Insurance, Anyone?

I work as a fieldman driving 80 kms per day on average. This makes my job of higher risk compared to those working in the office. Because of this, our company provides us with insurance. Aside from this, I availed a term insurance so that I am still covered even if I am already unemployed.

But what is insurance for, really?

The purpose of insurance is simple: If God calls you home today, your children will not go hungry. 

Buy insurance if you have people depending on your income. Not when you do not even have kids or aging parents to support. So that when your income disappears because you disappear, the insurance money will take care of them.

Plain and simple.

Buy Term Insurance

Wikipedia defines it as this. Term insurance is a type of life insurance policy that provides coverage for a certain period of time, or a specified "term" of years. If the insured dies during the time period specified in the policy and the policy is active - or in force - then a death benefit will be paid.

For people like us who are learning how to invest, we should buy pure and term insurance. 

We avail of term insurance while we build our wealth with the goal of being self-insured. This is mainly because building wealth does not happen overtime. It takes years. And while we are in the process of doing that, we buy term insurance.

It is the cheapest insurance. How cheap you may ask? In my case, at age 31, with Php1 million coverage (which doubles in case I die by accident), it costs Php5,340 per year.

So my suggestion is, buy only what you need. Buy term insurance and invest the difference.

Happy investing!

The First Step To Making Money In The Stock Market Is To Learn

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I have been investing in the stock market for a year now. And as expected, I get a lot of questions regarding this subject. Friends and workmates ask me how I started doing this, who my stockbroker is, how much amount is needed to start investing, if you could withdraw your funds anytime, or how much interest will it yield in a year. While most people are interested, there are also those who are fearful, thinking that investing in the stock market is risky. This blog aims to answer those questions.

People Fear What They Do Not Understand

This is mainly the reason why I encourage you to keep learning. It eliminates the fear.

I hear people say that investing in the stock market is risky. This is what I tell them. Everyday we are faced with different risks. Crossing the street is risky. For my fellow fieldmen, hours of driving is risky. (Note: Please get insurance.) Starting a business is risky. Even being employed in a huge company is risky when it decides to reduce costs in response to economic difficulty through letting go of its loyal employees.

More ofthen than not, we just have to weigh the risk versus the reward. If you learn the rules of investing, you will understand that the risk is nothing compared to the reward.

Two Ways of Investing in the Stock Market

Basically, there are two ways to invest in the stock market. Directly and indirectly.

You can invest indirectly through a Mutual Fund Company. There are a number of great ones around. You could earn around 12 percent per year. Through mutual funds, you have a fund manager who buys and sells stocks on your behalf. This is perfect for people who want to invest in the stock market, but do not have the time to learn how it works, and time to do it.

Last year, when the stock market was on sale, meaning you can buy great companies at lower prices, my cousin wanted to start investing. She wanted to do it directly, but unfortunately, she never had the time. Her money in the bank, which was supposed to be for her first investment, became liquid due to left and right mall sale. Now, she is starting to save again, and plans on investing indirectly instead.

Yes, you can invest in the stock market directly. This is how we invest at the Truly Rich Club. According to my mentor, there are only two acceptable ways of investing in the stock market: through Money Cost Averaging and Strategic Averaging Method (which we call SAM that was mainly developed for the Truly Rich Club). We faithfully follow our SAM because we grow our money in a quicker way.

When you invest directly, aside from the time to study how the market works, and time for buying and selling, you must also have the discipline to do it every month.

Choose which works for you. And when you have decided, make the commitment to do it TODAY. Make your first million through the stock market.

Happy investing!

Invest in the Future Before the Present



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As I write the word "Future" in the title, the first thing that came into my mind were my children -- which explains why I chose the photo above. They are my strong emotional why for pursuing financial freedom and why I choose to invest in the future before the present.

 

As my mentor taught me, there are only two money strategies in the world. And the money strategy that you use determines whether you will become rich or poor in your old age.

 

The Money Strategy of the Poor

 

Income - Expense = Tithes and Investments

 

 

This formula means that the moment you receive your income, you first subtract your expenses, and then tithe and invest from whatever is left.

 

 

Even I used this strategy in the past. I have friends who use this strategy until now. I even hear them say that they will start to invest with whatever is left from their income. And I think nothing is left, because they have not started investing until now.

 

 

The Money Strategy of the Rich

 

Income - Tithes and Investments = Expenses

 

 

This winning formula means that the moment you receive your income, you first subtract your tithes (10%) and investments (20%), and then live on whatever is left.



 

This formula teaches you to invest in your future before you invest in your present. 

