Sunday, February 28, 2016

Investment 101

"Wise spending is part of investing. And it's never too late to start."
                                                                                                  --Rhonda Katz 

According to Investopedia, investing is the act of committing money or capital to an endeavor with the expectation of obtaining an additional income or profit.

In simple words, investing is an activity where you money grows and works for you. And in this area where financial freedom begins.

We have been taught by our parents that in order for us to have more money is for us to work more hours. Well, that's what I have learned too. But not anymore.

My mentor, Robert Kiyosaki mentioned in his book, "Cash Flow Quadrant-Rich Dad's Guide to Financial Freedom" that it's very important to identify ourselves in which quadrant we belong and which quadrant rich people belongs to. See the illustration below:

Cash Flow Quadrant

Before we proceed, it's a must for you to identify which quadrant do you belong? Is it in quadrant E, S, B or I

Most people who belongs to quadrant E are those people who lives in a rat race condition. I'm sure most of us can relate. Before your paycheck comes, your salary is already finished. And since life has to move on, we take loans in order to live normal life. And at the end of every year, you got zero savings and more debts to pay. That's rat race!

Your financial freedom begins when you transfer to B and I quadrant.

Please don't resign yet from your job. Have your timetable with you and layout your game plan so you can escape the rat race at the soonest possible time. 

Let me share to you my story. 

Only in 2012 I started walking to I quadrant. As I said, "I'm walking" because it is a slow process. My mentoring helped me a lot to open my mind about investing. As an Overseas Contract Worker (OCW), I was introduced to Stock Investment (not Stock Trading) in the Philippines  by a friend of mine. I never thought that I can start as an investor  for only P5,000.00. You read it right. But before, you need P100,000.00 to open an account with COL Financial

After more than a year of investing in Philippine Stock Market, I was able to grow my investment by as much as 52%. If you are interested, just let me know so I can be of help.

To traverse an unfamiliar route, it is a must to find a mentor who can guide you. So that's what I did, I joined Truly Rich Club of Bo Sanchez. As a member, I will be assured of guidance on what stocks to buy, when to buy and when to sell. Plus all the information I need to know about investing, wealth strategies, email updates and both audio and video talks. 

There are lots of investment vehicles you can ride on. Always select which is best for you. Investopedia enumerates the Three (3) Groups of Investments: ownership, lending and cash equivalents

Ownership Investment includes stocks, business, real estate and precious objects.

Lending Investments include saving accounts and bonds.

Cash Equivalents include money market funds.

I choose stock investments because it's a long term one. The risk is comparatively less than stock trading because in stock investments, we only buy blue chips stocks. 

Lastly, in investing there's no age limit. And you can always start now!


Saturday, February 27, 2016

Setting Up Your Emergency Fund

"Your emergency fund is not an investment, it's insurance with one purpose--to protect you and your family."  --Dave Ramsey

You might ask, what is the difference between emergency fund and a savings? The only difference is the purpose.

On one hand, savings is intended for planned expenses like for example, you plan to get married two years from now, or you want spending your vacation in Europe or somewhere else.

On the other hand, emergency fund is intended for unplanned expenses like car repairs, house repairs because of calamities, illness in the family, unplanned trip due to death of loved ones and the worst thing is you lost your job.

Setting up your emergency fund is like setting yourself recession-free. In case of losing your job, six months period is probably enough already for you to find a new one.

How to compute your emergency fund?

Answer: Compute the total of your monthly expenses and multiply it into 3 months or 6 months. And that's your emergency fund.

Not all financial gurus have the same opinion on how many months of living expenses you should save as emergency funds. Others say it should be 3 to 6 months while others say it should be 8 or 12 months. In my personal opinion, the number of months doesn't matter; what matter is you should be ready in any case and life continues for you and to those who depend on you if something bad happens. In short, it's about your readiness to respond.

Where to put it? 

You can put it in a separate bank account where you can withdraw it anytime as the emergency situation comes or you can deposit it in any accessible money market account. If it earns interest then so much the better.

Compare in driving your car, emergencies in our financial life are like "blind spots". In life, the more you anticipate things, the more you are prepared. Little emergency fund is better than no fund at all.

