Tag Archives: investment

Why I decided to be a financial adviser

There are only two reasons.  First is because I wanted to have the freedom to do what I want with my own time.  After ten years of working the corporate life, I really don’t see myself cooped up in an office for the next thirty years.  I guess everybody who’s worked has felt that way. So how I did know I could be one?  It was when my sister asked me to check her life insurance proposal mid last year.  I evaluated the projected returns using the annuity formula, which allows you to compute the future value of annual payments made of a period of time given an interest rate (a good and common example would be loan payments or even those painful tax deductions).  Ever since I’ve learned that formula, I have used it to calculate the future value of my investments in mutual funds and stocks, which I put money into every month.  That’s also probably why I’m frugal, because I’m very much aware of the opportunity cost when I buy things that lose their value over time.

Second reason, I didn’t know it at first and it’s the people who I’ve talked to that have pointed this out but I’m really quite passionate about personal finance.  I’d rather talk about how my stocks are doing than gossip about local celebrities.  I’d rather read books and listen to people who talk about business and how to make more money than talk about the latest fashion trends.  I guess I’m geeky that way.  That has inevitably translated to how I spend and look at money. I’ve always been the practical one. My phone is pretty basic (never owned an Apple and the only Samsung I had was the one handed down to me by my brother) but I do splurge on footwear since comfort is a priority to me.  I have clothes which have been with me since high school and college (either because of sentimental reasons, they just fit me, or are just too comfy to let go). As for my bonuses, I just spend 10-20% on my wants while the rest would go to my financial freedom account (insurance, mutual funds and stocks).  I know that will all change when I have a baby of my own, and that’s exactly the reason why I’m maximizing my savings now.

Five months into it and all I can say is, it’s damn hard because it doesn’t mesh with another side of me: my shy side (haha!).  I don’t like approaching people and selling to them.  What I do like about it is that I get a chance to share my thoughts on savings, investments, stock markets, etc.   What I do like about it are the number of trainings I’m able to attend about the stock market and investments in general, especially those held by Sunlife’s very own fund managers and tenured unit managers. I know that if I were to make it here, I’d have to thicken my skin, and that’s quite a challenge for me.

To me, being a financial adviser is not just about selling life insurance.  It’s about educating the ordinary man how he can move out of the rat race to achieve financial security and freedom.  It’s about teaching them to plan and save for the rainy days.  It’s about changing their mindset about money.  After all, schools didn’t teach us about money, which is why many Filipinos are financially illiterate and struggle financially.  More than just being a salesman, it’s a service rendered by every financial freedom advocate out there.  If you’d like to be a  Sunlife financial advisor, let me know.  There’s a business opportunity forum at Sunlife Bonifacio Global City office next Saturday, February 28, 2015.

Getting Started on Wealth Accumulation

Here’s a great read from Huffington Post about personal finance which introduces various topics relevant to the second stage of personal financial planning, which is wealth accumulation.  I’m not going to discuss all of the points, just the ones which I feel strongly about.

#10. I’d rather have Php 2.00 tomorrow than Php 1.00 today.  Building wealth requires personal sacrifice and delaying gratification.  While you’re still young and able, you have to start thinking about the future because time is one of your best allies in wealth accumulation.  Look at this annuity table, with a monthly investment of P2,000, P3,000, and P5,000 based on a compounded eight percent annual return.

Monthly investment 10 years 20 years 30 years
2,000 (Php365,892.07) (Php1,185,894.44) (Php3,000,590.36)
3,000 (Php548,838.11) (Php1,778,841.66) (Php4,500,885.53)
5,000 (Php914,730.18) (Php2,964,736.09) (Php7,501,475.89)

This tells you two things.  You can start small, with just a monthly savings of Php2,000 but if you persistently invest it in a financial instrument that generates eight percent return annually, you will be a millionaire in twenty years!  That million can be used to start your own business which would further add to your income stream.  The second thing this table shows you is just how important time is to an investor.  Even if you only invested Php2,000 for thirty years (equal to Php720,000), the return is much bigger compared to the future value of the Php5,000 monthly investment for twenty years (equal to Php 1.2 million).   Of course, Php5,000 monthly investment for 30 years beats Php2,000.  The point is, if you don’t have the financial capital, you have to make up for it with time and if even you had the money but had little time, the growth will be limited.  It’s not hard to save Php2,000 monthly right?  This is just the same as saving Php 67 every day, less than what a one piece Chickenjoy would cost.

