WHAT TO DO WITH YOUR SAVINGS

Now that you have created savings, your next problem is what you are going to do with your savings.

If you are going to spend your savings in buying things that is not included in your plan, then that will not be called savings anymore. It can be categorized as expenses. This is because you did save for the future. And that future is actually future expenses. It is like you just delayed spending your money. Instead of spending your money right away you put it first into savings.

Remember in my previous post HOW TO CREATE SAVINGS, you can notice that there is also a 10% portion of your income that goes to “emergency fund”. That “emergency fund” must be responsible for your future expenses or unexpected expenses and not your savings. This is so because your saving must have an appropriate purpose in which you need to use to.   

So what are the possible things that you can do with your savings? You need to check your goal or purpose as to why in the first place you created savings. If you saved for the purpose of buying the top of the line gadget, then do so. If you saved for the college education of your children then that savings must be used for their college education. If you saved for a travel abroad then it must be spent to that. If you saved in order to buy a house and lot then it must be spent in buying a house and lot of your dream.

But if you don’t have a goal or purpose for your saving then you might be facing a problem. Why? This is because you might be tempted to spend all of your savings in order to gratify yourself. After all that is your money and you can do anything you want with that money. You might say to yourself that you sacrificed a lot in order to create that savings and now that you have that amount it is time that you enjoy your money. Though you will not violate any law by doing that, the end result is you might lose all of your savings and you will be back to zero once again. And hopefully you won’t find yourself indebted once again.

There are ways in which you can use your savings wisely, just in case you don’t have a plan or purpose for it as of the moment. Again, as I mentioned in my previous blog “How to create savings”, you can transfer some amount from your savings into your investment. In that way you can reinforce your investment. That will be a big lift most especially if your investment is doing well. Another option is to use your savings to acquire some assets that can produce passive income for you. Those assets, of course will naturally be a part of your investment.

You can also use some part of your savings into charity work. After all since you are now doing financially well, it is also a right thing and proper time to share your blessings. Why I did say that you are now doing financially well? This is because you are able to create savings that only means that you have now extra finances that are at your own disposal. Besides I strongly believe in sharing. If it is possible, do share the blessings, always, no matter how big it is or small.

There may be another option that you can think of with what you can do with your savings. Just use it wisely and avoid ending up losing all of your savings else you will have to start once again from the very beginning.     

HOW TO CREATE SAVINGS

Have you been working for a long time now?

How much did you save so far?

Or does your bank account usually run out of money even before you receive your monthly salary.

We usually set as one of our goals if not number one, is to have savings once we landed on our first job. It is a job well done if we are able to attain that goal and we can see that our savings is constantly growing.

However there are some who wish that they can start to have savings, but they always come short of finances month after month and they even find themselves in debt.

If we continue to aspire to have savings, the most probable result is we won’t have savings. However if we start to create savings, then we can have savings. Savings needs to be created not by other people but by ourselves.
You can create savings, no matter how small or big is your monthly income.
How then are you going to create savings?

The first step in creating saving is to get out of debt, just in case you are in debt right now. You have to pay all of your debt first and once you are out of debt then you are ready to create savings.

Let’s assume that you are now out of debt and you just receive your monthly income.
Divide your income into six portions.

10% of your income goes to your tithe. If you don’t believe in tithing then you have the option of giving that 10% to the needy. There are a lot of people who beg for food or you can choose to donate to the orphanage. You can also donate to foundations or home for the aged. Or you can give it as a donation in times of calamity. The choice is yours.

50% of your income goes to your monthly expenses. This monthly expenses is your budget for food, clothing, bills, transportation and the like.

10% of your income goes to emergency fund. This fund is to be used in case someone gets sick or hospitalized or you suddenly loss your job. An ideal emergency fund is equivalent to the total amount of your six month salary. So keep on funding this emergency fund until you reach that amount. Once you reach that amount you can add the succeeding 10% to your monthly expenses to make it 60%. Or if you can live extravagant with 50% of your income then you can move it to another item such as in savings or in investment.

10% of your income goes to support fund. This fund is your financial support to your family members. This is applicable if you are still single. But if you are married then this support fund can be added to your monthly expenses.

