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Monday, March 24, 2014

Ignorance is Expensive, Cut Your Budget On It

Money has been the common stumbling block for people who want to start investing. Ironically, it’s their money problem that they want to solve with the idea of investing. Almost everyone would say they want to prepare for their families’ future by investing and getting a protection for emergency needs. But still a lot of Filipinos even at their middle age are not doing anything about it. The usual reason is because it’s expensive, they think. 

But if you look at some people’s lifestyle, even some minimum wage earners have that excess money to buy items which they call “investment to self”. They buy gadgets, they dine out, buy expensive coffee, watch movies, have “gimik” with friends, go out of town and a lot more. You know what I’m saying. You see them being shared in social networking sites. Though it’s every person’s right to choose where to spend their hard earned money, there are those occasions that these people who spend their salaries on these luxuries are the ones not giving other people their rights to spend elsewhere. When these people who do not spend and save their earnings wisely meet an urgent need for their family (i.e. accidents, hospitalization, calamities, illness, death), they have no choice but to ask help from others who they know have saved some. 




Of course, not all who ask for help are irresponsible. Sometimes, no matter how prepared we think we are, the worst things happen and surprise us. And it’s always good to help others. But talking about those who don’t help themselves first and run to other people for their emergency needs, I think it’s unfair for those responsible people who earn the same as they are yet try harder in saving for their own families’ sake.

The fact is if you really want to invest, you can start for as low as 50 pesos per day to get as much as Php 700,000 pesos in protection for your family and possibly Php 1,000,000 (yes, that’s 1 Million) for your retirement fund. That’s cheap, right? You just have to give up some of these “investment to self” that you really don’t need. Or if you can’t give them all up, you can at least downgrade some of them. Downsize your coffee, fewer 3D movies, drink only water when you dine out, travel in budget, cut on your beer bottles, etc. To start on your investment, all you need to do is prioritizing your spending then ask the right people. Then act. 

Truth is protection and investment are not expensive, irresponsibility and ignorance are.


Please like our Facebook page, Layman Investment and follow me on Twitter, @lm_investment. If you have questions/suggestions/comments, you may also reach me at laymaninvestment@gmail.com. Hope to hear from you soon.

Tuesday, March 11, 2014

4 Ultimate Mistakes of People Who Won’t Start Investing (But Actually Like and Need To)

Apart from planning and talking about investments, and not doing it, here are some of those things that lifelong wanna-be investors always talk about. Yes, they always wanted to invest but never did and still haven't. These are their excuses.


1.       Cannot afford the amount to start the investment – You don’t need to invest the amount that you don’t have. You need to review your financial flow first. Read, study or have a financial advisor to help you. His role is to help you manage your finances, prioritize your spending and guide you on the investments which will suit your need. It’s always your needs first, current status and your target before discussing the investment for you. If you do not find him doing this, chances are he’s just after the commissions. But don’t worry; there are only a few who are like this. And it won’t be that difficult to recognize if your advisor is up to no good. The key here is to check the target investment first and how it is done before saying no.

2.       Spouse, parents, family member, etc doesn’t like it. – So… what? Each investment is created for a specific need or plan of an individual. One might not suit another person. But you are not the other person. You know your plans and your needs more than the others. Decide for yourself. Now move.



3.       Afraid of being scammed – People can’t be blamed for being skeptic regarding investments. But being affected totally by the few schemers and avoiding investment at all and just saving all your money in a savings account or just inside your piggy bank is one sure way of being a victim of money fraud which is called “inflation”. Start reading and asking the people who knows about investing. Be guided. Work out your plan. Then begin.

4.       Planning to start later when the situation gets better – How will you know if situations will get better? It could be worse. But you’re also right, it could be better. But the irony is that investments, if done right, will help make situations better. So a good situation will definitely become better with investments. What’s more with a bad one? Invest now, and your future self will thank your old self later for doing it.

So, are you guilty with some of them?

Got questions about investments? Let me know. Message me at laymaninvestment@gmail.com or at rogie_ylagan@yahoo.com 

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Thursday, March 6, 2014

Misunderstood Rich Man's Reply to the Poor Man



Dear Poor Man,

I understand how much you want to have a better life for yourself and for your family. You know what?  I was just very much like you in the past. You might not have seen my struggles before but it’s exactly the same as what you are experiencing.  A lot of us went through with the same hardships you are having before we became what we are. You might think there’s a lot of difference between us now. But truth is we are very much the same in every way. I think that there are only some obvious differences. One is on how we look at things and how we act on them. It’s the mindset. 



I’m not saying that it’s you but I know a lot of people who are proclaiming the same life status like yours who are thinking this way, that we are buying things just because we can buy them and that we just want them. I hope they keep in mind that before we got them, we worked hard for them and thought many times before deciding to get them. It’s not for social status whatsoever. It’s because primarily, me and my family need them. But I feel sorry that there are people who do what exactly some of you think. They buy things for a show. And they send the wrong message to others. And what’s worse is that those who have less are the ones who get victimized on picking up this wrong behavior. 

