Suze Orman: Where to put your money
During her second trip to the Philippines, Ms. Suze Orman seemed to have fallen more in love with Filipinos.
The “force in personal finance” gave straight-forward messages on finances that people might not have wanted to hear but really needed to.
Ms. Orman gave tips on money management summed up in her own words: “if you don't have money saved, spend your money just on needs. All the things you buy are really worthless.”
On debts, she said, “the greatest thing you can do for yourself is to pay your debts.”
Ms. Orman warned Filipinos not to follow the American lifestyle of incurring too much debt.
She also reminded them to be wise in the way they provide for others. “It's okay to take care of others but you also have to take care of yourself, too. Do the things for the right things not for what the culture says.”
Ms. Orman gave pieces of advice on money, particularly on money management but I would like to focus on her tips on investing.
She was very bullish on the Philippines. She said the Philippines’ status reminded her of where the US was in the early 1980s. She said the US stock market’s performance then was similar to the Philippine Stock Exchange’s performance now.
She encouraged Filipinos to invest in stock market products like equity index mutual funds, and practice investing regularly through the Dollar (Peso) Cost Averaging method (investing regular amounts periodically).
She discouraged investing in managed equity funds (mutual funds or UITF), saying index funds fare better. However, as per Philippine experience, managed equity funds have consistently outperformed the index for many years, a trend not seen in the US, she noted.
The low interest scenario amid a robust economy and stock market also presents a good opportunity to build wealth, according to Ms. Orman.
She called on Filipinos all over world to bring their money into the Philippines, and to dump their dollars in favor of Philippine pesos. She said the peso would continue to perform well because of the growing economy.
She also urged Filipinos to invest in exchange-traded funds once they are available locally.
Interest would most likely remain low, she said, so buying high-dividend stocks would be better than keeping money in interest-bearing instruments.
She advised against the customary norm on diversification. “Diversify not according to your age but what’s happening in the economy.”
Finally, she encouraged Filipinos to invest, but with wisdom. “Better to do nothing than do something you don't understand.”
“The best lesson in investing is to listen to your own heart, listen to the voice of God,” she added.
If I were to sum up what I picked up from one of the world’s most powerful woman in media, it is this: Spend less, and spend more on needs than wants. Borrow less and invest regularly and wisely. - Rappler.com
Randell Tiongson is an advocate of life and personal finance. He is a speaker, trainer, columnist and a Director of the Registered Financial Planner Institute Philippines. He will soon release his book “No Nonsense Personal Finance – A Step by Step Guide.” Visit www.randelltiongson.com