Wednesday, November 24, 2010

Pag-IBIG Fund as Retirement Savings

I worked in Pag-IBIG Fund for 3 years right after graduation. During that time the Fund was voluntary because of the backlashed that the Fund was a creation of Marcos. I have an open mind being a neophyte that a job in the government is better than not earning a single cent.

Im an activist during my college days but being with Pag-IBIG Fund for 3 years convinced me that the Fund was one of the good legacy of Mr. Marcos.

The idea is simple, Pag-IBIG will be provident savings program that is fast, easy and affordable way to save for future needs.

Since we as a people are slackers when it comes to savings, the government forced us to save thru salary deduction. The process is proven correct because the contributions I made as a member makes together with my employer counterpart are credited to my Total Accumulated Value (TAV).

This means double savings immediately with the addition of the employer counterpart contribution.

Aside from being fully guaranteed by the national government, members’ contributions are deducted from the gross income prior to computation of the income tax.

Members’ savings earn annual dividends that are also tax-free. The dividend rate varies depending on the net income of the Fund at yearend.

I bought my house thru Pag-IBIG Fund Housing program and I now have around P100,000 total accumulated savings since I started to be a member in 1989.

The vision of Pag-IBIG Fund is to promote and integrate a nationwide sound and viable tax exempt mutual provident savings system suitable to the needs of the employed and other earning groups, and to motivate them to better plan and provide for their housing needs by membership in the Home Development Mutual Fund, with mandatory contributory support of the employers in the spirit of social justice and the pursuit of national development.

My Pag-IBIG savings will be my supplementary retirement pay and because of this I am convinced that Pag-IBIG Fund is doing a good job and deserve a praise.

My friends at Pag-IBIG Fund, specially in Lucena Regional Office, I salute you!

next topic: Investing in Mutual Fund

Sunday, November 14, 2010

The 3 months cash reserve for Emergency

Before we begin to invest, many financial advisers plead, ask and urge us to have a 3 months cash reserve fund for emergency. It is a very wise advise because if we have none we will be force to use our credit card or even worse withdraw our retirement savings to pay for hospital bills, funeral or home repairs.

It is therefore a priority for a Filipino Investor to build a 3 months cash of living expenses as an emergency fund that you can withdraw anytime. This can be in a savings account, time deposit or money market fund.

The amount to be saved differs for everybody but the rule of thumb is how much you need to survive in a month and then multiply it by three.

Be careful though in determining the amount by distinguishing what are your wants and what are your needs. You will be amazed how easy it is easy to build a 3 months cash reserve.

My best wishes, always.

next topic: Pag-IBIG Fund as Retirement Savings

Monday, November 08, 2010

Insurance, why we need it

Majority of Filipinos are not taking advantage of life insurance. It is their least priority resulting to the low penetration of insurance in the country. The less or no exposure in personal finance, the complex requirements and the pushy insurance salespeople aiming only for commission contributed to slow investment in insurance policy.

But life insurance is a must for a Filipino investor. The death benefit that a beneficiary or dependents can collect can make the family of the Filipino investor start all over again. Life insurance is designed to protect the survivors of the insured.

The Filipino Investor should study the companies offering insurance. In the Philippines, I recommend you focus on the top 6 namely:
1. Philam Life
2. Sunlife
3. Insular Life
4. Philippine AXA
5. Manulife
6. Pru Life
source: Business World Top 1000 Corporation Year 2010

In my case, I opted to Insular Life because it is a mutual fund Filipino company which gives dividends every year to all policy holder. It is up to you however to decide which is the best insurance company for you.

As a rule you will need significant amount of insurance if you are:
1. working spouse married to a non-working spouse with or without children.
2. You are a single parent
3. You are a business owner

You will need NO or LITTLE insurance if you are:
1. single person with no children
2. nonworking spouse with no children
3. young child

In the Philippines there are different kinds of insurance such as term, whole life and variable.

In my case, I only need term insurance because it is ideal to be covered for a specific period of time.

Study well what will fit your requirements. just remember as a Filipino Investor you need a death benefit protection in order to provide money to your loved ones who will be left behind.

Again, my best wishes to you.

next topic: The 3 months cash reserve

Sunday, November 07, 2010

Stay Healthy and Pay your Debt

How can we invest if we are frequently sick due to unhealthy living and vices?.If we are always visiting our old good doctors and paying his hefty fee, what will be left to our pocket will not last for the next pay day.

Same , if we are addicted to debt just to buy the latest gadgets and the latest shoes by our favorite brand will leave us spending our savings to finance these expenses.

Truly the enemy of investing are many but nothing beats the twin evil of being unhealthy and consistently in debt.

The best way to be a good Filipino investor is to start to do things we supposed to do:

1. Exercise
2. Eat Right
3. Get Preventive health care
4. Pay our debts

Again, stay healthy and pay your steal-tomorrow debt.


Next topic: Insurance, why we need it.?

Thursday, November 04, 2010

Preparation before Investing

Filipinos now are not anymore ignorant on investing. They read business newspapers, blogs and browse finance websites.

But what is available in the print or new media are mostly written for western investors and the investing instruments they offer are mostly not available or applicable to the average Filipinos.

To close the gap and promote investing for the Filipinos, this blog is now aligned to the goal of propagating awareness of the Philippine Capital Market.

As a start, Filipinos are encouraged to follow the following eternal virtues BEFORE investing:

1. Live within your means or below them.

2. Shun credit card debt.

3. Don't borrow money except for education or a house.

4. Don't start investing unless you have a 3 months reserve fund.

5. Don't borrow money to buy stocks.

6. Don't use eating money or next year's college tuition to buy stocks or equity mutual funds.

7. Invest only money you you can afford to tie up for years if not decades and that money you can afford to lose.

Blog for Investing.

I received 25 e-mail from my blog readers requesting more articles on investment. For the past several days, there are signs everywhere that I should proceed.
Thank you for your trust and beginning this week this blog will focus on investing, personal finance and wealth accumulation strategies.

Arnel L. Cadeliña