The Top 10 Distinctions between Millionaires and the Middle Class

The Top 10 Distinctions between Millionaires and the Middle Class by Keith Cameron Smith

The Top 10 Distinctions between Millionaires and the Middle Class by Keith Cameron Smith is a easy to read and digest book on basic financial concepts. The author differentiates Millionaires (M) and the Middle Class (MC) using the 10 distinctions stated in his book. By understanding the differences between the M and the MC, we can stage and position ourselves for greater wealth building and creation. Most important of all, my belief sync with the author’s: Success is a journey. What i find more interesting is the author’s reasons of publishing this book. He mentioned 3 reasons for writing this book: Responsibility, Purpose, Legacy, which differentiates him from other authors of similar books – This guy is damned straight forward. The language he’d used is simple, direct, to the point. Most importantly, easy to understand by layman. 

I attempted to sum up what to expect from this book as follows:

Distinction 1: Millionaires ask themselves empowering questions. Middle class ask themselves disempowering questions. “Ask and you will receive.” & “As a man thinks, so is he.” – So better ask empowering questions. Learn to ask ourselves questions that stretch beyond your current levels of experience. The questions you ask yourself determine the results you get in your life. Think about questions that expand your mind. Empowering questions ask us what we can do, make us feel good, become a powerful and peaceful person. Questions controls mind, condition it to create success. 9 questions based on “Be, Do, Have” concept offers clarity; Know What you want, Why you want, and the How will naturally follow. Most important question to ask, “What would make my life meaningful?”

Distinction 2: Millionaires focus on increasing their networth. The middle class focuses on increasing its paychecks. Own assets (have value and earn passive income for us) using our paychecks. It requires new knowledge so study hard to learn how to acquire income-producing assets. Patience, knowledge and wisdom are required to increase our net worth. Wisdom is applied knowledge. Achieve Freedom – the freedom to work because we want to instead of because we have to. Learn to keep our cost of living the same even as we build our wealth. Uncommon wisdom of M: Do not increase spending when income increases, instead increase investing.

Distinction 3: Millionaires have multiple sources of income. The middle class has only one or two. The more sources of income we can develop, the more likely we will become a M. The trick to developing mulitple sources of income is to focus on making them passive (with minimum management). Build a team and learn to be humble. Employ Intentional Congruence concept – methodical planning, getting each source of passive income to support the other income. Focus on passive sources of income, build a team, and practice intentional congruence.

Distinction 4: Millionaires believe they must be generous. The middle class believes it can’t afford to give. Learn to be generous, it feels great when we give from the heart. Being generous is a sure way to be happy. (that’s why Keith write books, teach seminars on success – give people the knowledge they can use to make a long-term improvement) Understand the Law of Sowing and Reaping (Law of Causes and Effects in Buddism)

Distinction 5: Millionaires work for profits. The middle class works for wages. Wages are the pay we receive for the work we do. Profits are the result of buying something for one price and selling it for a higher price. Learn to earn profits, then sky is the limit.

Distinction 6: Millionaires continually learn and grow. The middle class thinks learning ended with school. Success is a process, a journey. The more money you spend on financial knowledge, the more money you will make. By reading more (even if it is just a concept in each book), we compressed time and learn financial secrets that took others years to discover. M invest in their knowledge with people who have achieved success that they want for themselves. Wisdom is Applied Knowledge. Focus on personal growth, love life. True success involves peace and contentment.

Distinction 7: Millionaires take claculated risks. The middle class is afraid to take risks. The only way out of the rat race for the MC is to take calculated risks. Calculated Risks means to gain knowledge first, consider the consequences of failing before taking action. 3 fears of the MC: Fear of Failure, Rejection, Loss. Fear can be overcomed with knowledege. Failure is part of the path to success – Embrace it and become wiser. We must want to succeed more than we want the acceptance of other people. Losing is part of winning. Live like you were dying – take more risks, take more time to reflect, do more things that would live on after we are gone.

Practice risk management with 3 questions:

1. What’s the best thing that could happen?

2. What’s the worst thing that could happen?

3. What’s the most likely thing to happen?

Distinction 8: Millionaires embrace change. The middle class is threatened by change. “For the timid in our society, change is frightening. For the comfortable, change is threatening. For the truly confident among us, change is opportunity.” – Nido Qubein, Mentor of Keith. Confidence is acquired thru preparation, hard work, result of working on ourselves, believing we can do whatever we choose to. We can choose or wish to be rich but remember that Choice is backed by a belief that we can do it, Wish is backed by a doubt that we can. Fear blinds us to opportunities – so develop confidence, learn to accept change and fear will become False Evidence Appearing Real. People are born to learn and grow. Change is good!

