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Tips from Francisco Colayco on how to save, invest wisely

May 1, 2012 1:35pm
According to the Bangko Sentral, only 20 percent of Filipinos have savings bank accounts. This is mostly because, according to those without savings accounts, they did not earn enough to save. But if expert financial adviser Francisco Colayco is to be believed, it doesn’t take a large pay check to have savings.

Francisco Colayco is the Chairman of the Colayco Foundation for Education, and published several books on investment and financial planning.   He shared some savings and investment tips last April 25 on “Tonight with Arnold Clavio," a bi-weekly talk show on GMA News TV.

1. Understand risk and don't make bigh purchases you're not sure you can pay.

“Growth, or making money, we can’t fully control. But the risk, we can.” said Mr. Colayco. "Ninety percent of us are focused on the gains, not on what could happen that could make us lose our investment. Having said that, we should be aware that whatever we invest, we can stand to lose. If we can’t afford to lose our investments, [we shouldn't] risk them.”
Asked why some high-income people also find it difficult to save money, Mr. Colayco answered: “The biggest mistake people with money can make is premature acquisition of assets. They have enough for a down payment, they make the purchase. When asked how they will pay the amortization, they answer ‘I’ll find a way.’ You can’t think like that, because the agreement you’ve entered into is an obligation that you have to pay whether or not you’ve made any profits. If you have no guarantee that you can pay, don’t make the investment, even if you have enough for the down payment.”
2. Set aside at least 20 percent of your income as savings.

For people with regular jobs and regular pay, Mr. Colayco recommends that 20 percent of their pay go to savings. “This money can go to emergency funds, for payments of term insurance for accidents or deaths, especially if you have a family. If you have a family, insurance is technical, not an investment. Insurance is protection.”

“There’s one company that has a nice practice that, if your pay is P1000, they only give you P900, and the P100 is forced savings. And it’s yours. They don’t give it to you, and they save it for you. And when you retire or resign, they give it to you. Not all companies are like this, but I wish they all were,” added Mr. Colayco.
3. Live within your means, not beyond.
Mr. Colayco has some advice for those with irregular jobs or low income as well. “If your basic salary is low, like PHP10,000, then adjust your lifestyle,” he advises. “Don’t live in a place you can’t afford. When you have a family, that’s when it’ll be a little difficult. So you have to find a little extra income.  There’s nothing magical about money.”

“The National Statistics Office says that food expenses can go up to 40 percent of your income,” he added, “but if you can, don’t let rent, transportation and food go above 60 percent of your income. The remaining 40 percent should be set aside for savings, some leisure money, clothes, etc.”
"Tonight with Arnold Clavio" airs Tuesdays and Wednesdays, 10:30 pm, on GMA News TV Channel 11.-FM/PF/HGS, GMA News Online

Follow "Tonight with Arnold Clavio" on Facebook and Twitter. To watch videos from past episodes of the program, visit their webpage at
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