What You Can Do With Your Christmas Bonus

For employees, a bonus is an additional compensation given to an employee above his/her normal wage. A bonus can be used as a reward for achieving specific goals set by the company, or for dedication to the company.

Admittedly, there is this different positive, excited and happy feel for me when the calendar flips to November. 

Why?

For a number of reasons. 

First, because work for the year is ALMOST done. For this year, I believe that we have a very fruitful and productive 2016. Credits to everyone who have been a part of this. 

Second, shopping for Christmas becomes a part of my regular routine. For the past weeks, I have been checking Pinterest for unique gift ideas. My eight-year old daughter also began her own Christmas shopping, with her own money, last week, and I can see her excitement everytime she ticks off a name from her latest list. 

Third, BONUSES!!! Woohoo!!! 

(I am obviously most excited about the last part. Lolz!)

So, how do you plan to spend your Christmas bonus?

One of my favorite quote by Dave Ramsey says, "A budget is telling your money where to go, instead of asking where it went." Before your bonus is credited to your payroll account, it is very important that you already have a PLAN of where this most-awaited money will go.

Please, don't let it slip your hands just like that. I'm sure you know what I mean.

During the past years when I was still financially illiterate, I would spend ALL of my money. I didn't know how to save, nor did I know anything about investing. The idea of NOT WORKING for money never crossed my mind. I have always thought that my ATM gets replenished every 15th and 30th, anyways, so what's the point of saving. My only goal then was to make my salary last for two weeks, until the next payday. Just that.

Fast forward to today, I knew better. I know now that when I invest, I am buying a day that I do not have to work, as Aya Laraya said it. And when you have a family of your own, especially being a mother, you would always wish for that DAY of NOT WORKING -- that day when you can just spend it taking care of your family, pursuing your passion, and living out your purpose. 

And right now, I could only wish that I knew about this SOONER. 

Celebrating 10 years this year with my current company, this got me thinking. If I invested Php50,000 every year (part Christmas bonus, part profit sharing, part salary, part incentive, the list goes on...), in Insular Life's Wealth Builder, a pure investment product with minimal insurance, my money would have grown to an estimated Php811,000 today. And by the time I retire at age 60, I would have had a nice Php9M on my retirement fund.

Hmmmm. Very nice.

Below is a sample computation of OPTION 1.

Policy Year	Attained Age	Total Single Premium / Total Top-up Allocation	ILLUSTRATIVE BENEFITS
			Full Withdrawal Value/Living Benefit			Death Benefit
			Low	Medium	High	Low	Medium	High
1	25	50,000.00	48,342.49	50,146.82	51,063.93	62,500.00	62,500.00	62,500.00
2	26	50,000.00	98,596.06	104,275.94	107,203.67	125,000.00	125,000.00	125,000.00
3	27	50,000.00	150,765.58	162,638.84	168,861.17	187,500.00	187,500.00	187,500.00
4	28	50,000.00	205,003.82	225,649.34	236,663.59	250,000.00	250,000.00	250,000.00
5	29	50,000.00	261,389.53	293,690.72	311,247.16	312,500.00	312,500.00	312,500.00
6	30	50,000.00	320,016.00	367,165.57	393,277.69	375,000.00	375,000.00	393,277.63
7	31	50,000.00	380,963.41	446,521.24	483,546.40	437,500.00	446,503.27	483,546.40
8	32	50,000.00	444,240.69	532,135.74	582,737.54	500,000.00	532,135.74	582,737.54
9	33	50,000.00	510,021.53	624,618.80	691,847.79	562,500.00	624,618.80	691,847.79
10	34	50,000.00	578,433.88	724,500.50	811,869.07	625,000.00	724,500.50	811,869.07
11	35	-	601,405.73	782,460.54	893,055.98	625,000.00	782,460.54	893,055.98
12	36	-	625,352.04	845,057.38	982,361.57	625,313.81	845,057.38	982,361.57
13	37	-	650,326.36	912,661.97	1,080,597.73	650,326.36	912,661.97	1,080,597.73
14	38	-	676,339.42	985,674.93	1,188,657.51	676,339.42	985,674.93	1,188,657.51
15	39	-	703,392.99	1,064,528.92	1,307,523.26	703,392.99	1,064,528.92	1,307,523.26
16	40	-	731,528.71	1,149,691.24	1,438,275.58	731,528.71	1,149,691.24	1,438,275.58
17	41	-	760,789.86	1,241,666.54	1,582,103.14	760,789.86	1,241,666.54	1,582,103.14
18	42	-	791,221.46	1,340,999.86	1,740,313.45	791,221.46	1,340,999.86	1,740,313.45
19	43	-	822,870.32	1,448,279.85	1,914,344.80	822,870.32	1,448,279.85	1,914,344.80
20	44	-	855,785.13	1,564,142.24	2,105,779.28	855,785.13	1,564,142.24	2,105,779.28
21	45	-	890,016.53	1,689,273.62	2,316,357.21	890,016.53	1,689,273.62	2,316,357.21
26	50	-	1,082,841.20	2,482,097.15	3,730,516.44	1,082,841.20	2,482,097.15	3,730,516.44
31	55	-	1,317,441.89	3,647,015.04	6,008,034.04	1,317,441.89	3,647,015.04	6,008,034.04
36	60	-	1,602,869.49	5,358,661.59	9,675,998.90	1,602,869.49	5,358,661.59	9,675,998.90
46	70	-	2,372,638.41	11,568,948.46	25,097,049.19	2,372,638.41	11,568,948.46	25,097,049.19

Another option would have been investing the same Php50,000 every year in Insular Life's Wealth Secure which is an investment for people with dependents, and thus greater insurance need. With this product, my Php50,000 can give me a Php1M life insurance coverage, additional Php1M if death by accident, and Php500,000 dreaded disease coverage. At age 60, I would have had Php8M for my retirement fund. 

