Let’s imagine for a moment that a cool million pesos just landed on your lap. How do you do financial planning to make sure it lasts and is put to good use?
“It’s just a million pesos,” they said. “It doesn’t amount to much nowadays.”
Naysayers can say what they want, but the fact remains that a million pesos is still a million pesos, and it doesn’t come easily for a majority of people. Those claiming to be too cool for a million probably wouldn’t even know the first thing to do if it fell on their lap.
In the event you end up with that money, financial planning is the key. Know how to handle your million pesos so that you can grow it into another million or even more. Here’s how.|
1. Clear your debts.
The first thing to do is to determine exactly how much of that one million is going to be for pure investment. If it’s “extra cash” in the most absolute sense, you have the entire amount to grow.
If, however, you have debts to clear and obligations to meet that your regular income or savings cannot cover, then that should be the start. Sure, it’s going to be a big chunk out of the million bucks, but this gives you the opportunity to be completely debt-free or at least it will significantly lower your debt. That’s financial planning—doing what’s smart to complement your savings and investment plans later on because there will be no more obligations to bog you down.
Start an investment fund. There are many kinds of investment opportunities that you can look into, whether it’s a full million pesos or several hundred thousand pesos. The most basic you can do is to open a savings account, particularly a time deposit account so you don’t chip away at it.
Other investment options include mutual funds, which can be considered a newbie-friendly investment. There are different types of mutual funds, such as equity, bond and money market. You can invest in these instruments for a year or shorter like in money market funds. Bonds, meanwhile, require a longer timeframe for investing because they involve the government or publicly traded corporations.
Another smart investment you should seriously consider is insurance. New insurance models now conveniently combine insurance with investments components, such as FWD Life Insurance’s Manifest and Set for Life. Both plans give you life protection while growing your money but Manifest rewards and gives you more bonuses for investing more for longer. Set for Life, meanwhile, protects you until age 100.
3. Do business.
Nowadays, franchise opportunities are a great way to do business and make money. What you should be careful about, however, is determining what kind of franchise or business you would like to invest in. Find the right manager, train the right staff, and be on hand to meticulously take care of the operations of the business, and you should be enjoying your ROI sooner rather than later.
If you want to come up with a new brand, you can use the money to invest in tools to improve your product and finally execute your grand ideas for sellable items or services. Don’t worry too much about not having enough money to get it rolling because that’s what partners and investors are for. Build a solid business plan that you can pitch and present to interested parties, and you won’t have to walk the path of entrepreneurship alone.
There are many things you can do with one million pesos. The smartest thing to do is to make it last. Talk to a financial advisor now to discover how you can make your money work for you—whether it’s a million, more than a million or less.