Category Archives: Personal Financing

6 Reasons Why You Need Insurance

26 Monday Oct 2015

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Photo Credits : Curious Bino

Photo Credits : Curious Bino

Good news: more Filipinos are getting covered by insurance. The unfortunate tidbit is that more still remain uninsured. Why are Filipinos not getting insurance?

  • They don’t think they need it.
  • They are investing in bonds and other portfolios that would hopefully bring them huge returns in the future.
  • They are expensive.
  • They think insurance companies are simply interested in their money.
  • They don’t have money.

We can cite more reasons to answer why, but regardless of what it is, it doesn’t change the hard truth that insurance benefits you more than you think.

Insurance can:

Give you the peace of mind.

According to the 2015 survey conducted by the American Psychological Association, money is the leading cause of stress among Americans. In fact, the stress can be so severe it can make one sick. While the survey was in an American setting, the results resonate around the world. We do worry about money because, although it cannot buy everything, it still remains a necessity.

Insurance is a form of guarantee that in case you find yourself or your family members cash strapped, you know there’s money to count on—a huge financial burden lifted off the shoulders.

Protect your assets.

 Life insurance, for example, can be used for estate planning and gives you income if something bad happens to you like developing a permanent disability. Health insurance protects your health while home and auto insurance cover your physical or tangible properties.

Reward you

Life insurance policies  such as variable-linked insurance combine investments and financial protection in the bundle. This means that a part of the premium you pay for the insurance is invested in stock, bond, or mutual funds, depending on your preference or investment profile. Other insurance policies have features like money backs or guaranteed cash value.

Adapt to life changes

As you grow old, you buy a house or a car, send your children to school, take on jobs, and get married, to name a few. In each of these seasons, your financial needs are different. Insurance can be acquired to provide you monetary support in your life stages.

Give you more financial freedom.

Insurance is there to see to it that if you’re faced with a major crisis, you’re not forced to dip into your emergency fund or your children’s college education fund. You won’t have to sell your home or whatever large asset you have, as well as skip your other financial obligation. Insurance would help ensure you don’t fall into an endless cycle of debt.

Provide you with great retirement.

Your SSS pension may not be enough to give you the retirement of your dreams, more so if it cannot beat inflation. You can use your insurance, particularly if it has an investment component, as a buffer.

Insurance isn’t merely an expense you pay every month or quarter. It is a worthwhile investment not only for yourself but also for your family and their future. It’s how you respect your hard work and show your commitment to your loved ones.

Does Everybody Need Life Insurance?

17 Thursday Sep 2015

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Source: Forbes.com

Source: Forbes.com

Does Everybody Needs Life Insurance? A question that an individual should know the answer. Well my answer is “It depends”, it depends on what? Perhaps my points stated below might give you an idea of having life insurance, or just forgetting the idea, You will have to decide after treading this blog post.

Insurance aims to replace the income of the person being insured.

The insurance can serve as an income replacement, so if a person is the bread winner of the family and if someone depends on his income, definitely he needs a life insurance. Most especially to all fathers working for their family. A non-working wife, might not need an insurance if her main purpose is just for income replacement. But of course there are still some other purpose in addition to income replacement.

Have you think of a situation that if your life was taken away while your love ones are still studying or while you are paying for a house or you have other fixed monthly expenses? As a follow up question, did you ever think on what will happen to your love ones when they are left with all the burdens? For sure it will be very difficult for them.

Have you heard about Estate Tax?

Have you heard about the Estate Tax? Estate Tax is the tax imposed on all the estate left by a dead person. Meaning that if a person dies and he have estates left (money in the bank, House and Lot under his/her name, Car,  bank in the money, mutual funds, any paper asset), all estate will be subjected to estate tax before it could be transferred to the rightful heir. If the rightful heir does not have money to pay for the estate tax he may resort to two options:

  • Borrow money to friends of relatives, then pay the estate tax and pay bank the relatives
  • Sell the estate on a very low amount and make an agreement with the buyer to pay all the estate tax on your behalf.

Normally option # 2, is being chosen by the heir if there is no fund to be used in collecting the estate. But normally option # 2 will make your estate with a very low cost compared to the assessed value of the estate.

