Don’t work for money; let money work for you.
Many, if not all, wish to get to that particular point—to earn sufficiently while putting in the least amount of work. Is it possible to make money work for you? Yes.
We interviewed Mr. Rex Ma. A. Mendoza to gain some insights on how Filipinos, commonly ‘men at work,’ can move to ‘money at work.’ He is the founder and managing director of Rampver Financials, a specialized niche player in the financial services sector offering asset management advisory, mutual fund distribution, and financial planning, training, and consulting.
Before ‘money at work’
Before you can even make money grow and work for you, some amount needs to be set aside first. However, insufficiency of income or savings is a common factor why Filipinos mostly remain as ‘men at work.’
“There isn’t a salary that’s insufficient for a person who knows how to budget, and there isn’t a salary enough for a person who knows how to spend,” Mendoza said.
“If someone’s salary is insufficient, there’s a tendency for that person to take debt. When someone does that, he’s already taking from his future income stream. No matter the size of one’s salary, what’s important is to set aside a portion for savings and investments,” Mendoza pointed out in espousing the idea that it’s best to save first and then spend later.
“If you save and invest first, you’ll make do with what’s left. You’ll make the money fit. This way, you’re regulating your lifestyle based on the way you’re investing, not the way you’re earning because you prioritized saving and investing over spending.”
Once you grow the habit of saving first and spending later, you now have a surplus of money. This takes you one step closer to moving from ‘man at work’ to ‘money at work.’
The ‘money at work’ stage
With a surplus of money, provided you already have an emergency fund, you’re ready to start making your money work for you. How does this become possible?
The answer is through investing. Investing isn’t only limited to mutual funds or stocks. You can invest in real estate and businesses. The common denominator is that all these options give you the opportunity to grow your money, and once your money starts to give you regular returns enough to fund your lifestyle, your money starts working for you.
A 10 percent annual return on P50,000 is only P5,000, which it is insufficient to live. However, a 10 percent annual return on P5,000,000 is P500,000 on the first year. It increases in succeeding years due to compound interest. There are those who can live off P500,000 a year. Once that is possible, wherein the returns on your investments fund your expenses, you’ve transitioned from ‘man at work’ to ‘money at work.’
When asked when he started in investing, Mendoza went back to the ‘80s. “I only had P2,500 then, but I was able to buy PLDT stock (TEL: PS) at P11 per share. Earning a salary of P1,800 monthly, I was even able to accumulate shares as it (the stock) went down further.” Today, PLDT stock is valued at P1,967 (as of March 29, 2016), while it has distributed cash and stock dividends through the years. Another investment made by Mendoza was in Alliance Global (AGI: PS), which he bought at P1.77 and sold at P30, for a 1,595 percent return.
Aside from stocks, managed funds like mutual funds and UITFs, stocks, real estate and businesses are other investment options. The key to investing, because they are not guaranteed, is to think long term. Learning, understanding, and research will help to increase one’s ability to make good picks. “It’s not rocket science. Investing requires time. You just have to be very patient,” Mendoza said, and then, “Don’t put something in anything you don’t understand.”
This is why he encourages beginners to take baby steps. Start with small, manageable amounts and invest in mutual funds, which are actively managed by professionals. “Invest regularly and learn the ropes before you try doing it yourself.”
After ‘money at work’
With money at work, you’re not weighed down by internal and external forces, be it the pressure to earn or to support your family. You can live the life you want, and now, have more time on your hands because you’re not merely a ‘man at work.’ At this stage, you have the time, means and capacity to prosper others. This is what Rex Mendoza advises and now does.
“After the financial preparation of making money work for you, it’s time to help others prosper. If I were entirely focused on personal finances, then I shouldn’t be working because I’m already done with that stage but I still continue to work.” Mendoza said, when asked what comes after ‘money at work.’
Mendoza now actively contributes and supports communities. He often speaks to educate Filipinos here and abroad on personal finance or financial literacy, which he considers his major advocacy. Recently, Rampver Financials spent a day with the children of He Cares Foundation—feeding, story-telling and playing with the kids. Through these activities he believes they are able to make a difference. Where he used to be in his personal financial preparation stage, he now tries his best to be a blessing to others.
Bea Bongat writes about personal finance at MoneyMax.ph. MoneyMax.ph is a financial comparison website aiming to help Filipinos save money through diligent comparison of financial products.