One step back, two steps forward

http://www.businessmirror.com.ph/home/opinion/16549-one-step-back-two-steps-forward.हटमल

Opinion

Written by Edmund Lao / Personal Finance

Sunday, 27 September 2009 20:24

SOUNDS like cha-cha? “Two steps forward, one step back” is usually a negative term to describe someone who is having trouble making progress. But switched around, “One Step Back, Two Steps Forward” means that instead of grousing or feeling guilty about a misstep, you can still come out ahead if you put your head down and push forward. This was the strategy of Chairman Mao of China when he ruled. But the more popular application took place in the Philippine Basketball Association, courtesy of the brilliant Utex Wranglers bench tactician Tommy Manotoc. During the 1980 Open Conference, the Utex Wranglers were going up against the Toyota Tamaraws having the legendary Robert Jaworski as one of its star players. In that game, Utex, with less than seven minutes left, was trailing by 11 points but ahead in the best-of-five series, 2-1. Coach Tommy pulled out all his starters, including the two imports, in an apparent sign of surrender. After the game, when asked by reporters why he gave up with so much time remaining, he quipped, “One step back, two steps forward,” referring to his tactic of reserving his players’ energy in preparation for sudden death Game Five. His tactic worked as the Wranglers overhauled a four-point deficit, sent the game into OT, and won the series. In our personal financial planning, can we also do a Tommy Manotoc? The answer is a resounding YES! Being employed in the corporate world is similar to playing a basketball game. We gain employment with the goal of earning money that will sustain our present and future needs. Majority of us think that working harder guarantees higher income. Realistically, we can earn more by working smart. Similar to a basketball game, the harder the team members play, the more points they can possibly make. However, in some cases, the opposing team makes more points seemingly at ease. How is this similar with regard to our finances? Before we earn our paycheck, we already lose. That is because we have a fixed expense in the form of tax , which is withheld from our monthly salary. Taxation is one of the causes people find it hard to build wealth. Income taxation here averages 25 percent of the gross. Then there is another loss—Inflation. Inflation erodes our money’s purchasing power. Although it cannot be seen, it can be felt. It is, in effect, our money’s silent killer! Third, there is unwise spending. It is an example of negative compounding of stewardship of money. Last, scams. We lose money when we unwittingly get involved in investment scams. They are schemes designed to lure us into putting our hard-earned money into the scammers’ pockets. These four are our money’s major opponents. As we build up our financial points, our money’s enemies also build up, making it hard for us to accumulate wealth. Most of the time, our financial opponents outpace our hard-earned money to the point we end up having a huge debt. What should we do? There is a way! Take one step backward, two steps forward. Realize and admit defeat first. Then declare victory later. For the first two factors, tax and inflation, there is not much we can do. We can’t control the tax imposed on us but we can go around it. Ask experienced accountants on how to do it. We also cannot control inflation, as this is the effect of the economy on our money. For the first two enemies of money, we have to admit that we lose since we cannot control them. This is the time we take one step backward and start planning. Then strategize to eliminate the third factor by learning to control money. Just like in basketball, control of the board by a good center can help ensure victory or snatch victory from certain defeat. The same principle also goes with controlling the money that goes into our pocket. In order to gain control, the following steps are recommended: 1. Have the discipline to control your emotions against impulse buying. Remember that money saved is money earned. Doing so will improve the financial points you are building. Create the habit of saving money regardless of the amount. The key is to trick your mind into believing that there is no more money after the money has been saved. Then, with discipline in place, start saving 20 percent of the income to build the investment fund. Spend only on needs. Sometimes it’s okay to spend for wants as long as it’s in check. 2. Take advantage of time, one of the allies of wealth-building. The earlier we save and invest, the lighter the financial load to begin with. Time is the most neglected part of wealth-building, and yet it is the most impatient of all. It waits for no one. Once gone, you can only look back but never go back. Use it wisely to make it an ally for it can’t be replaced. Otherwise, it will be your enemy. 3. Another ally of wealth is compounding interest. It is the 8th wonder of the world. As Albert Einstein said, “it is the most powerful force ever discovered by man.” Compounding interest means your money’s interest is earning interest. Your money is growing without any effort. This means that your money is working for your financial points. Assuming you have P100,000 today invested at 12 percent compounded annually, your money would have grown to P6.4 million in just 36 years! Determine your goals, risk preferences and your investment horizon. Consult reliable financial planners for more information and guidance. 4. For scams, it is observed that history repeats itself, but people never learn. Scams come and go, but due to greed, people always gamble away their money after being sweet-talked by scammers. Always remember the golden rule: If it’s too good to be true, then it’s not true. Investigate before investing. Check with different government agencies on the legality of the investment company. Make a background check on the stability and integrity of the company before deciding to invest your hard-earned money. Having done the recommendations, it is time to start the game again, and armed with the strategies, we can be sure to win the money game and take two steps forward to our financial freedom. Then the final buzzer sounds…only one person knows who won or lost…. It is YOU. **** Edmund Lao is a candidate for Registered Financial Planner (RFP) designation. He is a graduate of electrical engineering from Mapua Institute of Technology. Currently he is a sales engineer in one of the biggest media companies in the Philippines. He is also an active contributor to www.income-tacts.com, the country’s premier personal-finance web site. Join the 17th RFP Program (October 17 to December 12, 2009). Visit www.rfp-philippines.com or inquire at info@rfp-philippines.comThis e-mail address is being protected from spambots. You need JavaScript enabled to view it /Tel. No. 634-2204.