See --> The Poor Man's Letter

I can’t understand those working on minimum wage or just above it who are always trying to catch on the new trends in fashion and gadgets. With what I earn now, I can afford to buy some of those things also if I wanted to. But I choose to hold on to what I have now no matter how old they are as long as they are working and serving me their purpose. Like my 5 year old mobile phone. I rather save the money that I have now for future needs or other necessities that might come along the way. 



And no, we are not snob. You may approach us anytime. We also do the first move at times when we have the chance. You might think that we’re picky with the people whom we talk to. The fact is I love talking to people. I learn a lot from others’ experiences so I love hearing it from them. From you. But maybe, that connotation of us being a snob is what I can explain as saving what’s important for what’s important. Our time and energy are limited. So they are better well spent on people and things that really matter. Like my family, my friends, people in need and most of all, to the One who provided us with all of these. Thanking God and acknowledging that all these things that are happening are His will alone. I am nothing without Him.

Material things are never the final goal. But material things aren’t bad at all. Don’t ever think about that way. These are also God made tools. And you can use these to achieve higher goals in life, which are to become a man of purpose for others, to be better citizens and family members and most importantly, to realize how negligible we are compared to all of God’s creation. And to His eyes, you are not poor. You are also rich and blessed.

Sincerely yours,
Misunderstood Rich Man

Misunderstood Poor Man's Letter to the Rich Man



Dear Rich Man,


I apologize for almost sounding like a man obsessed in making wealth. I know I’m not like that but that’s what I heard some are saying about me. Some people or maybe most of them think that I already became too materialistic. And that I forgot which I need to prioritize. Some are even laughing at me thinking that my screws got loose already with my illusions of grandeur to think that someday, I’ll become one of the richest persons in the country. Or in the world.


Truth is that my goal is never to make more money nor to become filthy rich. My real objective is to give my family at least a decent kind of living. It’s just as simple as trying to have enough earnings so I can send my kids to reputable schools. I mean those same schools that you went to. Public schools are good. I know.  I went there. But if I have a choice, I know you would understand if I prefer to have my kids go to private schools. I know that you will understand this easily because you also made that choice for your own children.




I’m also doing this to keep my family intact. I don't want to leave for a job abroad as much as possible. We both know how it would increase the risk of having my family broken. Or my kids grow up without my guidance. I believe that with proper knowledge, I can make it here and that I don't have to part ways with my family.


See--> The Rich Man's Reply 
 


I may look up to those tycoons and talk a lot about them and how I think they do their businesses.  But believe me, it is you and where you are is just where I want to be. Not really to surpass you. I just wanted to be like you. You may say that you are not rich. But for me who grew up in that kind of poverty that most of your colleagues never met eyes with, you are rich enough.


It is not greed that drives me to do this. It's my love for my family. As a father, all I want to become is a good provider and protector. I want to keep my family away from harm always. I want them to live in a more secured place, in a more livable community. You know what I'm saying. It's getting more unsafe in our streets and in our neighborhood unlike with yours. Even the number of crimes in public transportation is getting worse than ever.




And I wanted to do something about it now and learn how to do it so I can start managing my time because I wanted to gain more of it to be spent on more important things. I believe that most of you sacrificed effort and time as well when you were beginning. But now, you have more time spent on better things, like your family. And also, to give back to people in need.  In my current stature, I am trying to do that also by sharing to others what I am learning. My time and my concern are the most valuable things I can give them right now. 


I’m just sad that you sometimes talk as if I’m being too much becoming of this world.  Can you do me a favor please? Don’t ever think that I’m forgetting and neglecting about my faith. It is never and will not happen. I assure you.  After all these years of hunger, hardships and sacrifices, our strong faith with Him is still and will always be on top of everything. And I’m aware that I may not achieve what I’m trying to reach. But I believe that even if I die while trying to give my family better things in life, non-materially and materially speaking, He'll never leave my family alone and the seeds which I will plant while I'm still living will help my loved ones grow and mature under God’s guidance and blessings. And if worst things happen to them when I’m no longer around, I hope and believe that people like you will be touched by the Lord’s hand and will reach out your helping hand to them. 




But while I’m still alive and the Lord’s letting me serve my purpose here on earth, I hope you wouldn’t mind what I’m trying to do here. I wouldn’t want to abuse the kindness of people like you. Rather than getting help always, I prefer to be the one helping. And I’m starting to do the helping to myself and to my family. And to others as much as I can. 


Thanks a lot for your time reading this letter. I hope you understand my situation more after this. God bless us all.



Respectfully yours,

Misunderstood Poor man

Sunday, March 2, 2014

Start Your Investment (But How, Where, When, Why?)

