Published: July 4, 2017 | Updated: July 7, 2020 | Posted by: Moneymax | Personal Finance
Only a few Filipino millennials identify themselves as investors. Given the increase in the number of millennials in the workforce and the ways on how investing can help you achieve your personal goals, why are many of us still hesitant?
There are a lot of investment options in the market but millennials actively seek financial advice before parting with their money.
A lot of millennials also prefer to spend on experiences such as traveling and buying good food. Choosing to go about pursuing their passions, doing things “for the ‘gram” versus doing things for the future.
Despite all of these, you should still set aside money for investing. Why?
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Traveling now can enrich your life with experiences and as you experience this while you’re younger, there’s a higher chance of you wanting to keep this lifestyle until you’re older.
According to Julio Bucoy, the Fund Managers of the Philippines Corporate Secretary, in an interview with Manila Standard:
“Money is required to indulge in many of these experiences, and investing actually allows millennials to afford more and thus make the most out of their finances.”
You can prepare for it by setting aside a portion of your income so you can regularly update your investment accounts.
Getting some investment products such as variable unit life insurance (VUL) is a great way to build your discipline when saving money. This is because you need to regularly pay your premiums either monthly, quarterly, or bi-annually. Your account will lapse and all your hard-earned money will be gone if you miss even just one payment to your bank.
This will be hard at first but as time goes by, you’ll be surprised that you’re able to set aside money for it unlike spending everything in one go.
Read More: Investment 101: Investing for Beginners
Most financial advisors suggest for young investors to invest on high-risk investment products since they yield more returns and the potential loss of money is more bearable if you are at a life stage of having less responsibility and more disposable income to allocate.
Read More: Best Investments For Every Risk Appetite
Aside from funding your travel goals, investing will also give you backup retirement funds aside from relying on the Social Security pension that slowly increases over decades. By the time you reach retirement age, will it be enough to fund for your medical concerns and dietary requirements?
In an illustration of the benefits of investing early made by Fitz Villafuerte, there was a P59,328.05 difference between two people who had a 5-year gap on when they started investing.
Having paper assets will also look good for your financial records since there is no central Credit Bureau in the Philippines. This can be declared during financial checks in processes such as getting a loan, applying for a credit card, or applying for a tourist visa.
Read More: You CAN Afford To Invest With Php 5,000
Smaller taxes are applicable to the amount you earn from your stock investments. The rates indicated on the Bureau of Internal Revenue website are 5% for any amount lower than P100,000 and 10% for any amount in excess of P100,000.
This is a big difference from the 32% income tax imposed on your salary from your employer.
Imagine getting P15,000 from your stock investment. You could have been taxed P4,800 but instead, the capital gains tax would only amount to P750.
Investing at a younger age will allow you to eventually do more as your investments grow. Of course, it doesn’t mean that you can’t enjoy once in a while. It’ll be important to balance saving, investing, and funding in order to give yourself the life you feel you deserve.
With a goal to help Filipinos lead healthier financial lives, Moneymax regularly publishes tips and tricks on personal finance and lifestyle, among many other topics. For more finance-related news and articles, follow Moneymax on Linkedin.