Lessons from Finance Superstar Suze Orman
I am a Money Magnet! We are Money Magnets!
Personal Finance superstar Suze Orman was in the Philippines for a brief road show, encouraging Filipinos to believe in the Philippines, to start saving, and to finally launch that journey to financial freedom. Here are some of the key points that she imparted during her stay.
On Marriage and Finance
- Having a Prenuptial agreement (prenup) is good.
- Marry someone who you can freely discuss money issues with.
On Debt
- Debt is financial bondage.
- You will never achieve financial freedom if you have debt.
- Pay off all your debt first before you start saving.
- The most common financial sin is Credit Card debt.
On Personal Debt and Psychology
- Incurring credit card debt is more often than not associated with a lack of self-esteem.
- You need to figure out why you keep on buying and incurring debt in order to solve your debt problem.
- Fix the emotional issue to solve your debt problem.
On Salaries and Savings
- The more you earn the more you spend.
- Only 2 out of 10 households in the Philippines have savings.
- It's not that people don't want to save, they just don't know how to.
- People also like to "wear their money." People buy expensive things that they don't really NEED (things that we WANT) to show others how much we're making.
- Suze Orman recommends an emergency fund of at least 8 months worth of expenses.
On Retirement
- If you are in your 20s, 30s, or 40s, consider investing for retirement for the LONG-TERM. When we talk of retirement, there shouldn't be any SHORT-TERM investments since the purpose of the investment is for when you're already in your 60s.
On Generating Cash Flow for Savings
- If you only have enough money for you basic needs, in order for you to be able to save, you need to find ways how you can REDUCE YOUR EXPENSES or how you can GENERATE MORE INCOME.
- Think about the future. If you only have enough today, you'll need much more in the future when prices go up and everything else is more expensive. PLAN and ACT on how you can generate more income for the future.
On Insurance
- Insurances are NOT INVESTMENTS. Don't think of insurances as investments. It would be wise to separate the two.
- Only individuals who have dependents need insurance. If you're single and you don't have dependents - your parents are self-supporting, you don't have children to raise, you don't need insurance.
Where to Invest?
- Invest in Mutual Funds / Trust Funds (UITFs).
- Specifically, Suze Orman recommends investing in PSEi Index Funds. These are funds that follow the composition/performance of the Philippine Stock Exchange Index.
- According to her, index funds outperform managed funds over time.
- Invest in the Philippines, believe in our country.
Here's a list of PSEi Index Funds being offered in the Philippines:
List is based on our initial research. If you know any other PSE Index funds being offered in the Philippines please share them in the comments section or contact us directly.
The BPI Philippine Equity Index Fund is a new UITF launched by BPI right after they invited Suze Orman to visit the country.
Watch Suze Orman at ANC's HeadStart here:
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