prepare to invest with these 8 money moves

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A lot of people are so excited to grow their money that they just jump into the game without proper planning and without laying a strong financial foundation that will ensure investing success. I know a lot of people (not excluding myself) who will immediately find a way to “invest” as soon as they have some spare money, without proper planning and due diligence because they want to grow their money right away. This is usually how people become victims of investment scams, become cash cows for the fat commissions paid to unscrupulous financial agents who take advantage of people’s limited knowledge or lose money as they are forced to sell off investments at a loss.

[bctt tweet=”It may be cliché but based on my experience, investing is like building a house. Yes, you can add a lot of nice, fancy stuff to your house but you have to ensure that you have a strong foundation to support the entire structure first. ” username=”MeKatieScarlett”] Even if a strong typhoon carries away your tiled roof and fancy accouterment, you can rebuild everything afterward because the foundation is sound.

This personally happened to me when I was just starting my investing journey. Without proper planning and research, I decided to invest in a variable universal life (VUL) insurance. Because I did not build a strong financial foundation, I was forced to stop paying the premiums and withdraw what I was promised as the money allocated for the investment portion of the VUL. Only, it turned out that most of the premiums I paid went into my agent’s commission and I was only able to claim more or less 25% of my money. An expensive mistake to learn for sure.

I believe that would-be investors should take these eights steps to prepare to invest and increase their chances of success. Ideally, you will do all of these steps and not cherry pick from them.

1. Have an Emergency Fund

Having an emergency fund is non-negotiable. As a matter of fact, even if you have no plans of investing in anything, you need to have an emergency fund – it’s just part of being a responsible adult. Do not rely on your parents or your credit card. You need to put aside money in an easily accessible account equivalent to at least 3 to 6 months of your expenses.

The thing with emergencies is that you’ll never know when it will happen, but you can be sure that when it does, it will not come alone. [bctt tweet=”You may have heard of Murphy’s Law: anything that can go wrong, will go wrong. So please, before investing your 13th-month pay, tax refund, or any bonus in the latest hot stock, use it to start an emergency fund instead.” username=”MeKatieScarlett”]

If you have no emergency fund because you already invested your money and then you encounter an emergency, you will be forced to either get into debt or withdraw your investments, even at a loss. If you have no emergency fund, you will always feel insecure and scared because you know that somewhere around the corner, an emergency is lurking. Your money has to work hard, fast and this can drive you into reckless investing behavior that might end up with you losing money (and/or friendships, reputation). It doesn’t make financial or common sense to invest if you have no money set aside for emergencies.

One great way to motivate yourself to put aside money for an emergency fund is to take advantage of a savings account that offers free life insurance. One such account is BPI Save Up, which offers insurance coverage of up to five times the account’s average daily balance.

2. Pay off your debts

Another thing that needs to be done before you invest is to pay off your consumer and other high-interest debts. In a way, paying off your debts is an investment as well. There are few investments that pay more than 8 percent interest per year but I can bet that many consumer debts and personal loans have interest rates higher than 8 percent. If you pay off your debt with 12 percent interest, it’s like making an investment with 12 percent returns. I challenge you to find legitimate, non-scammy investments with consistent returns that high.

So instead of making the bank or your local lender rich by paying high-interest rates for years, pay off your debts as soon as possible. Personally, what worked for me was the snowball method where I paid the minimum fees on all debts except the one with the lowest debt owed. I put all the extra money I had on the smallest debt so it was paid off immediately. As soon as that one is obliterated I moved on to the next smallest debt and paid that off in turn. And so on.

Also, having a lot of debts is bad for your mental health. Worrying about paying off debts all the time is not good for your psyche.


3. Be insured

This is an oft-overlooked step that needs to be addressed when preparing to invest. You have to remember that you are your best and most important asset, which means you have to take care of yourself. Make sure that you have proper health insurance coverage. If you are employed in the Philippines you are automatically a PhilHealth member. If you are an expat/OFW, you can apply for a PhilHealth membership online and register your family back in the Philippines as dependents. On top of PhilHealth, I highly suggest that you still get health insurance either through your employer or through a health insurance provider local to you.

Additionally, make sure that you have life insurance coverage to protect your family in the event that you die before making your fortune. Often, companies in the Philippines offer free life insurance coverage through a group insurance policy or through their HMO. If you are based abroad, buy a term insurance policy for the appropriate coverage when you go home to the Philippines for vacation. Do not get a VUL or a product that combines insurance and investment because I guarantee you that a big portion of your money will go to your agent’s pocket as commission.