One final question, If some emergency case happens to you and your family right now, would you say that you are ready? Remember, it's always better to be safe than sorry.

Friday, February 26, 2016

Debt Management: Its Importance

"Debt can be the most addictive thing in the universe, and it can kill you. You get used to living high off the hog. It was intoxicating."    --Harvey Weinstein

Being buried in debt is both an overwhelming and painstaking experience in one's life. But don't worry, there's always a better way out. And once you'll be able to get out from it, do make a resolution that you will never get into it again.

You might be buried in credit card debts because of overspending. Or because you've had bad business decisions in the past that lead you to loan sharks. 

In managing your debt, there are two things you must do:

1. Consolidate Debt

Debt Consolidation is a form of debt refinancing that entails taking out one loan to pay off many others. Not all our loan are interest-bearing. Sometimes we borrow money from families and friends and they never charge us for interest. In debt consolidation, we give priority to the loans which are interest-bearing and those which has higher interest rates. Instead of having loans from different sources, you have to find banks or lending institutions that would be able to give you a secured loan which has much lower interest rates than your existing loans combined. The lower the interest rates the better. It means you will save a lot of money that only usually goes to interest.

According to, a debt consolidation service can lower your interest rates, lower your monthly payments, protect your credit score and can help you get out of debt faster.

Debt consolidation is not a debt solution. It merely combines all your debt into one single, more manageable loan. If your current monthly repayments seems smaller in figure, check if it is due to a longer loan term, for which you may be paying higher interest rates.
 2. Eliminate Debt
Being in debt can be a stressful experience. Regardless of your circumstance is, if you signed for a loan, you are obligated to pay it back even if you have an unexpected event in life like losing a job, accident, calamities or having a new child.

According to Clark Howard, here are the Five (5) steps to get rid of your debt:

1. Make a conscious decision to stop borrowing money
2. Establish a starter Emergency Fund
3. Create a realistic budget and stick to it
4. Organize your debt
5. Throw any excess cash at your debt

It is very important that you always remind yourself of your freedom day (the day you want to be 100% debt free) because it will help you establish your ground to start all over again---from someone who is buried in a deep-neck debt into a person who is debt-free!

Thursday, February 18, 2016

Should You Get A Life Insurance?

"You need life insurance if somebody will suffer when you die."
                                                                          --David Woods

There are people who doesn't believe in insurance. For some of them, to have one is like you are losing faith in God. How about you?

Insurance is basically your protection from significant monetary losses or financial hardship. This can be a loss of job, loss of properties or premature death. 

If you are the breadwinner of the family, it's a wise decision to have your life insurance. It is your protection for your family who depends so much from you. What is their future in case something bad happens to you?

Your life insurance would be your income replacement. Its sole purpose is to sustain the life of your family for at least 5-10 years without you providing for them.

There are various types of Life Insurance available in the market. To help you choose, watch this video:

According to Lyndon Malanog, Financial Coach of Truly Rich Club, buying Term Insurance is the best choice. According to her, there are four (4) reasons for buying Term Insurance:

First Reason: It’s much cheaper than bundled insurance because you are only paying for one component which is the dying part of it both for natural and accidental cases. This type of insurance has no savings that’s why it has no “money back” component.

Second Reason: For your savings, you should be the one to oversee it in order to harness its full potential. You have to invest quality time to learn and participate in the different investment instruments.

In so doing you can take more risk and grow your investment portfolio substantially instead of receiving the guaranteed 4%-7% PA from the insurance company if you get a bundled insurance or the insurance with savings.

Third Reason: Why term insurance only? We only need insurance today because we are still on the process of accumulating our millions. I would suggest a 20-year term insurance and at the same time continuously invest on the other investment vehicles for value and capital appreciation. 

After 20 years of diligently and consistently investing, your investment portfolio will now be in millions and insurance coverage is no longer a must anymore.

Fourth Reason: If your investment portfolio is now in the tune of multi-millions, but you still want to add more value to your portfolio, then secure another 20-year term pure insurance. The insurance money is so liquid and is free from taxes and can be used to pay off your estate tax within 90 days from your death to avoid any surcharges. 

