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Personal Finance 101

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With 40 years of experience in the financial industry, Francisco J. Colayco educates Filipinos on how to obtain wealth, whether the economy is in a crisis or not.

“How much are you worth today?”

Like a teacher in a classroom, Francisco J. Colayco posed this question to insurance policy holders, VIPs, and regular investors at the 9th anniversary celebration of AXA that doubled as the launch of the insurance giant’s “Smart Investing in Today’s Market Conditions” forum series.

There were thought-provoking questions during the lecture. Colayco’s sound financial advice makes one pause, re-evaluate life, and realize that it is not how much one earns but how much one saves that counts.

[Photo of Francisco Colayco]Professor

Colayco managed a local construction and shipbuilding firm, which later became the first Filipino service contractor to build in the Middle East in the early ‘70s. In the ‘80s, he became president and CEO of the international division of First Philippine Holdings Corp.

Armed with a degree in AB Economics and a master’s in Business Administration from the Ateneo de Manila University, Colayco took it upon himself to mold financially literate people. Soon, the Colayco Foundation for Education Inc. was born.

Since 2003, the foundation has been teaching business and professional organizations, ordinary income earners, students, migrant workers and their families how to properly manage finances through seminars and forums. The founding chairman generously lends his time to speak at these gatherings. He believes having a population equipped with financial know-how helps build a nation.

Reading List, References

To impart his financial principles to a vast audience, Colayco has gone multimedia.

He has written books—Wealth Within Your Reach, Making Your Money Work, and the Pera Mo Palaguin Mo (roughly translated, it means “make your money grow”) workbook—as an ongoing guide to manage finances. He has also tapped the younger market through Money for Kids! A Parent/Teacher’s Guide to Financial Literacy for Kids.

The Internet is also crawling with Colaycoisms. “Saving for a rainy day starts with a mindset of abundance,” he writes in a blog he regularly updates.

Aside from being an author, he also hosts a show on AM radio. Listeners from all over the country phone in to consult with Colayco.

Course Description: Purpose-Driven Investing

Seminars, forums, and reading materials can only teach so much about investing and managing finances. Putting concepts into practice is a different thing altogether. And turning Filipinos into educated investors has not been easy for financial managers such as Colayco. Industry observers say Filipinos tend to be conservative and emotional when it comes to investing.

If not driven by emotion, some investors enter the market by jumping in the bandwagon. “We all save, but we follow what the other guys do,” says Colayco.

He then recalled the heyday of pyramid schemes, which attracted potential investors through the promise of big returns. According to the Securities and Exchange Commission, 70 billion pesos (US$1.44 billion)—the size of the RP mutual fund industry—was lost to these scams over the last five years.

As Colayco sees it, “It’s tragic that most of us invest because of returns. Returns are beyond our control. Risks, on the other hand, are within our control.” That’s why it is wiser for investors to focus more on managing risks, says the financial literacy advocate.

Choosing the kind of investment to get into is a very personal decision, says Colayco. He suggests: “Ordinary investors not so well versed in financial analysis can put their money in mutual funds or insurance-linked funds. For small investors, this is the greatest investment with big returns.”

Investment decisions are often made because “some ordinary investors don’t have a road map—a purpose.” While a lot of investors are driven by products and returns, Colayco says it is best to be “purpose driven.”

[Photo of Pisobilities]Course Ojective: Build Wealth

When investing and saving money, the goal should not only be to get rich. Colayco says, “In a market-driven economy, it is our obligation to save, invest, and sustain financial well-being over your lifetime. You need to plan for the day you can no longer earn actively. You need to provide for your future. It is our obligation to build wealth because we can’t share what we don’t have.”

Colayco also spoke of meeting factory workers belonging to the D and E income brackets, who have set goals to save 100,000 pesos. “I don’t know how they’ll do it. Maybe they’ll sell old appliances or an in-law,” he quips. In investing, he says, what is important is the drive and determination to save money to achieve a goal.

Basic Investment Principles

At the event, the financial guru related a few basic investment principles that seem to work for people who have played the field before.

Principle #1: Patience is a virtue. It is natural to get excited when new worlds of knowledge open up. “I believe that in accumulating wealth, slow is fast,” Colayco explains. He says this because, often, investors get antsy especially when the market hits some bumps and fluctuates.

Principle #2: Diversify. “Do not put your eggs in one basket,” so the saying goes. A powerful tool which is often taken for granted is asset allocation. Investments should be strategically thought of. “Assets should not be correlated. If one goes down, the others should not be affected,” says Colayco.

Principle #3: Think long-term. “Investing is something you’re willing to commit to for at least five years,” Colayco quotes billionaire Warren Buffet. So when looking to invest hard-earned money, Colayco advises to “only invest what you can afford to lose, not because your auntie says it’s a good investment.”

Colayco may make building personal wealth look easy. The reality is quite the contrary. He reveals, “I personally didn’t take advantage of these principles in my early working years. Like most young professionals, I was impatient and wanted to live a lifestyle I wanted right away.”

“Looking back, I probably would have 10 times more of what I have now and be much better off, had I religiously invested in small amounts and practiced these principles much earlier,” shares Colayco. He spreads these learnings to inspire people to save and be open to what could be a life of abundance.

Class Schedule: Now

Though today’s volatile market conditions have spread panic among investors, Colayco says now is the right time to take advantage of the situation and make the unstable market work in one’s favor.

“People say timing [is everything] but the time to save and invest is now. Whatever it is you want to do, you must do it now. Time is your greatest asset and is part of the capital you have to grow for your wealth.”

Course Requirements

Building personal wealth knows no boundaries. It doesn’t matter who you are or what you do. Being good at the numbers game is a bonus when it comes to financial literacy. “Our main concern with investments is not the economics, financial mathematics and all that; it is really a mindset,” asserts Colayco.

To build wealth, he adds, “We have to have our own road map whether you’re a professional, entrepreneur, employee, a born rich guy, or a born poor guy. That road can only be traversed with the fuel of money.”

Print ed: 04/09

 

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