Estate Tax is subjected to time frame for paying the text.

A wise decision is to calculate your total asset, and check with the prevailing estate tax law the equivalent amount and make sure that the owner of the asset is insured on more than the amount required.

Insurance money can be paid to the beneficiary after the claimant prove that the insured person died in a way accepted as stipulated in the contract. The beneficiary can take the life insurance proceeds free of tax ( Check this article)

“(B) Exclusions from Gross Income. — The following items shall not be included in gross income and shall be exempt from taxation under this title:

Life Insurance. — The proceeds of life insurance policies paid to the heirs or beneficiaries upon the death of the insured, whether in a single sum or otherwise, but if such amounts are held by the insurer under an agreement to pay interest thereon, the interest payments shall be included in gross income.”

Estate Tax filing has also a deadline:

Deadlines

File the return within six (6) months from decedent’s death. However, the Commissioner may, in meritorious cases, grant extension not exceeding thirty (30) days.

I hope that this article will help you decide to get or not to get a Life Insurance. I may not be an expert in law, but I hope this post gives you an idea about the importance of Life Insurance.

Biblical Principles for Financial Success: 7 Key Lessons on Money

09 Wednesday Sep 2015

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I firmly believe that Biblical principles and finance go hand in hand, offering timeless guidance for success. A recent Facebook post by Stormie highlights seven essential lessons about money from a Biblical perspective. The core idea is that everything we have comes from God, and it’s crucial to acknowledge Him in all aspects of our financial lives.

One lesson that resonates deeply with me is the seventh principle: “Love God, not money.” This powerful message reminds us that when we prioritize our love for God, rather than the pursuit of wealth, blessings will naturally follow. By following these principles, we align our financial practices with spiritual values, fostering both material and spiritual prosperity.

Angat Pilipinas Desert Convention 2015

30 Sunday Aug 2015

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I would like to report that Angat Pilipinas Desert Convention 2015 was a success. The financial literacy seminar went well as planned in 4 corners of Saudi Arabia, Riyadh, Al Hasa, Jeddah and Al Khobar. The seminar was attended by more than 200 OFW in 4 locations. I can share more information in Riyadh because I am one of the speakers in the event.

In Riyadh we were visited by Mr. Rustico SM De La Fuente, Labor Attache, Embassy of the Republic of the Philippines, PHILIPPINE OVERSEAS LABOR OFFICE (POLO), Riyadh Saudi Arabia and glad to hear from him that they have appreciated the advocacy that Angat Pilipinas Coalition for Financial Literacy is doing. They have also shared that POLO’s Reintegration Preparedness Program has two major components, Financial Awareness and Entrepreneurship Development.

The seminar was presented by 4 speakers namely Aldwin Resureccion, Odessa Liwanag, Kristine Rodriguez and yours truly. We had our Volunteers, Belle Olaso – Photographer, Paolo Laxamana – Technical Support and Laarni Resultan – Registrar.

We had a great seminar as we have received positive comments from the attendee. There are some attendee came from almost 130 kilometers from Riyadh Saudi Arabia.

There was part of the event that we asked the attendee to group themselves and share with each other on how OFW are being scammed and here are what they have shared:

  • People get scammed because of TRUST, there are times that they are just trusting without checking the legality of a certain company that is being referred to them.
  • People get scammed due to GREEDY, when people saw lots of money in Social Media they could easily get hooked in the advertisement even it is publicly announced that it is a scammed company.
  • People get scammed due to IGNORANCE, people try to get into an investment without first learning the ins and outs of it. People dive to investment without knowing that there are RISK in investing.

We have even received suggestions through our survey which I will share later.

OFW became interested also with Stock Market and Pooled Funds, which might be the subject of our future seminars. Hope that future seminars will be attended by more and more OFW.

I would like to thank all the attendee of the seminar and I hope we have help them in their financial planning. Below are some pictures taken from different parts of Saudi Arabia.