If you do decide to start this habit, it’s going to be difficult at the beginning.  Why? Because this takes time and constantly requires you to be disciplined and be focused on your goal.  After all, it’s so easy to think of P2,000 as dispensable money, one you can always save up for month after month. No question about that. But the thing is, it’s not the money that we might run out of, it’s time.

#9. Millionaires typically don’t drive Lamborghinis and Aston Martin.   This is the myth that the book The Millionaire Next Door has debunked. Despite billions in their bank accounts, some of the world’s richest are also the most frugal men alive. Warren Buffett continues to live in the same house he bought in 1958. Ikea’s founder Ingvar Kamprad flies coach not first class and drives a 1993 car model. If you want to be financially free, it’s important to keep whatever money you make. Don’t spend it on things that depreciate in value.   Simplify your lifestyle by living below your means.  Looking rich is different from being rich.  If they can do it, why can’t we?

#8. It’s Okay to Splurge on Something Nice…at the Right Time. The key is balance. You can’t just live today like there’s no tomorrow when there actually is, and you also must not forego living in the present. This is one of the principles behind T. Harv Eker’s jar system of money management.  You need to have play money to pamper and treat yourself.  Don’t be too stingy on yourself because the time will come when you will feel too deprived, that it will push you to spend big time, which is what we’re trying to avoid.  Splurge if you must, but it must be planned.  Save up for it.  Make it count. Don’t just buy impulsively.

#7. Forget Nuclear…Compound Interest is the Most Powerful Force in the Universe.  Einstein once said that compound interest is the eighth wonder of the world. He was right. It is such as powerful force, which when combined with time, allows your investments grow at an exponential rate. So what is compounding? It is interest earning on interest.

Let’s go back to the example in the article: Which would you rather have: Php 1,000 every day for a month or Php 0.01 doubled every day for a month?  This is the table we get.  The first choice provides a constant return every day.  This is wealth building by addition and what you would get if you were to put your money in assets that only give you simple interest and does not compound. With the second, you start with a measly one centavo but because it doubles, it increases sharply.  This is wealth building by compounding, where interest is reinvested to produce higher earnings in the succeeding days, giving you an exponential growth. If you look at the table, you’ll notice that it was only on the twenty third day that compounding surpassed the linear growth from saving, but after that, it increased by leaps and bounds.  That’s why we need time.  Like a tree which takes years to grow and bear fruit, because it roots itself first to the ground, your wealth accumulates at a snail-like pace in the first few years, but once it reaches a certain point, it multiplies.

Day A B
1        1,000.00                          0.01
2        2,000.00                          0.02
3        3,000.00                          0.04
4        4,000.00                          0.08
5        5,000.00                          0.02
6        6,000.00                          0.32
7        7,000.00                          0.64
8        8,000.00                          1.28
9        9,000.00                          2.56
10      10,000.00                          5.12
11      11,000.00                        10.24
12      12,000.00                        20.48
13      13,000.00                        40.96
14      14,000.00                        81.92
15      15,000.00                      163.84
16      16,000.00                      327.68
17      17,000.00                      655.36
18      18,000.00                  1,310.72
19      19,000.00                  2,621.44
20      20,000.00                  5,242.88
21      21,000.00                10,485.76
22      22,000.00                20,971.52
23      23,000.00                41,943.04
24      24,000.00                83,886.08
25      25,000.00            167,772.16
26      26,000.00            335,544.32
27      27,000.00            671,088.64
28      28,000.00          1,342,177.28
29      29,000.00          2,684,354.56
30      30,000.00          5,368,709.12
31      31,000.00      10,737,418.24

#1. It’s not about the money.  It’s about freedom.  This says it all. Why do we want to be financially free? To live the life we want!  The definition of freedom is different for everybody. For some it might be living a life where they can buy anything, go anywhere, and do whatever they want. For some, it’s about being their own bosses and the ability to have more control over their lives.  For some, it’s about giving back to those who have less.  Because financial success and freedom is different for everyone, you have to define it for yourself. But before you can be free, you have to work hard first to have enough money which will work hard for you.  To be financially free, you don’t need a lot of money or to be massively wealthy.  You just need to accumulate enough assets that provide enough passive income to cover your living expenses.

