Creating Wealth in our Lifetime

Wealth is the abundance of valuable material possessions or resources. This is a state almost everyone dreams to be in but only a few understand how to create. A number of those we see as wealthy may have been born into it, and they are lucky. What we need to understand, however, is that those who are wealthy now–and whose wealth did not come from inheritance or from lottery–decided to set aside a portion of the money that was coming in, at some point in the past, and made it work for them. They may have expanded a business or ventured to new ones. They invested and re-invested resources over time until wealth was created.

This is where financial literacy comes in. Knowing what to do with your money and resources and how to make these work for you to grow wealth may be an abstract concept for many Filipinos. Finding a suitable investment to meet one’s requirements and risk appetite may be difficult. Investment professionals will be able to help you sift through what is available in the market to find what is best suited for you, either as a newbie in investment or a seasoned investor. The trust industry advocates for financial literacy, financial inclusion, savings and availability of investments to all Filipinos. The members of the Trust Officers Association of the Philippines (TOAP) ensure that they are updated with current practices, regulations and trends to enable them to inform the clients of the investment outlets available in the market and to give them the best possible investment recommendations based on their needs and risk appetite. The TOAP, the umbrella organization of all trust entities, has likewise taken steps to professionalize the trust industry and is working closely with the Bangko Sentral ng Pilipinas (BSP) so that the industry is in synch with BSP’s programs for financial inclusion, financial literacy and investor safety.

As advocates of financial inclusion, TOAP reaches out to the public by holding seminars and sponsoring activities that will introduce investing to all. It introduces not just the concepts of investing, but also the practical applications of such concepts, how these are useful in real life and that investing is an important first step to wealth creation.

Investing is a choice and a habit at the same time. One can always say that they do not have funds to invest and that they cannot afford this practice as only the wealthy may have this luxury. This is actually the other way around. Wealth is created by starting to invest. It is a habit and a commitment.

The current pandemic highlights the need to have investments especially in times of unforeseen events. We now hear that the disparity between the poor and the rich is widening amid the pandemic. This is because some people have meticulously created wealth over the years, and it is now working for them.

There is no shortage to the investment outlets in the market that will cater to all, whatever the level of knowledge and experience in investing one has. Trust entities cater to all investors–the wealthy, those who seek to consolidate their wealth, those who are in the wealth creation phase, and those who are absolute beginners in investing.

Trust entities have services that create customized portfolio for clients who prefer this service. The BSP recently issued Circular No. 1109 which decreased the minimum requirement for an investment management account from P1 million to only P100,000, allowing more Filipinos to start investing with a customized portfolio. Those who have less investible funds may invest in the Unit Investment Trust Funds (UITFs) which have standard investment plans for each fund type. Clients of the UITF, with the help of certified UITF sales personnel, will just have to undergo the client suitability assessment for the trust entity to determine the best UITF type for them. Another worthwhile investment geared toward retirement is the Personal Equity and Retirement Account (PERA). Last year, BSP launched the digital PERA, a long-term personal investment account with tax benefits.

Moving forward, a number of member institutions have gone digital to let investors access investments online, with more options to open their accounts. With digital innovations becoming available and all sectors consciously moving toward financial inclusion, wealth creation is becoming more attainable to more Filipinos.

Creating wealth in our lifetime is a choice. It starts with you, and it starts today.