How to save on Christmas

How to save on Christmas

Planning Your Holiday Expenditures

– by Edmund Lao

Pasko na naman! The –ber months arrived and comes the season for celebration and giving. Majority are getting busy thinking about gifts and presents as well as food and parties for the coming holiday. Pinoy entrepreneurs will be busy in making money this season from consumers. In short, this is the season of spending for people from all walks of life.

Here lies a big problem that I hear every year. After the celebration is over, you will find that everyone was not able to save their bonuses and benefits received. Worse, almost everyone ended up in debt. If there was forward planning, I believe we can celebrate Christmas without having to splurge a large amount of money. Believe me, it can be done.

Following are my recommendations:

1. Plan ahead. Just like childbirth (which is certain to come, the parents should save for the moment pregnancy takes place). We all know that yearly, we celebrate Christmas. Treat Christmas as if it is a childbirth. As early as March, list down people you want to give gifts. Look out for mallwide sale, inventory sale, closing out sale, or even calamity sale. Definitely the price will be lower.

2. Go to Divisoria stalls. It is fun shopping there as you can haggle for discounts.

3. Look for UK goods (not the imported from London, but the ukay-ukay stalls).

4. Recycle the gifts received last season. That would be the best as you do not need to shell out money, time and effort. Just make sure not to accidentally gift it back to the source.

5. For foods intended as gifts, it is better to do it at home than to buy. Food need not be expensive. It is the thought that counts. Self-made delicacies will be appreciated more than those bought.

These are just some ideas to make Christmas worth celebrating without hurting our finances. Just keep it simple. Remember that during the first Christmas, there were no extravagant celebrations. The best way to celebrate is for every family to go to church for thanksgiving and have a simple dinner. Make it a practice and you will see how it can change your finance for the better.

Saving in Time of Crisis

By Edmund Lao

(This article appeared in the July-August issue of Money Sense)

Last week, a Singaporean businessman was here to join the exhibit on outdoor advertising industry. While we were having a short talk, he mentioned that even progressive country like theirs is not immune from the effect of the financial crisis. Business is not good, consumers are not willing to spend, and some employees are laid off. According to him, at least here, the effect is not quite felt. His observation is quite true. While there are companies that cut their costs, there are also companies that are in the expansion mode. For the advertising and signage industry, in this time of crisis, the opportunity to grow is evident as can be seen from the food and banking industry.

For the average people, are there opportunities too? The answer is YES. The only key is awareness to what is happening around. Business opportunities are everywhere, with potential income starting from a minimum of fifty thousand pesos per month. Although going into a business may help, a lot still depends on how well a person handles his finances. A lot of businesses preach financial freedom through earning more money and living extravagant lifestyle rather than preserving and growing the earned money. Just be careful with your emotion in order that you will not be drawn into a pyramid scam.

