Tuesday, October 03, 2006
Thoughts on Securing Your Retirement Future
Arnel L. Cadeliña
Several colleagues call and e-mail me urging me to write more about my thoughts on retirement. Judging from their enthusiasm I am influencing them. This is rather a blessing for me that I am a blessing to others. Hoping to transform the Philippines in my own little way, here are my thoughts on retirement that you may share with other people. Only that I ask that you mention to them that I wrote this piece.
Everybody needs a plan (yeah, that includes you!). If you go to a strange place, you need a map or a guide to reach that place. It’s the same with retirement. Everybody whether you are self-employed or an employee you need to plan in 4 ways:
First is Mental Preparation.
You need to compute your life expectancy. That is, estimate when will you die. (sound scary?). You have to accept the fact that all of us will die. It is only the question of when. Here’s a clue, according to National geographic, the average life expectancy of male is 74 while female is 78. Since you will retire at age 60, you need money until you reach 74 or 78. Now ask the question if your SSS, pension plan, Pag-IBIG Fund, CEAP will suffice. Can your children help you?
Now you are prepared mentally, make an updated will that you need to revise yearly.
Include your projection what you are doing at age 60, 65 and 70.
This is tricky but most important. You need your finances in order before its too late. Here’s the tip:
1. Buy stocks. You need to surf the internet, read investment books and ask people with background on stocks. In my experience buy stocks only when P/E drop. You have to check the company on their Cash flow (be sure it’s positive), sales forecast (be sure it’s growing) , operating margin forecast (be sure its positive), and investment spending of the company (be sure it’s not too risky). If you are ready, you may buy stocks on-line at CITI-SEC online.who charges only 0.25% gross trade amount and P20 per transaction. Hold your stocks for 10-15 years.
2. Buy mutual funds. . But stick only on equity fund. Practice peso cost averaging. Hold your mutual funds for 10-15 years.
3. Buy Index Funds. There’s only one in the Philippines called Philippine Index fund. You need P50,000 in order to invest.
4. Contribute to all available retirement income.. Explore endowment plan offered by life insurance companies.
5. Keep out of debt. As I said in my other blog (Retire with money not in poverty), throw away your credit cards. I mean now!.
6. Get a life insurance worth at least 3 times your annual salary.
7. Put away 15% of your income to retirement.
8. If you have the capital, own a business, buy real estate and get more whole life insurance.
9. This is the right mix in investment:
50% in stocks
35% in bonds
10% in cash
5% in mad money speculative investment.
Take good care of your health: eat right, beging walking or join a gym, keep a balance in your life
Heal your spirit- mend fences, strengthen relations, ask forgiveness, forge better
or newer alliances.
Feed your soul – have more time for God. This time you don’t have an excuse.
These are my random thoughts on retirements. Product of several years of experience, provided for you in order for all of us to live our dreams, by planning today for a secure tomorrow.
Here’s a parting words :
Retirement without money is…….hell.