Angta Pilipinas (13)

Angta Pilipinas (1)

Angta Pilipinas (3)

Angta Pilipinas (4)

Angta Pilipinas (5)

Angta Pilipinas (7)

Angta Pilipinas (9)

Angta Pilipinas (10)

Angta Pilipinas (12)

Angta Pilipinas (14)

Angta Pilipinas (15)

Website: Angat Pilipinas Coalition for Financial Literacy Seminar 

Taking Advantage of the High Exchange Rate

24 Monday Aug 2015

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As an OFW, I am used of sending money to the Philippines with an exchange rate of 1 USD to Php 44. But there was a turn of events in the world economy that is why from last month I can see an exchange rate higher that Php 45. I know that some OFW are happy on what is happening because higher exchange rate will mean higher money will be received by their relatives. But is it really true that money value will be higher on this days? Actually it is not because the higher the exchange rate the lower the economy, It is indirectly proportional. The PSEI (an economy indicator of Philippines) keeps on going low.

The following scenarios might be experienced

  • Higher cost of commodities due to higher cost of raw materials
  • Most of the items that uses imported materials will definitely have higher prices.
  • The higher tuition fee.
  • Fare hike, due to the cost of maintenance auto parts
  • Low investor in the Philippines

So how will you take advantage of the situation?

If there are some surplus money due to exchange rate it is better be placed in an investment. If you are paying your land or house amortization at an amount of Php 44,000 before you need to send USD 1,000 to pay off your monthly amortization. Now if you send the same USD 1,000 it will be converted to Php 45,000 therefore you will have a Php 1,000 surplus. The surplus would be better placed in an emergency fund or be placed in the stock market or an equity fund. Economist knows that this will be temporary. Therefore, if you put your surplus money into an investment, the moment that the economy recovers and exchange rate become lower, your surplus money will grow.

I hope OFW will take advantage of the situation and not just spend money in wants.

Needs Vs Wants, Do You Know the Difference?

30 Tuesday Jun 2015

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As I teach Financial literacy in different institutions here in Saudi Arabia, I came to know that majority of OFW does not know the difference of wants and needs. They probably know it theoretically, but they don’t know the importance of knowing the difference that it will make in their future. Delaying gratification is not in the vocabulary of most OFW’s. Here are some ideas which will definitely let you know the difference of Wants and Needs.

Wants:

  • Not dying when not be able to purchase a thing
  • It is only due to envy that is why your buying
  • You believe that those items that you will buy is part of your status symbol
  • Self-gratification
  • Buying because of “Sale items” thinking that you can save from your purchase even you will not need those items in the next few days.

Needs:

  • You will die if you will not purchase it (i.e food, clothings, etc)
  • It is needed in your work or business
  • You know what you are buying, and you know where you will use it after purchase.
  • You know that if you will not purchase now, it will definitely affect your future
  • You will purchase because you know that it could give your family peace in the event of unforeseen events.

I am not saying not buying those wants, but what I am saying is that we need to be prepared on buying those want. In other words you need to plan and save for paying those wants. Don’t buy want from credit. There is always a general rule that if you don’t have cash to buy for your wants, it is not for you.

Buying on want with credit will lead you to a big financial mess. Hope this short post will remind you the importance of knowing needs and wants. As always you can use extra money for investment.

Is it Safe to Invest in Mutual Fund?

02 Tuesday Sep 2014

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Mutual funds

Picture Credit : murraycoulterandassociates.com

The title of this post is a common question I encountered when I am conducting seminars and group study about Financial Literacy.

So is it really safe to invest in mutual fund? My answer depends on your definition of safe.

First of all there is No Risk Free Investment. Different type of Investment has its own associated risk. It only depends on how much risk you can take to define it as safe.

Mutual fund is managed by a fund manager, who are trained to manage pooled money. So with decision making with regards to fund allocation I can say that mutual fund is safe. Mutual Fund is also govern by SEC and have pass with different government strict rules before it could operate and received new funding from investor.

In addition, the money is being held by its associated banks and the money and not by the Fund Manager. Fund Managers only manage the transactions.

Money value of the funds depends on the daily NAVPS of a certain fund. There are days that the NAVPS is low and there are days that NAVPS is high. If the current NAVPS is lower than your purchased cost per unit then you are losing, but if the current NAVPS is higher than your purchased cost per unit then you are gaining. Of course purchased cost per unit includes fees ad other charges of the mutual fund company.