4. Educate yourself

Before investing, educate yourself first. Learn about basic financial terms, investment vehicles, and investing opinions so you can make well-informed and wise financial decisions by the time you are ready to invest. I know that this can be frustrating at times because of the wealth of information available to us. But I believe that there are books whose messages are applicable to most people, most of the time. Below are some essential personal finance readings that you can understand even at the beginner or intermediate level. Even though I provide short summaries, you will learn a lot more from reading straight from the source. I encourage you to invest in your future by reading these works in full.


A. Your Money or Your Life by Vicki Robin and Joe Dominguez

This personal finance classic is one of the most influential books among Millennial readers. It challenges readers to assess their relationship with money and at the same time lays out a sustainable guide to financial independence. It acknowledges that yes, money is important, but there are other factors that we need to consider to have content and full lives.

The book lays out 9 steps to achieve financial independence, steps that are applicable and replicable wherever you are in the world. It addresses not only money matters but also encourages readers to think deeply about their motivations and desires. The book’s advice can be digested thus:

  • Make peace with your past (no shame, no blame);
  • Calculate your money in terms of life energy exchanged for it (I wrote a blog post where I calculated my life-energy exchange as a former call center worker here);
  • Reflecting on the fulfillment, satisfaction, and value derived from your spending;
  • Create a visual representation of income and expenses;
  • Spend less;
  • Redefine what work means to you;
  • Find your crossover point, that is, the point where your income exceeds your expenses;
  • Invest


B. The Total Money Makeover by Dave Ramsey

Dave is probably one of the biggest names in personal finance and his fame and renown are well-deserved. A lot of people have already benefitted from Dave’s simple to understand teachings. Reading The Total Money Makeover is very empowering because the steps are very explicit. Dave tells you exactly what to do: save US$ 1,000 dollars for your baby emergency fund. Pay your smallest debt first. Save the equivalent of 6 months of expenses, invest 15 percent of your annual income for retirement. After these, you can start setting aside money for your child’s college tuition and fees, pay your mortgage, and invest to build your wealth and be financially free. Although these steps can be implemented wherever you are in the world, I wrote a post specifically applying these principles in the Philippine setting to guide my readers on how achieving a total money makeover can be done in our country.


C. Millionaire Next Door: The Surprising Secrets of America’s Wealthy by Thomas J. Stanley and William D. Danko

Despite the title, this is another book whose content can be implemented anywhere in the world. Its biggest revelation is that millionaires and multimillionaires are living amongst us, and these rich people are those who you least likely to suspect of being rich. Many of them live in modest homes, drive second-hand cars, and own few non-essential stuff but have accumulated wealth for important things that matter: financial security for retirement and old age. This book will open your eyes that it’s not necessary for somebody to be highly educated or to have a very high income to become a millionaire. Anybody can be a millionaire no matter their income level so long as they don’t adopt extravagant lifestyles and by not spending tomorrow’s cash today.


D. Rich Dad, Poor Dad by Robert Kiyosaki

Yes, I did slag Robert Kiyosaki a little bit in my post on how to escape poverty for misleading people about the existence of Rich Dad but I believe his message is sound. I credit this book for giving me a glimpse into the possibility that people don’t have to labor fruitlessly for 40 years until they hit retirement age and then spend the in-between years from retirement to death in poverty.  Although this book gave me (and many others who read it, I’m sure) a negative view of what Kiyosaki calls the rat race, aka, regular, respectable 9-5 jobs, I learned a lot about investment securities and how people can tend their money to earn more money. Prior to reading Rich Dad, Poor Dad, I had no way of knowing that investments such as stocks and bonds exist seeing that nobody in my family has heard of them before.


E. The Little Book of Commonsense Investing by John Bogle

This is another classic book from one of the most famous names in finance. John Bogle was the founder of the Vanguard Groups, which pioneered low-cost index ETFs. This book thoroughly explains why people should follow a solid strategy of investing in low-cost index ETFs instead of investing in individual stocks or in actively-managed mutual funds. In case you still need to be convinced why you should choose a low-cost index ETF or index mutual fund, read this book.


F. I Will Teach You To Be Rich by Ramit Sethi 

This is an easy to understand and non-boring personal finance book from a Millennial’s point of view. Full of information and amusing references, it explains financial concepts from Ramit’s take on money as a young Indian-American person. This book is very practical and features an actionable, six-week plan to jumpstart your way to gaining control of your finances and prepare yourself to invest, at the same time explaining the different securities available in the financial market.


