Income Shouldn’t End with a Salary
(CNN Philippines) — By the year 2040, 66.8% of the country’s projected population of 141.7 million will be part of the 16-64 age bracket, according to the National Statistical Coordination Board
This essentially means that the Philippines is on the cusp of what the Bangko Sentral ng Pilipinas (BSP) defines as a “demographic sweet spot” — that is, a demographic window.
The economic phenomena marks a period when a country has the most number of people available to participate in its workforce.
Financial guru Armand Bengco of the Colayco Foundation believes that Filipinos should take advantage of the economy’s improved investment climate.
“It’s a tragedy if you’re not enjoying in an improved investment climate,” he said in Money Matters, a seminar held by Entrepreneur Magazine last Tuesday (April 28). He believes that Filipinos, more than foreigners, should be the ones to benefit from the improved investment climate.
Likewise, the finance guru says that the Philippine economy is in a significantly much better state compared to more than a decade ago. “There is a lot more capital now [from 1997 through today].”
He also noted that inflation has become manageable and contained. According to the latest figures of the BSP, inflation eased during the first three months of 2015 at 2.4%, falling within the government’s target band of 2% to 4%.
More than big picture, however, Bengco stressed the importance of personal finance.
“No, get employed for life,” he said.
Citing government figures, he said that the average life span of Filipino males and females stand at 77 years and 79 years, respectively. That’s more than a decade after the retirement age of 65.
He also mentions an increased competitive atmosphere, pointing to a 21-year-old fresh graduate who is set to begin his first job.
“Those who are born today will be your competitors 21 years from now,” he said.
He added that investing is a key facet of personal financial management, defining it as a “commitment to use money, to expect to make money, based on a long term goal.”
Investing also entails an element of risk. Higher risks can get higher returns or losses: “What you will expect is not what you get.”
The case in inverse for lower risks: “What you expect is what you will get.”
He explained the investments should revolve around three words: purpose, target, and timeline.
“A good investment is not good because it is iso [popular], but because you have met your target amount within your timeline,” he said.
Bengco classifies investments in two types: buy and lend.
Buy investments are those that focus on capital growth and include stocks, mutual funds, and variable universal life insurance funds.
He said that such investments benefit from higher returns at a range of 10% to 20%. However, he warns that growth is not fixed or guaranteed, and one’s money is not insured.
On the other hand, lend investments are those that focus on gaining interest, such as bank accounts, government securities and corporate bonds.
Bengco said that by nature, such investments are fixed, guaranteed and insured. However, they have significantly lower rates of return at an estimate of 1% to 2%.
Bengco ultimately believes that Filipinos should take part in the economy: “Be present in the financial world.”
He cites a popular quote: “Let us not be afraid of tomorrow. We have seen yesterday. Let us make the most of today.”