BUSINESS FINANCE

2ND QUARTER – REVIEWER

LESSON 1: TYPE OF INVESTMENTS CURRENCIES. Generally accepted form of

money, including coins and paper notes,
 Everyone should invest as everyone which is issued by a government and
needs and deals with money. circulated within an economy (i.e. USD, EUR,
JPY)
TRADITIONAL INVESTMENTS
 Stocks and Bonds COMMODITIES. A basic good used in
 Managed Funds commerce that is interchangeable with other
 Real Estate commodities of the same type (i.e. Gold,
nickel, oil)
INVESTING – the act of committing money
or capital to an endeavor with the When making an investment, consider the
expectations of obtaining an additional following KEY FACTORS:
income or profit.  Financial Goals: Define your short-term
– making that saved money work and long-term objectives.
for you.  Risk Tolerance: Assess how much risk you
can handle emotionally and financially.
SAVINGS – the act of putting away some  Time Horizon: Determine how long you
money for future use. plan to hold the investment.
 Diversification: Spread investments
TYPES OF INVESTMENTS
across different asset classes to reduce
STOCKS (Equity). Type of security that
risk.
signifies ownership in a corporation and
 Market Conditions: Analyze current
represents a claim on part of the
economic trends and market
corporation’s assets and earnings.
performance.
BANK DEPOSITS (Fixed Income). Money  Fees and Costs: Be aware of any
placed into a banking institution for associated fees that may affect returns.
safekeeping.  Research: Conduct through research on
investment options and their historical
BONDS (Fixed Income). Debt investments performance.
where an investor loans money to an entity
which borrows the funds for a defined period
of time at a variable or commonly, fixed LESSON 2: PERSONAL FINANCES
interest rate. Managing Personal Finances
 Includes all financial decisions and
Alternative to Fixed Income and activities of an individual including
Equities budgeting, insurance, mortgage planning,
MUTUAL FUNDS. An investment that is savings, and retirement planning.
made up of a pool of funds collected from  It is primarily dependent on one’s
many investors for the purpose of investing earnings, cost of living, and personal
in stocks, bonds, and similar assets. goals and wants.
UNIT INVESTMENT TRUST FUND (UITF).  It involves analyzing current financial
Similar to a mutual fund but is managed by positions, projecting short-term and
banks. long-term funding needs, and
executing a plan to fulfill those needs
Other Investment Assets

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considering individual financial  Understanding of personal resources

constraints. by checking an individual’s net worth
and cash flow.
Personal Financial Planning Process  Helps in determining the time frame to
a. Objective Setting which personal goals can realistically
 Quantify monetary objectives with be met.
definite time frames.  May need to answer the following
 Prioritize objectives. questions:
 Examine these objectives with an  Do they have a clear understanding of
individual’s resources and limitations. their goals?
b. Data Gathering  How do they track their income,
 Use surveys, questionnaires, expenses, and net worth?
interviews to gather quantitative and  What financial benefits do they get
qualitative information from the from their employer?
individual. b. Adequate Protection
 Quantitative – for assessing financial  Analysis of protection needed for
status (i.e. investments, cash flow, unforeseen risks.
liabilities, etc.)  Includes risks of liability, property,
 Qualitative – to identify individual’s death, disability, health, and long-term
goals and objectives, lifestyle, risk- care.
tolerance, etc.  Some insurance plans enjoy some tax
c. Data Analysis benefits.
d. Financial Plan Recommendation  May need to answer the following
 Propose financial products. questions:
 At this point, the individual can » What things can they not afford
comment on the proposed solutions,
to lose?
e. Plan Implementation
» How will they take care of their
 Assist the individual in the execution
dependents?
of the recommended financial plan.
» How have they planned for
 Implementation may involve other
financial risks such as disability,
entities so assist the individual in
illness, long-term care, and
dealing with the parties involved in the
death?
execution of the financial plan.
c. Tax Planning
f. Plan Monitoring
 Management of when and how much
 Review the financial plan periodically
taxes will be paid.
to evaluate changing market
 Understanding possible tax incentives,
conditions (i.e. economic conditions,
deductions, rebates, etc. can have a
taxes, interest rates, etc.).
significant impact on managing
 Evaluate the financial plan regularly to
personal finances given the magnitude
see if it effectively meets the
of taxes paid by an individual.
individual’s goals and objectives.
 May need to answer the following
Six Key Areas of Personal Financial questions:
Planning » How do they manage their
a. Financial Position taxes?

