Money Matters: When Money Sense Does Matter

pooled fund
Today marks the first-year anniversary of my initial (and tentative) foray into investing. That sounds rather serious and portentous (even for me), but since this is something of a personal milestone, I guess it makes sense for me to mark it with a post.

Taking my first dip

The first time I ever got truly serious about money was when I decided to leave regular employment so I could turn to freelancing for good. That was when I learned to grapple with things like “cash flow,” “receivables”, expenditures, etc. It was oddly unsettling, because it made me realize that from then on, I would be reaping the fruits/feeling the pinch of every decision/mistake I make.

A few years down the line, I began to realize keenly that if I did not change the way I was managing my finances, I was going to end up in a worse place than I had imagined. So, after considering my options and reading tons of blog posts, books, how-to guides, etc., I decided that I would have to start investing for my future (retirement) as early as I could manage. Soon. Today. In fact, yesterday (or last month, last year, 10 years ago) would have been a better choice.

UITF, mutual funds, or direct stock investment?

After paring down my options to three — mutual funds, unit investment trust funds (UITFs), or direct stock purchases — I decided to go with UITF. Why? Because, with my topsy-turvy schedule and my relative lack of knowledge about investing, this was the most convenient and affordable choice. With UITFs, I could just go the bank of my choice, open a trust account, and let the fund manager do the worrying/investing for me. It also helped that it only required a minimum amount of P10,000.

BDO investment

After comparing the UITF products of various banks, I opted to go with Banco de Oro (BDO) for the following reasons:

  1. Its fund managers have a good track record (in terms of growth and solid earnings).
  2. There are BDO branches practically everywhere, and that’s not even counting the SM malls (in some SM stores, there are even 2 or 3 BDO branches within the mall complex); plus they have longer banking hours and some are open during weekends.
  3. Their service fees (Trust fee) are lower than anybody else’s — 1% (BDO) vs. 1.5% (BPI) or 2% (Metrobank) may not seem like much, but if you are investing for the long term, that seemingly small difference is going to eat substantially into your earnings.
  4. It is easy to check the status of your investment if you have an online account.

Taking the plunge

For my first foray, I selected BDO Equity. If you are a neophyte, people would normally advise you to avoid high-risk products like equities, but since I was in this for the long haul and it was only for a relatively small amount (note also that I did a lot of research before I made my decision), I decided to push through with it.

piggy bank

A few days later, I also enrolled my BDO savings account in BDO’s Easy Investment Plan (EIP), which is basically an installment plan for small-time investors who are willing to put in a specific amount on a regular basis (monthly or bi-monthly) until the minimum amount of P10,000 is reached (which constitutes 1 unit). This time I hedged a bit and chose BDO Balanced Fund, which carries a slightly lower risk. (Note that in investing, high risk = high returns; low risk = low returns; it is just a matter of deciding how much risk you are willing to tolerate.)

A year later

Twelve months have now passed since I took the plunge, and I am glad (and mightily relieved) to report that my precipitate decision has paid off. As of the latest update, my first UITF (equity) has now grown by 15.52%, and my Balanced Fund UITF has inched up by 10.48%. It may not seem that much, but to me that small amount of profit represents some sort of a validation that I have done something worthwhile with my earnings and that I have actually taken a proactive step to make my future just a little bit more secure.

As for regrets, I guess my only regret is that it took me such a long time to take that first step and that nobody has told me about this earlier. As such, I am hoping that this post will also encourage my fellow freelancers to take stock of their situation and finally turn their own plans into reality (if they haven’t already).


5 thoughts on “Money Matters: When Money Sense Does Matter

  1. Good luck to you both. It actually gets easier once you have started. You should try their Easy Investment Plan (it’s also applicable for Balanced Fund) para hindi masyadong mabigat. The best thing about EIP is that as soon as you have placed your first installment, it already starts earning (as long as the fund is performing well), even if you haven’t even completed the P10,000 minimum yet. 🙂


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