Growing Your Money: A Guide to Investing for Your Family’s Future

Having children is one of the most powerful motivators for investing. As your family grows, your financial strategy should grow with it. The goal is simple yet profound: to ensure your money grows alongside your family and their evolving needs. Let’s explore some investment ideas for young couples and families to secure your financial future.

Why invest?

The answer lies in two unavoidable truths:

1. Inflation is as certain as your children growing up (even if we wish they’d stay little forever).
2. As your family grows, so do your financial responsibilities.

Investing for young families isn’t just about hedging against inflation; it’s about actively growing your family’s financial security. It’s a tool that gives your money the potential to outpace rising costs and provide more value over time. Whether you’re saving for your children’s education, planning family vacations, or securing your retirement, smart investing can help you achieve these goals.

But where do you start? How do you balance immediate family needs with long-term financial objectives? The key lies in understanding different investment options and how they align with your family’s unique timeline and goals.

Investment options for every family milestone

Your investment choices should align with your family’s evolving needs and timelines. Here’s a guide to help you match your family’s goals with the right investment strategies:

Short-term: Quick wins for your growing family

These are goals you aim to achieve in the next one to three years, like replenishing or adjusting your emergency fund, saving for a family vacation, or preparing for home renovations. These investment ideas for parents can help you achieve your short-term goals.

Sample investment options:

1. Time deposits: These offer better interest rates than regular savings accounts. You agree to leave your money with the bank for a fixed period, and in return, they pay you a higher interest rate than a regular savings account. It’s a safe bet for short-term goals. Metrobank online time deposit, for example, offers up to 4.5%* interest per annum. The minimum placement is just PHP 10,000 and you can choose a term between 1 to 12 months.

(Note that interest rate of 4.5% per annum may vary based on the selected term and investment amount. Subject to 20% withholding tax.)

2. Money market funds: These funds invest in short-term, low-risk securities, offering potentially higher returns than savings accounts. The Metro Money Market Fund does not have a minimum holding period. You can redeem as early as the next banking day, without any additional cost. It’s like giving your money a quick power-up before you need to use it.
3. Short-term retail treasury bonds (RTBs): Think of these as IOUs from the government where they promise to pay you back with interest over a short period (usually 1-3 years). It’s a way to lend a hand to the country while earning more than you would from a typical savings account. Think of it as patriotic saving!

Sample scenarios:

• Regular investment: Maria and Juan are saving for a family vacation next summer. They start investing PHP 10,000 monthly in a money market fund earning an average annual return of 4.5%. After one year, they could have about PHP 122,600—enough for a fantastic beach getaway with their two kids!
• One-time investment: Lisa receives a PHP 50,000 bonus at work and decides to invest it in a money market fund with a 4.5% average annual return. After one year, she could have about PHP 52,250. That’s an extra PHP 2,250 for her family’s emergency fund or to kickstart their home renovation project!

(Note that the percentage of the average annual return is a hypothetical example for illustrative purposes only. Real market returns fluctuate and actual returns may vary significantly and are not guaranteed.)

Medium-term: Building blocks for your family’s future

These are bigger goals you aim to achieve in the next three to seven years, such as saving for a down payment on a larger home, funding your children’s education, or starting a side business to supplement your family income. Wealth building for young couples often focuses on these medium-term goals.

Sample investment options:

1. Balanced funds: Think of these as the “best of both worlds” option. These funds mix stocks for growth potential and bonds for stability. The Metro Balanced Fund invests in both direct bonds and in blue-chip stocks listed in the Philippine Stock Exchange (PSE). It’s like having a diversified investment team working for you, balancing the excitement of potential high returns with the comfort of lower risk. Perfect for those who want growth but can’t stomach too much market volatility.
2. Bond funds: Imagine lending money to companies or the government, and they promise to pay you back with interest. That’s essentially what bond funds do, but on a larger scale. It’s like being a mini-bank, earning interest payments while taking on less risk than investing in stocks. Investing in high-quality bonds made affordable and easy through the Metro Max-5 Bond Fund. These are great for those who prefer steady income over rapid growth.
3. Blue chip stocks: These are the A-listers of the stock market world. Blue chip stocks are shares in large, well-established companies with a history of reliable performance. Investing in these is like betting on the star player of a sports team—they might not always score the most points, but they’re consistent performers you can count on.
4. Dividend-paying stocks: Imagine owning a piece of a company that sends you a “thank you” check regularly just for being a shareholder (dividends). These stocks can provide a steady income stream while potentially growing in value over time. Perfect for those who like the idea of getting a regular “allowance” from their investments.

