According to the Philippine Statistics Authority (PSA), personal remittances sent home by Overseas Filipino Workers (OFW) reached ₱197 billion in 2022. While this cash has helped support the economy, research suggests OFW investment tips on insurance and investment planning are much needed.
The Bangko Sentral ng Pilipinas's Consumer Expectations Survey found that while investments made by OFW households increased in mid-2023, only 9% of remittances were allocated towards investments. This figure is significantly lower than the amount spent on consumer durables (18.2%), such as appliances and electronic goods.
Experts have also raised concerns over a decline in the pattern of remittance allotment to savings, from 43% in the first quarter of 2023 to 35.2% at the end of 2023.
3 Fundamental Rules to Securing Your Financial Future
Heavy reliance on remittances as a primary source of income can make households vulnerable to fluctuating foreign exchange. This dependence can also lead to inadequate planning for emergencies or retirement. Prepare yourself and your family for the unexpected with these fundamental OFW investment tips: save, invest, and insure.
Save: Grow your nest egg
Become mindful of your spending habits is the first step to building your retirement fund. Even if you're making a decent amount of money, allocating even 10% of your income towards a savings fund can help manage unforeseen economic challenges.
One helpful saving money scheme is to follow the "pay yourself first" principle, which involves setting aside money before splurging on discretionary purchases. This tactic ensures you meet your financial goals before spending on non-essential items.
However, growing your money in a regular savings account may not offer the best returns. Instead, consider harder-working financial products like unit-linked savings plans attached to expertly managed funds. These deliver higher earning potential over the long term, making them a smarter choice if you want to see your savings grow.
Invest: Lay the groundwork for your post-balikbayan era
Building wealth is vital if you dream of returning home to retire comfortably. Investing your money in high-return funds, stocks, or a potential business can ensure your nest egg grows sustainably. You may invest to save for retirement or use the funds to diversify your investment portfolio and generate income.
It's essential to keep in mind that investing money always comes with some amount of risk. How much your money grows will depend on how the market is doing. It's a good idea to seek the guidance of a professional asset manager or financial advisor to help you make astute decisions or give you investment ideas. They can help you navigate the complexities of investing and minimize your risk.
Insure: Protect your family's finances and health
Life insurance ensures the financial security you've built for your family doesn't disappear after you're gone. Its cash benefits can help ensure your loved ones are taken care of. But some policies extend protection you can use now.
For example, life insurance with an optional hospital income rider can help cover your living expenses if you cannot work due to an illness or injury. A critical illness rider can provide an additional cash benefit if you are diagnosed with illness or disease.
PSA placed the average remittance sent by overseas Filipino workers (OFWs) from April to September 2022 at ₱111,000. Setting aside 10% of this amount for monthly savings can result in an annual savings of ₱132,000. Earmarking this amount in insurance or other investment options can significantly reduce your financial stress.
Working abroad has provided you with the means to provide your family with financial stability. Strengthen their self-sufficiency further with a comprehensive financial plan. Reach out to an AIA Life Planner to help your financial planning and get more expert OFW investment tips to maximize your hard-earned money.
