Growing Your Money: A Guide to Diversifying Your Investments for Long-Term Success

You’re at the top of your game professionally, with the income to match. But with higher earnings come greater (financial) responsibilities—and even greater opportunities. Whether you’re eyeing early retirement, funding your kids’ college education, or planning that dream vacation home, it’s time to put your money to work as hard as you do. Let’s explore ideas for investing in your 40s and beyond to maximize your peak earning potential.

Why level up your investing game now?

Let’s face it: time is no longer just money—it’s your most precious commodity. The kids are growing up fast, retirement is on the horizon, and you’re starting to dream about the next chapter of your life. Your investment strategy needs to keep pace with your evolving goals and the economic landscape. Investing during peak career years is crucial for setting yourself up for long-term financial success.

Investment options for your peak earning years

Let’s explore some strategies to make your money work overtime. Here’s a guide to help you align your hard-earned money with your goals:

Short-term: Quick wins

These are objectives you want to tackle soon, like funding a child’s wedding, making a significant home improvement, or beefing that emergency fund you’ve been meaning to update.

Sample investment options:

1. Retail treasury bonds (RTBs): Think of these as lending money to the government with benefits. RTBs offer higher interest rates than traditional savings accounts. Risk appetite: Conservative.
2. Money market funds: These invest in short-term, high-quality securities, offering better returns than a savings account with the liquidity you need for short-term goals. 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 putting your money on a treadmill—always ready to run when you need it. Risk appetite: Low to Moderate.

Sample scenario:

The Santoses are planning their 25th wedding anniversary trip to Europe. They invest their bonus of PHP 500,000 in a money market fund with a 4.5% average annual return. After 2 years, they could have about PHP 545,000—enough for a luxurious second honeymoon!

(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 momentum

These are the goals that are just over the horizon, like funding your child’s college education, buying that vacation home, or setting up a robust retirement nest egg. Investing in your 50s often focuses on these medium-term goals as retirement comes into clearer view.

Sample investment options:

1. Equity-laced funds: These funds are like a turbocharged balanced fund. They have a higher allocation to stocks compared to traditional balanced funds, offering the potential for greater returns with a bit more risk. 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). Perfect for those who want to dial up the growth potential without going full throttle on equities. Risk appetite: Moderate to Aggressive.
2. Real estate investment trusts (REITs): Want to be a property tycoon without the headache of being a landlord? REITs let you invest in a diversified portfolio of income-generating real estate. It’s like collecting rent checks from multiple properties while sipping your morning coffee. Risk appetite: Moderate.
3. Dollar-denominated feeder funds: These funds invest in established international funds, giving you exposure to foreign markets. Metrobank Feeder Funds let you invest your Philippine Pesos and US dollars in the international markets through units of global funds. Note that as these funds are denominated in US dollars, fluctuations in the PHP-USD exchange rate can significantly impact your returns when converted back to pesos. If the peso strengthens against the dollar, your returns could be diminished. Risk appetite: Moderate to Aggressive.

Sample scenario:

Manny and Lisa, both 48, want to buy a beachfront property in five years. They invest their combined bonus and some savings amounting to PHP 2,000,000 in a mix of equity-laced funds and REITs. Assuming an average annual return of 9%, they could have about PHP 3,075,000 by the time they’re ready to make their beach house dreams a reality.

(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 legacy

These are your big-picture goals: a comfortable retirement, leaving a lasting legacy for your children, or perhaps starting that passion project you’ve always dreamed about. Investing during peak earning years should include a strong focus on these long-term objectives.

Sample investment options:

1. Fund of funds: These funds invest in a curated selection of other funds, offering you a highly diversified portfolio managed by professionals. The Metro Multi-Themed Equity Fund of Funds allows you to use your Philippine Pesos to invest in global markets and relevant themes that have potential to gain above market returns over the long term. It’s like having a team of expert investors working around the clock to optimize your wealth. Risk appetite: Moderate to Aggressive (depending on the fund selection).
2. First Metro Philippine Equity Exchange Traded Fund (FMETF): This is your express ticket to investing in the Philippine Stock Exchange index. It combines the diversification of a mutual fund with the trading flexibility of a stock. It’s like buying a slice of the entire Philippine stock market in one go. Risk appetite: Aggressive.
3. Global equity funds: Why limit yourself to local opportunities? These funds invest in stocks from around the world, giving you exposure to international markets and potentially higher returns. It’s like having your money work in multiple time zones, even while you sleep. Risk appetite: Aggressive.

Sample scenario:

Roberto, 52, wants to retire comfortably at 60. He invests his bonus plus some savings amounting to PHP 5,000,000 in a mix of FMETF, global equity funds, and fund of funds. Assuming an average annual return of 10% (factoring in the higher risk), he could potentially have about PHP 10,700,000 by his target retirement age. That’s a nest egg that could keep him comfortable and fund those golf trips he’s been dreaming about!

(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.)

Leveling up your investment strategy

At this stage in your career, it’s not just about growing your wealth—it’s about preserving and optimizing it. A mix of these investment options, tailored to your risk tolerance and financial goals, can help you build a robust portfolio that matches your goals. As you plan where to invest in your 40s and 50s, don’t forget:

1. Reassess your risk tolerance: You might have more capital to invest, but you also have less time to recover from major losses. Find the right balance between growth and preservation.
2. Diversify globally: Consider increasing your exposure to international markets to spread risk and tap into global growth opportunities.
3. Tax-efficient investing: Look into investment options that offer tax benefits or optimize your portfolio for tax efficiency.
4. Estate planning: Start thinking about how you want to transfer your wealth to the next generation.
5. Seek professional advice: Consider working with a financial advisor who specializes in high-net-worth individuals to optimize your investment strategy. 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.

Keep learning, stay informed about market trends, and don’t shy away from recalibrating your strategy as your goals evolve. 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.