FP presentation 2012 (simplified)
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Financial Planning and Retirement Planning Copyrights is with Sun Life of Canada Philippines.
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FP presentation 2012 (simplified)
- 1. Php10
- 3. 1. It is not the obligation of the employer to make its employees rich. 2. At any income level, each one can become financially independent. 3. Our ability to save has nothing to do with the size of our income. It has to do with our discipline to save. Points to Ponder…
- 5. FIRST and OLDEST life insurance company in the Philippines • in existence since 1895 • subsidiary operations in the areas of mutual funds One of the biggest in Canada • with approx CDN$ 571 billion assets under management as of end March 2013 Impressive Financial Strength • A.M.Best A+1 (Superior –2nd of 16 rating levels) • Moody’s Aa32 (Excellent –4th of 21 rating levels) • Standard & Poor AA- (Very Strong–4th of 20 rating levels) Who is Sun Life Financial?
- 6. “To be an internatio nal leader in protectio n and wealth manageme nt.” Our Vision
- 7. Our Mission “To help customers achieve lifetime financial security.”HELP PEOPLE DEFINE THEIR FINANCIAL GOALS IN LIFE AND MAKE IT INTO A REALITY!
- 8. FINANCIAL INDEPENDENCE… is simply having the means to maintain the lifestyle you choose without having to actively work… It is a state of economic well-being… …where your personal investments or savings are generating investment income sufficient to cover your expenses… and type of lifestyle you want.
- 9. 3 STAGES in one’s Financial Life MONEY AT WORK MAN & MONEY AT WORK MAN AT WORK 1 2 3
- 10. The sad fact is…
- 11. …40 years later… 4 Independent 1 Rich 54 Dependent36 died Out of 100 young men at age 25… 5 Working * Source: SSS 2009
- 12. WHAT IF… a couple retires at the age of 65 and expects to live 15 more years. On food expenses alone, how much will they spend? Sample Computation … 365 days X 2 persons X 15 years X 3 meals = 32,850 meals X 50.00/meal TOTAL = Php 1,642,500.00 Here’s a scenario for you to consider…
- 13. Year Amount 2010 1,000.00 2011 1,060.00 2012 1,134.20 2013 1,202.25 2014 1,286.40 2015 1,363.59 2016 1,459.04 2017 1,546.58 Today’s P1,000 bill is the equivalent of ... * Average of 6% inflation
- 14. Inflation 12 yrs. after 24yrs. from now 36yrs. From now
- 15. Only 1 out of 10 children finishes college 1 in every 4 youth is out of school due to the high cost of education * Source: SSS 2009
- 16. Tuition Fee Projections Per Year SCHOOL SCHOO L YEAR 2008 SCHOO L YEAR 2012 SCHOO L YEAR 2018 SCHOO L YEAR 2024 UST 45,062 71,540 143,11 1 286,27 9 MIRIAM 62,412 99,087 198,21 3 396,50 6 ASSUMPTION 84,315 133,86 0 267,77 4 535,65 6 SAN BEDA 64,152 101.84 9 203,73 9 407,56 0 DLSU 110,44 8 175,34 9 350,73 8 701,67 9 ADMU 90,614 143,85 9 287,77 6 575,66 9 * Source: CHED in Q4 2008, as quoted in PDI: Tuition fee Increasing by 12.25%/year Projected Cost of a Four- Year Course Starting SY 2024 P 1,373,249 P 1,901,985 P 2,569,471 P 1,955,011 P 3,365,866 P 2,761,431
- 17. INCOME LESS SAVINGS EQUALS EXPENSE BEHAVIOR 3 EXPENSE LESS INCOME EQUALS DEBT BEHAVIOR 2 INCOME LESS EXPENSE EQUALS SAVINGS BEHAVIOR 1 Which one are YOU? People’s Behavior on Money
- 18. …BECAUSE THEY DON’T WANT TO BE RICH …BECAUSE THEY ARE FINANCIALLY IGNORANT …BECAUSE THEY DON’T RIDE THE VEHICLES TO WEALTH 3 Reasons Why People Are Poor
- 19. The secret…
- 20. “THE POOR AND MIDDLE CLASS WORK FOR THE MONEY. …THE RICH HAVE MONEY WORK FOR THEM.”
- 21. INTEREST RATE YEARS 0% NEVER! 3% in 468 years 5% in 284 years 10% in 145 years 15% in 99 years Php 10 can grow into Php 10 MILLION
- 22. SAVINGS at 15%at 10% Php 10 56 40 Php 25 47 35 Php 50 40 29 Php 75 36 27 Php 100 34 25 How various amounts per day can grow into Php 10 MILLION!
