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

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 2^nd 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.

Arm Yourself Against Scams

News about complaints from people who got victimized by money schemes is usual nowadays. Big factor that often lead to this kind of story is due to the investor’s lack of financial knowledge and the big temptation on earning easy money. Easy money is a sure thing in scams only if you are the schemer.

In most things in the world today, knowledge about what you’re doing is the best weapon you can have. And greed is the worst character you would want to carry while dealing with anything about money. It blurs your vision and logical thought to decide well on your finances. In any type of investment, it’s more about what your needs and investment goals are and less of what the other person is trying to sell you more. But you should also be open for other opportunities while being aware of your current financial capabilities.

Here’s a post from my other blog that might help you avoid from losing money from scams.

--> Stop Losing Money By Making Trust Expensive

Things You Need When You Die

One of the basic tenets of preserving and increasing your assets is by identifying your needs from your wants. This is a financial advice that you will always encounter. Once you get the list of your needs and wants, it will be easy. But what people find difficult is identifying what they truly need. This is true since we also at times create our own reasons to justify the unimportant a necessity.

Most of us think that needs are tailor made for each person. But basically, we are all the same species that supposed to have the same needs but society affects our perception of it which results in the differences. As we go along, there will be additional needs that come up in every stages of our life that we have to cover. But the sad part here is we keep on chasing these new necessities while ignoring the basic ones until we need them. And usually it’s too late. So how do we know which basic needs that we need to address as early as possible? 

You still have time

I use this simple formula that helped me recognizing my own basic needs which you can also try for yourself. To know what these basic needs are, I just ask myself the “what if <bad thing happens>?” series of questions. And these bad things are the inevitable ones.  A lot of these scenarios have high chances if not 100% of happening within just a matter of time. These questions get me into thinking of the post-scenarios. It also helps me prepare and create solutions to lessen the after-effect of these scary situations. So what do these questions look like? Here are some examples.

• What if I lose my job tomorrow? Or my wife's? Or both of us?
• What if I get into an accident that disables me?
• What if I or a family member gets a major illness?
• What if I die early?
• What if any of the above happens, what will happen to our mortgages, loans, etc?  my children’s education? my family’s future?
• What if I grow too old, will I have enough money to enjoy my long years of retirement? Or pay for my medical bills that come with age?  

It’s just right when we say that we need this new smartphone that can make our work easier, or a new car for a more comfortable and safe travel to your office, or a new dress or bag as additional investment needed for your career. We do need these things and we rightfully deserve to have these things for our hard work. So you buy these things. But what if some of these bad scenarios mentioned above happen? Are you prepared?

Do you have enough savings to cover the after effects of let’s say a lost job or an injury or an illness? How long can your family survive with that savings amount you have before you can get a new job or recover from your ailment? Or what if the worse happen? You die. Do you even have prepared for the high expense of death services? And what will happen to your family if you’re gone soon especially if you still have very young kids? What more if the properties you purchased like your car and your house are mortgaged, how would you leave your spouse with that burden? Did you prepared for it as well? These things are what we really need which we realize only when bad things happen.

What's your dream retirement?

Don’t worry as these are just example and are not yet happening on you. But who knows. It might be soon. But I hope it won’t, not on me and not on you. It’s not that I’m wishing everyone bad things to happen. But let’s be optimistic. Yes, optimistic. These things might happen but you read it here and you got reminded. So you haven’t prepared for these things yet? Good. I really mean good for you because for everything mentioned above, there are different types of investments you can get into so you will be able to shield your family from worst things after any of the scenarios above happen. 

It’s good that you realize your basic needs now and you still have time to prepare. I can share to you on what I exactly did to become ready for these things that helped me sleep well at night. We’ll discuss these things on the next posts. But if you are raring to start as soon as possible, you can contact me directly right now. Email me at laymaninvestment@gmail.com or at rogie_ylagan@yahoo.com .

The clock is ticking.  When will you begin? Please share this post to others if it helps you as it might also help them. Thanks!

Always Better Than Diversification

Diversification is one thing you'll hear a lot when you are just starting to get into investments. By the root word ‘diverse’, it is the act of spreading your money into different types of investment to reduce the risk of losing a lot when you just put it all in just one basket, as they say.

It's a great strategy practiced by many successful investors. Diversification itself is an easy thing to do. You just put your money in several types of investments available to you like in real estates, equities, mutual funds, trust funds and other traditional businesses like retailing then voila, you are already doing it. 

But remember that your main objective in getting into investments is to grow your money. Lessening the risk of losing it is just a feature you practice while doing it. If your main goal is lessening risk, go ahead and diverse as much as you can. Spread your money. Put a little on this and on that. Chances are, you’ll earn in some and lose in some. You might end up break-even. 

Diversification is a great strategy. There’s no question to it. But keep in mind that the more important thing than knowing how to diverse is why you are doing it. You can only achieve that by studying your investments. There’s no other way. And by knowing your needs and visioning your objectives, choosing the better investments for you will become easier. Always remember that diversification is a tool for your perusal and never your end goal.