Asking ‘How to be you?’ is not necessarily a good strategy

Question: I have read many of your articles and attended a number of your seminars. How to be you?

perAnswer: Let me start with a quote from one of my guitar heroes.

“So, I don’t know why but some guitars are just like that. You know, like Stevie Ray Vaughan’s original No.1. It just didn’t sound like any other strat (stratocaster). And how is that possible ‘coz it’s just a strat.” -Tommy Emmanuel, regarded as one of the greatest acoustic guitarists of all time

To digress a bit, I am looking to buy a used 1952 model butterscotch blonde Fender Telecaster. But I want to buy one that not only sounds good as played by my guitar heroes, but is also a potential collector’s item. You see, there are many models to choose from. But I am confused on whether to buy one that is made in the United States, Mexico or Japan as the price differences are also wide.

And as I scoured the Internet for reviews, tips and prices, I invariably came up with just one solid piece of advice. That advice can be summed up in a saying I first heard from a great friend of mine who is an avid golfer, Butch Villamor. Butch said, “It’s the Indian, not the arrow.”

The original saying, which seems to be from 1700s or 1800s, is, “Blame the Indian, not the arrow.” And the modern version is, “A bad workman blames his tools.” Put in a positive way, the workman is more important than his tools.

And regardless of model, make and gear (like amps, effects and what nots), a guitar will only play music that will be as great as the guitarist himself. And if that guitarist uses his instrument in a unique way, his guitar or guitars will eventually become collector’s items themselves. This is the exact answer to the (rhetorical) question posed by Tommy Emmanuel at the beginning of this article.

When it comes to personal finance, there is one common tool we use and that is money. Some will have lots of it in one go while others have to earn money throughout their lifetime.

I have met a lot of people who keep millions in low interest savings accounts to the obvious delight of their bankers. I tell them to optimize the use of their money by figuring out how much cash they really need to maintain for their daily living and how much would be needed to cover emergencies. Anything in excess should be kept in investments. And if possible, they should keep savings accounts in higher interest-bearing deposits like those of some digital banks or high-yield time deposits.

Debt provides a great leverage for investing in earning assets but eats away at finances when used largely for consumption. When used as leverage, there needs to be some shrewd calculation on the returns to be potentially made from the leveraged investment to ensure that the debt can be repaid at the right time with the right amount while making a handsome profit. That is why financing an investment with 100 percent debt is hardly a good idea.

Insuring protects from the unthinkable downside risks to health, property and life. But insuring just enough is also the ideal as returns on money can be better turbo-charged with investing.

And finally, investments are great multipliers to wealth. But investments are not all about returns. On the other hand, risk, which all investments bear, is not the reward. Investments need to be tailor-fit to the needed returns to meet long-term financial goals as tempered by risk preference.

So, learn the basics in personal finance. Then create your own mark by managing your finances your own way, according to your unique and personal financial goals.

Going back to my planned guitar purchase, I have decided to just buy a midrange priced guitar, enjoy playing it loudly during my seminars, and softly while I practice at home. That way, I know that in the end, I will be leaving it as a work horse of a guitar that had served me well in my career. That alone should be enough to put some value into it and hopefully make it a collector’s item. INQSend questions via “Ask a Friend, Ask Efren” free service at www.personalfinance.ph, SMS, Viber, Twitter, LinkedIn, WhatsApp, Instagram and Facebook.

Efren Ll. Cruz is a registered financial planner and director of RFP Philippines, seasoned investment adviser, bestselling author of personal finance books in the Philippines and a Yaman coach. To consult with a Yaman coach, email [email protected]. To learn more about personal financial planning, attend the 99th RFP Program this January 2023. To inquire, e-mail [email protected] or text 09176248110.