Allianz Guru Series by Henry Yang: What You Need to Do Before Investing

By now, you probably are excited and waiting to read on how to invest. Wait! Before you go out for a long drive, you need to check several items — battery, lights, brakes, etc. This pre-driving checklist is done to make your long drive a smooth one, preparing you for what could go wrong. Same can be said before starting on your investment journey – make sure that you have everything in check before letting your money work for you! 

In life, surprises come in many forms and some of them are nasty ones. It can be as simple as a delayed paycheck or can be as bad as losing your job or having a very weak business environment. For unexpected financial difficulty, having a generic emergency fund can ease a lot of burden. This should not be confused with doing a “retail therapy” (Lazada or Shopee purchases) or going to a night out with friends when you could’ve spent your money on more important things.

Because an emergency can strike any time, having quick access to your extra funds is crucial. To do this, you could put your emergency fund in a savings account or e-wallet. However, in exchange for its accessibility and convenience, the interest earned from this savings account with your emergency fund would be very low, if not zero. This account should be separate from your personal account that you use for daily living.

Generally, a 3-6 months’ worth of expenses would be a good starting point. Feel free to adjust it, depending on your situation. Are there multiple income earners in your household? Is everyone in your family healthy? Maybe you need a bit less. Is your family a large one with multiple dependents? Is your job or business’ industry a bit shaky? Maybe you need more.

What if somebody in your family got sick? What if your car got into an accident? What if aliens started to appear and turn out they are not friendly? There’s so much curve balls that life can throw at you, and if you try to accommodate them all with a generic emergency fund, then you’ll probably need millions just to be ready for them. Thankfully, you don’t have to.

There are risks that can be passed onto insurance companies so that you don’t have to worry about them or set aside a huge fund to be ready for them – remember, emergency funds barely earn anything and is losing value year after year from rising prices of goods. 

Got a car? Insure it. Depending on the policy you bought, you don’t have to get migraines from theft, accidents, or floods. Got a strong body? Protect your life; insure your health. You won’t know what could go wrong in the future. But at least you know that there’s a funding source for the diseases that would require medical intervention, should something happen to you.

Getting a hefty medical price tag and having no means to pay for it is one of the worst nightmares anyone could experience. There’s a saying that health>wealth. If you’re uninsured, chances are you would lose a huge portion, if not all your wealth, to pay for your health. I’m sure you know someone who suffered this fate during the pandemic. 

When planning for a travel, you’ll usually start out with a general idea. What do you want to do? Where do you want to go? From there, you can look for the fitting schedule, set the budget, and even plan the clothes to wear. Same can be said for your financial journey – write down your plan. What do you want to achieve and by when? How much would you need for it? Start with the priorities, the things that you really can’t live without, then work your way down the list.

Having this plan gives you a roadmap: an idea of what you’re aiming for. Like a journey toward a new destination, you don’t have to be alone in planning and discovery. Find guides and resources that will help you along the way – this can be a book, an online reference, a financial advisor, or even a friend or family member. They should help you make financial planning a fun, successful journey!

Head of Investments
Henry Yang is a Chartered Financial Analyst (CFA) holder and a graduate of the University of the Philippines with a degree in Electrical Engineering. He spent the initial years of his career in building maintenance, electrical design and installation of construction projects, and teaching engineering. Later, he pursued his Master's in Business Management from the University of the Philippines - Los Baños as well as held investment-related roles at a top local bank, a U.S.-based investment company, and a global insurance competitor. Currently, he serves as the Head of Investments at Allianz PNB Life Insurance, Inc.