 

 

Millionaires Who Went Bankrupt

 

The other day, I read an article about music stars who blew millions and went bankrupt. One of which was Lady Gaga who admitted that she was left bankrupt after spending millions on crazy outfits for her Monster Ball tour.

 

Sixty percent of NBA players go bankrupt five years after they retire. Scottie Pippen earned $120 million in his basketball career, but went bankrupt.

 

In the NFL, eighty percent of football players go bankrupt after just two years.

 

Evander Holyfield earned $250 million and Mike Tyson earned $400 million, both of them got bankrupt.

 

Why?

 

Because all of them used the money strategy of the poor. Again, it is not how much you earn, but how much you invest.

 

I urge you to use the money strategy of the rich:

 

Income - Tithes and Investments = Expenses

 

If you do, you even get to enjoy two fantastic bonuses.

 

Bonus #1: No More Budgeting

 

Until last year, I used to have this cash flow graph wherein I input my income and expenses every month. But this year, I gave up. I realized it was tedious and time consuming.

 

I've stopped budgeting my money -- the way most people define it. Yes, I still have a list of my income every month, so I am reminded of how God has blessed me abundantly. But for my very simple budget, I just use The Abundance Formula taught by my mentor: 100-10-20-70 and that's just it!

 

I set aside my tithes (10%) and investments (20%) and live within 70% of my income.

 

Bonus #2: No More Fighting

 

A huge percent of couples argue about money. The husband's priority is different from that of the wife's. Fortunately, for a few years now, my husband and I have not fought about money. Even if he sees me buying a new stuff, he does not argue with me about that purchase. Why? Because he knows that I have already set aside money for our future.

 

Why argue about that? Over time, my husband has learned to trust my financial decisions. During dinner last week, I told him that my VUL from Insular Life can shoulder one of our daughter's college expenses. And that definitely put a smile on his face. He knew that will give him less future expenses to worry about. With improved financial planning, our marriage has become so much better now.

 

 

Rule: Invest in the future before you invest in the present.

 

Ask Yourself: Have I been Investing in the Future Before the Present?

 

Over time, I have been given the privilege to listen to my friends' and workmates' financial stories. They tell me about their personal struggles with money, how they have been spending it lavishly and left with nothing for investment.

 

Last week, one workmate shared, "Tulad 'tong relo ko, binili ko ng Php12,000, pero kapag tinitignan ko ngayon, masaya ba ako?" (Like this watch, I bought it for Php12,000, but looking at it now, does it make me happy?) Maybe it gave her joy, but only short-term.

 

Based from my experience, during the time when I love spending on the latest gadgets and watches, I did not find happiness in those purchases.

 

Let me share a quote from one of my most favorite books, Tuesdays with Morrie by Mitch Albom, "If you are trying to show off for people at the top, forget it. They will look down on you anyhow. And if you are trying to show off for people at the bottom, for get it. They will only envy you. Status will get you nowhere. Only an open heart will allow you to float equally between everyone."

 

This is how volunteerism and child sponsorship came in. I found long term joy knowing that I am able to make a difference in someone else's life.

 

When a friend commends me about my blog, how they can relate to my stories, and how I have inspired them to change their financial situation, I am overjoyed. And that is where I invest part of my money now -- in trainings and books for better financial planning.

 

I also realized that my random purchases, like using the latest phone or wearing a new watch DO NOT ADD VALUE to who I am as a person. Why? Because these are not real assets. My net worth does not increase with these items. An asset is simply defined as something that puts money into your pocket. Many people are still confused with that thinking that the things they own are assets, when they are actually liabilities, draining money from their pockets over time.

 

Invest for Your Long Term Goals

 

Many of the working moms dream of being a full-time housewife. Admittedly, I am one of those. Actually, I share this dream with my kids. That one day, when Mommy is no longer an employee, I can drive them to school everyday, and attend to their needs everyday. I will be like the Mommy of their classmates who don't go to work. (They are from very rich families, by the way.) You may think that doing this will only give them false hopes. On the contrary, doing this forces me to act on this dream every single day.

 

When I talk to a friend who asks for financial advice, I first ask what will the investment be for. Why? Because as one of the 7 Habits of Highly Successful People says, BEGIN WITH THE END IN MIND. This will give you the direction that will lead you to where you want to be.

 

Again, invest in the future before the present.

 

P.S. If you find this post helpful, kindly click the SHARE buttons below.

 

P.S.2 I would love to hear about your long term goals! Send me an email anytime at jssalandanan@gmail.com.

 

Be very blessed!