- 23. THE VALUE OF STARTING EARLY A 40 y/o saving 2,000 monthly for 10 yrs will accumulate 864K at age 60 A 30 y/o saving 2,000 monthly for 10 yrs will accumulate 2.2M at age 60 A 25 y/o saving 2,000 monthly for 10 yrs will accumulate 3.7M at age 60 40 y/o based on Sun Life Prosperity Fund (10% growth) 30 y/o & 25 y/o based on Sun Maxi Link Prime, min. FA + TDB, fund growth at 10%
- 24. Time: Save as early as you can Money: Save as much and as regular as you can Interest rate: Find better than inflation interest rate Lessons Learned …the secrets to building your passive income
- 25. DIVERSE RANGE OF FINANCIAL INSTRUMENTS FINANCIAL “BASKETS” YOU CAN CHOOSE FROM LIFE MUTUAL FUNDS VUL
- 26. How to get there…
- 27. STEP 1: Know what you want STEP 2: Know how much you need STEP 3: Know where you are now and the options you have STEP 4: Prepare and implement a plan … NOW! STEP 5: Evaluate your plan 5 STEPS To Meet Personal Goals
- 28. STILL PROCRASTINATING? If you’re 25, may 40 years ka pa When you’re 30, you have a house and car to pay, and maybe a family to feed When you’re 40, you make more money but your kids are in college When you’re 50, you want to assist your older kids in setting up, and you are helping your aging parents
- 29. And then you hit 65 .... and you wished you started 40 years ago! There is never an ideal time for retirement planning, much more to secure your protection and while you can always find a reason to put it off, DON’T
- 30. It’s Time!
Editor's Notes
- Do You believe that your one time Ps 10 can grow into…
- Ps 10 million. This is one of the things that we shall talk about today. I’m __________________________ of Sun Life Financial.
- I’m here today to talk to you about Financial Planning or Management of Personal Finance. Every time I get the chance to conduct financial planning to employees/professionals like you, I always start out by sharing three (3) important things that forms the framework of what I want to share in the next hour. Allow me to share them with you also: It’s not the obligation of the employer to make you wealthy. Becoming wealthy or financially independent has always been a personal obligation. It’s your personal responsibility to be wealthy. At any income level, you can become financially independent. Financial Independence is not reserved for the rich. You only have to know what financial independence is and how to get there. Your ability to save has nothing to do with the size of your income. If you’re problem is your inability to manage your earnings, no amount of earnings will solve your problem. You need to know what your financial needs are, plan it well, and manage your expenses. In this very short session, I will show you how. But first, let us start off with trivia questions: First Question: Who’s the richest guy in the Philippines today? (Let the audience answer) Correct Answer is Henry Sy based on Fortune 500 magazine as of 2012. He’s worth $8.0 billion in net asset. He’s the 8th richest man in South East Asia and 116th in the world. Second Question: To date, how many SM Malls are there in the Philippines? (Let the audience answer) Correct Answer is 42 malls excluding the 5 malls in China. Also, SMPH (SM Prime Holdings) plans to build one mall every year in China. Third Question: How much does one SM Mall earn on a weekday? Common sense will tell you, it simply doubles on a weekend right? My question is, on any given weekday, from Monday to Thursday, (Friday, in the mall culture, is considered week end already) How much would an SM Mall earn? (Let the audience answer) Correct Answer is 2 to 3 million. The most profitable SM mall at the moment is the Mall of Asia. It earns 3 to 4 million. Now, you have an idea why Henry Sy is the richest guy in town. He was awarded “Management Man of the Year” by the Makati Business Club and conferred an honorary doctorate degree in business management by the De La Salle University and the University of Guam. In one of those occasions, he was asked, “Mr Sy, what has been your greatest legacy as an entrepreneur?” To my mind, he could have easily said my greatest legacy is that I was able to build more than 30 malls in my lifetime. However, this is what he said, “My greatest legacy is this, I was able to bring together under one roof, the Rich and the Poor and made them realize that they are holding the same money.” Ang isang libong piso ng mahirap pagka idinikit mo sa isang libong piso ng mayaman, pareho lang sila ng ichura hindi ba? So where lies the difference? Answer is: in management of money. The difference between the rich and poor is management of money. And that’s the reason I’m here with you today. allow me to walk you thru a short course in Financial Planning – in managing your personal finance.
- Allow me to walk you thru a short course in Financial Planning – in managing your personal finance.
