Two weekends ago, I was at the Kerygma Conference 2014 held at SMX Convention Center in Mall of Asia. This is the biggest inspirational event in the country -- a time to deepen our faith in God and to learn new things about various interests.
Shown on the photo above is me with my mentor on entrepreneurship, Dean Pax Lapid. Today he launched a new book, How to Become a Happy Retiree: A Guide to Retiring Wealthy and Worthy in Your 40s. Now who does not want to know about that?! This is definitely one interesting topic.
Before the book signing, Dean Pax gave a talk about the same topic. Let me share with you some important notes.
1. If the reasons why you want to retire include a bad boss, burn out, office politics and tough commute, then just change jobs.
2. Anyone can prepare for a happy retirement. It is a mission possible with the right framework. We need to be ENLIGHTENED that retirement is not a pre-requisite to death. Death does not happen at 65. What if we live too long?
Remember that our social security pension will never be enough for a decent living. We also need to be ENCOURAGED to plan for our future. Lastly, we need the EXPERIENCE to grow our hard-earned money.
3. The most expensive advice is a free advice then sells you something you do not understand. Insurance brokers (who were called such because they are usually broker than you) are the perfect example for this.
Even I have experienced this in the past. I was given a VUL product, investment with a little insurance, although what I actually needed was only term insurance. I had no idea about the difference back then. So I was paying for something I do not need.
After reading financial books and a year of premium payments later, I just cancelled that policy and my money just went down the drain. I realized that I will only be wasting more money if I continue paying for it.
Some of my friends share the same sentiments with me.
One friend was given a VUL with Php7M life insurance. She is single and has no dependent. A bigger part of her premium payments could have been allocated to investments instead of insurance.
I have two workmates who have the same insurance broker -- and both of them did not understand what they actually signed up for. One of them, who is a very close friend, even asked me to talk to this broker, explain to me my friend's policy contract, and I am to explain it to my friend. After relaying it to him, his reply was, "Ah, ganun pala yun."
Before signing anything, please make sure that you understand every detail of the proposal. Make sure that it is tailor-fit based on where you are now (your budget) and where you want to be. That is the purpose of a VUL.
As a VUL client, these are my points of concern:
a. Profile of the insurance company
b. The amount of premium. This is computed based on your financial goals, but adjustable based on your budget. Although you don't invest what is left after spending, but you invest without sacrificing your lifestyle to the extreme. You can cut on your discretionary expenses and put these into investment instead.
c. The mode of premium payment, what you are most comfortable of. It may be monthly, quarterly, semi-annually or annually.
Personally, I prefer paying annually because it gives me less "payables" to think about every single month.
d. The sum insured.
Insurance has a lot of purpose. It does not only ensure that your family will not go hungry in case God calls you home. Insurance can be used to pay off mortgage and other debts. It can also cover your kids' educational fund. It can be for your retirement income. It can be your accumulated savings. It can be for charitable donations. It can be used to pay estate and death taxes.
e. The fund allocation.
Although this is based on your risk tolerance, it is your financial advisor's duty to explain to you the difference and which is most suited for you.
Last month, I saw my husband's annual policy report. He got this five years ago, he was 29 years old then. His investment fund was allocated in fixed income (low risk, low return). His money could've grown faster if it was invested in equity fund (high risk, high return). He wouldn't be needing the money anytime soon, anyways. After explaining the difference to my husband, we had his next premiums redirected to equity.
I appeal to financial brokers. Remember that our goal is to help Pinoys get out of debt and achieve financial freedom. Let us give them the best suited investment product for their goals, and not the one which gives the highest commission. Thank you very much.
4. Investing in foreigh currency (US$) is not a good investment. If you bought US$ back in 2006 where $1= Php53.07, you have already lost 16% of your investment as the Philippine Peso continues to depreciate, now at Php44.80 per US dollar.
6. The formula that we need to remember to live comfortably:
Passive Income + Active Income SHOULD ALWAYS BE GREATER than your Lifestyle
This may sound like a cliche, but live below your means but within your needs.
7. Money does not grow on trees. It does not grow on banks either. Learn to invest your money where it would beat inflation and make the wonder of compounded interest work for you, and not against you.
ONE LAST NOTE
Retirement is your responsibility. It is your response to your ability to prosper your money and family.
Credits to Dean Pax Lapid for sharing his slides. With these new learnings, may we see retirement in a WHOLE NEW WORLD.
Be very blessed!
P.S. Do you dream of being a wealthy and worthy retiree in your 40s? Learn how to grow your money directly in the stock market. Join the Truly Rich Club and be mentored by Dean Pax Lapid.
P.S.2 Do you have an insurance need AND want to grow your money indirectly in the stock market? Send me an email at financialplanningforpinoys@gmail.com and we will create a financial plan for you.
P.S.3 I hope you find this post helpful. Kindly click the SHARE buttons below. Thank you very much.
P.S.2 Do you have an insurance need AND want to grow your money indirectly in the stock market? Send me an email at financialplanningforpinoys@gmail.com and we will create a financial plan for you.
P.S.3 I hope you find this post helpful. Kindly click the SHARE buttons below. Thank you very much.
