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

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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 COVID-19 pandemic. A recent study titled “State of Banking and Financial Wellness” by US-headquartered research firm Forrester, commissioned by fintech company Backbase, found that more than half (58%) of Filipinos identified building savings (58%) and planning for retirement (52%) among their concerns in personal finance. Debt is a top concern, with 70% of Filipinos citing it as a challenge in financial management.

In this B-Side episode, Chorie Chan, first vice-president and head of the Financial Markets – Investment Distribution Division for Countryside at Metrobank, talks money with BusinessWorld, and how the pandemic has changed how we view and think about it.

TAKEAWAYS

What has changed, and what hasn’t

“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.”

We must be able to assess our own financial wellness

People need to reassess how they view money in an environment of uncertainty.

“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.”

Explore various ways to manage portfolio

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 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.