10/04/2021
Different financial vehicles provide different solutions.
SAVINGS vs INVESTMENT vs INSURANCE ๐คจ
These three words ang usual na maririnig mo or mababasa mo when you go to a bank, financial institution, or sa adulting social media feed mo. Some would offer you products na 3-in-1 dawโbut what really are the differences among these 3? Totoo ba yung mga 3-in-1 na yun? You decide for yourself after this. ๐
๐ฐ SAVINGS - In Filipino, IPON. This is the money you set aside in a piggy bank or a bank savings account with the usual goal of accumulation. Sa totoo, kaya mo gusto mag-ipon para LIQUID ka when money is needed.
Liquidity refers to how easy it is for you to convert something into cash. Sa piggy bank, buksan mo lang, may cash ka na. Sa savings account, pumunta ka lang sa working ATM, may cash ka na. Pero sa stocks, sa VUL, sa mutual funds... It will take days bago ka makapagwithdraw. At minsan, kahit willing ka sa 3-5 days na turnaround time, baka mas mababa pala yung value ng pera mo so syempre ayaw mo naman ilabas yun, diba?
๐ INVESTMENTS - Ito yung financial products na ang goal ay magpatubo ng pera.
โBakit hindi ko nalang ilagay lahat ng cash ko sa savings?โ Well, malulugi ka kasi. Yung 1,000 bill mo sa piggy bank mo nung 2010, andyan pa rin, pero mas konti nalang mabibili niyan nowadays due to INFLATION. But had you invested that 1,000 nung 2010, tumubo na yan ngayon (in index funds for example, nasa 3,200 level lang nung Feb 2010 vs today na nasa 7,000 level na).
There are SO MANY investment products out there, pero bago ka pumasok sa kahit anong investment, check if your RISK PROFILE and TIMELINE match that of the productโs. Baka kailangan mo iwithdraw yung pera in 3 years, pero sa MP2 ka nag-invest (eh minimum of 5 years doon). O kaya naman, mahina pala ang puso mo pagdating sa possible losses, tapos lahat ng investment money mo e pinasok mo sa cryptocurrency (na sobrang high-risk, speculative, at fluctuating).
Wag din maniniwala sa โguaranteed returnsโ na sobrang taas. Pag sinabing sureball 30% return in 1 month, wag ka maniwala. 99% of the time, scam yan. ๐
For such high returns, possible naman yan pero bawal mo sabihing guaranteed dahil may concept tayo ng RISK & REWARD. The higher the potential reward, the higher the risk (of losing).
โ๏ธ INSURANCE - Hindi ka yayaman sa insurance. If gusto mong magpatubo ng pera, kuha ka ng investment. ๐
The primary purpose of insurance is to ensure na ma-aavoid ang financial loss when certain incidents happen.
Sa car insurance, you would only have to pay a small participating fee pag nabangga ka at magpapaayos ka sa casa. If wala kang car insurance, you would be spending hundreds of thousands to have your vehicle fixed. Ano lang ba yung 20k per year na binabayaran mo versus that, diba?
Now, apply that to your own health and life. If nagkasakit ka, how many hundreds of thousands would you have to spend? Research about the cost of cancer treatment, of ICU hospitalization, of surgeries... Youโll be shocked at how utterly unprepared you are if wala ka pang health insurance.
Pagdating naman sa life insurance, sino ba talaga ang may kailangang kumuha nun? If you are a breadwinner, or if you have dependents, then YOU DO.
Say youโre earning 500K per year, and your family is enjoying the current lifestyle you have, thanks to your income. Now, if youโre gone tomorrow, saan nila kukunin ang income na yun? Yes, other family members may still be working, but the quality of lifestyle they have will surely deteriorate kung wala yung income mo.
Had you had a life insurance, say 2.5M worth of coverage, technically parang binigyan mo sila ng income mo worth of 5 years of work. Their lifestyle is covered for the next 5 years, or probably even more, assuming na they keep on spending the usual or na they invest part of the money.
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After reading about these 3, think about what you already have now. Yung โhybridโ products na possibly meron ka or iniisip mong kuhanin, what do you think? Do they really satisfy all these 3, or may primary purpose sila that you have to focus on?
Personally, I think it would be best to have all these 3 separately. You may go get those hybrid products, pero i-assign mo kung ano ba siya among those 3. Do not ever rely on just 1 product to accomplish these 3. Mahirap yun besh. ๐
๐ปโโ๏ธ Talo ka at the end.
Match your needs to the right instrument. ๐ฏ
[Quote from Randell Tiongson]
