I have a workmate who lives a frugal lifestyle. He lives way below his means. He only buys new clothes, shoes, and even undergarments during our national conference, which happens twice a year. According to him, this is because he saves his money in the bank. He feels his money is most secured by doing this.
I tell him that he is actually losing his money, the purchasing capacity of his money in particular, by keeping his money in a savings account. This is also true even in time deposit. He could not believe what I was saying.
Based on the Philippine Deposit Rates in our country today, most banks offer a mere 0.25% interest per year for regular savings account. The highest interest rate given is 1.375% for time deposit of your Php5M minimum with a holding period of one year.
But how does your money in bank depreciates? The answer is because of inflation. Last January 2012, the inflation rate in the Philippines was as high as 5.2%. Currently, it it at 2.5%. Yes, it is lower now compared in the past because of our growing economy, but it is still higher compared to the interest rates that your money earns in banks.
Invest in Banks
My mentor taught me that if we want to truly invest in banks, buy shares of that bank through the stock market. Personally, I have shares of the biggest banks in the country today. I have BPI (Bank of the Phil Islands), BDO (Banco de Oro) and MBT (Metrobank).
Investing in the stock market allows your money to earn at 12% to 20% per year, way higher compared to putting your money in banks, and beating inflation rates.
Banks are ideally for your emergency fund and business only. And besides, banks use your money and invest it in the stock market, wherein they earn through capital appreciation and dividends.
If you want to truly invest in banks, buy the bank.
How? Two ways.
You can directly invest in the stock market, with you choosing which stocks to buy, when to buy and when to sell. You can start doing this with as little as Php5,000 to open an account with an online stockbroker. The simplest and most effective way to learn how to do this is through signing up at Bo Sanchez' Truly Rich Club. CLICK HERE.
You can also invest in the stock market indirectly through financial institutions and insurance companies. With Insular Life, which is the first and the largest Filipino-owned life insurance company, you can start investing with as little as Php20,000 per year. Aside from growing your investment portfolio, you are growing your insurance coverage through this as well. You can request for a FREE quotation by filling up our form HERE.
Grow your wealth while preserving your fund's real value.
To understand this fully, please watch the short video below.
P.S. I hope you find this post helpful and finally ACT on starting your journey towards financial freedom through investments.
