Some people have gotten tired of investing their money because of past failures and wrong decisions. Discouraged by losses brought about by the global financial crises in the past, many have opt to be too “conservative” that they just leave all their money in savings and time deposit accounts. Or worst, they just keep them under their pillows.
Taking risks again after losing thousands of bucks from investing in unknown businesses or schemes will not be very easy. Many of them admit that they have learned their lesson well and therefore decided not to invest again. However, this is a wrong approach of learning from life’s failures.
Here are three proper ways to learn and move on from all these bad experiences.
Educate Yourself Before (Re-)Investing
Several years ago, I did not know anything about paper assets. I did not know anything much about pooled funds any other type of investment. Without even doing my research on variable universal life insurance, I invested* my first few savings in it. Not knowing that if I fail to pay the premium on time, the entire amount that I put in will be forfeited. I will no longer be covered with the insurance that I paid for.
And so the time came when I could no longer pay the monthly premium. The rest is history. All my savings were gone because of an uneducated decision to buy an expensive life insurance. I should have analyzed first what type of insurance suited my needs and capacity back then.
But don’t get me wrong. I’m not against life insurance. In fact, I would even advice you get a life insurance to protect your family and your assets. Get a variable unit-linked (VUL) insurance in case you have not invested on any paper assets yet, or a term life insurance if you are already investing in the stock market or mutual funds for the long-term. Or whatever really suits you.
Make sure that you purchase your life insurance only from the longest-running, best-performing, and reputable insurance companies in the country. No unknown and untrained insurance brokers please.
Never go to a war without studying your strategies. Know thyself and know thy enemy.
Are you planning to invest for your future, your children’s education, or to build your first home? Set your long-term investment goals clearly.
*Life insurance serves as protection to your assets. It is not classified as an investment but it provides cash to pay for debts and liabilities, taxes, final expenses and other fees without selling assets or borrowing money in case of an individual’s sudden death. It also helps provide for an organized distribution of assets to heirs based on beneficiary designation.
Build Your Emergency Fund
While educating yourself about investment, take time to build your emergency fund.
Did you remember the last time you lost your money in an investment vehicle you did not even understand in the first place? I’m assuming that the risks of investing in that instrument were not clearly explained to you by your agent. Or if he did, most probably you were not paying attention to the details or did not have a clue on what he was saying.You probably were just interested in harvesting the promised high returns.
You know better this time. Keep an emergency fund of at least six months’ worth of your monthly expenses.
In the event that your next investment falls apart again, you have your emergency fund to back you up. But don’t stop saving for your emergency fund even when you already reached that goal.
You can keep that emergency fund in two bank accounts from two different reputable banks. Put half of that in a regular savings account, and the other half on a short-term time deposit account.
Choose The Right Investment Vehicle
Once you have a firm understanding of the different financial instruments available around you, make a choice on whether you will go for the low-risk paper assets such as government/private bonds, treasury bills, money market, etc. or medium-risk investments such as blue-chip stocks, UITF’s, and mutual funds.
Scatter at least 20% of your monthly income on these investment vehicles with most of it in blue chip stocks. Using the cost-averaging method for your long-term investment, your money will grow over time regardless if the economy is down or taking off. Use the power of compounded interest.
For people who experienced family feuds, breakups, depression, or suicidal tendencies, I advise that you do not dip your feet in high-risk investments such as speculative/active stock trading or forex trading. But if you insist, invest only an amount in excess of your funds that you can afford to lose.
Time To Move On
Once you followed those three major steps, it’s best that you focus on the long-term goals that you have set from the beginning.
It is true that it is hard to forget the painful past (and you shouldn’t). But instead of looking at these as obstacles, make use of it as your motivation to learn more and become stronger to achieve those goals.
To receive more life lessons and tips to motivate you, subscribe for FREE to BurnGutierrez.Com
Join the OFW UsapangPiso Facebook Group to learn how to plan your finances the right way and how to grow your money in various financial instruments and investment vehicles such as stocks, mutual funds, UITF’s, bonds, money market, real estate, and others.
Rock your way to abundance!
P.S. 1. Bro. Bo Sanchez has appointed me as a coach for our young and new investors at the TrulyRichClub social site. It’s a fun, learning family with the purpose of “helping good people become rich”. I’m inviting you to join the TrulyRichClub too and email me at firstname.lastname@example.org if you have any questions. Click here to join!
P.S. 2. My co-author/illustrator Des Feliciano and I have just launched our “The Adventures of Pepot Kuripot and Dora Gastadora” comic book! It’s arguably the first and only personal finance-influenced comic book in the Philippines. Order your copy now from our website http://pepotanddora.com and have it delivered right at your doorstep. Or you can grab your copy yourself at The Pantry at 07 in Makati City and ilovemilktea in Las Pinas City. Now available also in Australia, Saudi Arabia, and the USA! Email email@example.com for more details.
P.S. 3. If you are based abroad or just outside of Metro Manila and has been itching to learn more on how to jumpstart your business dreams, join me and my friend, serial entrepreneur Ginger Arboleda, as we take you through a series 2-hour webinars (for 11 Saturdays) that will help you focus on the technical skills and specific things that you have always wanted to know about in order to grow your business. We have come up with 10 sessions with 11 expert lecturers (with 1 FREE session if you enroll in the full program) that will make you a stronger and better entrepreneur. Register here to join the Enter Entrepreneurship Webinar Program now!
P.S. 4. Are you an OFW who’s been looking for a investment placement where your money could grow higher than your time deposit accounts? Are you outside of Metro Manila and would like to start investing in mutual funds but have no personal advisors to help you out? Click here so I can help you open a mutual fund account NOW! .
P.S. 2. I’m inviting you to attend our entrep webinar called “Negosyo 101 for OFW’s: A Crash Course on Entrepreneurship and Business Development“ on September 28, 2013 at 3PM (Philippine time) with our ever reliable personal finance blogging celebrity Fitz Villafuerte. This online seminar is cool and fits (Fitz!) those who are based abroad and either wanting to grab business ideas or just expand/grow their existing ventures. You can get more details of the webinar by clicking here.