Advance Merry Christmas everyone! Indeed, it is fast approaching and we are only few months away from the must-awaited dates in December. As an employee, it goes without saying that our bonuses, especially our much-awaited 13th month has made it more exciting while waiting for this year to end.
Every year, I always write an article about this topic because it is very close to my heart. I believe that teaching more on this matter is what every Filipino needs to hear and learn. Where did your 13th month bonus go last year? Common answer is that it has gone too quick and too soon. But now, we need to make sure that it will not happen again and we can have our money last longer and grow more. Here are few things you need to do. You can either apply it one at a time or you can combine both.
How to spend your 13th month?
Pay your credit card debts
This is on the very top of my list because I knew how urgent it needs to be settled. Your 13th month pay is a great opportunity to clear your financial obligations. When someone asked me if she can already invest even if she still has her debts, I told her that she needs to have it paid first. When we do it the other way around, it doesn’t make sense anymore while missing the whole point.
Credit card debt is the perfect opposite of any type of investment vehicles. When you leave it unpaid, it will also accumulate compound interest rates in a negative way. The more you exposed yourself in debt, the more it will drown you to the end as it continues to pile-up.
Build an Emergency Fund
Emergency fund or buffering fund is a very important thing to think about. When I started to fix my financial life, I was able to start saving by keeping the whole bonus in my bank account. Until now, I still have it and it is growing because I was able to invest it properly.
By principle, you need to set aside an amount “for the rainy days” that is good for 3-6 months whole expenses should there be emergency that will happen in the future or in case of unemployment. To some, their 13th month pay would not be enough, however, it is already a good way to start. You can continue it by topping-up an amount every month to complete it.
To learn more on how to start saving for your emergency fund, you can read this blog: What it takes to build your emergency fund?
Buy an Insurance Policy
Life insurance or several types of insurance policies are now already very cheap to get. Your 13th month bonus is a good way to start. Talk to a financial advisor today to get information and features/services you can compare with other insurance firms. Make sure that if you will get a policy, it will suit your needs and objectives and your income should be enough to cover the recurring payment to avoid missed or unpaid premiums.
There are lot of large insurance companies you can go to that will accommodate you; Sunlife, Pru Life-UK, Manu Life to name a few of them. Click here to check the insurance companies in the Philippines and their services.
Get Variable Unit Linked (VUL)
VUL is a special type of investment vehicle where it is already an insurance and investment in one. You can start getting one for as cheap as 500 pesos to open an account. This is highly recommended by insurance agents and to get one should be very easy. You can also check this thread to get ideas about VUL and the companies that are offering this program. Click here.
Open a Universal Investment Trust Fund (UITF)
This type of investment vehicle is offered by banks. I would suggest you open an account from a reputable bank that has good performing record on their UITF program. I would highly recommend this to working people and professionals that have their full-time jobs. Just like Mutual Funds, you will have your own fund manager that will take care of your funds and you will be given a platform so that you will get updates on the performance of your investments.
What you only need to worry is to top-up money to add to your funds regularly. You just need to treat it as your piggy bank as it will continue to multiply. The longer the time-frame, the better the opportunity for compound interest. You will not go wrong when you put some portion of your 13th month bonus in this investment vehicle.
Click here to compare the top performing UITF in the Philippines.
Open a Mutual Fund
Mutual fund has been very popular in our country and large number of people has been already-fully invested in this program. Mutual fund is, basically, another type of investment vehicle that is very easy to understand and learn. By investing into it, you would have stocks, real estate, bonds, and many others in one portfolio.
Good thing also about this is that once you open an account, you will have a fund manager to manage your fund and you will always get a real-time updates on a daily basis via online. Click here to compare the top performing Mutual Companies in the Philippines.
Open a stock brokerage account
If you want to buy stocks directly in the stock market, you can open a stock account for as low as 5,000 initial capital from one of the brokerage companies. I’ve heard just recently from Utrade that they offered 2,500 for an account opening. It is so amazing that is even cheaper than most of the smartphones in the malls.
By doing so, you can build your wealth by buying shares of these large and promising companies in the Philippines and take advantage on their earnings and growth potentials. You can also read this blog to start investing in the Philippine Stock Market. Click here.
Open a Personal Equity and Retirement Account (PERA)
It is similar to 401K program that is widely-known in the United States. It is a voluntary retirement savings account program that encourages individuals to save and plan for their retirement while enjoying tax incentives both from the amount contributed and the income from investments.
As of 2017, a few banks have already started offering PERA investments to investors. PERA is a product of Republic Act 9505 or the PERA Act of 2008 which was signed into law on August 22, 2008. Tax incentives became effective starting January 1, 2009. For comprehensive information about this new investment vehicle, you can click it here.
Now decide for yourself how to use your 13th month bonus…
Do you like this article? You can also read this blog: 10 THINGS ONLY KURIPOT PEOPLE WOULD UNDERSTAND.
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