OVERCOME FINANCIAL HURDLES. Investing, like running, can be for everyone.
The world of investments may seem too complicated or intimidating for most of us.
But the truth is, investing, just like running, is for everyone. Whether your financial goals are short-term or long-term, achieving them boils down to preparation, discipline, and commitment.
No one knows this better than Marvin Fausto, a seasoned fund manager who has recently finished a number of full marathons including the world’s biggest ones in New York and Tokyo, the latter being the only Asian marathon among the world’s majors. With over three decades of experience in the investment management industry, Marvin has figuratively ran hundreds of miles in his life marathon – starting out as an analyst and eventually becoming the Chief Investment Officer of the country’s largest bank.
Taking a page from his own book, Marvin shares the following advice to all Filipino investors who aspire to reach their financial goals:
WINNING. Marvin Fausto at the New York Marathon. Photo courtesy of COL Financial
Going into a marathon, runners like Marvin often set a personal goal in terms of distance and time to finish. By the same token, investors must identify their time horizon and primary motive for investing. This may revolve around building a retirement fund for the next 20 years or preparing for the educational needs of their children in the future. Some goals may even be short-term or just for general wealth accumulation, but what is important is to identify your goals from the onset as they will determine the direction of your investment journey.
Know your limits
In the same manner of choosing which category to join in a running event, it is key to know your level of endurance and to have a complete understanding of your physical condition. Similarly, before putting money in any investment, it is important to determine your ability to tolerate risks and what kind of investor you are.
In general, investors are categorized among the following risk profiles:
Conservative – those who value the preservation of their capital and are not willing to stomach significant price changes of investment securities;
Moderate – those who are comfortable with taking a modest amount of risk to gain better returns;
Aggressive – those who want to maximize returns by accepting a higher risk level in their portfolio.
Knowing your investor profile will help you decide which investments are suitable for you.
Investing, like running, needs personal preparation and discipline. In order to attain your desired running shape, one has to put in a lot of hard work by having the proper training and diet. The same level of commitment is needed to stick to an investment plan set on your future financial goals.
It is important to have a good understanding of your investments. Your investment plan, whether short-term or long-term, must guide you to properly allocate your resources according to your objective.
Find the right fit
Choosing the right pair of shoes is critical in achieving that proper running condition. After doing all the preparation by identifying both your investment objectives and risk tolerance, the next step is determining the appropriate financial securities you should invest in.
At present, the three main asset classes in the market are Money Market instruments, Fixed-Income securities or bonds, and Equities or Stocks. Choosing the right investment instrument and having the proper knowledge are keys to success. The sooner you start investing, the less money you will need to achieve your financial goals.
Marvin asserts that investing is indeed for everybody, but it entails time and attention. According to him, the challenge really lies not only in choosing the right investment, but in selecting the specific security under each asset class that best fits your financial objectives and investment profile. However, not everyone has the luxury of time and experience to conduct a thorough analysis of each investment security.
Financial products like mutual funds address this problem.
Mutual funds provide you the benefit of diversification and professional management. It can immediately give you exposure in various securities of a particular asset class screened by an expert to minimize risk and maximize returns.
These funds work by pooling the money of multiple investors and entrusting it to a fund manager who will actively monitor and manage it. With a minimum initial capital of P5,000, you can already have a diversified portfolio of quality assets.
Reaching the finish line
If running enables you to be healthier while gaining the physical strength to live longer, investing helps you to achieve financial independence and the ability to be self-sustaining beyond retirement.
In all forms of investing, the journey to your financial success may be challenging but you must always keep running towards the finish line where your investment goals are waiting to be fulfilled. Marvin highlights that in all aspects, “commitment and discipline are keys to achieving your goals”. To this day, he continues to apply this philosophy in his life goals.
As a result, he was able to retire early and embark on his next race in life – to use his expertise honed over the last three decades to help every Filipino have better lives through investing. – Rappler.com
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