Building wealth may be difficult but with the right information and proper planning, the task will be a lot easier. Below are some pointers.

1. Begin with the end in mind. This is one of the seven habits in the book of the author Stephen Covey. Without the end in mind, no one would start his quest for financial success. One has to think far into the future so that he can determine what he has to do today. I remember a quote from an anonymous source. It goes like this: “A wise person thinks of tomorrow today. His years of hard work must give a reward which will take care of his needs in the far future”.

2. Invest in your education. Read books, attend seminars, look for mentors, network with people, surf the internet for financial knowledge. Many young people spend money like there is no tomorrow. They think it is time to enjoy when they start working. They are unaware that it is only the beginning of schooling in the University of Life. As the saying goes, “If education is expensive, try ignorance”.

3. Invest in your health. Health is wealth. By maintaining good health, you can eliminate spending huge amount for medicine and hospitalization. Imagine how much critical illness can hurt your finances. With a single stroke, your wealth can be wiped out instantly.

4. Eliminate or reduce vices. Vices are one of the greatest hindrances to wealth building. These are the unnecessary wants that we can live without. Just imagine a person smoking a pack of cigarette everyday. How much money did he burn in a year? Not only that, he also is not investing in his health. In short vices are not good to one’s physical and financial health.

5. Live below your means. This statement has been used so often but is taken for granted. Yuppies tend to splurge money to enjoy the money they worked hard for. That is instant gratification. Sometimes they spend too much that they have to incur debt just to sustain their extravagant lifestyle. Isn’t it debt sounds like death? Remember the book “Till DEBT Do Us Part” by Chinkee Tan? The only way to delay instant gratification is to have proper mindset. You have a choice, either “SACRIFICE NOW, ENJOY LATER or ENJOY NOW, SUFFER LATER”.

6. Start your savings program. Saving money is not at all difficult. Every time people hear the word “savings”, there is only one response” “I have no money left for savings”. They do not realize that the amount of money to be saved is irrelevant. It is the discipline and habit that matters. By saving, you are in principle, “paying yourself first”. Imagine paying all your bills first and leaving yourself for the last and penniless? The trick here is to consider yourself as an expense on top of your other expenses. Take ten to twenty percent of your paycheck and save it. (Remember the story of Joseph as governor of Egypt?) Then budget the remainder for your expenses. Learn to determine the wants and needs. Cut down on wants and focus on the needs. If the budget is still short, it is time to look for additional income so that you can increase your cashflow for your budget.

7. Create emergency fund. As a rule of thumb, savings equivalent to three to six months of salary must be reserved for emergencies. The usual problem is there is always emergency but no fund. Emergencies are those events that suddenly arise without our control. Childbirth can not be considered emergency. Some time in the past, a worker was borrowing money from me for emergency because his wife will be giving birth. I frankly told him that it is not emergency because the time he learned his wife was pregnant, he should have planned and prepared the amount needed.

8. Invest to grow money and outpace inflation. After accumulating emergency fund, it is time to transfer excess money to an instrument yielding higher rate of return. Inflation can not be seen but can be felt. Inflation, by definition, is the loss of value of money over a period of time. To make it plain, just imagine you have fifty pesos last year. That amount today can not be able to buy the same thing you bought last year. So it pays to learn different investment vehicles for your financial growth.

Time is of the essence here. It can be your ally or enemy. One only realizes the full importance of TIME when there’s little time left. Everyone’s greatest asset is one’s unexpired years of productive life. Take advantage of time and make it work with your money.

Checkmate!

