Which is safer and better: unit investment trust funds (UITFs) or mutual funds?

What a hot, burning question this is for many of us right now.

Filipinos are very interesting. I know many who can’t sleep at the thought of not being able to withdraw their money anytime they want. On the other hand, many have only one reaction when told of a new investment prospect or business: magkano kita? (How much is the return?). Both questions show flaws in the Filipino’s financial psyche, as tales of the Multitel scam illustrate.
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Before I die, I want to see a polar bear in its real environment, play with penguins, explore Scotland, stand on the spot where Jesus likely gave his sermon on Beatitudes, experience backpacking across Europe with my only daughter and intimately know the beauty of the Philippines’ unexplored beaches, mountains and waterfalls.

You all have a sacred list of what you want to do before you hit the bucket. Have you figured out how much money you need to save so that you can retire well and do everything on that list?

Andrew Ferrer, a Fil-Am living in the US with his wife, is planning to retire in the Philippines to maximize their dollar savings. He asks:

How much income do you think we need to have per month for us to survive a pretty decent lifestyle?”

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These are White Tree Nymphs common to the Philippines (Photo taken from Agence France Presse). Look at them with their frail antennae holding up a twig that probably weighs much more than them.

We are all frail creatures hoping to elevate ourselves and our nation into a higher plane. We can only do that if we help each other out. We can’t do that if we begin calling each other names.

This blog is my space that I opened to everyone wanting and needing to know about how to improve their personal finances. Through the foresight and genius of INQUIRER.net, we have been given a forum to share information and give our little contribution to a better life for fellow Filipinos. When you get invited to someone’s personal space, you try to respect that space and use your best manners.

Isn’t it true that we can all benefit if there is open discussion – different opinions and all – without name-calling? When we start doing that, our messages, the points that we want others to understand, do not get the attention they deserve. The gems of understanding get hidden under the murk of offensive words. There is a Filipino word that cannot be accurately translated in English: sayang.

Let’s drop the name-calling. You are free to post your opinion but we don’t have to force them on others. From now on, posts that do not bring us closer to this goal will not be approved.

Now that’s clear, let’s all get on with the business of learning more, empowering ourselves to improve our personal finances and sharing our knowledge.

It was amusing and a bit surreal to see all – or at least most – of the country’s fund managers all in one room.

As I went inside the Taipan Chinese restaurant at the Tower Club (where the food is always impeccably prepared by the way), I could sense a lot of tension and saw very little socializing. Could be because fund managers are competitive. They have to be, being in an industry where your entire performance can be summarized by three figures and a percentage sign!

But last night, members of the Investment Capital Association of the Philippines (ICAP) kept friendly competition at bay to award the best mutual funds in 2006. (I was about to say sheath their claws, but that’s overly dramatic hehe).
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I had fun taking this wealth test by the late Larry Waschka (author of The Complete Idiot’s Guide to Getting Rich). I’m sure it’s not a “scientific” test but it could give you a picture of where you are right now and what adjustments you need to take.

It could tell you if you have what it takes to be a millionaire and if you already are, to be a gazillionaire

Here ya go. Tweaked it a bit to give a hint of Filipino flavor.
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Emerson Abraham has a stable job, his own house, a lifestyle that some would call spartan, and no credit card debts. He knows that saving money is important but he and his wife set aside some funds when there’s extra and spend some when they feel they should. In his own words, “it was not a priority.”

Then his children got sick with something that their health cards did not cover. His stay-at-home wife, worn-out with taking care of the children, also got sick. Then he got sick. Emerson’s savings were depleted and things were pretty rough for some time.

The family has since recovered. Emerson now places great importance in saving part of his income regularly. There’s a rule of thumb that says people should set aside 10% of their income regularly. Let’s put this rule under the microscope.

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We stayed home this year instead of going to our favorite spot in Boracay so that we don’t burst the seams of our financial plan :-p. My husband and I had overspent quite a bit early this year when we decided to – ehem – celebrate our 14th wedding anniversary with a renewal of vows.

Our “second wedding” was limited to family and very good friends. It was simple enough that we were able to customize invitations and placecards and save a lot of money that way, as well as have loads of fun being the control freak persons that we are. Still, it was not in our budget, but hey, I’m not complaining and neither is the hubby. We still have that warm, fuzzy feeling whenever we think about it, that tells us it was worth it.

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Business papers burp with all sorts of economic indicators almost every day. Inflation, trade reports, Treasury bill rates, gross international reserves – those are just some of the staples within the business section.

Take inflation, for example. Reports last Monday showed that annual inflation slumped to a 20-year low of 2.2 percent in March. If you’re watching personal finance closely, this is probably one of the most important figures you have to follow because impacts savings, investments and personal expenditures.

I remember struggling to make this story more understandable to ordinary Filipinos. Rushing back to the newsroom after interviews at the NEDA one day, I started talking to the taxi driver who deftly wove in and out of traffic as he drove me back to the office. Oh, he had a clear grasp of what it was, it didn’t take me more than a minute to explain that it was all about the rise in consumer prices. He said something like: “Di ko naman yan nararamdaman eh. Dati sa isandaang piso ang dami mo nang mabibili, ngayon ilang galunggong na lang yan.” (I don’t feel that. Before, P100 can already buy a lot, but now that’s just a few pieces of fish.)

Photo credit: AFP

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An Inquirer.net reader wrote a stinging open letter to Banco De Oro Credit Cards:

To Whom It May Concern,

It has come to my attention that recently delivered credit cards to your clients will be declined due to your “Systems Upgrade” activities which will last until April 16, 2007. I have already suffered major inconveniences and embarrassment today and I sympathize with others who will surely suffer the same inconvenience. Clients who do not know about this will put gas in their cars, check into hotels and line up at the groceries and supermarkets in preparation for the Holy Week break. If they are not informed they will surely experience stress and embarrassment because of this and this will not look good on a company that takes pride in “finding ways.” I was told that I was informed about it but for the record, I have not received any email, text, email or any written notification whatsoever. I paid for my bill in full in preparation for the Holy Week break only to find out that I would not be able to use my available credit until April 16, 2007 long after the Holy Week break which I have painstakingly saved for. Numerous cardholders will find themselves in similar or probably even worse predicaments when they have their transactions declined while out of town. I now feel lucky that this happened to me while in Manila. It frightens me to think about what would have happened if the card was declined in a hotel after a few days stay. Now, that would be very stressful, traumatic and embarrassing. Please find it in your corporate heart of hearts to “find ways” in informing your clients about this.

Sincerely yours,
BOBBY BERNAS

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If there’s anything I have learned from writing about personal finance, it is this: pay debt as soon as possible. Do not be held hostage to it. It can cripple you and your family because as J. Reuben Clark says:

Interest never sleeps. It never gets sick. It works on Sundays and never goes on holidays.

But what of those who are seriously trying to clean up their act? Which one should come first? Pay debt or save money? Do both at the same time? What is the best strategy?

Our Money Myth Buster today is: pay debt first.

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