Mutual Funds Philippines

Being financially free is not a Cinderella story. In which a fairy godmother will come and save the day. Nor it is a movie in which the poor and dumb always win. More than anything, its a sacrifice and depriving oneself from pleasure and gratification while enriching yourself with knowledge about investing.

I write this post to let everybody know that, this path that you have chosen… To be financially free, to be well off, or to be “self made” millionaires is a lonely path. Not many people decide to take the journey. Well, most of them would like to, but never will take the first step. That’s why a lot of people only “wish” to have a business but will never leave their 9 hour job. The thought of leaving their job is paralyzing for the average person. That is why, you might find yourself alone or if you are happily married, good for you.

Sacrifices, there’s no other way to be financially free. Not unless mama at papa are wealthy, you only need to know how to manage the business. But for all of us who were never born with a silver spoon, we go scrambling in the dark looking for signs and a way to make our risk count.

What are these sacrifices? And why did you say that this journey is lonely?

Sacrifice #1 – Social Sacrifice

I started investing after I graduated… That is, after I quit my day job. I was working while taking my engineering degree. And once I graduated, I quit my 9 hour day job to run a business of my own. And during those times, depression starts to kick in.

Friends and family will never understand, why would you deprive yourself of having a good time, not having to drink with your buddies, go bar hopping, go on a vacation or travel. It is a lonely feeling to sacrifice all these “happy experiences” for a better, more long term future “better experiences”. But don’t be sad my friend, all these sacrifices will return the favor, what difference does it make if you plan to eat later than everyone else? You get to feel hungry, that’s all. But isn’t it a good and better feeling if you eat after being so hungry for a long time? Just like Steve Jobs always said “Stay hungry, stay foolish.”

What I mean is, what’s the difference if you plan to travel in your 40′s than in your 20′s? The great wall of China will still be there probably a lot longer than you. There should be no rush to experience all the best things in life. What you want to do first is build your nest. Your investments. Your passive assets. And money is very honest. It does not care if the person holding it, is good or bad, is politician or a lottery winner, an ugly person or good looking model. It only needs to know if you know how to handle it and it will reward you with great riches using the power of compound interest.

This also includes, turning down friends. And they will brand you as KJ or antisocial. I have been branded as one. And there is nothing wrong about that. As you grow older, you will realize who are the friends that you should keep and who are the friends that only knows how to party. Can you really consider a friend just because you spent more time in the bar together than everyone else? I guess not…

Sacrifice #2 – Mental Discipline

Investments, especially in mutual funds, needs a lot of time before you can earn the profits. Most of these investments are for the long term, that is, money for retirement. Having the mental discipline to “hang on” is very hard if you can see that your money is losing because the price of a stock is declining, or there is a market recession, financial crisis or war.

Having the discipline to stay calm is a must. Not just in business, but also in investing. What can you do to alter your “panic” emotion? Think about this, can you control financial recession? Can you control war? Can you control a country’s impending default? I guess not. So why worry about it? What you should focus on is to make more money so you can take advantage of the recession. During those bad times, stocks and market prices goes down, and its the perfect time to buy more investments!

Sacrifice #3 – No Flashy Stuff, Cars, Clothes or Gadgets

How many times did I list these stuff as a no no in investing. If you don’t need a car, you don’t buy a car. Just because your childhood friend is getting a car doesn’t mean he is getting ahead in life. Cars mean nothing. Don’t let material things define you. Socrates said that needing something is only human, but a man who does not need anything is divine. Material things gives a false sense of getting ahead in life. Its a loud loud way to saying to other people that you’re getting rich. But think about it, the pride and ego of letting your neighbors know that you’re rich, is it worth it for the price of a car or a large house? Its only pride.

And a costly one. P1M to P2M spent on a house could be better put in an investment such as a dividend paying stock or mutual fund… You can easily earn P8,000 per month with that passively and that’s only 5% the return, the good thing is, its for life and compounds the longer you stay in that investment. You are building a nest that could feed you, to be free, using the money that is well spent.

Or instead of buying your dream house, why not make it into an apartment? Passive income from the rent can feed you. All these glamorous, big houses, can be bought later, if you really want to.

The only drawback that you’ll experience in this sacrifice is that people will judge you by the way you look.

The Benefits

The benefits of all this is your freedom. You’ll be able to retire early and send your kids to college even before you start having a family. If you’re young and aware of this fact, the better, as compound interest is on your side. Let the party goers party all night, let them travel abroad while you sit in your couch and read investing books. Let them experience the best things in life early, let them burn their youth and health to unnecessary things instead of building a better future. Delayed gratification will be much sweeter once you have your nests built and ready.

As you walk the path to financial freedom, you’ll lose some of your friends. But the ones that are real will remain. You’ll meet new friends that think the same as you but are richer than you and more successful than you. There is no better, humbling and more satisfying feeling than be with people who have been in the same path as you, walked the same path as you and sacrificed all the things that you did and have all the stories to tell. You know that the destination is reachable, the path is only hard.

So if you’re in this same path in life. Hang in there. The sacrifices will bear its fruit, you don’t have to rush things, all you need to do is keep on walking. Add funds to your mutual funds, to your investments, keep reading, attending investing seminars, educate yourself, deprive yourself of luxury and unnecessary things and most importantly, stay humble.

Money should not change your character, only a way to keep score.

Happy New year everyone. Happy investing.