10% of your income goes to your savings. You can open a time deposit account so you won’t be easily tempted to take it from the bank. Once your savings grow, you have the option to move some of this amount to your investment.

10% of your income goes to your investment. This investment will grow and will help you sustain in the future. Your investment will be your retirement fund as well.

So with this step you can start creating savings. It doesn’t matter even if it is a small amount that you can save on a monthly basis. What is important is you started to create savings and it will naturally grow.

Investing Basics – What Are Your Investment Goals

When it comes to investing, many first time investors want to jump right in with both feet. Unfortunately, very few of those investors are successful. Investing in anything requires some degree of skill. It is important to remember that few investments are a sure thing – there is the risk of losing your money!

Before you jump right in, it is better to not only find out more about investing and how it all works, but also to determine what your goals are. What do you hope to achieve with your investments? Will you be funding a college education? Buying a home? Retiring? Before you invest a single penny, really think about what you hope to achieve with that investment. Knowing what your goal is will help you make smarter investment decisions along the way!

Too often, people invest money with dreams of becoming rich overnight. This is possible – but it is also rare. It is usually a very bad idea to start investing with hopes of becoming rich overnight. It is safer to invest your money in such a way that it will grow slowly over time, and be used for retirement or a child’s education. However, if your investment goal is to get rich quick, you should learn as much about high-yield, short term investing as you possibly can before you invest.

You should strongly consider talking to a financial planner before making any investments. Your financial planner can help you determine what type of investing you must do to reach the financial goals that you have set. He or she can give you realistic information as to what kind of returns you can expect and how long it will take to reach your specific goals.

Again, remember that investing requires more than calling a broker and telling them that you want to buy stocks or bonds. It takes a certain amount of research and knowledge about the market if you hope to invest successfully.

MY FIRST SHARE

It’s been more than a year since I started to invest in the stock market. And I should say that the return is satisfactory. My desire for investing started after I read the book “Rich Dad, Poor Dad” by Robert Kiyosaki.

At first I ask around through friends about the treasury bonds.  Getting not so much information about treasury bonds, I shifted my attention to mutual funds. I spend about five months monitoring the mutual funds through the NAVPS website. A mutual fund is a good investment scheme because it is a pooled fund and your investment is managed by the fund manager. This is good most especially if the investor don’t have much information on which share of stock they should buy.

Then through some forum in the internet, the stock market got my attention. I should say that my introduction to the stock market is timely because of the recession. The stocks are all undervalued at that time. It’s like entering into a market and all the goods that are for sale are in a bargain price. Since I am new and I’m not familiar with the real value of the shares in stock market, I did found it hard which share I should be buying. To ensure some profits I bought the company that is about to give dividends. At least through dividend I can have an outright income.

There is a feeling of delight when finally I was able to buy some shares with my initial investment of PHP25k. However, that feeling suddenly change when the value of the share went down the following day and I am losing 3% of my investment. And to make the situation worse, it continue to go down on the first two weeks since I made my first purchase. I am losing around 25% of my investment. There is a panic inside of me. What if the price continues to go down in the coming days?

As I have learned, those losses are only paper loss as long as you keep your share. But something inside of me, is asking, for how long you want to keep it. I have to sell my share right away in order to minimize my loss. But deep inside of me I want to keep my share, somehow the price can still recover, and all I have to do is to wait. In about a month after my first purchase, the share price of my stock started to recover. That’s the only time that I got relieved and I am happy because I didn’t sell my share. I did receive my “dividends” and earned more because my share continues to appreciate.

I treasure that experience of holding on while my whole self is in the panic. As Mr. Robert Kiyosaki says in his book, we need to master our emotion. Stock market sentiment is volatile; when the stock market dives, it sinks with your investments. So is your emotion. If you panic and sell your share then that is the time that you had a real loss, but if you keep your share, you will only have paper loss.

I let my wife to do the stock trading in our other purchase, so she can also experience the same thing that I had felt. And when she is in the panic mode I told her to hold on and do not sell. I shared to her everything that I had learned from Mr. Robert Kiyosakis book. And it’s good that she listens to me.

Now she’s doing most of our stock trading activity in the stock market. I just give her some advice on which share to buy and which share to sell. We also kept on buying the shares with dividends.