Distinction 9: Millionaires talk about ideas. The middle class talks about things and other people. “Big people talk about ideas, average people talk about things, and small people talk about other people.” What do you spend your time talking about? Ideas, things or people? M do talk about people and things. M compliments people for what they did right. M shares notes and books with each other. The power of our words create the experiences of our life; so change our vocabulary, stop complaining and start learning. Learn to develop gratitude. The lessons of life come to teach us to look at life from new perspectives. This leads to new ideas.

Distinction 10: Millionaires think long-term. The middle class thinks short-term. Give up scarcity mentality (money is in abundance!). Make long-term thinking a habit to release its power. Thinking long-term requires patience and patience is an asset. Thinking long-term builds relationship. Thinking long-term builds health. Thinking long-term develops perserverance. The secret of M: Do what you love to do to make money. Keith concludes with the concept of repetition to train our mind to think differently.

Remember, Success is a Journey. To read more about Keith’s free sharing, goto http://keithcameronsmith.com/. You can also download his book at eBooks.com – Download a book today. Get 20% off at eBooks.com! Another realisation

I’d after reading this book is, “Diversification spreads risks. Knowledge reduces risks”. If I want to increase my wealth, I must choose to, commit to, plan to and act to achieve wisdom, not just diverse.

7 Habits of a Wise Saver by PDIC

Some rural banks have been known to offer generous interest rates on their deposit accounts. And as the rural banks under the Legacy group have shown a few of these banks are really just out to scam people out of their hard-earned money. So, exercise extreme caution when deciding where to put your money. Learn PDIC’s 7 habits for safe and responsible banking. These are timely reminders during the observance of the Rural Banking Week from August 24 to 28, 2009.

The 7 Habits of a Wise Saver PDIC “Be a Wise Saver” campaign

1. Know your bank Know the owners of your bank – the people behind it and the people who manage it. Find out and ask about your bank’s finances and its strengths and weaknesses. PDIC, BSP, SEC, and your bank’s websites, newspapers, magazines, television and radio will provide most of the information you need.

2. Know your bank products Understand where you place your cash. Don’t confuse investments with regular deposits. Read and understand the fine print and don’t hesitate to clarify with bank personnel terms and conditions that are not clear.

3. Know your bank’s services and fees Choose the right bank for you by knowing your needs and matching these with your bank’s services. Be aware of bank charges and fees.

4. Keep your bank records safe and updated Secure your passbook, ATM, certificate of time deposit (CTD), checkbook and other bank records at all times. Have your passbook and CTDs updated every time you do a transaction. Inform your bank whenever there are changes in your contact details to avoid bank mails with sensitive information getting into the wrong hands.

5. Transact only inside the bank with authorized bank personnel Do not hesitate to ask personnel to present an ID and always ask for proof of your transaction.

6. Be informed about PDIC deposit insurance PDIC guarantees deposits up to P500,000 per depositor. Investment products, fraudulent accounts, laundered money and deposit products from unsafe and unsound banking practices are not covered by insurance.

7. Be cautious Simply walk away from offers that are too good to be true. Generally, excessively high interest rates carry more risks. Please refer to Bangko Sentral ng Pilipinas Circular 640 (http://www.pinoysma rtsavers. com/c640. pdf) for more information.

Investing on Land vs Investing on Condominiums

Land vs Condominiums

 

Given a particular location, many Filipino buyers contemplate on whether to buy land (this includes House & Lots and Townhouses), or a condominium for which to live in or invest in. Allow me to enumerate the advantages and disadvantages of each below…

LAND – ADVANTAGES   Your Living Space tends to be BIGGER You have more privacy for your family Land will always remain present no matter how many houses you build on it, so it can be passed on to future generations of your family Land values appreciate over time (since they don’t make new land) You can have your own garden, garage, and even a swimming pool if it’s big enough and if you’re rich enough

LAND – DISADVANTAGES  More expensive especially if you want to live in highly developed areas – these prime lands are usually high-end private villages with large lots and hefty prices All the repairs and maintenance of the house will be shouldered by you Cheaper Lands are usually farther from highly developed areas and offices

