How did remote work help you? Well, it allowed us to have a decent (and growing) income stream without the hassles of commute and time flexibility — more time means more income sources and moments for the things that matter most.
But as you grow your financial stash, how do you actually handle your money? You might be thinking of investing. But where do you start?
Disclaimer: This article is not investment advice. It’s better to research on your own and handle the risk you are comfortable with.
Pyramid of Financial Planning
Before you even start investing, you should understand the pyramid of financial planning. Some people jump into high-risk investments first without the proper foundation. And they end up going back from scratch when things fall south.
Yes, you can put small percentages of your income early on at higher levels of investment. I mean, we can’t really stop you if you want to invest in cryptocurrency. But make sure that it’s not significant enough that you will be broke in the process.
With that, we will explain some of these stages as we go through these investment options. So here are 9 simple investment options for starting remote workers and freelancers.
The first foundation of financial freedom is cash flow handling. Basically, it’s budgeting. Going up this pyramid will be more accessible if you follow a budgeting technique that suits you.
In any budget, there are income and expenses. Income minus expenses = savings. The more savings we can have, the more we can invest.
Yes, we can decrease our expenses and live below your means? But we can also increase our income anyway. And investing in education will lead you close to that.
The best investment you can make is honing your skills to make yourself more valuable. We can’t stress this enough.
Education doesn’t necessarily mean a degree. It can be a seminar, a book, or reliable educational platforms. By investing your money in these educational materials, you can upskill yourself and charge more from your clients in the long run.
Imagine investing P20,000 in stocks (and that’s your only money) because, generally, it can give higher returns. But when you get sick or maybe your car suddenly stops working, where will you get the cash to pay for it?
Yes, your investment will be for naught. Or worse, what if there is a market downturn? You have no choice but to withdraw at a loss.
Don’t even start investing a hefty amount of money without an emergency fund.
There are so many unforeseen emergencies. I mean, can you really predict the COVID outbreak? If you suddenly lose your job, what will happen?
So it’s time to build an emergency fund. An emergency fund is roughly 3 – 6 months of your salary. It gives you a leeway to find another source of income within your buffer months. In this way, it manages your risks. And you don’t get drowned in debt for sudden mishaps in life.
Life and Health Insurance
Is it exciting to build your wealth only to pay it all up when you get a chronic disease? Imagine saving 1,000,000 PHP only to lose it all for your hospital bills. I don’t think so.
That’s where life and health insurance comes in. It hedges your unforeseen expenses just in case something happens. Some life insurances have an investment component. But don’t rely on this for wealth accumulation because the growth is not that significant.
But this is an important component of your financial pyramid because it allows you the peace of mind to protect your income while building your wealth.
High Yielding Deposits
Now, we go to savings and low-risk investing. We all know that the banks today offer an insignificant amount of interest for our deposits. I mean, 0.5% per annum? And even time deposits with “higher rates” range from roughly 1 to 1.5%. Where can that take you?
Luckily, online banks now offer higher yields for your deposits. Gsave and ING are currently at 2.5% to 4%, depending on your deposit amount. That’s way higher than traditional banks! And they can work like normal bank accounts.
ING even has a debit card you can use for regular transactions. Accessible money with high interest rates? Yes, please!
Tonik 6% Time Deposit
Let’s put it a notch further! If you have some extra money that you won’t be needing, you can invest it in a time deposit. But should you when the interest rates are so low?
There’s a new product by Tonik Bank that offers 6% per annum for a 6-months time deposit. Tonik is a 100% online banking solution and is also insured by PDIC.
Do you need more love? Well, if you can’t get it from a significant other, you can actually earn more money with PAGIBIG MP2. (Btw, “love” translated in Filipino is “Pagibig.” Just in case you didn’t get the reference.)
PAGIBIG is a government institution that caters to housing and development for their payees. And now, they offer investment opportunities called the PAGIBIG MP2.
To date, the performance is at 5-7% per annum. And it’s by the government, so you don’t have to worry about losing your investment.
Unit Investment Trust Fund
If you want a higher return, Unit Investment Trust Funds or UITFs might be for you. UITFs are pooled investments handled by fund managers to trade your money for you.
There are varying levels of risk involved in this, depending on where the fund is invested. These are invested in money market funds, bonds, stocks, or a combination of all. You need to check the fund’s performance and your level of risk tolerance to find the funds perfect for you.
Take note, though, that past performance doesn’t guarantee future returns. So know your risks.
You can now invest through your favorite digital bank! Gcash now offers Ginvest, where you can choose unique funds to invest in. The difference between normal UITFs is that Ginvest allows you to access stocks traded outside the Philippines.
For example, they have the ATRAM Global Money Feeder Fund comprising stocks from Apple, Google, and Samsung. You can enjoy returns from foreign investments. Nifty, right?
If you want to increase your money even further, you can try out People to Business lending or P2B. P2B offers investment opportunities for as low as P1,000. You can invest in funding multi-million peso projects like buildings with an average return of 10-13% per annum. That’s a lot compared to normal investment channels in the Philippines.
Are you ready to be financially free? With the investment channels above, you have relatively lower risk, and you can climb up to the “saving & low risk investing” level.
When you complete this, you are ready to take on better investment opportunities for more wealth accumulation. Cheers!