Have you read or heard about the "Buy Term Invest The Difference Concept?" 

Philamlife offers this kind of Term Insurance. For exactly the same amount of life insurance protection, you can pay a very low premium for a term plan, compared to the very high premium you would otherwise  have to pay for a typical Endowment or Whole Life Plan.   

Here are some of its features:

  • Mutual fund equities earn average of more than 10% compounded annually.
  • Allows guaranteed renewability
     Available riders:
  • Accidental Death, Dismemberment & Disablement (ADDD)
  • Terminal Illness Benefit (TIB)
  • Critical Illness Benefit (CIB) optional

  For free life insurance quotes, email me at

Tuesday, February 16, 2016

Why Prioritize Your Healthcare?

"Health care is not a privilege. It's a right. It's a right as fundamental as civil rights. It's a right as fundamental as giving every child a chance to get public education."  --Rod Blagojevich

Have you asked yourself these two important questions?

Question#1. What if I die too soon? Who will take care of my family?

Question#2. What If I live too long? Who will take care of me?

Most of employed individuals are covered by healthcare provided by their companies. And take note that the coverage of their healthcare is only during their employment. Once they quit their job, their coverage stops. The scary thing is, most of our health issues and concerns occur even after we retire. 

There are two kinds of healthcare available in the Philippines, the Short Term Healthcare and the Long Term Healthcare. Let's enumerate the difference between the two.

Short Term Healthcare
-Renewal not guaranteed if with high claims
-Yearly increase of premium until age 60
-Generally, no insurance coverage. Some provide insurance, but very low coverage.
-No accumulation of unused health fund.
-No Return of Premiums (ROP) for non-utilization.
-Cover only up to age 60.
-Pre-existing illness is not covered during the 1st year & lifetime/permanent exclusions may be issued on the 2nd year renewals.
-Not flexible, non-transferable benefit design.
-Reinstatement is limited only within 30 days of lapsed policy.
-Continuous yearly payment terms.

Long Term Healthcare
-Renewal is guaranteed
-Fixed premiums for 7 years
-With four (4) way Insurance Coverage up to the Long Term Healthcare Plan:
      a. Term Life
      b. Accidental Death and Dismemberment
      c. Waiver of installment due to death
      d. Waiver of installment due to permanent and total disability
-All unused health fund accumulates with interest.
-With return of premiums up to 85% of contract price for non-utilization during the paying period.
-Covers beyond age 60 with long term care yields*.
-Pre-existing is not covered during Accumulation Period. No exclusions after the 7th year of coverage*.
-Flexible, transferable, up-gradable and maybe re-dated benefit design.
-Reinstatement within 2 years of lapsed policy.
-Seven (7) years of spot-cash payment options.
*subject to availability of accumulated health funds.

Kaiser International Health Group, Inc.  is a registered health care provider in the Philippines that offers Long Term Healthcare. Kaiser is far more than an HMO. While HMOs cater to both group and individual accounts, Kaiser's product is geared to address the long-term care needs of individuals especially after their employment and retirement years.

You can check for HMO (Health Maintenance Organization) in your area and choose the plan which is best for you. Always start with your healthcare, especially if you are the breadwinner of the family. Always remember, it's better be safe than sorry.

Going back to the above two important questions, I'm sure you already have your answer. 


Saturday, February 13, 2016

Ways To Increase Your Cash Flow

"Never depend on single income. Make investment to create a second source." --Warren Buffet

Two things to remember in managing your cash flow. One is to earn additional income. It can be a direct selling or network marketing or multi-level marketing. Second is to manage your expenses.

Managing your expenses is like controlling the valve of your kitchen faucet. By doing so, you will be able to manage your cash outflow. 

Let discuss it one by one.

Managing Your Cash Flows

Cash Inflows. These include cash that comes from your salary, other income, loan proceeds, investments, business or proceeds of sale of your assets (e.g. car or house and lot).