CONDOMINIUMS – ADVANTAGES  Locations are usually very near the highly developed areas which house offices and malls, making it very convenient in terms of travel expenses Available in small sizes, which allow small families and individuals to live in highly-urbanized areas as well Enjoy the Amenities like the Swimming Pool, the Gym, and Function Rooms Commands higher Rental Revenues and Income to Investors Repairs and maintenance of the Condominium will be taken care by the Condominium  Administration like the electricity, water piping, maintenance of the amenities, building facade and interiors

CONDOMINIUMS – DISADVANTAGES  Living Spaces tend to be smaller Monthly dues can be burdensome especially for big-sized condominium units Building itself depreciates over time, although the land value increases High density – you have plenty of neighbors sharing the same building and amenities

Know what you’re investing into – Think about these given observations first before choosing between a land or a condominium in your desired Philippine Property location. Depending on your available finances, your preferences and your dislakes, you should be able to discern whether a landed property or a condominium suits you and your family better.

Choose well!

Article by Terence Ong (http://www.realestatephilippinesblog.com)

Eight Most Common Credit Card Myths

Credit card debt seems to be the gripe of so many.  The recent credit crunch only makes things worse.  Are people doing so many things wrong when it comes to credit cards, then?  If they are, credit card debt myths are partly to blame.  There are so many of them out there, lining up on both extremes: some debts make the situation appear to be totally hopeless, while others make people just a little more complacent.  Either way, a credit card debt myth is a financial troublemaker that needs to be completely debunked.  Here are eight of the most common myths on credit card debts and the truth behind them:

Myth #1: Credit card companies send applications to those who can afford it

 

Think about it logically: how can credit card companies research each and every household they plan to send an application to?The time they could spend on doing just that they’d rather spend on making mailing lists and sending as many applications as they can.  It is just like a more personal take on advertising.  The credit card companies just want you to be aware of the services that they are offering.  So when you get a handful of credit card applications from various banks, it does not mean that you can afford any of the deals they are offering.  Maybe you are even better off without a credit card at all.

Myth #2: Pay the minimum balance and you will be fine

If you are so confident about your credit card debt because you tend to zero in on how much the minimum payment is, you will end up in deep financial trouble.  Think about the balance that you left last month and then add up the balance you will leave this month because you are paying only the minimum.  Calculate the interest that will result in all those left-over balances and you know that you have gotten yourself deep under a pile of debt.  Not only that, think about the state your credit score will be in after all this: terrible, just terrible.

Myth #3: Using a debt consolidation company is easy

You probably think that since you are deep in debt, there is no other way for you to pay everything off but by hiring the services of a debt consolidation company.  It won’t be easy, however.  There are many things that you should consider about a consolidation company.  Can you afford its service?  Remember that you are already deep in debt.  Is it a reliable company?  There are debt consolidation companies that operate under the radar; they cannot be trusted with your money.   Is it superior to your ability to pay off all your debts yourself?  Maybe, it is. However, if you have enough discipline to pay the company a certain amount, you can have enough discipline to consolidate your own debts.

Myth #4: You only have one credit score

Having one credit score may be neat, especially for those with nice scores.  It may be a disaster if your score is a mess.  You actually have three credit scores from three main credit agencies.  Pray that your best-looking record will be referred to when your credit history gets checked out.

Myth #5: You only need to cancel a credit card to improve your credit score

When you close a credit card account, you only give yourself a little bit more control over your finances.  You have fewer or no credit cards left after the cancellation.  However, closing the account will not improve your credit card score at all.  You also shorten your credit age, which is an important factor in your credit score.

Myth #6: Your negative record remains in your credit score for seven years

Bad credit record does not have to stick around for seven years or for any other period of time. In fact, you can actually negotiate to have a record removed. One way to negotiate with creditors is, of course, by paying the debt.  You will just ask for the creditors to eliminate the record that states that you have been awfully late with your payments.  You do not even have to be completely paid to negotiate with your creditors; you can actually promise to pay them within a certain period of time.

Myth #7: All three major credit bureaus will have identical reports

Refer to the debunking of the myth that says you have only one credit score.  The three companies do not have the same records. The reason for this?  Not all of your creditors get to report to every company. So, the more creditors you have, then the more likely your three reports are completely different from each other.

