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The title was a quote by Benjamin Franklin.
Ten years ago, when I first started working, an insurance broker came to me and offered me something which I did not really understood back then. Because I did not know what it was really for, I just allowed it to lapse. My premiums for a few years, around Php100k just went down the drain.
Three years ago, another insurance broker talked to me. I know her personally so there I was again, signing a policy contract that I do not understand. After a few months, when I started learning about financials, I came back to my insurance broker and asked how much will my kids get in case something happens to me. She said it was a measly Php150,000. Surprised, I asked, "Just that?!" Well, that was what I unknowingly signed up for. And thinking that I will be wasting more money if I continue with this particular policy that I do not need, I made it lapse again. This product does not answer my main concern which is financial security for my dependents when God calls me home. And again, my hard-earned money went down the drain. To my recall, I think I have also wasted three-digits for that.
This is the price I had to pay for lack of knowledge, or lack of interest to learn.
Last year, I met a new friend who works in a leading insurance company (#1 to be exact). She did not offer me insurance. But since she has been reading my blog, she offered me to join her team. Seeing this as an opportunity to learn and also earn on the side, I said YES without thinking twice.
Before 2013 ended, I was a licensed financial advisor myself. Knowing what exactly me and my family's financial needs and wants, most of my bonuses from work went to getting four insurance policies. A life insurance for me and my husband, and an investment plan that gives GUARANTEED allowance for each of my children for as long as they live with coverage that their beneficiaries (my grandchildren) will receive when they expire. And yes, these came cheap. I work as a rank and file so my bonuses were not really that huge.
Last year, at age 32, I started investing for my retirement. With PHp42,200 paid semi-annually (Php80,000 if annually) for ten years only, invested in the stock market, I will be retiring at 65 with Php15M. If I started earlier, this could have been bigger since TIME is our greatest ally in investing. But then again, better late than never. Yes, I honestly think I started investing late in life. So, if you haven't started investing yet, whatever your age may be now, I encourage you to START NOW. Remember, investing for your retirement just a few years before you retire is like learning to swim when the boat is already sinking.
I told my friend about this particular policy plan and he was in disbelief. I told him that is possible using COMPOUNDED INTEREST. It is the same force that works on your credit card debt every time you pay only the minimum. If you own a credit card, make it a rule of thumb to PAY IN FULL ALWAYS.
Make compounded interest work for you. Talk to your financial advisor (ahem!). Avoid insurance brokers who will only try to sell you whatever it is that gives them huge commissions. Check their financial backgrounds first and make sure not to get money advice from broke people. As one of my mentor says, the most expensive advice is the free advice that you get then sells you something you don't need.
Make sure that your financial advisor provides you with an investment/insurance product that answers your need and is also within your budget. Invest only the amount that will not compromise your lifestyle. With lifestyle, I would mean simple living okay? Never buy an investment product that you cannot afford or else your policy will only lapse. Check also the background of the company. Make sure that they are registered with the Insurance Commission and have been in the business for a hundred years surpassing even a stock market crash.
Do not wait for better days to start investing. You can start with Php20,000 per year (less than Php2,000 per month) and increase it as your income increases or your expenses decreases. When you realize the value of investing and how it serves as a bridge towards achieving your financial dreams, setting aside for money for this bridge would be easy. Next to tithing (which is the best investment), investing for your future will be your priority.
For your financial concerns, you may post your comments below or send us a message in our Facebook page Financial Planning for Pinoys.
Happy investing!
P.S. Finally decided to start investing? Send me an email at jssalandanan@gmail.com .