Sunlife’s Dynamic Fund in Maxilink One

And the market has spoken.  In just four days after it was launched on November 10, Php 400 million pesos have been subscribed.  Latest data as of November 15 showed that this amount increased to close to Php 800 million last Friday.  The fund closes once the P2 billion capital threshold is reached. Don’t miss out on this. If you want to get the best of both worlds, protection and investment, this is it.  For inquiries, PM me or email me at luisaangela.a.nucum@sunlife.com.ph. For more details, read on below.

ATT00001

———————————————————————————————————————————–

dynamic fund

Mark your calendars everyone. Tomorrow is the launch of Sunlife’s Dynamic Fund as a fund option in Maxilink One, which is a single-pay investment-linked insurance.  The best feature of the Dynamic Fund: it’s a swing fund that switches between equities, bonds, and cash depending on the market conditions.  It’s aggressive when the market is up, allocating as much as 90% on equities.  When the market is down, it adopts a defensive stance opting for bonds and cash instead.  It is thus an adaptive, agile, and flexible fund that aims to maximize returns by taking advantage of market opportunities.

The Dynamic Fund was first launched as as MUTUAL FUND last July 2014 with an approved Php 2 billion peso capital tranche.  You know what happened? It was sold out in its first month and was even oversubscribed at Php 2.7 billion pesos!  To date, the Dynamic Fund has generated more than 5% return in just over 3 months, meaning if you placed Php 100,000 last July, its value would now be more than Php 105,000.  You wouldn’t get that in a time deposit account, with just a hundred thousand pesos and in just three months.  That MUTUAL FUND is closed now since it already reached its capital limit. But you can still take advantage of the Dynamic Fund as a fund option in the Maxilink One variable-unit linked insurance (VUL).

What is Maxilink One? It is a SINGLE PAY insurance.  You won’t be billed for any succeeding annual, semi-annual, or quarterly premiums.  The minimum one-time placement required is Php 250,000 and I suggest you maximize this since additional “deposits” or top-ups are not allowed.  The insurance coverage is 125% of the amount you invested, meaning if you placed P250,000, you will be insured for an amount of P312,500 pesos. What’s more, there are NO UPFRONT CHARGES, so 100% of your money will be invested for faster wealth accumulation.  There’s also a GUARANTEED INSURABILITY offer, which means that regardless of age (until 70 years old only) and medical history, you will be approved and won’t be required to take any medical examinations.  Just like a mutual fund or a bank deposit, you can withdraw from your fund value anytime. Exit rates apply if you take out your investment within five years: 5% on the 1st year, 4% on the 2nd year, 3% on the 3rd year, 2% on the 4th year, and 1% on the 5th year. After the fifth year, there are no charges.

Is this FUND for you?  This is a financial solution for individuals with moderate to high-risk tolerance, aiming to maximize the returns on their idle and liquid assets, which are just stuck in the bank and losing to inflation year after year.  This is for grandparents who want to endow their beloved apos with a “liitle” something when they come of age.  This is for employees who wish to build a retirement fund or for parents looking to finance their children’s college education.  This is for anybody who has a financial need in the long run, doesn’t need the money now and can afford to forget it in the next few years. To give you an illustrative example of the returns, assuming an 8% growth rate per year, see attached table.  These values are compounded at 8% using this formula: Principal x (1.08) raised to the number of years.  In ten years, if the fund grows constantly at 8% per year, your investment would have more than doubled. That’s passive income for you. That’s your money working hard for you.

Number of years
Amount 5 10 20 30
   250,000.00    367,332.02        539,731.25   1,165,239.29   2,515,664.22
   500,000.00    734,664.04    1,079,462.50    2,330,478.57   5,031,328.44

Of course, every seasoned investor knows nothing is guaranteed when you invest in stocks. Yes, you could lose in the short run but if you let time do its work, if you don’t panic and pull out when the market is down, the returns are rewarding.  If you let your money sleep in the bank, yes you are guaranteed your money is preserved but it’s also guaranteed that you will lose the real value of your money.  Do you think that your Php250,000 now will be able to buy Php250,000 worth of goods after 1 year? 2 years?

This is one of Sunlife’s products that I’m really excited and passionate about, that I’m even going as far as to subscribe and take advantage myself. Give yourself the gift of financial freedom this Christmas. Don’t let this opportunity slip away. Given the highly favorable market response on the Dynamic Fund as a mutual fund, I don’t think this will be open in the market for long. For inquiries, you can reach me at luisaangela.a.nucum@sunlife.com.ph. Happy investing!