There are different types of Mutual Fund to choose from, they Equity Funds, Balance Fund, Fixed Income Funds (Bonds) and Money Market Funds. There are other type of funds but those mentioned are the common types of Mutual Funds.

Equity Funds has the highest risk while the Money Market Funds has the lowest risk. But you should also understand that the higher the risk of an investment the higher also the potential gain of it.

Before investing in Mutual fund you should asses your goals/objective. If the length of time is short then it is not recommended for you to proceed with risky investment. But if the length of time is long then an investor could go to a riskier investment. (ie. Saving for your 1 year old son college expenses)

I hope this simple post gives you an idea to answer the question mentioned in the title, “Is it Safe to Invest in Mutual Fund?”

Learn first before investing. Happy Investing.

I also believe in the saying, “If your fail to Plan then You Plan to Fail”.

Investing Even in Debt?

20 Wednesday Aug 2014

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Image Credit : investprogram.org

Seminars about investing and YouTube videos about investing are now easily accessible. Facebook post and updates talks about investing and savings. In reality it makes our drive to invest as soon as possible more.

So what if you want to start investing and yet you are filled with credit card debts, Will you start investing in Mutual Funds or stock market even if you are in a big financial mess? For me it’s a big NO.

What I meant is that paying of your credit card debt or any debt is the start of your investing. While paying your credit card, you will start the habit of saving a portion of your salary or income to pay off your debt. Normally I recommend 70, 20, 10. 70 % of your income is for expenses, 20% of your income is for your investment and 10% of your income for your Tithes or Love offerings. Use the 20% to start paying off your debt.

When time comes that you have paid off your debt, you will then be in a habit of saving a portion of your salary. The same amount that you used to pay your credit can now be used to build you emergency funds. After the emergency funds then you can go into Mutual Funds or even stock market if you can take the risk.

The idea is that you should not be investing in Mutual Funds or Stock Market if you don’t have Emergency Fund and still in debt because if time comes that you need money due to emergency, chances are you will get your investment even if it is still losing.

So be wise in your investing decision. In addition you need to set your goal prior to Mutual Funds or stocks investing. Knowing your goal will determine the amount of risk that you can take. Knowing your risk, may allow you to determine the type of investment portfolio will you go.

So be wise and Happy Investing. Study first before investing.

Financial Freedom, Invest After Being Debt Free

24 Monday Mar 2014

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Not everybody can experience financial freedom, actually it is rare to see people who is experiencing financial freedom. But how could you really experience financial freedom? I believe it is only, if you are debt free.

Before, when I have surplus money I normally opt not to pay future payment such as monthly amortization and school fees. Because what I believe is that I can still use the money to make it grow. But sad to say it always lead me to debt.

There are times that you spend money which could cover advance payment for school to your wants. If you have money in your pocket or ATM the tendency is you can easily decide buying your wants instead of paying your monthly payment in advance.

As an example SSS payment can be made for the whole year. If you will not pay for the whole year, even you are capable to do so, tendency is that monthly SSS payment can be one of the reason why you will be in debt. Sometimes small amounts when accumulated will give head ache and lead you to be buried in debt.

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It is also the reason why most people who have declared being debt free in credit card tends to borrow again due to unavoidable circumstances. Those are people who after paying off their debt, did not work out for their emergency funds.

For OFW who owns Credit Card in Philippines, it is not wise to use the credit card overseas. As per computation the moment an OFW uses his Philippine Credit Card overseas, he have to pay additional 3% of his purchase due to exchange rate adjustment. By the way it my personal experience.

Investment shall only be made if you are debt free. I must admit that I did investment even if I am not debt free, but the sad things is that there are times I need to pull some of my investment just to cover my emergency needs. I need to learn investment in the hard way.

It is really important to be educated before investing. Know the risk and opportunities before investing. Don’t just go to investment because your friend told you to do so, or because your idol to you to do so. Be prepare in investing and learn to know your risk tolerance.