- Now let me introduce to you the company I represent, Sun Life Financial. Sun Life has been here in the Philippines since 1895. So if you do a little math, our company has been in existence here in the Philippines for 117 years already. In fact, we’re the first Life insurance company in the Philippines. Question, kelan ang Independence Day ng Pilipinas? (Ask the audience date and year) Correct answer is June 12, 1898. Which means, three years before the independence of our country from Spain, Andito na ang Sunlife sa Pilipinas. That’s how long we’ve been here in the Philippines. Thru the years sun life has evolved from a life insurance company into a financial services organization to be able to cater to the growing needs of its customers. That’s why we also have operations in the areas of Mutual Funds and Pre-need. As a Canadian company, Sun Life is one of the biggest in Canada with approx CDN$464.0 B assets under managements as of end December of 2011. Following the financial meltdown experienced by multinational corporations and local companies, more and more individuals get concerned with the companies they wish to partner with as far as financial matters are concerned. With this, I am pleased to share with you the ratings given by independent financial rating organizations as of february 2012. These are foreign organizations who review on the stability and strength of companies in the financial sector the ratings accorded to SLF speaks highly of the financial strength and stability of the company afterall SLF’s mission is “Financial Freedom for Filipino” and we can only be true to this statement if we take good care of the hard earned money of our customers and of course, deliver the goods as they fall due!
- Now, as a company I’m sure you have a Vision-Mission statement. In Sun Life, our Vision is to be an international leader in protection and wealth management. And for this to happen, Sun Life needs to be the preeminent provider. You may ask what Preeminence is. I will not define it for you but will give you an example of preeminence so you’ll understand the vision of our company. Photocopier is a staple machine in companies nowadays right? Now, if you want some extra copies of an important document, you go to a photocopier operator to have your documents what? What do you normally tell the machine operator to do for you? “Sir, pa ________`naman 6 copies (fill in the blank, ask the audience). Answer is XEROX. Now, XEROX is a brand of a photocopying machine right? You don’t normally say to the operator “Sir, pa CANON naman 6 copies. You don’t right? Because you’re not used to it. When you want a document to be photocopied, the name XEROX comes to mind. That is pre eminence! For the ladies, you normally go to a store to buy Kleenex right? Actually you’re buying a tissue. Kleenex is a brand name. Or you ask your niece “Iha pakibili nga ng pampers sa tindahan yung EQ sabihin mo”. Funny right? You’re actually buying a diaper. Pampers is a name of a diaper brand. The famous of them all is “Pagbilan nga ng Colgate yung Pepsodent.” That is what Preeminence means. The brand sells itself. It has become a household name. Strong brand recall. In the same manner, for anyone who wants to seriously manage his or her personal finance, hopefully you’ll remember Sun Life as a possible partner to help you on your way to financial security.
- Now, to help us accomplish our Vision of becoming preeminent, we have taken upon ourselves this mission or responsibility, that is, to help our customers achieve lifetime financial security. In other words, make the most number of Pinoys financially free or financially independent. And offering this free financial planning session particularly to employees/professionals like you is one of the ways to realize our Vision and Mission. The question is, what is financial freedom or Financial Independence? Allow me to offer you a very simple definition.
- (Read the definition slowly and clearly in a modulated voice) Simply put, it means that I can afford to stop working, say, in the next 2 years, with no regular income monthly without getting hungry and can even sustain my standard of living. Let me ask you, can you afford not to work in this company for the next six (6) months and not get hungry and continue to sustain your lifestyle? If your answer is no, then that means you’re not financially independent. It means, you’re only good as your last salary like the majority of salary – generating segment of people at work. The reality is that one of these days, your income will stop…. hopefully not by death or disability but by retirement. You cannot actively work forever because at 60 or 65 you will have to retire. Now, how sure are you that at 60 or 65 you have saved or kept enough money to sustain your lifestyle and needs as you go through retirement? It’s not how much money you earn that matters, but how much money you keep and how long that money works for you that’s more important. Financial independence as mentioned is a state of economic well being where your savings or some people call it investments, generate another form of income, which we call Investment income. So therefore, when an employee receive his/her salary (use the word income if professionals like lawyers, architects, etc), he should be able to set aside a portion of his/her salary - it doesn’t matter if big or small amount – place it in a certain “basket’ and that basket will allow that portion of your salary to grow while you’re busy working for your company. That portion of your salary set aside to grow in a certain basket is what you call investment income. In the same manner that your employer pays you a salary, you also have to be an employer to yourself by paying yourself also – that pay for yourself comes in the form of savings. Therefore, you don’t only work for the money but a portion of your money works for you.
- There are 3 stages in one’s financial life: Stage 1 – man at work, or what we refer to as the ACTIVE INCOME stage. Stage 2 – man and money at work, which is when the ACTIVE Income is coupled with a PASSIVE Income. Stage 3 – money at work; where did the man go? obviously at some stage in our life, we won’t be earning significant levels of ACTIVE Income anymore, and thus we have to heavily rely on our PASSIVE Income.
