With it being the New Year and all, I thought that it’d be nice to take the time to discuss my personal methods on how to achieve my financial goals this 2018. In this post I’ll mostly be talking about the Sun Life Mutual Funds program and possibly give out some of my hopefully useful financial tips to anybody who’s interested in investing in the Philippine market.

Standard disclaimer though: I’m not a financial advisor nor have I been formally trained/certified to dole out any real advise on how to handle money. I’m just an ordinary middle class worker who wants to have a comfortable retirement fund by the time I’m fifty-five years old. Just like you (I mean, you are here reading this), I tried to do as much research as I could before investing in mutual funds.

Let’s get to it!

Tip #1: Really ask yourself, what are you saving for?

Having a goal in mind when saving money is possibly the best tip out there because there’s no better motivator than having that proverbial carrot dangling in front of you. As I’ve mentioned before, in my case I’m saving up for a fund big enough so that I would be able to afford to retire by age fifty-five should I wish to. Are you saving up for a car? A house? A condo unit? Having these end goals in mind would most likely keep you from stealing cash from your mutual fund.

Tip #2: Make sure that you have an emergency fund at the stand-by.

While it is relatively easy to withdraw your money from these investments, your money is still technically tied up and possibly may not be released until a full week after redemption. That’s why it’s important to have a separate emergency fund for well, emergencies, so that you can access your money quickly if you really need to.

Tip #3: Start early!!!

This is possibly my biggest regret about the whole investment thing. Had I known about this earlier I’d probably have focused my attention to this rather than buy a car. With these types of investments, whoever has the benefit of time would most likely end up as the winner because you would be able to ride out the sporadic ups and downs of the Philippine market.

Here are some questions that I had when I first heard about mutual funds:

What is a mutual fund anyway? Mutual funds are basically pooled funds that investors (people like you and me) give to a certified institution (like Sun Life Financial) who have trained fund managers to grow their money. From what I understand, Mutual Funds are for insurance/financial companies while UITF (Unit Investment Trust Funds) are basically the same thing, except you give your money to the bank fund managers.

There are different types of funds being offered by these institutions and you as an investor get to choose which vehicle you’d like to put your money into. In my case I have money placed in two funds from Sun Life: Equity and Index. In the Equity fund the fund managers put the pooled money into stocks in the Philippine market and in the Index fund the managers put the pooled money into the top 30 companies in the Philippines.

Is it like buying stocks? Kind of, but not really. If you had ten thousand pesos and you would want to buy San Miguel stocks, you would get 8.69 shares at 23.02USD per share. With mutual funds or UITFs, you give your ten thousand to the fund manager and they combing your money with the money of other investors and they buy stocks from the companies agreed upon in the fund’s’ portfolio. Like in the Index Fund, the fund managers can only put money in the top 30 companies in the Philippine market.

Is it like saving in a bank? No, because your funds are not liquid if they’re invested in these vehicles.

Personally I treat my investments in these vehicles like a savings account in the sense that I allocate a certain percentage of my monthly income and put it into the two funds I’ve mentioned above. Because my end goal is a retirement fund, I am comfortable in parking my money in the Sun Life Mutual funds for ten years or more.

Are there guaranteed returns on my investment? Because these are investments, there’s no real guarantee that your money would grow. Basing on the performance of the Philippine market in the past couple of decades though, chances for growth are pretty high. If you have time on your side (like a minimum of ten years), I believe that your money would flourish more in mutual funds/uitfs than keeping them in savings accounts.

I started investing in the Sun Life Prosperity Funds in February 2016 and I’ve tried to consistently top up every month. So far, the lowest percentage of growth I have is 7%. I’m perfectly fine with that because as I’ve said, I’m in it for the long haul.

A more concrete example is my money in the Index Fund. I put 25,000php in the Sun Life Index Fund in March 2016. Currently, the value of my fund is a little bit over 31,000php, which gives me a 24% growth.

Of course it’s all more complicated than that but if you’re intrigued, I highly urge you to speak to a real financial advisor to discuss your options.  I actually started on this journey from a Christmas present a couple of Christmas-es ago; someone gave my mother a Sun Life Prosperity card that contains 5,000php and my mother, bless her, gave it to me so I can start being smart with my money. Now the Sun Life Prosperity cards are my go-to presents to weddings, christenings and debuts because I think everybody deserves to at least know about these options.