5. Be careful in following free financial advice

The internet is a wonderful, wonderful thing. We can basically access most of the world’s knowledge from a device the size of our hand, instantaneously. Add to that the growing number of people who generously share their knowledge and time on the web to strangers for next to nothing. Unfortunately, there is also a lot of misleading and/or outright incorrect information on the internet. So when researching, practice good judgment: cross-reference information from different sources and ask yourself whether the writer has underlying motives for saying what they are saying.


A lot of personal finance bloggers, including myself, sincerely believe that we’re giving objective and well-informed opinions. Many of us recommend products, services, and investments that we believe our readers will benefit from while getting paid through affiliates, sponsorships, free stuff, or commissions at the same time. I personally think that there’s nothing wrong with earning money this way especially if the blogger is transparent and discloses this fact. But you, as a consumer of information, should also assess if the information you read online is good for you or not. Remember that personal finance bloggers are not contractually obligated to give you personalized financial advice that will work for your specific needs. So ask questions, engage, and clarify.


6. Figure out your goals

Notwithstanding the previous advice, the internet is a great place to virtually meet like-minded people who can help you figure out what financial goals you can work towards. There are online communities for achieving financial independence, financial independence and early retirement (FIRE), fat FIRE (maximalist FIRE), lean FIRE (minimalist FIRE), optional retirement, etc. etc. You can browse the internet to get a glimpse of what these goals would entail.


Alternatively, you can also just write down what you want to achieve in the short-term, mid-term, and long-term the old fashioned way. Free up your schedule to have at least a couple of hours on a weekend to figure out and write down your goals on a piece of paper. Do you want to be able to save Php 100,000 by the end of the year to jump-start your emergency fund? Write that down. Do you want to start investing in an index mutual fund by the first day of the following month? Write that down too. After you’ve figured out your short-term financial goals, move on to your medium-term goals and then proceed to long-term goals.


The important thing is for you to think about, define, and verbalize your goal instead of it just being a hazy concept that only resides in your brain. Instead of “I want to have an emergency fund equivalent to six months expenses,” actually compute how much that amount will be. Instead of saying that you want to invest 15 percent of your annual income for retirement, multiply your annual income by .15 and write down the resulting number to be displayed in a prominent place in your home to serve as a visual representation of your goal. This way, you know how much you will actually need to save and invest instead of just guesstimating some numbers.


Remember that writing down your financial goals does not mean you can’t change them in the future. You can always change your goals as you go along and gain more investing experience and insight.


7. Open your investment accounts

Even if you don’t have money set aside for investments yet, you can already open a brokerage account to hit the ground running. You can open an online brokerage account that does not require minimum deposits like AB Capital Securities (to invest in the Philippines) and TD Ameritrade (to invest in the USA).


Why would you open a brokerage account when you don’t have money for investments yet? So that you can take advantage of the free tutorials and online seminars available to clients, including the inactive or unfunded ones. These free seminars are taught by certified professionals and are only available if you have an account with the brokerage.


Additionally, it’s easier to take the leap from non-investor to investor when you already have a brokerage account; your mind will have a narrower gap to scale. Basically, you should give yourself less excuse not to invest. Once you open a brokerage account, you have one less excuse not to invest. Do not get hung up on which online brokerage is the best. I suspect all online brokerages in the Philippines have the same developer. They all suspiciously look the same with some minor tweaks to match company branding. But in essence and functionality, they are all basically offering the same service. The exception is First Metro Sec Pro, which has the most advanced functionality and user interface among Philippine online brokerages.


8. Connect your savings and brokerage accounts online

Make saving and investing easier by enrolling your bank and investing accounts for automated services. Have your bank automatically transfer a portion of your salary to a separate account. Once the money is automatically deducted from the available cash, the easier it is to forget that it was even there in the first place.


You can also link your savings or checking account to your online brokerage account. If your bank does not offer online money transfer or cannot be linked to your online brokerage, consider switching to a different bank or a different brokerage. If your bank does not offer automation or online transfers, it means that they are not responsive to the market and you’re probably better off leaving that dinosaur.


As an OFW/expat, the ability to move money around is a crucial factor in ensuring that I actually invest. So far, I succeeded in setting up my accounts for maximum success. I have accounts with several banks, all of which are accessible through secure mobile apps. Transferring money from my banks to brokerage accounts is almost painless (here I’m talking about brokerage accounts in the Philippines).



I hope that this post will inspire you to take action now and encourage you to prepare to invest. Preparing to invest is not easy, but it’s not exactly quantum physics either. There are actual steps you can take to make investing easier for you. Again, ideally, you do all these steps without skipping anything to ensure the highest chances of success and peace of mind.


