OFWs are our modern-day heroes. The remittances they send back home contribute to the growth of the Philippine economy. This money also helps improve the lives of their loved ones, and in fact, according to the Bangko Sentral ng Pilipinas (BSP), the personal remittances in the first quarter of 2024 increased by 2.8 percent compared to the first quarter of 2023. That is, an increase of 9.15 billion USD from 8.90 billion USD last year.
However, OFW live can be challenging. They must make sacrifices living far away from their families. They have to adapt to a new culture and environment. Despite these challenges, OFWs generally remain steadfast and focused on their goals. Having said that, many OFWs find it difficult to save money and build a solid retirement fund. This article aims to provide tips on how OFWs can save for retirement to secure their future.
Planning for Retirement: a Guide for OFWs
OFWs can have a hard time saving money overseas. This is due to the following reasons:
- High cost of living abroad
- Easy to access savings in traditional bank accounts and mobile wallets
- Little is left after sending money back home.
Because of these challenges, it is more important to know how to invest. Investing helps OFWs grow their money over time, building a retirement fund that can not be easily stopped or reduced.
OFWs who are getting close to retirement or planning for retirement should understand the various retirement options available to them.
Top Investment Options for OFWs
The following is a list of top investment options for OFWs:
- Stocks
- Mutual Funds and Unit Investment Trust Funds (UITFs)
- Variable Unit Life Insurance (VUL)
- Real Estate
- Starting a Business
We will discuss each of the following options in more detail:
Stocks
Investing in the stock market is one of the most effective ways to grow your money over time. When you have stocks for a particular company, that essentially means that you partly own that company. If the company grows, the value of your investment grows as well. Here are some tips that you need to remember when investing in stocks:
- The Philippine Stock Exchange (PSE) is now more accessible than ever, even for OFWs
- You can open accounts with the help of stockbrokers for as low as 5,000 pesos
- You need a good understanding of the market
- Initially, purchase stocks from well-established companies
- You can diversify your portfolio the more comfortable you become with stock trading.
- Be patient, understand trends in the market and keep informed about global economic conditions.
Mutual Funds and Unit Investment Trust Funds (UITFs)
MFs and UITFs are a more hands-off way of investing. Professional fund managers are there to help you grow your money. With mutual funds, you buy shares in a fund, while with UITFs, you buy purchasing units. Here are some common facts about these types of investments:
- MFs and UITFs are highly accessible
- You can invest with as little as 1000 pesos.
- These funds are professionally managed, so that you don’t need to study much.
- This investment can be risky because it depends on how healthy the market is.
Variable Unit Life Insurance (VUL)
You can think of VULs as being a combination of life insurance and investment premiums. This dual purpose helps clients receive protection while at the same time invest money.
For OFWs, VULs can be quite useful if they are also looking for life insurance at the same time. Here are some facts about VULs:
- VUL policies offer flexible payments based on financial situations
- VUL policies are typically offered in both peso or dollar denominations
- Investment with a VUL policy allows clients to benefit from fund growth.
Real Estate
Real estate is still one of the most popular and reliable investment options for OFWs. Real estate is tangible, and typically its value increases over time. As such, real estate investment is a stable and lucrative income source, especially if you choose to rent out the property you bought. One can even sell the property if you deem the market favorable.
Starting a Business
Starting a business is another way for OFWs to secure their financial future. While it can be risky, a successful business can provide a steady cash flow that far exceeds what they might earn from working abroad. Here are some tips with regards to starting a business:
- Start small
- Partner with a trusted family member or friend at the beginning
- Franchise, if you can, especially if you don’t have time to start a business from scratch.
- Start a small business that is aligned with your interests and skills
Planning for Retirement: A Crucial Step for OFWs
Having a retirement plan is important and so it must be comprehensive. Creating a retirement plan involves knowing your financial situation, knowing what your retirement goals are, and creating a roadmap to achieve these goals. To summarize, here are the steps:
- Assess your financial readiness
- Review your current savings, investments and retirement benefits.
- Explore various retirement plans, including those from the government or from private institutions
- Diversify investments; try stocks, mutual funds, real estate, etc.
Saving for retirement as an OFW is a challenging but essential task. You need to explore various options to build a solid financial future. This requires you to make sacrifices at the present, but it will definitely pave the way for you to have a brighter future.