- The sad fact is… (Show the statistics to stress why without investment income they will never achieve financial success).
- Out of 100 young men at age 25 after 40 years of hard work… - 1 is rich; - 4 are independent for life; - 36 have died; - 54 are dependent on their children; and - 5 are still working What do you want to be at age 65? (Solicit answer from the audience) This is from the recent SSS survey and Sun Life’s mission is to provide Financial Freedom for Filipinos. That is why we are here to educate you about financial independence. May mga kasibihan sa pinoy: Hindi ka pinoy pag wala kang utang or credit card..dapat IN ka Yung iba, hindi ka pinoy kapag hindi ka palilipat-lipat ng eskwelahan. Hindi ka pinoy kung hindi ka naranas ng disconnection notice Madalas sa pinoy, palipat lipat ng bahay. Madalas sa pinoy kailangan pa din magtrabaho after retirement kasi hindi nakapaghanda. These are the things we need to address. Di ba sabi nila: Take good care of the opportunity you have earned; and your opportunity will take very good care of you.
- Here’s another scenario…. (Go thru the slides, click it one by one) 365 days a year multiplied by two (a couple) will give you 730 days, then multiplied by 15 years as stated in the example will give you 10,950 days. Multiply 10,950 days with 3 meals, will give you 32,850 meals. So, in 15 years you need to eat at least 32,850 meals. Please remember that hunger pangs are involuntary muscles. Meaning, you can’t decide not to get hungry, right? Now, how much is a decent meal here in your area? Within the vicinity of your office? (Let the audience give you their answers. Listen to them.) Ok, for the interest of time let’s peg it at Ps 50/a meal (then press enter so that Ps. 50 pesos appear in the slide). Without considering yearly inflation on food which is around 6% every year…kung hindi tataas ang presyo ng pagkain for the next 20 years, nakapako lang sa Ps. 50: How much do you need as a couple both at age 65 just to eat for the next 15 years? Answer: (press enter for the answer to appear…wait because the answer will crawl) My question is: Where will you get one million six hundred forty-two thousand five hundred pesos if only to eat for the next 15 years? (pause…look at the audience) Now, in the first half of my presentation, I wanted you to realize that you can actually start saving if only you know the simple and proper way of doing it. In this portion of my presentation – the second half, what I want to do is to build the urgency by giving you reasons why you should start saving now. I want to make you realize that saving for the future is not whimsical but something that’s purposive. Tayong mga pilipino will not save for the sake of saving. Filipinos will save for aspirations – for something that we’re emotionally attached to.
- Our example earlier did not include the effects of inflation that is why our meals were pegged only at 50 pesos. But what if we consider the effects of inflation to our computation? Then the amount will be much bigger!! For those who don’t know what inflation is… Inflation is the rise in the general level of prices of goods and services in an economy over a period of time caused by several economic factors. To further illustrate inflation to you, here is a sample illustration. The worth of your 1,000 pesos today, at 6% inflation, will be inadequate next year and the next years to come. If ngayon, ang pamalengke mo is P1,000 every week, by 2017 it will cost you P1,546.58 already for the same amount of gulay, karne, at isda! In short, the purchasing power of your P1,000 decreases over time. Classic example for inflation is the cost of pamasahe. (For discussion purpose ask the audience) Magkano ba ang pamasahe dati? Sino umabot nung ang pamasahe ay piso lang dati? Ngayon magkano na? Or ang coke? Naabutan nyo ba nung dalawang piso lang ang isang 8oz ng Coke? Ngayon magkano na? Gasolina? Dati it only costs P25 per liter ngayon P50 na. How about 1 kilo ng bigas? That is inflation. Ang value ng pera natin lumiliit at konti na lang ang nabibili.
- Here is another statistics from SSS: Only 1 out of 10 children finishes college 1 in every 4 youth is out of school due to high costs of inflation. Now would you like your children to be part of the statistics? I’m sure you don’t.