Do you have tips that you think should be included in this list? Please let me know in the comments.


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Prepare to Invest with 8 easy steps

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Katie Scarlett

is a personal finance advocate working towards achieving financial independence and early retirement (FIRE).

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11 Responses

  1. Hi Katie,
    I read your posts today and I can reallt relate to this one. I bought VUL 3 years ago (when i wanted to invest so bad and did not do enough research) and it’s too late when I checked the policy contract and it has 2.25% management fee, monthly insurance charge and policy fees, 75% surrender charge on year 3. Since then I have been wanting to cancel my VUL, what stops me is that I have already invested a large amount (3 years worth of payment) and I’m not sure what to do. Continue paying until 10th year? Cancel the policy now but with 75% surrender charge on cash value? Cancel the policy on the 4th year 0% surrender charge on cash value?

    How did you go about canceling your VUL and can I ask for your advice on my current situation?

    Thank you so much.

    1. Hi Cookie,

      Personally, I will cut my losses by canceling my VUL and consider the losses as my “tuition”. The 2.25% management fee is too just too much. There are a lot of other investments out there that can give you better results with smaller fees. I’m not sure about the surrender charge though, my old VUL didn’t have a surrender charge (or maybe I just forgot about it). How will that be calculated? If you’re worried about the surrender charge just wait until the fourth year.

      To cancel the VUL I texted my agent and told her I wanted to cancel it. We meet in a cafe, signed some papers, and then they issued me a cheque.

      Good luck!

  2. I can totally relate with Cookie’s Dilemma. Need your advice Katie, I’m on my 4th yr paying for Sunlife VUL. Haven’t checked the terms for cancellation yet, but I’m pretty sure the numbers won’t look good either. I even got Sunlife MF Index Fund early this yr, locked in for 5 yrs. After reading through your blog, I realised I wanna open up PERA with BDO. However, considering a bunch of hiccups on my first few attempts with investing, I’m not really sure how to go about moving forward. Appreciate your help!

    1. Hi Steph,

      Don’t give up on investing. I also had losses and false starts but it pays to continue learning and growing. I’m able to write and share my experiences about investing because I went through some struggles myself. Keep at it! I’m rooting for you!

  3. Hi Katie, it feels great reading your articles. I appreciate all the knowledge that you share with us. My question is, can i do 2 steps at the same time? Emergency fund and investment. I can allot small amount of my monthly income for my small investment (ETF and pagibig mp2), i also have term insurance and long term healthcare (kaiser). I only have a small salary but maybe with my plan to start small, it would pay off in the future. Thank you for all your help.

  4. Hi! I just started my VUL and I’m on my 6th month. I know VUL is expensive that’s why i was hesitant to get one. I decided to get VUL because i don’t have any idea where to get term insurance. Everyone are using the general term. I was searching online which company offers term insurance but i search none. Financial advisors online are not disclosing or suggesting available insurance company that offers term insurance.Maybe you can help me with it. I am planning to keep my VUL for 10 years because I thnk it would be a big loss for me to cancel now.

    1. Hi Sheena,

      Term insurance is actually also available from the same companies that offer VULs. They just don’t like talking about it because the agents don’t earn as much when you buy term insurance. The challenge for you is to find a financial advisor that has your interest in mind, instead of their personal earnings.

      I think it’s still not too late to cancel your VUL since you’re barely a year in. Cut your losses as early as now and buy term insurance and invest the difference in mutual funds with low annual management fees like FMETF or if you’re a conservative investor, in Pag-IBIG MP2.

      Katie Scarlett

      1. Hi!

        I just want to share regarding Sunlife VUL. I invested in one VUL more than 3 years ago. Instead of getting a plan that requires me to pay a yearly premium, I invested the minimun lumpsum amount (i.e. 250K Php) that does not have a sales load IF you don’t withdraw/redeem your investments within 5 years. At that time the NAVPS was low (so it’s a good deal), and despite the fluctuations in the past 1 year or 2, I have never experienced a paper loss. But I agree that the management fee of 2% per annum is quite high, that’s why I’m also investing in funds offered by other companies.

        Best regards,

        1. Thank you for sharing your experience JT. The management fee is only one of the reasons why I don’t recommend VUL for most people. Another is the large percentage of the premiums paid to the sales agent (financial advisor). I appreciate the fact that they make a living out of selling VULs but I’d rather have more of my money placed in a low-cost investment instead of a huge portion going to the sales agent.


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