Financial literacy, or the skill to effectively manage one’s finances through budgeting, saving, and investing, has become a challenge for most Filipinos, with a World Bank report noting that the Philippines lags behind the region at 25% compared to its peers in Singapore (59%), Myanmar (52%) and Malaysia (36%), among others. Knowledge of properly managing one’s finances has become more crucial during the pandemic, especially as Filipinos faced layoffs and dealt with health problems that led to unexpected medical costs.
These challenges gave Filipinos, particularly millennials and Generation Z, valuable money and life lessons according to Know Your Ys and Zs: A Manulife Study | Manulife Philippines. These generations have shown increased interest in investing, with 67% of millennials already into it, 77% of them already practicing investment concepts like diversification and taking advantage of the latest investment products available, while 79% are looking to further grow their money.
Responding to the needs of this demographic, Manulife Investment Management Philippines (Manulife IM Philippines), the investment arm of global insurer Manulife, has made investing more accessible through Manulife iFunds, its online platform that allows Filipinos to explore global and local investment funds that can maximize their income and capital growth potential for as little as Php 1,000.
According to Head of Wealth Solutions Paul Lu, Manulife strives to bring the company’s global investment capabilities closer to more Filipinos by collaborating across the organization and with colleagues in different geographies to identify opportunities and enhancements that will strengthen distribution potential across different channels. As a millennial himself, Lu has a unique perspective on how young Filipinos can make the most out of their investments and shares the following wisdom.
Diversify your investments with a wide variety of investment funds available
Manulife IM Philippines has a wide selection of funds geared towards capital growth. Each fund has a specific focus on a region, country, or sector, and these can be combined to create a diversified portfolio that captures the best opportunities. There are also several funds geared towards income generation. “Each fund has a specific focus on the source of income including bonds, preferred securities, and Real Estate Unit Trusts (REITs). We even have a multi-asset strategy that can serve as a one-stop shop income solution,” Lu says.
Lu noted that innovation has largely focused on giving the younger generation access to unique investment channels that can help them meet their specific goals. These have helped them in understanding the importance of diversification or the distribution of your assets to various investment channels or funds to manage risks. “Investors have a strong interest in minimizing risk through diversification. Feeder funds are becoming a popular solution to diversify into global investment opportunities. Investors also have strong interest in creating passive income streams outside of traditional deposits. Distributing funds are becoming an alternative option as they can provide regular payouts based on income generated from different investments including bonds, preferred securities, or REITs.”
“We offer one the most varied range of Unit Investment Trust Funds (UITFs) that give access to local and global investments. We hope that these UITFs can serve as important building blocks to create a diversified portfolio to achieve different investment goals,” Lu added.
Don’t be afraid to start small, what is important is that you remain consistent
It can be intimidating to start investing, as you might get overwhelmed with the initial investment needed. To make it easier for younger Filipinos to start, majority of Manulife IM Philippines’ UITFs have a low minimum investment of only Php1,000. They also have an option to top up their investment amount, depending on the extra savings they have to increase the growth potential of their investment. This can be automated via iFunds, helping customers be consistent with their investments.
“The younger generation has also formed the habit of saving money every pay period and following a monthly budget. To align with this behavior, Manulife IM Philippines has a Regular Savings Plan (RSP), our savings and investment facility that allows clients to make regular contributions to their UITFs. This provides a convenient way to invest and benefit from cost averaging,” Lu gladly announced.
Cost averaging is the practice of investing a fixed amount on a regular basis, regardless of market conditions. Aside from reinforcing the discipline of investing, this has also been shown to help minimize risk over the long term.
Take advantage of online financial platforms that can help you manage your investments
Social media and other investment products have also affected the young’s mentality by creating a culture of instant gratification and huge quick wins, and Lu believes that while this can impact near-term investor behavior, the long-term demand for UITFs should be supported by improved investor education in the country. “Filipino millennials and Gen Zs are willing to learn more about investing and this gives us the opportunity to better educate them on the important role that UITFs can serve in creating a sound financial plan. While there can be a lot of noise from social media, companies like Manulife IM Philippines have also taken advantage of online platforms to better spread financial awareness on time-tested investment concepts such as long-term investing, diversification, and cost averaging,” he explained.
Manulife IM Philippines uses these innovations as a positive way for its investment products to reach more clients, by making them more accessible through digital platforms, such as the company’s website or through third-party online platforms. “Aside from Manulife iFunds, we also partner with the top online brokerage firms in the country to offer our funds to their clients.”
Lu acknowledges that it is important for the younger generation to see where their money goes. “Having a sound financial plan starts with clear goals and an honest assessment of your personal risk appetite. It’s tempting to jump straight into the world of investing but having a plan will help you make better investment decisions and take full advantage of investment products that are right for you. This can be done on your own with the abundance of resources available at your fingertips or with a trusted financial professional who can personally guide you through the process,” Lu concluded.
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