Follow us on Spotify听
REITs (real estate investment trusts), thematic mutual funds (those focused on technology and essential retail), and regional funds are the pandemic picks of Rex听Ma.听A. Mendoza, president and chief executive officer of听Rampver Financials, a distributor of investment funds in the Philippines.听
In this B-Side episode, Mr. Mendoza shares financial advice with听大象传媒听reporter Patricia B. Mirasol, along with his thoughts on alternative asset classes such as NFTs (non-fungible tokens) and cryptocurrency.听
鈥淎 lot of people think that getting into millionaire status means needing to earn more and save more. No. The real issue here is consistency,鈥 he said. 鈥淚t鈥檚 always a balancing act … That鈥檚 why we recommend a robust portfolio that is diversified so that, through hell or high water, a part will do well, and the other part will recover when the time comes.鈥听
A note on the other hats that Mr. Mendoza wears: he is lead听independent director of Globe Telecom and Ayala Land Logistics Holdings Corporation, director听of听Seedbox听Technologies, and听the chairman of Singapore Life Philippines and The听Soldivo听Funds. He has been working in the financial services industry for 38 years.听
TAKEAWAYS听
Interest in health insurance will remain post-pandemic…听听听
Filipinos are more interested in health and life insurance products versus investment-linked offerings amid the coronavirus disease 2019 (COVID-19) pandemic,听said officials from The Philippine American Life and General Insurance Co.听听听听
This interest in insurance for health will be here to stay, Mr. Mendoza听said.听鈥淭here is a realization that this is not going to be the end of it. There鈥檚 always going to be a new variant or virus,鈥 he said. 鈥淚n the future, we have to be ready for anything… getting covered for medical insurance will always be relevant.鈥澨听
听鈥 as will interest in retail investing.听听听
According to the Department of Finance, retail investors accounted for 43.3%听of the volume traded by local investors in the January to March period 鈥 significantly higher than the 26.9% in 2020 and 18.2% in 2019.听
This interest will have grown even if the pandemic didn鈥檛 happen, Mr. Mendoza added, as financial literacy gains traction: 鈥淎 lot of people are now talking about the topic, even on TV and radio shows.鈥澨听
Investing is also more accessible. 鈥淲hen I was a lot younger, you will never see a [local] company to be the number one brokerage,鈥 Mr. Mendoza said. 鈥淣umber one would always be a multinational player with foreign funds to boot. Now it鈥檚 COL Financial.鈥听
Other platforms such as听YouTrade听and听MyTrade听are also growing leaps and bounds, he said. 鈥淩etail investing is going to be the way to go.鈥澨听
Individuals need to know which investment vehicles suit their needs.听听听
VULs, Mr. Mendoza said, have become popular because Filipinos like combos 鈥 with VULs bundling life coverage with an investment component. The other reason, he said, is the number of financial advisors selling it to people.听听听
鈥淢any financial advisors are equipped and capable, but some give advice connected to their pocket,鈥 Mr. Mendoza said. 鈥淲e need to be sure it is our best interest that is on the table.鈥澨听
Individuals need to analyze their life goals, and allocate assets based on those. Mr. Mendoza suggested an emergency fund that鈥檚 at least 10% of one鈥檚 income, with the rest of the pie spread across managed funds like bonds (20鈥25%), real estate (25鈥30%), business or mutual funds (25鈥30%), security like insurance (10%), and risky instruments like cryptocurrencies (5%).听听听听
鈥淚鈥檇 love to see the day Filipinos become natural entrepreneurs,鈥 he added.听听听
Greed will be your downfall.听
Filipinos are savvy about Ponzi-like schemes, said Mr. Mendoza, but they still fall prey to greed, which is why these schemes still succeed.听听听
听鈥淚t鈥檚 sad. It鈥檚 like a trip to the cliff, with the intent to stop right before going off the edge,鈥 Mr. Mendoza said of their intention to bail after earning money from the scam. 鈥淏ut who knows when the music will end?鈥澨听
Diversification is key.听听
A robust portfolio is the way to go if听you听find yourself with a cash windfall 鈥 as in the case of Olympic medalists.听听听
When asked by听大象传媒听what he would do with his cash prizes if he were one of the victorious Tokyo Olympics athletes, Mr. Mendoza said he would first set aside an amount for his income needs, and place the rest in growth positions.听听听
鈥淎s an athlete, you know your career is short-lived. I would compute backwards to assume the income I need,鈥 he said. 鈥淚f you need a million a year for your upkeep, and you set aside P20 million in a portfolio that earns at 5%, then your P1 million will be assured annually from today 鈥檛il the day you die.鈥澨听
What鈥檚 key, he said, is setting aside what you need for your income so if you continue working, that鈥檚 because you choose to work, and not because you have to.听听听
Recorded remotely on Aug. 5.听 Produced by听Paolo L. Lopez听and听Sam L. Marcelo.听听听听
Follow us on Spotify听
