Ask Moritz: 5 Best Questions |

Last June 22, we had our first #MoneyMaxPHAnswers featuring our Country Manager, Moritz Gastl. For about an hour, Moritz answered finance-related questions via Instagram Live. Other than sharing finance tips, he also chose five (5) best questions sent by our Instagram followers. Each of them will receive PHP 1,000 worth of gift certificates.
Below are their questions and Moritz’s answers to each of them.

1. In managing your personal finances, how do you balance between seizing the moment and preparing for the future? – Navi Gustillo[1]

I would apply that to my personal finances, and how I manage my life and my expenses. First, it’s important that you’re structured with your finances. You need to create a stable base so you’ll be able to have a solid amount of income that brings you through your day.

You have your housing expenses, your normal living expenses. By the time you’ve deducted all of that you [should] still have enough money to go out with your friends, go out for a drink. Once you have that solid base covered, it’s important that you have a certain percentage that you can use for unexpected things. Unexpected can mean in a bad case—let’s say you need money for when someone gets into an accident—and can also mean on the good side, like if there’s a business opportunity. You should always have a bit of money on the side to be able to use to seize an opportunity.

It’s important that you always have control of your finances. For some of you, it might work to use a spreadsheet to write down your expenses on a monthly or weekly basis. I guess for others it may not be needed as they just have their expenses on top of their heads.

2. I am risk averse. I only feel safe if my money is in the bank. What should I do if the stock market makes me nervous? [At the same time], I really want to invest [in the] to stock market. – Leonamae Pangilinan, @jesus.mae07

I think you’re already ahead of some people because you are storing your money in the bank. At least you’re not storing it under your blanket, so I guess that’s a lot safer already.

Being risk averse is actually a positive thing. I think it is very good. Risk averse is when you are aware of the challenges you may face. For example, if your loan defaults or if you pay back your debt too late; just generally being informed about the financial decision you are making.
Ask Moritz: 5 Best Questions |
You’re saying you’re risk averse but you want to invest in the stock market. The thing with the stock market is there are different kinds of investments. It can be stocks, it can be bonds, it can be mutual funds, it can be VULs. Each one of them have different risk profiles. The stock market is considered—at least if you invest into individual stocks—a higher risk of investing as compared to an actively managed mutual fund. It may be better if you look at different investments where the risk is actually pooled together. You invest in one mutual fund, which then has many equities in their portfolio. That is one way to mitigate risk.

If you really want to invest in the stock market, I think you’re probably better off investing in companies that you know. Companies that are well-known, companies that you understand what their actual business is. In the Philippines it would be the blue chips, which are Ayala, SM, and Aboitiz. I’m not necessarily recommending to invest in them individually. I think it’s very important that you, if it’s your first time investment, that you invest in companies that you know. You need to understand how they make money and you actually believe that in the long run, these companies are gonna do better than they currently do.

3. Which is better: invest in a VUL (insurance plan with investment component) or invest in a term insurance for your protection needs and have separate investments (in any collective investment scheme) for your wealth accumulation needs? – Vincent Acosta, @vincentacosta777[2]

I should say that I’m not the biggest expert in life insurance, but this question comes up a lot so I’ve looked into it before. The plain, simple answer is that these are different products.

Term insurance is a life insurance product. It essentially gives you a certain amount of money back in case of death, for example, or in case of any major event in your life. VUL products, in wherein the premiums are usually a lot higher, is an investment product.

My advice is that if you go into a VUL bracket, you need to be aware of what you are actually getting into. Meaning, if you invest into a VUL[3], you’re passively investing in a mutual fund that is managed by the VUL company. Let’s say, in the Philippines, it would be Sun Life or Philam Life. If you’re making an investment there, you need to understand who is managing that investment. I think that’s very important.

Ask Moritz: 5 Best Questions |
Photo c/o

Number two, you need to look at what’s in the basket. For example, if you invest in a VUL and you’re indirectly investing in a mutual fund, you need to understand what this mutual fund is actually investing in. For example, if you’re investing in blue chip (the big conglomerates) it could mean that these companies are investing in small and risky financial companies. If that’s your risk profile then that could be the right thing to do, but if you’re risk averse then you would rather not go into that direction.

So, the verdict is these are two different products and [using them] depends on everyone individually. For example, you may want a term insurance and then do investments on your own, or if you want to save and don’t want to look at [investments] in a weekly basis then just do a VUL.

4. For a fresh graduate of bachelors, do you think it’s best to open a business or to apply for a job? Taking into consideration that the parents are willing to support if she or he will open a business. What would be your suggestion? – Ada Juan, @adabadabadoo[4]

I think first and foremost, once you finish school, that you think of the following questions: “What do I actually want to do?” “Where does my passion lie?” and “Where do I want to be in the next three or five years?” It’s extremely important that you know what you enjoy doing because if you apply that to your job or your business, you’ll be a lot more successful.
Ask Moritz: 5 Best Questions |
Second, when starting your own company, I think it’s not a question of “Do I want to work for a corporate environment?” It’s a question of “Do I actually have a great idea?” “Is that idea needed?” “Do I believe there’s a demand for what I want to do?” If that is the case, you should obviously go to starting a company because there’s no point in working for a corporation when you believe you could do it better. If, however, you don’t have a good idea, especially nowadays people say “Oh I wanna start something, I wanna do this” it’s better if you work in a corporation first. This way you can learn how companies operate and learn the roles in a corporate setting. Afterwards, if you decide you don’t like it, you can still move on and start your own business.

5. Is personal finance needed to be taught in school, preferably for adult students to know its importance? – Marylene Simon

Yes, absolutely. I’m not 100% familiar with the school curriculum here, but personal finance is one of the most valuable subjects you can teach in school. Simply because it helps people get to their lives. You need to know how to manage your finances, you need to know how to track your finances, you need to know how to calculate your interest rate, you need to know how to get a loan in the first place. And if you think these [topics] are not widely known here in the Philippines, then personal finance should absolutely taught in school.

Congratulations and thank you for your insightful questions @nhaviegator, @jesus.mae07, @vincentacosta777, @adabadabadoo, and @mrscheffff! We’ll email you about your prize soon.

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