Gadgets vs Mutual Funds: Where do you invest?


It's a day after the payday weekend and iPhone 5 is out in the market. Who's buying it? I can see a raise of hands! But there's one investment advocate who wants to share something to you if you are planning to buy the latest gadget in town. And especially if you just have started your career, her story is for you. Lets call her Nicole as she doesn't want to reveal her identity for now. Here's her story:

First day of September marked my 1styear in my career! Happy Anniversary to me! 

For the first twelve months of my career, I can say that I really learned a lot, met new people from all walks of life and have grown as a “young” professional. And in line with this, I had financial growth too. But I have a confession to make. I’m sure some of you especially those with my age can relate with my declaration of guilt.

Confession of a Young Professional 
As a first time employee who earns her own money, I spent a lot in clothing, shoes and accessories. Surely, what a girl wants! My sisters told me it is normal during the first six months to a year of working. It is a way of treating yourself with a pat on the back. But as time went by, I realized since I’m not in a customer-facing service, I do not need to wear different set of new clothes all the time. Being dressed in my most comfortable clothes which I already worn weeks ago and put on my jacket that suits with it. I don’t care much now since I always work in front of a laptop.

Aside from that, I spent a lot eating in fancy restaurants and watching a lot of movies which I do until now. I deserve some break but do you have any idea how many movies I get to watch a month? Three movies a month! Yes, you read it right. I have the opportunity to achieve my target emergency fund in the bank if I only cut back my movie ticket purchases. And I know, that’s not normal anymore. So I am controlling myself now. Though I spent some of my earnings on clothes, accessories etc., I’m thankful that I don’t own a single credit card which I can use for emergency purposes if I choose to have one because I bought everything on cash only. Most importantly, I don’t spend too much on gadgets.

Because of the advancement of technology, most people nowadays tend to invest in gadgets. Also, there is an army of advertisements who will rob your money if you will buy the newest gadget in the market. There is nothing wrong with it but try to understand that its value depreciates rapidly. As for me, I only have my laptop and a dual-sim touch screen phone that I really love. That’s enough for me. What I only bought from my hard-earned money was a digicam that is very convenient when travelling since it’s handy and great in taking pictures with its 16 megapixels feature.

So aside from my personal purchases, where do I put my money? I got three answers: Emergency Fund, Mutual Fund and Life Insurance (VUL). And those will definitely last long because my savings will grow because of the time value of money. Do you want to know how much my money now in my Mutual Funds account? It becomes (drumroll, please):

Investment Amount  Php10,000
Value (as of Sept. 17, 2012) Php11,570.83
          or 15.71% growth

I started investing in Mutual Funds when I just started my career same as my VUL (Insurance with Investment) plan. The amount is not as big (for now) but compared to the bank's interest rate of not more than 1% per year, I'm very happy with the growth of my savings. 
  
Moreover, I’m following the 70-20-10 rule or sometimes, 60-30-10 rule where I put my 30% of earnings in the bank, investments and insurance. And of course, my tithes.

I am thankful to have mentors and blogs like this (SYF) who always guides me in my finances as early and as young as I am now. I invested on things that will definitely appreciate through time and will not depreciate like if you only invest it in gadgets, clothing, etc. You really have to know what your needs are and your wants. And be thankful on the things you already have.

Years from now, I believe I will tell myself, “Nicole, you did the right thing! You made the right choice! No regrets at all! I’m so proud of you!”

There is still time and that time is NOW. Start saving. Start investing. Start now!

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