 

 

Myth #8: Credit cards are your little helpers

 

 

Credit cards may seem like free cash, especially at first.  However, they are also very expensive to maintain.

 

Instead of paying for the retail price of a product, you end up paying not only the retail price but also the interest.  If you have not been able to pay all your balances every month, you will end up paying so much more.  To put things to the extreme end, credit cards cannot really offer a lot of positive things, except letting you buy things that you should not buy anyway. Most people have become so dependent on credit cards that one of the popular myths has arisen:  credit card makes you afford things and without it you cannot afford anything.  The truth is that you should not use your credit card to buy extremely expensive items in the first place: it would take a long time and heavy interest fees for them to get paid.

There are still a lot of credit-related myths out there.  Educate yourself about credit cards in general.  This way, you can debunk the remaining myths and keep away from credit mistakes that can drive you towards bankruptcy.  If you can manage your finances with cash, try to stick with it.  Remember the time when you applied for a credit card for emergency purposes?  Try to steer yourself back in time

The Rule of 72: How Long Will it Take to DOUBLE Your Money?

That if you divide the figure 72 with your desired interest rate you’ll get the approximate number of years when your money can double in value?

 

For example, if you have an account earning at 18% per annum, divide 72 with 18 and you’ll get 4. Therefore, it would take approximately 4 years for your money to double with an 18% annual interest.

 

For example, if you have P100,000 in an instrument earning at 18% per annum, your money will become P200,000 after a little over 4 years. Wait another 4 years and this will grow to P400,000. And another 4 years, P800,000. Or you can also use the reverse formula. If you want to know what interest rate would you require if you want to double your money in the X number of years: 72 ÷ number of years = interest rate.

 

Applying the equation, if you want to double your money in 5 years time, your interest rate in your chosen financial instrument should be about 14.4% per annum.

8 WAYS TO RAISE FUNDS FOR YOUR BUSINESS

Many people are afraid to go to business because they don’t want to gamble their life savings away; the good news is you don’t have to.

 

There are many alternatives that entrepreneurs can avail of; in fact banks are mandated by law to allocate at least 8 percent of their net lending portfolio to small businesses.

 

With a piece of encouraging news in mind, here are few ways to obtain capital in your business:

 

01.) TAKE OUT A PERSONAL LOAN

 

HOW IT WORKS:

 

Unlike bank loans, a personal loan is far easier to secure as it is usually based on the borrower’s integrity and ability to pay, and is not dependent on collateral, If you are currently employed, you can also take out what is called a salary loan.

 

Here in the Philippines, personal loans are available through government institutions such as the Government Service Insurance System (GSIS), Social Security System (SSS), Small Business Corp (www.sbgfc.org.ph) or the Department of Trade and Industry (DTI).

 

There are also micro-financiers willing to provide start-up capital to people without the need of collateral: all they require is a sound business plan and credibility.

 

PROS: Personal loan institutions can lend amount for as low as Php 5,000.00, perfect for entrepreneurs who want to start in small scale. Interest rates are also lower than commercial bank loans —- 8 to 9 percent for terms for less than one year. To get a full list of micro-finance providers, go to www.napc.gov.ph.

 

CONS: Make sure that you are not remiss in your contributions to the GSIS or the SSS: otherwise you are ineligible to apply for loan.

 

02.) OBTAIN A BANK LOAN

 

HOW IT WORKS:

 

The banking world is always on the lookout for good investments. Investors are keen to grow their money, and if your business plan is sound, a bank might agree to be your partner in business.

 

PROS: The financial strengths of banks make them good partners—as your business grows, a strong bank has the financial wherewithal to grow with your needs. Two SME friendly banks are Planters Development Bank (www.plantersbank.com.ph) and Bank of Philippine Islands (www.bpi.com.ph)

 

CONS: Interest rates on a personal bank loan are advertise at 1.10 percent per month—around 23.5 percent per annum—although business–specific SME loans are offered at lower rates. Also you will be required to provide collateral for the loan (house, car, etc.).

 

03.) ENTER INTO A JOINT VENTURE

 

HOW IT WORKS:

 

Pool your resources and start a business with partners who share your vision! The extra strength of teamwork can succeed where one alone might fall.

 

PROS: Each can contribute to the business startup capital, as well as through their individual business strengths. One may be a strong accountant, another excellent in sales and marketing.