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2ND QUARTER – REVIEWER

» How do they plan the timing of » How should their assets be

income and deductions for tax disturbed upon death?
purposes? » How will their intentions be
» Are they comfortable with the carried out? (i.e. will, trust,
tax environment applicable to power of attorney, etc.)
them?
d. Investment and Accumulation Goals Golden Rule of Personal Finance
 Planning on wealth accumulation for
INCOME – SAVINGS = EXPENSES
large purchases such as house,
educational expenses, investments for
retirement, etc.
 May need to answer the following Four Simple Habit for Personal
questions: Finances Success
» What are their goals for wealth
accumulation? (i.e. education, Save Money
home, business, retirement Avoid Debt
comfort, etc.)
» How are their current Invest
investments performing to meet Protect Downside (insurance/diversification)
their goals?
» How much will they need? When
will they need it?
LESSON 3: MONEY MANAGEMENT
e. Retirement Planning
 Understanding the cost of retirement. Needs Versus Wants
 Analysis of cash flows to come up with
investment plans that will meet the NEEDS – the things that you need to survive
costs of retirement in the future.
WANTS – the things that you want, but can
 May need to answer the following
live without.
questions:
» How are they preparing for their A needs and wants vary from person to
retirement? person. A need for one person can be a want
» How are their liabilities affecting for another person.
their retirement objectives?
» Do they think they can maintain Inflation
their standard of living during
Happens with the general rise in the prices of
their retirement?
goods and commodities. This occur when
f, Estate Planning
spending increases relative to the supply of
 Planning for disposition of one’s assets
goods.
after death.
 Estate taxes paid to the government If INFLATION GOES UP too much, we will
are huge, so avoiding these taxes can not be able to afford the same amount of
significantly impact one’s personal goods we used to afford.
finances.
 May need to answer the following If INFLATION GOES UP the value of our
questions: goods in general goes down.

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Purchasing Power EVALUATION AND REPORTING. Save and

invest and to be able to grow your funds
Inflation affects purchasing power paste than inflation.
The amount of goods and services money
can buy. The purchasing power of a person Sound Practices about Money
or group of people is the amount of goods or Management
services that they can afford to buy. 1. Set up an emergency fund – set up several
smaller savings goals, rather than large one.
2. Lists of all debts – make a list of all your
debts and the amount of required payments.
3. Cut back on unnecessary spending – New
purchases maybe unnecessary, hence try do
delay buying.
4. Pay off credit card / debts. Pay some
amount monthly, to keep you record clean.
5. Apply for a credit line for emergency use –
In the given example, the purchasing power Apply for a credit line with your bank for
of the family budget for five dropped due to access to cash only during emergencies.
the 20% inflation rate. Meaning the original
6. Talk to a financial adviser / advisor – If you
Php 50,000 budget can no longer pay for the
are unable to make payments, let them know
family expenses.
your situation.
Money Management Philosophies 7. Monitor all your accounts’ cash flow –
Monitor your bank accounts, investment, and
Money management is the process of
retirement accounts and track the value of
budgeting, saving, investing, spending or
your stocks or mutual funds.
otherwise overseeing the cash usage of an
individual or group. It is also called 8. Trust that things will work out in time – Do
investment management. not panic. Trust that you have resources
around you that will help you find a way to
Money Management Cycle keep your finances in order.
PLANNING AND BUDGETING. Reduce
Four Financial Advice That You Can
consumption of all items across the board.
Apply Para Umasenso Sa Buhay
RESOURCES ALLOCATION. Maintain
consumption of some important items and 1. WORK HARD AND WORK SMART
cut consumption on some unnecessary 2. SAVE EARLY
items.
3. INVEST EARLY AND SMARTLY
OPERATING AND MONITORING. Look for
another source of income to augment 4. SURROUND YOURSELF WITH SUCCESSFUL
revenues. PEOPLE (Mutual Fund, Stock Market,
Cryptocurrency)

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2ND QUARTER – REVIEWER

Why is Philosophy of Money an investment features. This type of

Management Important? insurance gets bundled with an investment
component. You’re insured, but you can also
If you have a healthy philosophy about have the option to invest your money. It’s
money, one that treats money as a tool ideal because you get the best of both
and not as an end goal, you’re more worlds.
likely to come out on the other side with
Unit Investment Trust Fund (UITF) – a
money in your bank account and a type of investment in a bank wherein you put
healthier approach to earning, giving and your money on the bank and let the bank’s
spending your money. fund manager allocates your money where to
invest and it will also grow or go down it
depends on the time you’ve decided to
LESSON 5: INVESTMENTS – withdraw/pull-out your money on the bank.
MANAGING PERSONAL FINANCES They are not insured by the PDIC. (pool of
investment)
INVESTMENT – an asset or item acquired
with the goal of generating income or Best Investments for Millenials
appreciation.
APPRECIATION – an increase in the value of
an asset.
In finance, the purpose of investing is to
generate a return from the invested asset.

Common Types of Investment

Time Deposit – an interest-bearing bank
account with a fixed term. A low risk low
return investment wherein you put your
money in a certain period of time and it will
accumulate a fixed amount of return when it
matures.
Variable Unit Link Insurance (VUL) – a
type of investment wherein in it served as a
protection on you in case of emergency and
at the same time your money is being
handled by fund manager who buys and
allocates your money on a certain company’s
stocks/bonds but it will either grow or go
down it depends on the stock market
movements by the year it matures.
– 1 (Pru Life UK, Sun Life, Manulife,
Philam Life, etc) It is a form of cash-value life Advice for Students
insurance that offers both death benefits and

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“I suggest that students especially those who

are new in investing need to study first and
ask themselves if what are their
goals/objective that wanted to achieve
before investing on a certain product in the
bank... as of now I encourage them to put
their money on a time deposit to make sure
that they will earn (it’s a low risk low return
investment). – Mr. Jero Guinoo, BDO Unibank
Inc.
“I highly encourage the students to open a
savings account in the bank. With the help of
their parents, they must know the value of
saving money at their young age. So that
when they graduated and set their goals,
they can now choose which type of
investments are suitable for their saved
money.” – Anthony Pascual, Malayan Bank
“An investment in education always pays the
highest returns.” – Benjamin Franklin

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