Written by Edmund Lao / Personal फाइनेंस/बिज़नस Mirror

Sunday, 23 August 2009 23:00

Chess…an ancient game of strategy that traces its origin to India, has been around for centuries. The objective of the game is to capture the opponent’s king by checkmate within 2.5 hours, a position where the king has nowhere to go. When an opponent gets checkmated, the game ends. The game has three main stages: opening, middle, and the end game. The opening consists of the starting and the developing moves by deploying key pieces to their most effective positions to control the center. The middle game is the planning and execution stage. It is here that complications arise. The skill of the player in defense and offense and making critical decisions determines the outcome of the game. Erratic evaluations from a deceptive move by the opposing player can cause a winning game to be lost. Making decisions can even gain or lose a tempo (time on/against the side of a player who seizes/wastes opportunity). This is where the nerve of the player counts a lot. The end game is the result of a properly or poorly planned middle game. Masters have varying styles: aggressive, conservative or both. It is usually the young ones who are aggressive and the young “once” who tend to be conservative. In the financial game called money, how do people move and win? Financial planning is like a good game of chess. The opening Playing the opening game in chess poorly always results in a crushing defeat. The same principle applies to personal finance. When one starts earning income (more or less at the age of 22), it is the best time to begin the quest to win the money game by making savings a habit. In this game, money represents chess pieces. As chess pieces are moved forward to attack, one has to move his money forward, too. He has to learn how to manage money and make it work through wise and aggressive investment moves. By being in control early on through financial discipline, the financial success is not hard to achieve. In chess, studying the position is a must in order to have a good chance of emerging victorious. The player has to seize the initiative at the opening. In financial planning, one has to study his position and gather information for him to make good financial decision. Unfortunately, majority commit the same blunder by delaying savings early on and putting first instant gratification or having the herd (or heard) mentality in investing. This kind of financial blunder is very costly, as one cannot take back lost time. Self-control is the key to success. One has to be in control or else he will be under control. By committing himself to learn first, he already built a strong foundation for his personal financial planning. Take advantage of time. Control your emotion and discipline yourself. Think of your goal of checkmating your financial opponent (you). In chess, the opponent is the other player. In financial planning, the opponent is ourselves. It is out human nature to resist change. We need to overcome and change old selves if we want to succeed. The late Bruce Lee once said we need to empty our cup. That means we need to discard the old and useless and retain the useful/absorb the new ones. Be up to date with financial information and put it into action. The middle game As a person begins to earn more, his expenses, unfortunately, also begin to keep pace. It is sometimes inevitable that because of factors such as family needs, lifestlye changes, impulsive buying decisions or new investment opportunities, a person’s expenses exceed his income. When this happens, a correct mindset plays a a very crucial role in keeping in check with your financial target. Before investing your money, investigate first. Remember that scammers will be very happy to have a chip of your hard-earned money. They usually invite people to their business-opportunity seminar and will make them “feel good” and part with their money, only to realize later that they had been “hypnotized” and pressured into taking part with the organization; although not all business-opportunity seminars may be scams. Financial planning has never been a “feel-good” session. In fact, financial planning will present to you the harsh realities of life that you need to address and solve! One needs to gather information and use logic before jumping into any decision. Ask around, make research or background investigation, weigh your options before risking money. Even if you failed because of a bad decision, begin again. Remember the sayings “It ain’t over until it is over” and “There’s no failure until one stops trying”? Like a chess game, a player in an inferior position still has the chance to win when his opponent makes a wrong move. As long as one does not quit, there is always room for success. Whatever the result, continue playing for a win. End game At last! We come to the end of the game and the battle of wits is almost over. The scenario now is much simpler and easier to analyze. There are only a few pieces left on the board. Checkmate is in the offing. Only one will emerge victorious. The winning player remains composed and has plenty of time to make a move while the losing player is usually stressed and finds himself in time trouble. Then suddenly, checkmate! The question is: Are you the announcer or the receiver of the announcement?