 

CONS: Going into business with friends or family can put a strain on relationships if things become difficult, particularly is one member’s passion for the work is not there. So be careful who you go into business with, because feelings might get hurt.

 

04.) USE CREDIT CARDS

 

HOW IT WORKS:

 

If you qualify for a credit card or have an existing card, this is an easily accessible resource for starting your business—whether to buy equipment, pay suppliers, or change operational expenses.

 

PROS: A credit card is as good as cash. Just make sure that your spending limit can cover your expenses.

 

CONS: Watch what you are charging, because credit card debt can get out of control. And when you find yourself unable to pay off the debt, you will face penalties as high as 3.5 percent interest per month! Even worse: this interest also compounds every month—whatever interest you don’t pay this month adds to the capital next month.

One suggestion to avoid mounting credit card debt is to mind your cut-off date—make purchases right after the cut—off date so that it get’s reflected in next month’s bill, giving you time to save up.

 

05.) AVAIL OF CHECK REDISCOUNTING

 

HOW IT WORKS:

 

You provide a post-dated check to lender—say Php10, 000.00 dated months ahead—and in return they give you that same amount in cash but minus interest, i.e. Php9, 500 at 5 percent interest at the end of the month (or whatever the terms are), they cash your check.

 

PROS: This can be a useful way to meet short-term business cash—flow needs– e.g. a supplier’s deposit on a product for which you have a confirmed buyer.

 

CONS: If your cash—flow does not cover the cashing of the post-dated check you may incur penalties from your bank or financier. A variation of this is check kiting, wherein you write a check for money not in the account, and then deposit money to cover the account by writing another check that does not have sufficient funds to cover it. This is illegal and could land you in prison. In addition, interests rated tend to be monthly rather than yearly, resulting into a comparatively high rate of interest.

 

06.) TRY CONSIGNING

 

HOW IT WORKS:

 

Consigning works on selling goods on behalf of a supplier, with payment due upon sale. Either you tack on your commission when you sell the product, or your supplier pays you an agreed–upon percentage afterwards.

 

PROS: This lets you generate money through selling without needing to purchase inventory. Good relationships may provide healthy repeat business.

 

CONS: Your commission will not be as great as what you would earn for your own items. In addition, higher value items may not be accessible on consignment terms.

 

07.) LIQUIDATE PORTFOLIO INVESTMENTS

 

HOW IT WORKS:

 

Portfolio investments include stocks, bonds, and mutual funds. Because they’re your own assets, you are more careful with how you will spend them.

 

PROS: If your business takes off, your return on investments will be more than if it was just left in a mutual fund. On the other hand, if your business fails, at least you won’t be burdened with the pressure of having to pay interests on unpaid loan, unlike if you borrowed, say, a bank.

 

CONS: When you cash in your investments, you are risking your own savings, so be sure you do not go into business unprepared.

 

08.) TAP A VENTURE CAPITALIST

 

HOW IT WORKS:

 

Strictly speaking, venture capital is not a loan that needs to be repaid; rather, venture capitalists (VCs) invest their money in exchange for an ownership share in your company. You may search for Filipino VCs by logging on to the brain gain (www.bgn.org).

 

PROS: VCs have a wealth of experience and an extensive network which you can tap to enhance you business.

 

CONS: You are no longer the sole owner of your company and lose free reign over running the business; certain decisions, for example, need to be run past VCs first before they can be implemented. But however you raised capital, remember the golden rules: never borrow more than you can pay, and always pay promptly. When you have a good credit history with your lenders or investors, they will happily continue to do business with you in the future.

 

Note: Article by JONATHAN RICKARD & JACLYN LUTANCO-CHUA

 

 

 

 

Guide when Buying Real Estate in the Philippines (Part 2)

Taxes, Commission & RegistrationThis is the standard sharing of expenses between the buyer and the seller when transferring the real estate property title (TCT – Transfer Certificate of Title or CCT – Condominium Certificate of Title) to a new owner:

 

The SELLER pays for the:

    * Capital Gains Tax equivalent to 6% of the selling price of the property. (Withholding Tax if the seller is a corporation)
    * All unpaid taxes due (if any).
    * Agent / Broker’s commission.

