Retirement Planning: Simple, deep and fundamental guide towards peace of mind

This is a guest post by Grace

Do you know that 8 out of 10 retirees will be dependent on their children for financial support? This statement was released from the Philippine National Statistics Office in 2003.

We are already in 2015, and yet I still see a lot of families who have their parents living with their children. It is happening and I am not even surprised because it has been in the culture of many Filipinos. I have been a Financial Advisor for almost 5 years now and witnessed many single young professionals stayed single for a long time without saving a penny because they spend quickly on gadgets; travel a lot, big purchases or constantly providing for their family (Mom, Dad and nephews). I have nothing against the latter but I still believe that making them financially secure through total dependency on you makes you a greedy person rather than a generous person. Why? Because you are holding them of their talents to earn a living by providing for themselves, In short, passing the legacy to them, so that even when you are not around they know what to do.

There are only 3 easy steps that I want to share to young people who do not yet know how to save for their future:

Step 1:

 The moment that we start working, we can already set aside 10% of our salary. What is the 10% for?  The 10% goes directly to God’s hand. How do we give to God? The head of the church is Jesus Christ and we are the parts of the body, the church should allow you to practice this willingly. We are in God-believing country and yes, it is a command in the book of Deuteronomy 14:22. The Bible talks about tithe which means a tenth of your first crop. 2 Corinthians 9:7 gives us an insight of the attitude of our hearts when we give to God. And how do we do this? We start a relationship with him through believing in Him. What is 10%, when what we all have is His. The gospel truly changes our values inside out which are truly critical in managing our finances.

Step 2:

This may vary on your needs and salary: at least 20% goes to savings and investments. Let’s say you have a P15,000 salary. What you can do is send 10% of 15,000 to your retirement fund and another 10% in your savings account. In this way you will have the discipline of making your money work for you and another for emergency funds.

Step 3:

What about the 70%? Our favorite part of our work is when we finally enjoy the fruits of our labor. This is the part where we spend for our basic needs and take a vacation. This is when we work around with the 10,500 or 70% of the 15,000. We budget around with this because we still need to be disciplined when it comes to our expenses.

In summary, this is the classic example of putting your money in order:

Salary = Tithe + Savings & Investments & Protection + Expenses

How we see our future is how we save for it.  Are we among those 8% of the retirees who will be asking their children for money because of sickness and old age that we cannot work anymore? I know some parents who felt ashamed already because they knew that their children wanted to provide for their own family. Or are we among those 2% who are financially secured?

A grandmother who planned her retirement 40 years ago, have been living an abundant retirement now. Because the time she spent with her family is when they visited her in her house while having a sumptuous meals together or even travelling abroad. She’s now 80 years old and never did I see her ask for financial support except when playing with her grandchildren.

We too can experience this kind of retirement in the future if we start now while we are still healthy and earning a living. Let us increase the 2% of the retired population and make more people aware of their discipline. The way we can do this is to start with ourselves and pass it on.

The point is this: whoever sows sparingly will also reap sparingly, and whoever sows bountifully will also reap bountifully. – 2 Corinthians 9:6

Grace Panugayan is a Registered Financial Planner and working with one of the leading Insurance Company in the Philippines, Pru Life UK for 5 years.

Photo Credits to the following

north.cofc.edu

www.huffingtonpost.com

beatthe9to5.com

Red flags of Investment scam



Image by EuroGamer

I am suspicious of all the things that the average people believes.”
― H.L. Mencken

History shows that a lot of people are not learning   at other people’s mistakes. We may either blind, financially innocent or not really aware of it. Modern financial engineering is not new anymore. Some of us may be one of the victims of fraud or you know someone who was victimized by a large organization which is insolvent (Not having enough money). Identifying it is just one of the ways how you can prevent yourself from being financially distress. Self- awareness can help you bring   the red flags into the light.

1.   The products are too good to be true  

When someone tells you that the investment product has no risk involve, think again and run away from it. Someone is hiding the fact or keeping the truth from you. Everything has a risk. In every aspect you either gain or lose some of it. When you think about low risk and high gain, does it sounds good?  Yes of course, but no one is offering it aside from those scammers.  There were many people who took that bite and changed the course of their financial life. Lack of investigations will not resolve the issues.

2.   They promise guaranteed returns

Many scammers are selling the end goals but they seldom explain the process and the journey of it. They intentionally hid it from you and presented what you wanted to hear to lure you with the products and services. They always highlight the   return   with minimal financial sacrifices.       Maslow’s     hierarchy of needs tells us that we need security in our lives. If we apply it in investments, having a secured return of   it   will be a more financially sound decision for a lot of people. When a scammer addresses that need it will be a monster disaster when you get in.

  

3.   Be mindful of “The Credible guy”  

All fraudsters were credible guys before their skills were exposed publicly. Before Ponzi scheme became a worldwide term he became a financial advisor of Prime Minister Benito Mussiolini. I just want to remind that financial freedom is in your hands so do your own due diligence. You know someone who has credibility but check also their qualifications like their values system. Never stop asking questions until you get the right fit. The fact that they are credible, it should also be verifiable.  Most of the time we just trust and give all the money that we have blindly, not knowing the background of that con-artist.

4.   Everyone is buying that

Without checking your goals, visions and emotions you will be trapped immediately. The problem about the herd mentality is everyone doing it, so it must be good. Big no! The quick rich scheme mentality will easily gobble you up. The power of social pressure will pull you underneath the surface. Behavioral Finance Expert Daniel Kahneman states,” that driven by emotional reactions such as greed to gain money and fear in losing funds, you normally conform to the desire to be accepted by a group”. As a result, investors were seen joining frantic purchasing of that products resulting in economic crises. Example, the CAP (College Assurance Plan).

5.   They pressure you to get the products.

Biggest scam tactic is to let you feel that this is the last ride , limited editions, phase out and the availability of the product will not be visible for the next couple of years. Creating a false sense of urgency by claiming limited supply gives you this impression. Joining the bandwagon is good but be careful. The Budol Budol gang, the Aman futures group used these strategies to lure investors. The famous Ponzi scheme even tried to do this. We use emotion when we buy, but we use logic to defend why we buy things.

6.      The Reciprocity Tactic.

Many fraudsters asked investors to attend free seminars while other legal entities are also doing the same thing. Now, how will you know who is telling the truth? This is a tricky part. Offering to do a small favor for you in return for a big favor is a classic example. They give  materials, free lunch or dinner. Without you doing some intense research about the company, products, business model and the one selling the services you are at the brink of financial disaster.

These are just red flags but not totally immediate indicators that the company is a scam. Before you invest, be cautious, be aware and investigate.

  

But those who desire to be rich fall into temptation, into a snare, into many senseless and harmful desires that plunge people into ruin and destruction.  1 Timothy 6:9

David Isaiah Angway is a Financial Evangelist