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Intelligent Investing

Reward yourself with a gift that keeps on giving

/ 05:12 AM December 10, 2018

A lot of us will be getting our 13th month pay and even our bonuses soon. This is something that I’m sure we are all excited about. After all, we deserve to reward ourselves with something special given all the hard work we have done the past year. Using our once-a-year windfall, we can buy a new phone, a laptop, the latest designer shoes and bags and finally take our dream vacation. However, we should also include financial investments such as stocks as one of the gifts we reward ourselves with every year when we get our 13th month pay and bonuses.

Financial investments like stocks are always among the gifts I reward myself with and give to family members because they are gifts that keep on giving. We can’t wear them or brag about them in social media, but they silently and diligently work hard for us, giving us a return, either in the form of cash dividends or appreciation in value or both. This process goes on and on until one day, the returns become big enough to buy us something even more special than what we sacrificed so that we could make an investment!

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For example, during the past 11 years, my husband and I have consistently used the cash gifts our daughters get during their birthdays and Christmases to buy stocks. From this simple act, our daughters’ cash gifts have more than tripled in value, which is significantly more than what these funds would be worth if they were just deposited in a bank or used to buy toys. Hopefully, these funds will help our children live more comfortably when they start their own families someday.

At my company, we also have clients with sizeable portfolios of stocks that were slowly accumulated over time either by themselves or by their parents when they were still young. Some of these portfolios earn a few hundred thousands, even millions in cash dividends annually, which our clients withdraw to fund their day-to-day needs or their shopping sprees.

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I also remember someone who approached my husband for help because she found stock certificates of SM when she was cleaning her house. She said her father bought her those shares during SM’s initial public offering (IPO). However, she does not know what to do with them since her father already passed away. I told my husband that she should lodge her shares with a stockbroker since the value of her SM stocks have already increased by more than seven times in value since its IPO in 2005!

In evaluating different investment options, there is always the temptation to buy jewelry, designer watches and bags instead of stocks as investments. After all, there are luxury goods that keep their value. They also make us happy when we see and use them and can be used to start a tradition as we pass them on to our children, making them emotionally easier to buy compared to stocks.

However, unless you already have sizeable financial investments, it might be better to delay the purchase of luxury goods as investments. In case of an emergency requiring you to sell your luxury goods, you will most likely be forced to sell at a loss because people who are willing to buy second-hand luxury goods usually ask for a huge discount.

Although you could also lose money from financial investments like stocks, studies show that the likelihood of losses diminishes over time. Moreover, stocks are more liquid and can be sold right away, making it easier to raise funds in case of an emergency.

Investing in stocks is also now more convenient and affordable. There is currently an abundance of online stockbrokers that allow you to enter your orders online. In fact, the cash you need to fund your account can be transferred electronically to your stockbroker. Investing has also become very affordable because you can open an account for as low as P1,000.

Lack of knowledge or not knowing what stocks to buy is also no longer an excuse not to invest. There is currently an abundance of equity mutual funds, which address the needs of people who don’t have the time or the skill to pick stocks as these funds are managed by a team of professional fund managers who decide when and what stocks to buy. These funds are also now available online through your online stockbrokers and can be purchased for as little as P1,000.

Once you get your 13th month pay or bonus, I hope that you will seriously consider rewarding yourself one of the best gifts that money can buy—a financial investment in stocks, a gift that keeps on giving!

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