The BUYER pays for the:

    * Documentary Stamp Tax – 1.5% of the selling price or zonal value or fair market value, which ever is higher.
    * Transfer Tax – 0.5% of the selling price, or zonal value or fair market value, which ever is higher.
    * Registration Fee – 0.25% of the selling price, or zonal value or fair market value, which ever is higher.

Incidental and miscellaneous expenses incurred during the registration process.
The above sharing of expenses is the standard practice in the Philippines. However, buyers and sellers can mutually agree on other terms as long as it is done during the negotiation period (before the signing of the “Deed of Sale”).

The “Deed of Sale” or “Deed of Absolute Sale” is the document showing legal transfer of real estate property ownership. The deed of sale is then taken to the Registry of Deeds to be officially recorded after paying the documentary stamp, transfer tax and registration fees. Always verify from the Registry of Deeds the authenticity of a Transfer Certificate of Title before buying a property. If the seller only has a tax declaration, be extra cautious and check with neighbours, the Barangay captain or anyone in the know in the community to verify the seller/owner’s true identity and the property’s history.

Your Agent / Broker will usually do the registration process (sometimes for a fee), however, all government , taxes, transfer fees and incidental or miscellaneous expenses will be shouldered by the buyer.

Documents needed when transferring the title (TCT or CCT) to the new owner:

    * Certified true copy of the title
    * Copies of the Deed of Absolute Sale
    * Latest tax declaration of the property
    * Certificate from the Bureau of Internal Revenue that the capital gains tax and documentary stamps have been paid
    * Receipt of payment of the transfer tax and registration fees

An adapted form of the “Torrens” system of land registration is used in the Philippines. The system was adapted to assure a buyer that if he buys a land covered by an Original Certificate of Title (OCT) or the Transfer Certificate of Title (TCT) issued by the Registry of Deeds, the same will be absolute, indefeasible and imprescriptible.

_{source:http://real-estate-guide.philsite.net}

Guide when Buying Real Estate in the Philippines

Tips Before Buying Real Estate in the Philippines

Here are tips a buyer must remember before buying any property in the Philippines, specially if you are buying a single property from an individual:

1. Make sure the “Transfer Certificate of Title” is authentic. The easiest way to check if the title to the property you are buying is authentic is by getting “Certified True Copy” of the title from the Register of Deeds. This office is usually located at the city or municipal hall where the property is located. Ask the seller of the property for a photocopy of the title -you will need the title number and the name of the owner to get a certified true copy of the title from the Register of Deeds.

2. Verify that title is clean – meaning the property is not mortgaged (no liens & encumbrances on the property). You can see that at the back of the title with the heading “Encumbrances”. This page must be empty if you are told that the title is “clean”. But sometimes the space for the technical description of the property on the front page of the title is not enough and the description of the property is continued on the “Encumbrances” page, this is of course all right.

3. Make sure that the land described on the title is really the land that you are buying. You can validate this at the Register of Deeds or by hiring a private land surveyor or a geodetic engineer. Land titles don’t have any street name and number to pin point a property, it is a must to confirm that the actual property you are buying matches the technical description on the Transfer Certificate of Title.

4. Make sure that the sellers are the real owners. If you are buying from an individual property owner, ask for identification papers like passport or driver’s license, it is also a good idea to talk to the neighbors or the Barangay Captain to confirm the identity of the sellers (you might as well ask some history of the property).

5. Confirm that the yearly real estate taxes are paid. Ask for certified true copies of the Tax Declaration and original Tax Receipts to confirm that real estate tax payments are up to date. If the above check list is in order, it is generally safe to proceed with the purchase of real estate in the Philippines.

Source:http://real-estate-guide.philsite.net

Financial planning through the ages

Sunlife President Henry Joseph Herrera talks about how Filipinos can be financially free by age 60.

Every person has unique personal finance challenges. This makes writing about the topic quite tricky. However, going through the questions you send me tells me that certain age groups go through similar logjams. And similar exciting turns, too. The best resource I’ve seen so far on financial planning through the ages is The Wall Street Journal’s Lifetime Guide To Money.

I thumbed through it to share with you some principles that might help beginners going through the maze of life and finances. I adjusted some of them for Filipno-centric concerns. This could also work as a reminder to those who need to reassess their paths.

For 20 and 30-somethings

“Whatever your goals, the sooner you start saving, the less painful it will be. Once you have made a start, you will find that there is a special satisfaction in facing up to the challenge. Honest.”

