Teaching the discipline of saving and investing
Now in its 200th year, Citi has been serving clients worldwide and continues to keep its strong presence in the largest cities across the globe. Clients benefit from its global footprint in more than 1,000 cities in 160 countries and jurisdictions, help
You’ve been te l l ing yourself that it’s time to start saving and investing your money. Your parents, your friends, your boss and your colleagues have been saying the same thing.
So you try to put aside part of your income every month. But after you’ve paid the bills and gone shopping there doesn’t seem to be much left for your savings account. Or else there’s some thing you decide you absolutely cannot live without: a new smartphone or tablet you must buy now. Anyway you can start saving money next month, right?
Before you know it, months or years have passed and you have a grand total of zero in savings.
“It would seem that for every reason to save, there are reasons to spend,” says Ben Thomas Panares, president of Citicorp Financial Services & Insurance Brokerage Philippines. CFSI is the brokerage arm for consumer clients of Citi in the Philippines. “In fact it should be the other way round: For every reason to spend, there are reasons to save.”
The real issue is not whether one should save money, but how to acquire the discipline to do this. For anyone who is serious about saving money, Citibank offers the Regular Savings Plan.
“The Regular Savings Plan (RSP) has many advantages for a person who is working and trying to save money,” Panares explains. “First and foremost, it enables you to save on a regular basis. We could do an automatic debit from your checking account to your RSP every month. The amount could be as low as P5,000 or $100. This way you know that every month, you’re putting money aside.”
Now that you have savings, the next step
is to figure out how to make your money grow. You could let your money sit in your account, slowly—very, very slowly—earning interest, or you could invest your money. You keep hearing about the advantages of investment funds and you want to get in on the action, but how do you begin? Is there an Investments 101 course for newbies?
The Regular Savings Plan takes care of that by educating you, the client, on how to invest funds. For as low as P5,000 or $100 a month, you can get started on your investments.
“The RSP works for anyone who’s just starting in investments, or someone who’s already into investments and wants to not have to think about having to invest every month,” says Tiffy Floresca, AVP for Citigold Marketing. “For the beginners, we’re setting up the infrastructure for them and helping them acquire the discipline. For those with experience in investing, we make it easier by using the cost averaging strategy.”
You know from the financial news that funds go up and down. The market changes constantly. Through the RSP, the client safely navigates these ups and downs by investing small pre-set amounts every month.
“You’re investing small amounts, say P5,000 per month,” says Panares. “This way you’re minimizing the risk, and historically you get a better return. We always say, ‘Make volatility your friend.’ In a volatile environment, you can buy investment products at a lower average cost per unit. This way you get to buy more units.
“In the event the market goes down—or
even in a financial meltdown such as the 2008 crisis—the important thing is not to panic,” Panares notes. When the value of their investments went down, many investors panicked and got out of the market. In doing so, they sold their investment holdings for less than the prices at which they purchased them.
“But if they had held on to their investments and stayed in the market, their holdings would’ve recovered and increased in value,” Panares adds. “It’s sensible to stay in and keep on buying. In a depressed market environment, you’re buying at a lower cost. So when the market goes back up, you’ve accumulated more shares.”
The cost-averaging strategy employed by the RSP diminishes the risk of emotional investing while teaching the client the discipline of saving and investing.
What’s a sensible amount to put aside as savings every month? “The challenge of saving in the Philippines, an emerging market, is that the discretionary income is not the same as our neighbors,” Panares notes. “But we’re getting there. In my opinion, one should set aside 10 percent.” And what is a sensible amount to invest each month? “The rule of thumb, assuming you want to grow your funds instead of simply preserving your wealth, is to deduct your age from 100. That’s the percentage that should be in equities,” says Panares. “But there is no one-size-fits-all rule. Our officers go through your financial profile and based on that, they determine what your asset allocation should be.”
When you sign up for an RSP, a Citigold relationship manager will interview you to create your personal investment
profile. Based on information such as your liquid net worth, age, your investment objectives, risk attitude and investment knowledge, they will determine the type of investor you are. Are you the safety-oriented investor who should be limited to investments with negligible or no price movements, which can be sold at short notice or promise to repay your investment within a year? Or are you a very aggressive investor who can tolerate greater uncertainty for the promise of bigger returns?
“We have to consider questions like, What are you saving for? Retirement? Education? To buy a house? The investment portfolio we design for you depends on your objective,” Panares explains. “The key is to have a conversation with our financial officers, and look at your asset allocation.
“Objectives and markets change,” he adds. “Your investment portfolio should not be static; it should be reviewed once a year. It’s good to have a trigger point — a percentage by which your investment goes up or down—where you assess your situation. When you hit that trigger point ask yourself, ‘Does it still make sense to be where I am now?’”
In order to take care of your investments, your wealth management team has to know you very well. Citibank has maintained its position as the leading wealth manager in the region by building strong relationships with their clients.
Now in its 200th year, Citi has been serving clients worldwide and continues to keep its strong presence in
the largest cities across the globe. Clients benefit from its global footprint in more than 1,000 cities in 160 countries and jurisdictions, helping individuals save and invest as well as protect their funds with trust and confidence. The Philippines is one of the first markets in Asia where Citi established its presence, and is the largest foreign bank in the country in terms of customers, assets, revenues and domestic branches.
In the early 1990s, Citibank pioneered wealth management in the Philippines with Citigold and since then the bank has enjoyed the trust of generations of clients. “We know them in terms of their financial goals, risk appetite,
and time horizon, and we work with them to create a financial plan,” Floresca says.
“We don’t do product pushing. We look at the products we have and match them with our clients,” Floresca adds. “On that level we have to know them very well. That’s what sets us apart from other wealth management services.” Citigold holds regular market briefings to educate their clients on investments and help them grasp in layman’s terms what is happening in the market.
“We pride ourselves on having the most open architecture in this country,” Panares explains. “Open in the sense that when you visit with our relationship managers, we are able to provide you with choices. Before these funds even get into our menu, they go through a due diligence accreditation process on a regional scale.
“You will not be limited to Citibranded funds. Perhaps if you go to another bank they will offer you a similar fund, but it’s their own. It’s XYZ funds from XYZ bank, regardless of performance,” Panares continues. “If you come to us, you may even be offered a product from a competitor. We look objectively at what is best for you.”
“Our goal is to promote financial education and push
diversification,” Floresca says. “If you look at your portfolio and everything is in traditional
banking products, that’s not diversification. If you really want to grow your wealth, we encourage you to start looking into investments. That’s one way of diversifying.”
“A lot of working people in their 20s have the misconception that investments are only for the rich,” Panares observes. “In reality, it takes a lot less than you think.”
For more information on Regular Savings Plans and other Citigold wealth management services, talk to your Citibank relationship manager or call the 24-hour Citigold Wealth Management Hotline: +632-995-9888 in Metro Manila, and +63 32 234 9888 in Metro Cebu.