FREE SEMINAR on Financial Literacy
(this module costs thousands in business schools,
but you can learn this FOR FREE)

Wealth Academy Series 1 Training

* How to Increase Cash Flow
* The Law of Building Wealth
* The Rule of Money, The Rule of 72
* The Wealth Formula
* Fundamentals of Investments
* Putting the Allies of Wealth to Work on your Side
* Overcoming the Enemies of Wealth
* How Money Works
* How to Get the Highest Potential of your Money


Wealth Academy Series 2 Training

* Breakthroughs and Innovations in Financial Solutions
* Creating Multiple Passive Income Streams
* Be your Own Financial Expert
* Investment Vehicles such as Mutual Funds, Bonds, Balance Funds, etc.
* New Concepts of Making Good Money
* Learn the economics of today and the strategies behind the wealthy
* Understand why we need to do things differently than our grand parents


Wealth Academy Series 3 Training

* Goal-setting
* Financial Check-up and Need Analysis
* Coaching and Mentoring
* The HIDE Method
* The ‘Investible’ Fund
* Fortune from Small Change
* Statement of Income and Expenses
* Statement of Assets and Liabilities
* Debt consolidation
* Estate Preservation
* Create your personal financial strategy


For FREE SEMINAR schedule please contact: edmund.lao@gmail.com


VENUES:
Philippines: Makati, Cebu, Cagayan, Davao, Iligan, Iloilo
International : Dubai, HongKong, Taiwan, Kuala Lumpur, Palau, Rome, Athens, Macau, Milan, Barcelona


Attain FINANCIAL FREEDOM - that means having money for ALL your needs and wants.
The road to financial freedom starts with financial knowledge.Discover the ways to fight poverty...

If you think Financial Education is not a waste of time,
Attend the FREE SEMINAR Now!

email: edmund.lao@gmail.com

Business and Education Package!

“Money is not the most important thing in the world, but it affects everything else that is important." -Kim Kiyosaki

WANT TO INCREASE YOUR FINANCIAL LITERACY?
WANT TO START A BUSINESS?

GET THEM BOTH AT WEALTH ACADEMY!!!

During these difficult times, we learn that JOB SECURITY IS JUST A MYTH. Financial education is more important than ever before. Recession-proof yourself!

FINANCIAL SECURITY is not a dream. It is a PRIORITY. If you have the will, we will show you the way!

SERIES 1: Building Solid Financial Foundation (absolutely free!)

ADVANCED SESSIONS: (SERIES 2 and UP)

• Passive Income 101 (Business solutions)
• Financial Coaching & Mentoring (workshop)
• Finance 101
• Investment Strategies
• Winning Principles
• Mutual Fund Investing
• Real Estate Investing
• Building Big Business

SEMINAR SCHEDULES:
Wed at 7pm
Fri at 7pm
Sat at 2pm


Financial security is not a dream.It is a PRIORITY.

For seminar reservations and appointments, please contact:
EDMUND LAO
Mobile 0917.326.2077

VENUE:
3F King's Court 1 Bldg.,
Pasong Tamo corner dela Rosa,
Makati

LOCATION:

How to Become a Millionaire

By: Tyrone
First posted at Millionaire Acts
http://www.millionaireacts.com

Becoming a millionaire involves discipline, hard work, and financial education. A lot of us are dreaming to become a millionaire and I was one of those. That is why I simply created this blog entitled Millionaire Acts – to know how a millionaire acts and to mimic their success.

Based on the book that I read entitled "The Millionaire Next Door" in which the authors conducted a study on how millionaires live, we can deduce what these millionaires undertook to achieve their "millionaire" status. And I will summarize it together will all the lessons I learned on how to become a millionaire.

MILLIONAIRES ARE FRUGAL INDIVIDUALS:

Millionaires know how to pay themselves first. If you are an employee like me, the first thing you should do is to pay yourself first whenever you received your paycheck. Set aside enough savings first before you spend the rest. Use the equation INCOME minus SAVINGS equals EXPENSES.

A good way to know how much you should save is by using the universal rule called Pareto's Principle of 80/20. In business, you must put most of your efforts on the 20% that bring in 80% of the income. In saving, 80% of your savings come from 20% of your frugal living. In other words, you should live within 80% of your income and set aside at least 20% of your salary every payday.

Millionaires live below their means. Most millionaires are not fund of showing their wealth by living a lavish lifestyle. We are oftentimes compelled by media to live extravagant because that's how media portrays how millionaire lives – large houses, luxurious cars, expensive jewelries, etc.

However, a lot of millionaires are simple. They wear simple clothes, live in a simple house, drives simple car and yet you will know they are already a millionaire by examining their bank accounts, their stock portfolio and other investments.