Handling your investments includes the technical and non-technical aspects. And it also involves a lot of common sense. We usually leave this part while thinking that the how-to-dos are enough to manage your investments properly. But are we really doing it right?

People invest on many things such as cars and houses. By working hard and smart, they save enough money for the down payment and then have their jobs and savings keep up with the amortization. But we are all aware that bad things happen on the most unexpected time. Accident may happen to your car the moment you drive it out from the casa. And your house can be burned down to ashes on the first day you moved in. So to protect your investment, the first thing you do when you purchase a house or a car, you get insurance for them. So even if the worst thing happens the moment you get a hold of the keys of your car or your house, possible expenses will be covered by insurance. It is even now a requirement to get one before you can get a house or a car loan. That’s how valuable insurance is for your assets.



Can happen even if it isn't your fault.

Now imagine this. You decide not to get insurance right away. You choose to save money first in the bank or in other money investments like mutual funds, stocks, bonds, time deposits, etc.  After several months of saving, you were able to keep aside a bit of money. Let’s say a hundred thousand pesos.

And then the misfortune happens. You got into an accident. Either you got injured, get disabled or worse, you die.  Whichever of that happens, your family will surely need money for that.  Here are two scenarios that could happen to you after that unfortunate event:


Scenario 1: You get injured and need some time to recover

You will need money for your hospital bills. While you’re confined and resting to recover, your income will stop because obviously you can’t work. That Php 100,000 you saved will be needed. Then you hope that it’s enough to cover the hospital bills  and aside from that, including everything else that you were paying for from your monthly salary (bills for electricity, water, cable and phone, monthly rent or loan amortizations, food, etc). Good for you if you have a health card but still, it can’t cover everything. Unless you have reimbursement benefits from your company, you will also need to shoulder amounts for your medicines. And remember that you only have Php 100,000 for all of these while not having work for unknown period of time.

Scenario 2: You die from the accident

Worse is you may die from it and that Php 100,000 is the only money you have. Funeral services now are exorbitant. Let’s say Php 40,000 will be set aside for it. And your family will be left with Php 60,000. That amount for the rest of their life? Maybe you left some other assets like your home, car and others which I hope you had already paid in full or got Mortgage Redemption Insurance for them. And these might be subjected to estate taxes before being transferred to your loved ones. It could be worse if you’re the solo income earner in your family.



Start saving somewhere


But again, the good thing here is it’s not yet happening. You still have time to prepare for these possible scenarios. There are many ways to prepare for it.  And each scenario has its own solutions.

For Scenario 1, you will need to study all your expenses right now. Check out each of them and see which among them you can remove and live without. Maybe you need to avoid eating out most of the time. Start cooking your own for your “baon”.  Lessen your movie days and you might want to watch some of them by renting dvds and see them at home with your friends and family. The story won’t change anyway even if you’re late seeing it than others. You may also cut off some from your vices (less bottles of beer per month). Cut off some of your magazine subscriptions. Try commuting once in a while. I’ll stop there.  I will leave the specific money saving ways to you since you know your situation better. The bottom line here is you need to save. This will give you more money to keep and quicker time to grow your “emergency fund” (more of this in the next posts) for such needs.  Check your lifestyle and spend wiser. This will help you and your family to survive if scenario 1 happens.

On the 2nd Scenario, you also need to do everything that was mentioned above. But one important thing you must add to that to prepare yourself and your family is to get an insurance policy. In purchasing cars and houses, we invest in insurance to protect our investment for any possible damage that might happen. So logically, you must do it for yourself as your body is your number one investment tool. In our scenario, you were able to save at least Php 100,000 before death occurred. In reality, a lot of us have difficulty to save that amount even for a long period. But most are able to keep small amounts from time to time. But due to lack of self-control, many are not able to keep that money intact. More often than not, we are tempted to spend it for other stuff which are more often than not, unimportant. So when the time comes that they need the money, they don’t have anything to show.


Are you and your family in good hands?

Good thing today is that insurance policies offered by different companies are made to fit the different needs and capabilities of different people. There are still those traditional life insurance policies which most of us are familiar with. But better things now are being offered especially for the young ones. You can now start getting an insurance policy and at the same time start a long term investment which you can use as your retirement fund or for business start ups later on. Those small amounts that you’re able to keep and are tempted to use in buying unnecessary things can be put into better use in this type of investment. More on this type of investment in the next posts as well.

If we are really serious in thinking about our family’s future, it’s not hard to identify what we really need to start doing. On the next posts as mentioned above, we will talk about what we call the “emergency fund” and “insurance + investment” types of policies. But if you are raring to go soon about these things, just send me an email at laymaninvestment@gmail.com or at rogie_ylagan@yahoo.com and I’ll be happy to share with you whatever that is which I also learned from others. Good day and God bless.