Sample scenarios:

• Regular investment: Carlos and Anna are planning ahead for their daughter’s high school education. They start investing PHP 2,800 monthly in a balanced fund averaging 7% annual returns. After 5 years, they could have around PHP 200,000—a solid foundation for those upcoming school fees!
• One-time investment: Miguel inherits PHP 100,000 and decides to invest it in dividend-paying stocks yielding an average of 5% annually. After 5 years, assuming he reinvests the dividends, he could have about PHP 127,600. That’s a PHP 27,600 boost towards the down payment for a bigger home for his growing family!

(Note that the percentage of the average annual return is a hypothetical example for illustrative purposes only. Real market returns fluctuate and actual returns may vary significantly and are not guaranteed.)

Long-term: Securing your family’s legacy

These are your ultimate goals, the ones that sit farther into the future. This includes preparing for a comfortable retirement, achieving financial independence for the entire family, or generational wealth for your children. Investing when you have a family should include a strong focus on these long-term objectives.

Sample investment options:

1. Equity funds: These are pooled money from various investors to buy a diverse range of stocks. The Metro Equity Fund is a long-term investment that achieves growth by diversifying into select blue chip equities listed in the Philippine Stock Exchange (PSE). It’s like joining a treasure hunt expedition—there might be ups and downs along the way, but the potential for discovering great wealth is there, especially if you’re in it for the long haul.
2. Real estate investment trusts (REITs): Ever dreamed of being a property mogul? REITs let you invest in real estate without the headache of being a landlord. You get to own a slice of income-generating properties like malls or office buildings. It’s a way to get your foot in the real estate door, enjoy regular dividends, and potentially benefit from property value appreciation.
3. Exchange-traded funds (ETFs): ETFs give you a basket of stocks or bonds in a single package, traded on the stock exchange. They offer the diversification of mutual funds with the flexibility of stocks, often with lower fees. It’s a great way to invest in a whole market or sector without having to pick individual stocks.
4. International mutual funds: These pooled funds invest in companies across different countries and regions. It’s like having a global potluck in your investment portfolio—you get to sample a bit of everything from around the world. This diversification can help spread risk and tap into growth opportunities beyond your home market. Perfect for the investment adventurer looking to add some international flavor to their portfolio.

Sample scenarios:

• Regular investment: Sarah and David are thinking about securing their family’s future. They start investing PHP 3,000 monthly in an equity fund when their first child is born. Assuming an 8% average annual return, by the time their child turns 20, they could have over PHP 1.8 million! That’s a significant contribution to their retirement fund or their child’s college education.
• One-time investment: The Garcia family decides to invest a lump sum of PHP 150,000 in a mix of ETFs and international mutual funds when their twins are 5 years old. Assuming an average annual return of 7% and reinvesting all dividends, by the time the twins are ready for college, this could grow to about PHP 380,000. That’s a substantial boost to the family’s long-term financial security!

(Note that the percentage of the average annual return is a hypothetical example for illustrative purposes only. Real market returns fluctuate and actual returns may vary significantly and are not guaranteed.)

Getting started

A mix of these investment options, tailored to your risk tolerance and financial goals, can help you build a robust portfolio that grows with your family. The key is to start early, invest regularly, and stay committed to your long-term financial goals. Remember:

1. Set clear goals: What are your family’s priorities? A bigger home? Your children’s education? Early retirement?
2. Assess your risk tolerance: Are you okay with some ups and downs for potentially higher returns (aggressive), or do you prefer steadier, slower growth (conservative)? Maybe you want something in between (moderate)?
3. Research: Consult with investment professionals to execute a strategy that aligns with your goals and risk tolerance. They will help you diversify your investments to mitigate risk. Check out Metrobank’s wide array of investment options with professionally managed funds and access to global markets. You can also go to FirstMetroSec to access investment options including stocks, bonds, REITs, and pooled funds.
4. Diversify: Spread your investments across different asset classes to mitigate risk.
5. Start now: Even if you’re starting small, the sooner you begin, the more time your money has to grow.

Investing is about achieving your dreams and securing the future you and your family deserve. Keep learning, regularly review your progress, and don’t hesitate to seek professional advice when needed. Explore more guides about investing, credit management, and insurance at lifebanking.ph.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always do your own research and consider consulting with an investment professional before making investment decisions.