- Now, how about saving for education? – Of sending our children to good schools and universities. In the Filipino psyche, education is sacred, right? Last 2008, I inquired how much are the tuition fees of some of the known schools and universities in metro manila (you can change this to the cheaper schools or your local schools in the provinces—a ready hidden slide is provided). Please take note that these are tuition fees minus the miscellaneous fees because schools will not volunteer the information. So, for a parent who has a zero year old child in 2008, how much would you need when your child turns 16 by 2024 and is ready to enter college? With a yearly projected tuition fee increase of 12.25% which is very conservative, I came up with the following number: (go thru the slide…) Now, you will notice from the slide that every five to six years (point to the slide 2008, 2012, 2018…) tuition fee what? ….(pause).. it….what? (Listen if your audience will notice what you want to point out) Answer: TUITION FEE DOUBLES EVERY FIVE TO SIX YEARS. Here’s the reality, tuition fee represents only one – third of the whole educational funding. What are the other two – thirds? Answer: Miscellaneous fees, uniform, books, school service, baon etc… Therefore, UST tuition fee @ three hundred thousand represents only one-third of the expense. So, if you multiply three hundred by three, in total you will need 900,000 for your kid to survive first year in UST. Again, my question is, WHERE…WILL…YOU…GET….THE …MONEY? When do you plan to prepare for it? Now? Or later? Or BAHALA NA SI LORD? I remember one pastor when he said “To invoke the lord, and to pray for something and not make yourself available to create possibilities is plain hypocrisy” hindi naman puedeng puro ka lang dasal hindi ba? Nasa dios ang awa, nasa tao ang gawa.
- There are only three behaviors of Pinoy when it comes to money. You can deny it or admit it but at the end of the day, you’ll realize you end up in one of these behaviors. The truth will set you free don’t worry. The first is the typical behavior of Pinoys when it comes to money and it goes this way, the moment you receive your income or salary, without too much thinking, automatically, the next best thing to do is spend the money, right? Ang iniisip mo kaagad ganito “Bagong sueldo ako, ano ba magandang bilin ko? Naiinis ka pagka wala ka agad maisip na bibilin hindi ba? Now, after spending your income at may natira, nagugulat ka pa hindi ba? You call this behavior – Accidental savers. Hindi sinasadyang makaipon. The second is the worst behavior. Hindi mo pa nakukuha ang income mo, gumagastos ka na. Welcome to the world of plastic money – of debit cards and credit cards! Is it bad to have a credit card? No, for as long as you know how to use it. Let me share with you at least three (3) points on the proper use of credit card: Use your credit card to buy ONLY the things that you NEED and not the things that you want. Your credit card does not increase your money, only your spending ability. Don’t use other people’s money (i.e. credit card is bank’s money not yours) to buy your whims/wants. Save money instead so you can buy what you want. The worst that can happen is you end up buying wants using other people’s money. Almost always, it results to bad consumer debts. Huwag kang umutang ng pera para mabili lang ang gusto mo. Ito yung mga bagay na hindi mo naman kailangan, gusto mo lang sya. Best example: buying a second cellular phone. Clearly, it’s a want. If you can limit your credit card to only 1 card, please do so. You don’t want to arm yourself much less your spouse with so much spending power, do you? Why do you need more credit cards anyway? Be aware of your real credit limit. It’s not what the bank tells you. It has something to do with how much is your monthly salary. In reality, limit your use of the credit card only up to one-third (1/3) of your monthly salary. So, if your monthly income is Ps. 15,000, you should limit your spending up to Ps. 5,000 using your credit card. That’s your real credit limit. The bank can always tell you that your credit limit is Ps. 20,000. However, if your income is only Ps. 15,000 and you end up spending all the money in your credit card, it results to bad debt and a very bad habit. A lot of salary earning Pinoys end up in behavior number because of credit card spending. Now, where do we want to bring everyone? We’re teaching people to go to Behavior number 3 where even before you receive your monthly salary, you ask yourself “How much of my salary can I set aside as savings?” even before you touch or spend a portion of your money, savings should come to mind first. Hindi mahalaga kung malaki or maliit ang savings, what’s important is to form a habit of always setting aside a portion of your salary. Kung magkano ang komportable sayo, kung magkano yung reasonable amount of money that you can set aside for savings – that should be enough to start your way to financial freedom. Let me offer you a tip: Think of your monthly salary (kung maliit lang hindi naman matagal isipin hindi ba – smiles). Now, think of your net monthly income. From your net income, you can start deducting 5% for savings every month. If you can, go for 10%, kung kaya pa 15%, or up to 20%. Now, the maximum amount of money you can set aside from your salary is 20%. Hindi puedeng gigil ka mag-ipon. You can’t save 90% and live on 10% of your money for the month. You save up to 20% (maximum) of your net income every month and live on the 80%. Now if you’re a good Christian, you can save the 20%, give 10% to God and live on the 70%. You may ask, is it ok to save beyond 20%? Answer: if you have other sources of income, then you can go beyond 20%. If not, stick it out with 20% max. You will be amazed when you realize that 5% of your monthly net income is an amount that’s bearable and not difficult to do on a monthly basis. The best example of saving I can think of is the Catholic Church’s Pondo ng Pinoy. The idea is to save twenty-five cents in empty bottled waters then give it to the nearest church or chapel. Gagamitin ng simbahan para sa pag – aaral ng mga mahihirap na bata ang perang maiipon. The project was launched last 2004. To date, those twenty-five cents have already reached more than 100M. Amazing hindi ba? True to the project’s philosophy – “Anumang magaling, kahit maliit, basta’t malimit ay patungong Langit.” In savings, hindi pinag-u-usapan kung maliit or malaki. Ang mahalaga ay malimit. So, which behavior are you in? My intention is to make you realize what I’ve said at the onset of this session, that at any income level, you can become financially independent. Kaya mong makaipon, kaya lang marami sa mga pinoy hindi alam pano sisimulan ng tama ang pag – iipon. Bakit? Kasi hindi naman itinuro sa atin kung paano.
