Question: I’m an OFW in Singapore, 24 years old and have started to become serious about my finances. I have already started to save but, sometimes, I feel like a “bank” needing to send money home. I am now torn between helping my family and preparing for my future. I already built my emergency fund, so what’s next for me?—M.B. Pangilinan, via e-mail
Answer: Let me first get this off my chest and say mabuhay ka M.B. Pangilinan! Being an overseas Filipino worker is hard and yet you endure all of it. In my eyes, you guys are truly modern-day heroes and I mean it.
Let’s see how we can sort out your sticky situation. It is very noble of you to help your family despite your young age. Our society is unique when it comes to giving family support, we have burdened our children into providing for us, and yet it is also very noble of us that we do not abandon kin who need our help.
I don’t know you personally nor do I claim I understand your family’s situation. What I can say is that you look for some sort of balance—a middle ground of some sort. While we can argue that it is not your obligation to provide for other members of your family, I don’t think that ignoring their plea for help will let you sleep well at night. I suggest you have a nice talk with your folks, respectfully tell them about your willingness to help, and your situation, goals and aspirations.
Look at your cash flow, determine how much money you can send home and still have enough left for you to prepare for the future and start investing. Only you can discern that part of your income that you can send home. By continuing to send big amounts of money home, not much will be left for you to prepare your future with. I believe that too much dependence on your income will prevent other members of your family from being productive.
An honest-to-goodness talk with the folks, done in a very respectful and loving manner, will keep the harmony in the family. As to your other concern, what’s next for you after establishing your emergency funds? That’s the fun part, brother—you can slowly build your portfolio and make your money work for you. Every dollar you set aside and invest is a step closer to achieving your dreams. Start by identifying your goals, what is it that you want? Do you see yourself retiring earlier than customary retirement ages? Do you envision coming home in a few years to settle down and put up a business? Knowing your goals is the first step to investing. Your financial objectives should determine every action you will take. What is your risk tolerance? Would you consider investing aggressively or do you see yourself as a conservative player? In investing, yields are determined by the risks you take—the higher the potential yields are, the higher the risk, and vice versa.
It would be good to allocate a regular amount, part for savings and part for investing. You may want to look at pooled funds. If you plan to invest in Singapore, there are a plethora of choices there. Just be careful and investigate the funds you are investing in. Many of them are termed “exotic funds” and might not be consistent with your goals and risk preferences. Should you decide to invest in the Philippines (and I pray you do), you can also look at pooled funds here such as mutual funds or Unit Investment Trust Funds (UITF) being offered by many local banks. They are investment funds professionally managed. You can opt for conservative, moderate or aggressive risk profiles.
Pooled funds are good for starter investors since it allows one to invest in small amounts and access professional investment management services.
While you are still trying to decide, it is prudent that you start planning and execute those plans. (“The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty,” says Proverbs 21:5.)
In case you will be home for the holidays, why don’t you send me a message so we can sit down and discuss further or better yet, join us for the Happy OFW Christmas, a blow-out gathering for OFWs on Dec. 16, 2011, from 1 p.m. to 6 p.m. at the Philamlife Auditorium, U.N. Avenue, Manila. This is a project with the Blas F. Ople Policy Center, an advocacy I am part of.
(Randell Tiongson is an advocate of life and personal finance and a director of the Registered Financial Planner Institute. For questions, write to randell@randelltiongson.com.)