Millionaires know how to budget. One way to live below your means is to budget your income. You should assign every peso for each of your expenses every month after taking out your savings from your income.

MILLIONAIRES ARE FINANCIALLY LITERATE:

Millionaires know how to invest. The first thing to be financially literate is for you to know that the value of money depreciates over time because of inflation. And that is why you need invest. You need to let your money work for you because you worked hard to earn it. You should know how to read numbers and to understand some basic accounting terms.

Millionaires are familiar with the terms active income and passive income. You should have a lot of income streams. If you lose one, then there could be other streams that can support you. You should not just put all your nest eggs in one basket but in a diversified portfolio that may probably contains stocks, bonds, real estate, and other investment vehicles. Educate yourself with these types of investments and how these investments provide returns for you and what are the associated risks involved.

Millionaires start early. You should be informed that time is essence in becoming a millionaire. It's not a quick-reach step on top of a ladder but it involves a lot of time. It's not an overnight success.

MILLIONAIRES ARE DETERMINED TO BECOME MILLIONAIRES:

Millionaires have goals. You should start with a goal. It will serve as your target and gives direction to your actions. There will be a lot of temptations out there that can sway you away towards reaching your goals but it's just a test of how determined you are. You must possess the drive and the will power to overcome these challenges. You should have the discipline to achieve success. Overcome your fears. Believe in yourself that you can become a millionaire! You can do it!

Millionaires have mentors. You should get yourself a mentor. He will serve as your guide to become a millionaire. He might not be physically present all the time to teach. You can buy his works of art like books in which he shared all the things that he went through in order to achieve his millionaire status.

Mingle with the same people who have the same mindset as yours. Learn from each other. Create value to each other. Surround yourself with positive people, people who can help you and teach you to reach your goals to become a millionaire. Read books that inspire you, that keeps your drive in flame.

Overall these are the collective thoughts I knew on how to become a millionaire. But I can summarize all these in one line - EARN MORE and DESIRE LESS

Are you ready to become a millionaire? Are you a millionaire in the making?

Why I enrolled at RFPI?

Why I enrolled at RFPI?

by: Denky dela Rosa, MD

I have just completed the course for registered financial planning (RFP). Was it worth it? Certainly! It opened my world to so much information which many of us only take for granted. I had so many AHA! moments in the course such as realizing that investment risk is not something that you must resist at all costs but something you must learn to minimize. You don’t need to have a financial background to appreciate the education. They are able to explain the concepts in easily understandable terms.

Many have asked me why I took the course. I guess it all started with Oprah. I saw an episode where her guest was Suze Orman and I was fascinated. I kept hearing her mention about financial planners so I started asking around for them here but I couldn’t find any. Last December, I saw a magazine article written by Al Sembrano and I noticed his title RFP. I googled RFP and stumbled upon the website of RFP Philippines and saw that they were offering a course in financial planning and the rest was history.

You may still be wondering why enrol when I can just hire financial planners to do the planning for me. I think the bottom line is my desire to keep on learning. “Continuous and never ending learning and improvement” is one of my mantras and it has always served me well. Here are the reasons why:

1. Innovation is the name of the game. I know of a couple in their 60’s who used to have a printing shop. They lived quite comfortably in their early years and provided well for the children. During the time that I met them, they were no longer in excellent health and had to undergo a few treatments here and there. I would prescribe some medications and ask them to undergo some tests and come back in a week or two. Often, they would miss the appointment and a skip a number of doses of medications. On one occasion, I asked them how come they were having financial difficulties when they had their own business.
They said that new technologies have practically made their services obsolete and the volume of their business has gone very low. Why is it that some companies have thrived for decades while others have died? I think the answer here lies with our abilities to adapt to the changes and embrace them like they were our loved ones. The younger generation may not be familiar with the walkman and betamax because they now have their ipods and DVD players. This is what innovation means.