I can just imagine myself living comfortably and not depending on anyone else for my living expenses even when I have stopped working.

Below is its sample computation of OPTION 2.

Policy Year	Attained Age	TOTAL PREMIUMS PAID	ILLUSTRATIVE BENEFITS
			Full Withdrawal Value			Death Benefit
			Low	Medium	High	Low	Medium	High
1	25	50,000.00	4,490.22	4,721.25	4,837.06	1,004,490.22	1,004,721.25	1,004,837.06
2	26	50,000.00	26,778.76	28,117.63	28,794.61	1,026,778.76	1,028,117.63	1,028,794.61
3	27	50,000.00	57,697.54	61,423.15	63,334.72	1,057,697.54	1,061,423.15	1,063,334.72
4	28	50,000.00	108,389.21	116,645.41	120,939.24	1,108,389.21	1,116,645.41	1,120,939.24
5	29	50,000.00	161,047.24	176,222.88	184,241.00	1,161,047.24	1,176,222.88	1,184,241.00
6	30	50,000.00	215,811.60	240,566.54	253,872.94	1,215,811.60	1,240,566.54	1,253,872.94
7	31	50,000.00	272,705.24	309,995.13	330,404.87	1,272,705.24	1,309,995.13	1,330,404.87
8	32	50,000.00	331,813.33	384,915.43	414,526.79	1,331,813.33	1,384,915.43	1,414,526.79
9	33	50,000.00	393,101.87	465,641.66	506,871.30	1,393,101.87	1,465,641.66	1,506,871.30
10	34	50,000.00	456,535.49	552,513.13	608,134.24	1,456,535.49	1,552,513.13	1,608,134.24
11	35	-	475,070.55	598,113.75	671,023.34	1,475,070.55	1,598,113.75	1,671,023.34
12	36	-	494,355.89	647,667.20	740,703.53	1,494,355.89	1,647,667.20	1,740,703.53
13	37	-	514,306.76	701,407.26	817,802.20	1,514,306.76	1,701,407.26	1,817,802.20
14	38	-	535,079.28	759,839.21	903,269.22	1,535,079.28	1,759,839.21	1,903,269.22
15	39	-	556,530.97	823,201.36	997,843.87	1,556,530.97	1,823,201.36	1,997,843.87
16	40	-	578,757.38	892,003.95	1,102,600.28	1,578,757.38	1,892,003.95	2,102,600.28
17	41	-	601,797.53	966,740.96	1,218,668.64	1,601,797.53	1,966,740.96	2,218,668.64
18	42	-	625,569.85	1,047,826.11	1,347,178.17	1,625,569.85	2,047,826.11	2,347,178.17
19	43	-	650,049.97	1,135,773.24	1,489,446.64	1,650,049.97	2,135,773.24	2,489,446.64
20	44	-	675,212.26	1,231,142.84	1,646,938.09	1,675,212.26	2,231,142.84	2,646,938.09
31	55	-	1,004,633.22	3,010,793.22	5,028,587.88	2,004,633.22	4,010,793.22	6,028,587.88
36	60	-	1,182,308.19	4,536,871.55	8,393,566.03	2,182,308.19	5,536,871.55	9,393,566.03
41	65	-	1,366,747.22	6,846,549.47	14,040,052.12	2,366,747.22	7,846,549.47	15,040,052.12
46	70	-	1,542,793.03	10,347,331.66	23,528,322.81	2,542,793.03	11,347,331.66	24,528,322.81
56	80	-	2,007,398.39	24,058,879.77	66,734,068.57	3,007,398.39	25,058,879.77	67,734,068.57

Take note that the HIGH values are only at 10% compounded annual interest. But base on Insular Life's history of its Equity Fund, its actual performance was at an average of 14% compunded annual growth rate since 2005. 

For me, that is STABILITY and MONEY WORKING HARD FOR ME even while I sleep. 

Many may say that investing in Equity or tge stock market is too risky because it goes up and down. One thing I have learned over time, and as what one of my mentors also said, the market behaves in an UPWARD BIAS wherein the low is higher than the previous low, and the high is higher than the previous high. Over time, the noise about the stock market today will only be murmurs in the future. It would't even matter.

Delay Comes With a Price

Because I did not start investing as early as I hope I did, the same target retirement fund is not as cheap as it was when I was 10 years younger.

So, I highly encourage you to start investing today for the kind of future you want to have. This peace of mind can be the BEST CHRISTMAS GIFT you can give youeself and your dependents.

Be very blessed!

P.S. I hope you find this post helpful. I would appreciate it very much if you can click the SHARE button and help spread financial literacy. Thank you very much.