Happy Investing

Investing Needs Focus, No Risk Free Investment

22 Saturday Mar 2014

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If you decide to invest you need to be focus. You need to focus on your goals. I need to remind you the basics of investing, know your goal before investing into any investing vehicle.

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For short term goal, invest to a non-risky investment and for long term goal you may invest in riskier investment. It is a fact that time reduces the risk of any investment, but time does not eliminate the risk. Every investment has its own risk you just need to make sure that you understood the risk before allowing yourself to be part of that investment.

When a broker says that they are offering a “Risk Free” investment I could say that it is a scam, or the broker does not know what he is selling and he is only after the commission.

Many of my colleagues who got their insurance due to sales pitch of brokers does not know their policy well, they don’t even know why they get those insurance. And worse they feel that it is a burden paying those insurance.

Insurance is a must in investing. Without insurance, your investment might be wasted. Just imagine being sick without insurance, definitely the last resort to do is to touch your investment especially if you did not work out you emergency funds.

There are lots of investment vehicle, before going to a certain investment, learn and know the risk associated with it. Before getting the next investment you need to master the ins and out of your chosen investment.

In addition always remember not to keep all your eggs in a basket. Which mean don’t keep your investment in a single investment company. Diversify.

Investing is Not Easy, But Definitely Rewarding

18 Tuesday Mar 2014

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invest-2Who says that investing is easy? For me it is not, it involves self discipline and goal setting. Imagine choosing to invest your hard earned money in replacement of having fame in your office by owning a new gadget that worth thousands of pesos. I was a spender for almost 10 years before I learn investing, and I could say that it is not easy changing paths going to Financial secure life.

It was easy to spend and use my credit card and spend on my “wants” rather than stopping my craving with new gadget in town. After learning about financial literacy by joining different Facebook groups and talking to mentors as well as reading books about finance, it made me realize that even investing is hard at first, time will come that it will be your life style. In addition it feels good to know that at least you are expecting something for your future.

I said it’s rewarding because time will come, you will harvest the fruits of your hardship in investing. Time will come that you can meet your goals and objective in investing.

Imagine being financially secured when you get old, you can do whatever you want like doing your ministry for the Lord or even travelling all over the world.

It is better to suffer for a while and gain in the future.

Here are 10 things I regret in doing for the past 10 years before i become an investor.

  1. I did not bother paying my SSS
  2. I did not even save or open a mutual fund account while blogging earning is good.
  3. I did not put 20% of my income to any investing vehicle.
  4. I did not read books during my spare time.
  5. I did not talk to people who knows about investing.
  6. I perceived insurance as not important because I am young.
  7. Investing to educational funds which I did not learn first  and ended me paying for nothing due to bankruptcy.
  8. Not investing in Training and seminars.
  9. Procrastination
  10. Believing that every financial adviser only wants my money.

Some of the items as mentioned above might be what you are doing now, I suggest learn from my mistake and start learning before investing. Good day.

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Start Investing As Early As Possible

19 Sunday Jan 2014

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Asset.jpgDid you know that you are losing potential gain every time that you delay your investing. This is what I regret in doing 10 years ago. I just started investing about 2 years ago, and I told myself that I should have done this the first time I had my salary. I had wasted lots of potential gains for the last 8 years buying unnecessary things that easily depreciate. I mean buying high tech mobile phones and Laptop including accessories. I have also paid lots of interest to the credit card company because I do not know how to handle my finances.

Some say that it’s not good to invest this year because the market is down, if you would like to ask me then I think it is a good time because after some time, market will definitely go up, then the shares that you bought low can be sold high which could turn into high profit.

It’s a matter of starting and studying. Whenever you started investing and study about it’s in and outs you will definitely make it a habit.

Investing is not only for rich people, it’s for wise people. Wise enough to think about the future. Actually most of the rich people have invested time studying the market and studying the pros and cons of the market. They read a lot of books.

For me, I would like to retire happy and do whatever the Lord wants me to do in His ministry.

Just a reminder don’t be too focus in richness because it will lead to greed. Always remember that the God controls everything. Either Market up or Market down our Lord does not change and so are you. Happy Investing.