2. Diversification. Many people are losing sleep over fears of losing their job. Some people fear that they are somewhat old to be hired again while others are afraid because their skill is so specialized that no other industry will utilize their services. Take the case of the auto industry worker who is excellent in making cars but has not developed himself in other fields. “Who else will hire me?!” is probably nagging in his head. The same is true for a company who has specialized only in making a certain part for the auto industry and is now fearful of losing his business. He does not have the means to cushion the blow of this tragedy.

In investments, diversification of portfolio is crucial in minimizing losses. Big corporations such as Ayala and SM thrive over the long haul because their business is not concentrated in only 1 or 2 sectors. They engage in entertainment, banking, insurance, real estate, telecommunications and many more. So why is it that most people are concentrating in only one craft or one job? Many of us will say that we don’t have time anymore to engage in other things. But I think we simply refuse to admit that we are afraid to step out of our comfort zones. The current events has taught me that diversification of abilities and sources of income is now a must in order to prevent the risk of being wiped out and devastated after losing a job or being caught in the middle of the demise of an industry. We can no longer rest on our laurels no matter how stable the company is that we work for or how thriving our business may seem. We must keep on diversifying and growing until we leave this world.

3. Knowledge is power. Have you ever bought something only to find out that it was not exactly what you were looking for and because the salesperson was so glib in convincing you of the benefits of the product? Admit it, all of us have fallen victim to this scam at some point in our lives. Many people have been enticed by high yielding investments without really understanding what they were getting into. Marketing will always be there to hound us and there will always be bad people preying upon us. Emotion and ignorance are enemies of financial well-being. Money governs everything that we do. Money makes the world go round. We all work so hard for our money so that it only makes sense for us to exert all effort to ensure its safety and the only way there is, is by educating ourselves. Education (especially financial education) makes us more rational and enables our better judgment.


There is a formula to live a good life as well as a solution to all of our problems. I just haven’t figured out the entire equation for now but I am certain that never ending learning is a major part of that equation.

Warren Buffet said: “The best asset you have during the time of recession is your talent”. I’ll have to end here. I don’t want to be late for my next class.

Registered Financial Planning Program

Financial Planning Program
What will I learn in the RFP® Program?

Module 1 - Behavioral Financial Planning

* Apply household finance and its economic and financial underpinnings to improve your personal financial planning
* Differentiate various types of household expenditures assuming the household as a functioning enterprise
* Apply cash flow analysis, develop savings approaches and employ financial ratios to household finance

Module 2 - Financial Planning Process

* Find out why financial planning is important to your personal financial health
* Learn how to apply the financial planning process for yourself and your clients
* Understand the particular needs and behavior of people for whom planning is to be done

Module 3 - Time Value of Money

* Develop a working understanding of compounding
* Apply time value of money principles in day-to-day situations
* Establish the effect of inflation on the purchasing power of the peso

Module 4 - Investment Planning

* Apply risk and return principles to investments
* Evaluate the factors that enter into investing
* Recognize how portfolio management differs from individual asset selection

Module 5 - Tax Planning

* Learn Value Added Tax (VAT), Income Taxation and others
* Develop a knowledge of key tax-planning strategies
* Compare the tax benefits of major investment vehicles

Module 6 - Estate Planning

* Determine what estate planning is and how to employ it
* Recognize the merits of having a will and establish the steps in an overall estate plan
* Develop several tax reduction strategies

Module 7 - Insurance Planning

* Apply retirement needs analysis
* Appreciate how risk can risk can alter the capital needs calculation
* Perform an insurance needs analysis

Module 8 - Financial Planning Practice

* Apply the six step process in making comprehensive financial plan
* Appreciate how financial planning concepts are used in actual case
* Demonstrate how financial planning can improve the profession

How do I become an RFP®?

Once you complete the modules and pass the assessment paper, you can apply to become Registered Financial Planner (RFP®) of RFPI USA. As RFP®, you can put "RFP®" after your name to signify your competence in financial planning. You can also practice financial planning as an alternative profession to your clients and friends, and you will get regular technical sessions and support from RFP® Association of the Philippines for updates and further training.

