Don’t Put Your Retirement Fund in the Bank

Let me share with you one of my favorite topics in Bro. Bo Sanchez’s book, “8 Secrets of theTruly Rich”. It inspires me to learn more about Financial Education since I have worked with banks before but acquired no knowledge about how money works. According to my financial mentor Bro. Bo, when it comes to money, there are really only three kinds of people in this world: (1) Spender, (2) Saver, and (3) Investor. And sadly, only one of these three will win in the money game. 

Which one are you?

The Story of Three Salesmen
James, Jim and John were salesmen. After closing a huge deal, their company gave each of them a commission check worth P100,00. But they used their money in very different ways and plans. Because James was a Spender, Jim was a Saver, and John was an Investor.

James was the Spender. When he received his check and encashed it, he invited all his friends and went straight to a very high-end restaurant. He bought himself an Ipad, fashionable clothes and designer shoes. He even took a holiday trip to Boracay. After a few days, James had nothing left from the P100,000 commission but with lots of credit card debts.

Jim was the Saver. He went straight to the bank with his P100,000 commission check. He approached bank teller and asked, “How much interest will you give me?” The bank teller suggested putting it at a time deposit account with five percent interest a year. After thirty-six years, he was 65 years old. When he got his retirement package at age 60, he only spent it in five years and was now totally broke.


Banks are good for our emergency funds and for business purposes but not for our retirement funds

He visited the bank, approached the manager and asked, “How much my money now after investing it for 36 long years?” The manager said, “Sir, you now have P400,000.” Jim was shocked but the manager insisted that their records show no mistake.

John was the Investor and he goes straight to where the bank puts their money. In other words, he bypasses the bank. After researching about mutual funds, he visited the best mutual funds company in the Philippines. He said, “Miss, I’ve never done this before but I want to invest in mutual funds. How much interest will you give me?”

The lady said, “Unlike banks, we don’t guarantee our interest rates. They depend on the ups and downs of the market.”

“Isn’t that scary?” John asked.

“Sir, It is—if you plan to invest for only a short period of time. But if you plan to invest long term and ‘forget’ about it, it won’t be scary. Like for the past years, we’ve given our investors an average of nine percent to 12 percent growth.”

“Yes, I want to invest for long term but I don’t have millions.” The lady laughed. “Sir, the minimum is P5,000.” So John invested his P100,000.

After thirty-six years, at the age of 65, John planned to get his investment back. So he walked into the same mutual fund company and asked the same lady, “How did my investment go the past 36 years?”

She said, “To be honest, there were bad years and good years. There were years your money earned only seven percent but there were great years when your money earned 20 percent and more. In the past 36 years, you averaged 12 percent a year.”

“Is that good?” John asked.

“According to my records,” she smiled, “your original P100,000 has now grown to P6.4 million. Now you tell me if that is good.”

“That’s very good!” John was very happy about his investment.

I have learned that in the Philippines, less than one percent of Filipinos invest in mutual funds, while 99 percent invest in banks. But in America today, 70 percent already invest in mutual funds, while 30 percent invest in banks only.

Banks are good for our emergency funds and for business purposes but not for our retirement funds. They are using our money and making the most interest out of it.

Considering the fact that they are investing P100,000 in other investment vehicles like mutual funds which will give them P6.4 million after 36 years. But they only give us P400,000 and that makes them P6 million richer because of our own money.

Your next question may be like this, “How can I invest in mutual funds?” You can visit, http://www.pifa.com.ph/ for a complete listing of mutual funds in the country. Or contact me:

Jacqui Noynay (Licensed Mutual Funds Representative)
Mobile: 0933-2014898
Email: jacquinoynay@gmail.com

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