Cash Outflows. These include cash that goes out of your pocket like your house rent, tuition fee, food, gasoline, payment for your car installment, credit card payment etc. In short, these are your expenses that you have to manage.

Is there a way to earn additional income to improve your cash flow? Yes there is! In fact, Forbes offers 44 Ways to Earn More Money.  All you have to do is find which one is doable and best for you.

In my case, I searched for a company who is into direct selling and multi-level marketing, a company who is known for its integrity. There are lots of network marketing company out there who offers good compensation plan, but they are not there to stay. If you choose the wrong company, your integrity would be at stake. In my search, I found Forever Living Products. It is a perfect choice because the company has local office in my area. No need to worry about product distribution and training.

Managing Your Expenses

Have you heard about the 70/30 rule? This is what I have learned from my mentors. 70/30 Rule means that your expenses should be within 70%  of your income. (Read more...)

It would be hard at first to implement the 70/30 rule specially if you have loans to pay. To live within 70% of your income is indeed difficult. If the rule is not applicable to you as of the moment, then you can start with what is workable to your budget. Before, I started 90/10 because of the loans that I have to pay. And since majority of my budget goes into paying my debts, I prioritize those loan which bears interest. For quite sometime, I was able to pay as well those loan from other person which doesn't earn interest. After 3 years, I was able to implement the 70/30 rule.

If you are still looking for additional source of income, then you can start immediately in managing your expenses. At least, something is happening in your personal finance.

In managing your expenses, please take note of the following advice:

1. Make a budget. 

Have a dedicated notebook where you can list down all your expenses up to the last cents. Why? Because by doing this, you will have a clear picture where you money goes. Just do it for 2-3 months. After that, you will be able to analyze which areas of your life you spent too much. It might be on your food, your leisure, or you bought a lot of stuff which are not necessary. You will also notice here if you do save money, do you invest or not.

Once you know where you money goes, then the next step is to identify which areas of your budget that has to be controlled or where to cut your spending habit. Like a leaking faucet in your kitchen, that area has to be repaired immediately before its too late.

Lastly, by following the 70/30  rule, prepare your budget next month, next quarter or next year. This procedure will help you to identify what particular month you will get budget deficit because of a foreseen event in your life like birthday, anniversaries and so on.

2. Be a wise spender.

Every time you get money from your pocket, ask these simple questions: Is it necessary? Is it a need or a want? You have to know how to distinguish one from the other.

Personal finance is not being taught in many schools. Also, we learn things from our parent when it comes to money. If there are not good in managing their finances, most probably you also learned their money habits. The good news is, everyone can start anew. 

The financial aspect of our life is just one of the aspects that we have to manage. But this aspect is the most important one because it affects our mental, emotional and physical being. The time to change is now!

Thursday, January 28, 2016

What Is Your Theology of Money?

When we talk about money, what is the first thing that comes into your mind? Money is good? Money is evil? Or both?

Well, the answer is, it depends!

In our Christian perspective, the Bible always says one thing about money: it's the LOVE for money that makes it evil. Let me share to you some verses from the Bible:
Is money good or evil?

1 Timothy 6:10 ESV

"For the love of money is a root of all kinds of evils. It is through this craving that some have wandered away from the faith and pierced themselves with many pangs."

“No one can serve two masters, for either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve God and money."

According to Bo Sanchez, people don't see financial blessings and they don't want to accept financial blessings and they don't know what to do with these financial blessings because of two major reasons: Wrong Theology of Money and Wrong Strategy of Money.

For example, if you hold a knife, does it make you evil? No. Well, it depends on your purpose of holding it. Are you going to use the knife to slice your vegetables or meat to prepare your meal? Or are you going to stab your mother-in-law who never sees anything good in you? See my point? It is you who will define the purpose of the knife.

The same principle also goes with money. It depends on you. Are you going to use the money to feed the hungry, to shelter the homeless and abandoned, or to bribe the government officials to get the project that you want? 

Ask this to yourself: "If I will get rich today, what would I do with my money?"

 Answer it with all honesty, then you will know your own theology of money. 

Is it good?

Is it evil? 

Well, it depends on the size of your heart.