- How many people are poor in the Philippines? Answer: close to 4.7M families. What do we mean by poor? Answer: kung chamba lang makakain ka ng tatlong beses isang araw, mahirap ka . Now, there are people who earn a good salary but have poor mentality or “mindset”. If after all these years, the only vocabulary you know about money is to spend it then you’re also poor. People are poor because they don’t want to be rich. Ang ibig sabihin yung pagiging rich ina- ambisyon din para mangyari. You don’t simply pray to be rich. Pinapangarap ito. Manny Pacquiao is a personification of one who dared to dream big and realized it. In his early days, you would see him in the streets of manila selling smuggled cigarettes. Until he laid his eyes on Boxing. And the rest as they say is history. People are poor because they are financially ignorant. Again, if to this date the only thing you know about money is how to spend it, then you’re financially ignorant. You will forever struggle with money. People are poor because they don’t ride vehicles to wealth. Let me offer you a simple analogy: There are four (4) ways to go to Baguio coming from Manila: 1st you can take a walk. Kung ihi lang ang pahinga mo, in 5 days you’ll be in Baguio. 2nd you can take a bike. Again, kung ihi lang ang pahinga mo, in 3 days you’ll be there. 3rd the usual, you take a bus or ride a car to baguio. In 6 hours or less, you’ll be in session road in baguio. Now, what do you think is the fastest way to reach baguio? (wait for the audience answer) Correct! The fastest way is to take a plane to Baguio. In less than an hour, you’ll be in baguio. Now, ganoon din ang pinoy pagdating sa pag–i–ipon ng pera. A lot of Pinoys take a walk to savings. Why not fly? Kse nga financially ignorant. There are better ways to grow your money than simply keep it in your pocket or under your pillow.
- Like I said, there are better ways to grow your money than simply keep it in your pocket or under your pillow. The secret…
- The poor and the middleclass work for the money. While those who are keen with their hard-earned money, we call them the rich – will always have a portion of their money work for them. That’s the secret.
- Who among you have a Ten peso coin? May I borrow? (Wait until someone from the audience gives you the bill) How does a typical pinoy save money? A lot of pinoy simply keep their money inside their wallet, others in a secret corner in the house. If this is the way you keep your money, and you keep one Ps 10 coin one time only, say, under your pillow, will that Ps 10 coin with the passing of time become 10M? Answer: No. There is a way to grow your money than simply keeping it inside your wallet or under the pillow. For example, I borrowed fifty pesos from Gina. (or ask the name of the participant near you and use her/him as example) By lending her money to me, Gina loses two things: She lost her 10 pesos to me She lost the opportunity to spend her money now by lending it to me. After sometime, as I pay Gina back the fifty pesos I owe her, I also pay her a ‘consuelo’ for losing the opportunity to spend her money while it’s with me, right? You call that “consuelo” – Interest rate. So, by simple definition, interest rate is the price of borrowed money. It’s the cost of money. That means, when I’m borrowing money, interest rate works against me (an enemy). On the other hand, if I am saving money (i.e. people using my money and pays me interest or consuelo for using it) interest rate becomes my Ally or friend. Are you with me? Is the concept of interest rate clear? Again, suppose I have decided to save Ps. 10.00 one time only, not every day or every month but one time only then place it under my pillow. Will it grow to be 10M? Answer is: NO Now, suppose we place the same Ps. 10 coin one time only in a basket that will grow it by 3% every year, will my Ps. 10 become 10M? (Let the audience give their answer first – just a Yes or a No). Answer: Yes. How long? Answer: 468 years. (This answer always evokes laughter from the audience). Now, bakit ang tagal maging 10M? Because one time saving lang yung Ps. 10 eh. However, the point is – Money can grow. That’s why Albert Einstein once said, “The greatest discovery of this generation is not the atomic bomb but the law of compounding interest.” (Proceed with the rest of the example. . . if you place your money in a basket that will grow it by 5% ….in 284 years it will become 10M….if you…. In 10%…..in 145 years…etc.) (Note: The figures were taken from the book Eight Secrets of the Truly Rich by Bo Sanchez. According to Bo, he got these from the book Multiple Streams of Income by Robert Allen).
