EconomyForex

[B-SIDE Podcast] Money Talks: Graduating to investing from saving

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Follow us on Spotify BusinessWorld B-Side

Money Talks is a series on personal finance sponsored by Metropolitan Bank & Trust Co. (Metrobank).

Money is on the mind of many people, particularly amid the coronavirus disease 2019 (COVID-19) pandemic. Debt is a top concern, with 70% of Filipinos citing it as a challenge in financial management, according to a recent study titled “State of Banking and Financial Wellness” by US-headquartered research firm Forrester commissioned by fintech company Backbase.

The same study found that more than half (58%) Filipinos identified building savings (58%) and planning for retirement (52%) among their top concerns.

In this B-Side episode, Chorie R. Chan, vice president and head of the trust retail products division at Metrobank, explains how the pandemic changed how we think about money and saving.

TAKEAWAYS

The basics remain the same but we need to have better returns, more diversity.

“I have been in banking for over 27 years now and what the pandemic taught me is this: the basic tenets of saving, budgeting, and investing are still there. Am I saving enough? Am I spending too much? How should I budget my finances?” Ms. Chan said.

“No matter how you think about it, no matter if you compute for unforeseen expenses, if you still have an extra amount that you couldn’t possibly need, then we talk about investing. That’s still a universal truth that has not changed over the years, pandemic or not. A universal truth that has probably evolved over the years and more so in the pandemic, would be the need to have better returns, and the need for diversity in what you can possibly invest in.”

Amid uncertainty, we must be able to assess our own financial wellness.

“Before we seemed to have that confidence in stability. Stability of where we are if we have businesses, if we are employed. We kind of were able to project that ‘I’m still going to have this income stream in the next couple of years. But lo and behold, the pandemic happened, and none of us are as certain as before that this could persist in the years or months to come,” Ms. Chan said.

“This has become too pressing for all of us that we might want to consider expanding or deepening that amount of savings that we might need anytime soon to beyond the six-month requirement for expenses.”

Saving is not investing.

“I don’t equate saving with investing. A lot of us get confused that when we have extra from our inflows minus the outflow, we automatically consider that as an investable fund,” Ms. Chan said.

“Liquidity. The ability for anyone to convert savings into cash. Liquidity means that you are able to access your money in whatever form it is in and be able to use it for an unforeseen expense. So if there is any doubt in your mind that if say, a family member would need help or your car need maintenance in a few months, then there is an amount that you should always keep liquid, so you can spend for that unforeseen need.”

‘There’s a whole wide world of ways to skin the cat.’

At the end of the day, what you need to do about saving and investing will have to depend on what you need and what you hope to accomplish. “There’s a whole wide world of ways to skin the cat. A whole wide world that you are able to discuss how and why and in what manner you can construct your portfolio. At the end of it all, it will have to be about your investment objectives, your tolerance for risk, and your requirement for liquidity,” Ms. Chan said.

“The critical point that an investor has to be mindful about is the access to these financial investments, securities, or assets is so free that you can actually approach any financial institution that you’re comfortable dealing with and be led to talk to specialists within that institution. Ask them, feel free to explore, talk to people who are in touch with financial markets so they can sit down with you. Advice is free, I’m sure. And they can profile your suitability and your preferences and match these with your needs and objectives.”

Recorded remotely Nov. 4. Interview by Santiago J. Arnaiz, BusinessWorld contributor and chief operating officer of health startup Day3 Innovations. Research by Bjorn Biel “JB” M. Beltran. Produced by Paolo L. Lopez and Sam L. Marcelo.

Follow us on Spotify BusinessWorld B-Side

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