Important things to remember:

• Automate your savings
• Start with saving at least 10 percent of your income and increase from there
• Start setting up an emergency fund up to six months of your living expenses
• Invest unexpected windfalls instead of spending them on gadgets or gimmicks
• Try mutual funds
• Inquire about your company’s retirement plan package
• Invest in stocks if you have the stomach for the roller coaster ride in the market. Over long periods, stocks have gone up much more than they have gone down
• Consider bonds if you are a conservative investor
• How much to invest for the long-haul? A rule of thumb says you should subtract your age from 100 and then add a percentage sign
• Just say no to debt other than a home mortgage
• If you can’t live without plastic, pay the entire balance each month
• If you have debt and have savings, take out your money from the bank and pay your debt. Paying off a loan can be one of the biggest investments you can make
• Review your health benefits at work to make sure you have the coverage you need
• Even if you are just renting an apartment, be sure you have insurance on the contents
• You do not need life insurance if you have no dependents. Once you have children (or if your parents are now dependent on you), you will probably need more than at any later time in life
• No-frills term insurance is usually the simplest and lowest cost option
• Think carefully about buying a house versus renting. Since the fees can be steep, buy a home only if you are going to live in it and do not need to relocate in a few years
• Buy only a house you can afford. A lot of people end up getting strapped for cash because of the tendency to stretch themselves to buy the biggest house they can
• Start thinking about writing a will

For 40 and 50-somethings

“These years can be a real juggling act, particularly for people who had their children in their 30s. With retirement beginning to loom in the horizon, these are the years when most people become more serious about setting money aside. Ideally, these are high-earning years in which you have plenty of income to sock away.”

Important things to remember:

• Take a hard look at what you can really afford, making sure you are providing for future needs
• Be realistic about retirement
• Watch out for tax-advantaged retirement funds that may begin due to the recently-signed PERA bill and prepare to maximize them
• Structure your portfolio for strong performance, while working to keep it simple
• Check your safety net (insurance) for holes. Find out whether you have enough
• Plan your career well. Leaving your long-time employer for a lucrative offer may affect your retirement benefits
• Consider getting additional academic training or start a sideline business that might grow into a new career
• Be extra cautious about trying to retire completely while still in your 50s because of the risk of outliving your money
• Talk with your spouse about how much of your children’s college costs you can bear while saving for retirement at the same time
• Beware of the temptation to dip into your retirement fund for a vacation or buy a new car
• Think twice about moving to a bigger, more expensive home that could seem way too large when the kids move out
• Go through the clutter of your investments to make sure they are working hard for you
• Think about how your family would fare if you are disabled and unable to bring home a check
• Even if you do not feel wealthy, figure out how much estate-tax bite would affect your estate

Your 60s and beyond

“The period of life that begins at 60 is characterized by sweeping lifestyle changes—and by some momentous financial decisions that can affect you and your family for many years to come.”

Important things to remember:

• Have a vibrant, active retirement but do not rush into it before you can really afford it
• Tend your resources carefully by investing prudently but not too conservatively
• Arrange your affairs so that a surviving spouse will be provided for and assets divvied up appropriately after death
• Review your medical coverage when deciding when to leave work
• If you receive a lump-sum payment from your employer upon retirement, that can be the biggest lump sum you will ever get. Make sure you learn all about investing and don’t invest it in scams
• Be wary of taking too much risk and too little risk
• Stick to time-tested vehicles such as mutual funds and bank accounts
• Watch for how fast you draw down from your accumulated savings. In the early years of retirement, unless your wealth is immense, you should use only a small part of your savings for living expenses
• Get help on estate tax planning
• Do not feel obliged to preserve all your wealth for others.
• Enjoy your retirement

Nothing like a checklist to keep things simple and clear

Mutual Funds Facts & Figures

*** 4 Types of Mutual Funds

1. Stocks

2. Balance

3. Bond

4. Money Market

 

*** There are 22 Available Mutual Funds in the Philippines

– 6 are Bond Funds

– 5 are Stocks Invetsments

– 10 are Balanced Funds

– 1 is a Money Market Fund

 

*** 5 Things to make you want to try Mutual Funds

1. Professional fund management

2. Low investment requirement

3. Access to diversification

4. Liquid and convenient

5. Sound and prudent investment

 

* all figures wa staken from the Investment Company Association of the Philippines (ICAP); www.icap.com.ph