- Now, what if I save Ps. 10 everyday? And this time in a basket that will grow my money, say, by 10% or 15%. So, again, the question is how long will it take for me to have 10M if I decide to save Ps. 10 everyday? How much is Ps 10 everyday in one year? (Let them answer first) – correct answer is Ps. 3,650 - that’s 365 days multiplied by Ps. 10. You see, just by saving Ps. 10/day, in a year, that’s close to 4k already hindi ba? How much more if you save it in a “basket’ that will grow your money and create compounding interest for you. Let’s see. If I save Ps 10 everyday for the rest of my working years say in a basket that will grow it by 10% (pause for awhile) in 56 years I have 10M. Now, if I save the same money this time in a basket of 15%, in 40 years I can reach 10M. Maliit yung Ps 10 everyday? Well, you can go 25….50…75…100. (go thru the slides with this) Now, kung masyado naman malaki yung Ps 100/day then go 75…di pa rin kaya? Go 50…25…10? Malaki pa rin? That means, ayaw mong mag – ipon. Hindi dahil hindi mo kaya. That’s why at the start of this presentation I mentioned to all of you that the size of your income does not have anything to do with your ability to save.
- And to add more support to our advocacy of ‘starting early’, take a look at these --- (read off the list). Now, is it good to start saving early? You bet.
- These are the lessons learned from the 3 slides shown earlier. Incidentally, these lessons are also the secrets to building your passive income which we said is the key to achieving financial independence.
- Now, what are some of the vehicles to wealth that you can look into, study and choose from, as you start saving a portion of your salary? As you progress in your saving and investing, it’s best that you have all these financial vehicles under your portfolio that will help you become financially independent. Let’s go through them and get familiar with the vehicles. First, there is the life insurance, and then mutual funds, and then VUL or Variable Universal Life plans. If this is the first time you’re hearing these financial vehicles then you’re not in the know. It’s important for you to have a look/see as to how these financial tools can help you.
- Now, ultimately there are only two things that can happen to you and me: First, is the reality of the inevitable happening too soon. The question to ask is: If, as a breadwinner, I’m out of the equation (I passed away today), will the people who depend on me be all right financially without me? Can they carry on with life without my income supporting them? The truth is, if I pass away today, my income passes away with me too, right? Now, if you can’t answer the question with a resounding yes, I guess it’s good for you to look into Life Insurance – the main purpose of which is to protect the breadwinner from sudden loss of income (i.e. death) or critical illness. The reality is you buyt life insurance not because someone must pass away but because someone must go on living. On the other hand, may mga tao naman na kahit lasunin mo ayaw mamatay hindi ba? Some people simply live too long – way beyond the mandatory retirement of 65 years old. Now, if this happens, who will take care of your needs when you’re old and retired? Your kids? How sure are you? With a life insurance policy, you can just cash in your cash values and accumulated dividends to take care of yourself as you go thru your retirement years. How much you receive depends on the size of your insurance policy.
- Now, for Investments specifically Mutual Funds or MF in short. A mutual fund is a company that brings together money from many people and invests it in stocks, bonds or other assets. The combined holdings of stocks, bonds or other assets the fund owns are known as its portfolio. Each investor in the fund owns shares, which represent a part of these holdings. There are different baskets or funds you can choose from in deciding to start your MF. The choice of fund depends on your need, time horizon and investment appetite. If you are the type who’s very aggressive and has a long-term plan for your money, you can go for EQUITY FUND. If you’re the complete opposite, conservative and can’t sleep knowing that there’s a portion of your money away from your pocket, you can go for BOND FUND. Now, if you want to have a mixed of the conservative and the aggressive funds, you can go for BALANCED FUND. There’s also a DOLLAR FUND, Money market and Government securities Fund you can look into.
