation: the rate of increase in prices over a given period. Inflation is typically a broad measure, such as the overall increase in prices or the increase in the cost of living in a country. www.imf.org
* Capital appreciation is a rise in an investment's market price. Capital appreciation is the difference between the purchase price and the selling price of an investment. If an investor buys a stock for $10 per share, for example, and the stock price rises to $12, the investor has earned $2 in capital appreciation. www.investopedia.com
King San Jose-Santos, RFP, CFC, LFA, CTA is a Universal Licensed Consultant in several financial products, including Life, healthcare, investments, and non-life financial products. He is a registered financial planner, a certified financial consultant, and a certified technical market analyst. He is an expert in corporate retirement funds, market analysis, and wealth management for individuals and corporations. He is a member of International Financial Organizations such as the Society of Technical market analyst, USA, International Financial Consultants, Canada - USA, the Financial Planner organization Philippines, and the Philippine Management organization of Philippines.
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