As a financial advisor, it’s our responsibility to draft a financial road map for our clients that will lead them towards financial independence. It doesn’t end with simply buying insurance to protect one’s family from unforeseen circumstances. It also involves creating a budget, a savings and investment plan for future needs such as education, retirement, and even estate planning.
You save for short term needs but for your long term goals like retirement and educational expenses for your children, you have to put your money in assets that not only beat inflation but provide high returns (stocks, mutual funds, etc).
If you want your children to go to the top tier schools, you have to INVEST because tuition fees increase by an average of 10-12% per year. Compound that with the number of years you have to wait before your child goes to college and you have six to seven digits figure that you need to save up for. You can’t merely put your money in a time deposit because their 1-2% return will just lose to the annual rate increase for tuition fees.
If you want to retire comfortably, you also have to save up for that. I say save up but I’m actually saying you have to invest long term. What a comfortable retirement is varies per person. For some that requires P30,000 pesos to live on every month for your living expenses, others probably would want to live on P50,000 – P100,000 thousands per month. Multiply that with 12 months in a year and just to be conservative, by 20 more years if you’re female since we have a longer life expectancy, and you get a whopping seven or eight digit figure. Retirement is expensive yet most of us fail to plan for it. That’s why when you start working, you have to build your financial freedom account very early. I started mine when I was 24 years old. That was when I opened my first mutual fund accounts with Sun Life Asset Management Inc and First Metro Investments (a Metrobank subsidiary) and so far, I’m very happy with the returns. I’ve now diversified into stock trading and have created a personalized investment plan for myself so that when my husband and I retire, we don’t need to depend on our children or anyone.
Admittedly, I don’t know much about estate planning, because for one, I don’t have an estate and I still have a few decades ahead of me. I still can’t compute the taxes due but that’s easy to learn since the BIR has a matrix for that. For those who don’t know, an estate is simply everything you own. These are the properties you divide and give to your children in your last will and testament. Yes, the government taxes you for the properties you bequeath to your children. All I know about estate planning is that you can use life insurance to pay off your estate taxes. How? Your life insurance should be equal to the amount that you need to pay off for your estate taxes. Normally when someone dies we get billed for medical and burial expenses. But if you have life insurance, the insurance company issues you a check to your family so that when you die, they have something to pay off outstanding debts, expenses, and even taxes. Now isn’t that great? If you don’t have any debts to pay, life insurance proceeds can be part of the money in your will which you can give to your children as well.
If you want to create your very own financial plan, or if you’re a company who wants to educate their employees on the importance of saving and investing or if you’re planning to create a retirement plan for your employees, the financial planning seminar offers valuable and sound advice and it’s for FREE.
If you’re interested or have any questions, leave a comment. 🙂
Happy weekend to everyone!