- Lastly, Variable Universal Fund or VUL is a hybrid product. It combines the protection benefits of life insurance and the investment flexibility of mutual funds. In return, VUL provides you with maximum savings and maximum protection all in one product. Just like any life insurance, this product gives you maximized insurance protection. In the event of death, your beneficiaries will receive the face amount plus the fund value. The proceeds can be used to take care of your dependents’ immediate expenses. And just like mutual funds, this product invests a portion of your premiums into high-yielding funds which you can choose from. If you are the type who’s very aggressive and has a long-term plan for your money, you can go for EQUITY FUND. If you’re the complete opposite, conservative and can’t sleep knowing that there’s a portion of your money away from your pocket, you can go for BOND FUND. Now, if you want to have a mixed of the conservative and the aggressive funds, you can go for BALANCED FUND. My Future Fund on the other hand, is a special type of fund with a fixed maturity date. Its objective is to preserve wealth to help clients achieve a specific investment goal given a time horizon, usually a financially secure education or retirement. With My Future Funds, you don’t have to choose which investment funds to invest in and in what percentage. Instead, you simply choose the fund with a target date closest to your estimated education or retirement date. This fund takes care of diversification and asset allocation considering the fund’s maturity date. With My Future Fund, your money is moved to bonds as you approach the fund’s maturity date, so that a market downturn won’t significantly reduce your fund 6 months before your child’s education or your retirement. With My Future Fund, you have more time for yourself. Because the fund is managed by top-notch investment professionals with a wealth of expertise and experience, you don’t have to spend time selecting your investments, rebalancing your portfolio, and researching new funds. You can spend your time the way you want to.
- In closing, allow me to offer you these simple steps to achieve financial independence:
- 1. Know what you want First, know where you want to go. It’s important to set a financial goal. It could be retirement, your own house and lot or securing college fund for your kid.
- So figure out what you want to achieve: Is it increasing your wealth? Is it saving up for your child’s education? Is it protecting your income for your family? Is it setting aside for emergencies? Or is it securing your retirement? Be it retirement, college fund for your kinds, your dream house/vacation, or maybe anything that money can buy, it is best to set the mind for that goal of yours.
- 2. Know how much you need Second, put a price tag to those goals. Libre ang mangarap pero kung hindi paghahandaan, mananatiling pangarap lang. How much would you need for those goals? How much of your salary are you willing to set aside for savings? 5% of your monthly net income? 10%? 15%? 20?
- Know where you are now and the options you have Third, you can’t have ALL financial instruments or vehicles at once. So, you need to weigh which one is your priority? What do you want to address first? Income protection? Critical Illness? Retirement? Education? (Then introduce the Financial Needs Analysis form) We can have a FREE one-on-one consultation later after this session. I will ask you to fill-out the Financial Needs Analysis Form (show sample) so that I can make a thorough assessment on your individual circumstances. Syempre, iba ibang tao, iba iba rin ang financial needs. Through the Financial Needs Analysis form, I will be able to assess where you are now and the options you have vis-à-vis your goals. Para rin lang akong doctor. The reason I need to know these facts is the same reason why a doctor must know all the symptoms and check you thoroughly before making a diagnosis and recommending a treatment. So the only way I can make an accurate analysis for you will depend on the information you give me.
- 4. Prepare and implement a plan… NOW! Next step is for you to really do something about it. Act on it. For the past couple of minutes, I can sense that you like the information you’ve been hearing from me. Sana, this session doesn’t end up simply as a “feel good” session. My main intention is to fuel you up to take immediate action of building your wealth as you start out on the road to financial independence.
- 5. Evaluate your plan Lastly, to help you evaluate your financial needs properly; it would help if you consult with a Licensed Financial Planner REGULARLY. I’m proud to say that as a Licensed Financial Planner, I was able to help plenty of people in mapping out their financial needs, priorities and help them take a leap – or baby steps to some - in achieving their financial goals in life. I took several licensing seminar and exams to secure my license from the government so I can help people manage their finances. If you want, I’ll make myself available after our session. With no cost or obligation on your part, I can give you a tailored – fit financial plan/proposal based on your needs and priorities that you can bring home with you and study. When you’re ready to take action we can set another appointment most convenient to you. How does that sound to you? (Wait for an answer)
- Before I go, let me leave you with this short but nice story of procrastination. It goes like this (read thru it)
- (Continue reading thru the story)
- So whatever goals you would like to achieve, may it be sending your children to a good school, buying your own house or car, retiring comfortably, or getting married, remember “it’s not how much money you make that matters, but how much money you keep and how long that money works for you.” Take control of your financial life. It’s never too late. It’s time! val/ - transition from tuition fees to This can affect how you can manage… (summary), and this next slide that I will show you has an effect on how to manage your finances Do you want to know why we’re sharing these facts? Busy Reminder So how do we avoid this? We really need to know how to manage our… Products to steps Siguro by now na-realize…. How can we work on it? Simple steps to go through After definition of financial independece Are you financially independent? (stand up – sit if financially independent) Before the 5 steps
- You may visit our website www.itstime.com.ph to know more about our advocacy. Thank you!