For more information, logon to our website at www.rfp-philippines.com

The 9 Steps to Financial Freedom

The 9 Steps to Financial Freedom


Suze Orman's book stands out from the field (she covers most of the topics other writers do) are two very useful insights:

(1) That our psychology and subconscious has a lot to do with how we do (or do not) manage money;

And (2) money, in and of itself, does not have power over us; indeed, it is the other way around -- the way we manage our money speaks about who we are.


Other than these two insights (which are eloquently communicated) Ms. Orman covers the basics - as tortuga has posted - "get out of debt, make sure your family is protected (emergency fund, life insurance, etc.), invest for retirement and college for the kids," etc.

She does a very good job in the relatively short book of covering these fields in sufficient depth. A note to those who dislike her philosophical/religious diversions -- do not let them stand in the way of receiving some excellent advice.

Honestly, she talks down to my level and wifey's much like the Gardner brothers of The Motely Fool fame "To amuse, enlighten and enrich" type of prose.


According to Suze:

Step 1

"The road to financial freedom begins not in a bank or even in a financial planner's office but in your head. It begins with your thoughts.

And those thoughts, more often than not, stems from our seemingly forgotten past with money."

Step back in time to see how your feelings about money can be traced to your past. We all have "money messages" passed down from generation to generation.

When Suze Orman was 13 she watched her father dive into the flames of his burning take-out chicken shack in order to rescue his cash register. In that moment Orman learned that money was more important than life itself. And so it became her quest to be rich. But years later, when Orman became a wealthy broker with a huge investment firm, she was profoundly unhappy. What went wrong? She had not yet achieved financial freedom. In her nine-step program, Orman covers the ingredients to financial success--confronting our beliefs and fears, learning the nuts and bolts (and insiders secrets!) of savvy management, and finding the spiritual trust that leads to abundance.


Step 2

"Facing your fears and creating new truths.

Don't you find it strange that you can raise a family, hold down a job, fix things that are broken, and deal with everything that comes up in your life – except your money? "

The book sets the premise that you never learn to deal with money successfully until you overcome your fear of money...of not having enough, and fear of taking action with your money. It's about how to make money work for you so you have more than enough because you learn to devote energy, time, and understanding, to money. The three ways of getting money in this world:

(1) Work for it
(2) Inherit it
(3) Invest the money you save (the most powerful, respectful way to get money there is) e.g., DRIPing.


Step 3

"Being honest with yourself."

Quit using plastic cards for money. They are addictive and destructive as drugs, giving you a quick fix by satisfying temporary desires.


Step 4

"Being responsible with those you love."

Establish life insurance, wills, power of attorney, estate planning, etc


Step 5.

"Being respectful of yourself and your money."

If you do what needs to be done with money, you will attract money to you.


Step 6

"Trusting yourself more than you trust others."

You and your money must keep good company. Credit cards are never good company. Get out of debt. Respect yourself and your money by making every penny work for you. Trust yourself more than you trust others. Find the "little voice" inside you; listen to what it has to say.


Step 7

"Being open to receive all that you are meant to have."

When you are in control of your money and have enough to be generous, money flows to you.


Step 8

"Understanding the ebb and flow of the money cycle."

Money has natural cycles as it ebbs and flows through your life. Money flows through our lives like water...plentiful at times...a trickle other times. These transitions are exciting or scary, but are all part of the natural cycles of money. There are two important reactions to these cycles:

(1) You must take the long view of your financial future
(2) You must believe that what happens is positive and let it be.


Step 9

"Recognizing true wealth."

If you choose to entrust your money to someone else, and you really don't know how money works, unscrupulous people can take advantage of you. Further, you discover the thrill that comes from wanting to deal with your money instead of just having to deal with it.

Get in touch with your money; delight in spending it as you did as a child, but enjoy choosing not to spend it too; take pleasure in putting some away for later.

Most of us need to spend our money differently. Not drastic action like getting by with one car. Unrealistic budget cuts, like diets, never work.

Rather, decide to spend $25 to $30 less per month from fifteen or twenty of your spending categories; with each decision you make to spend less, you are gaining power over your money, and you will find creative ways to reduce your spending so you hardly notice. Rather than being dictated by a restriction, your actions are guided by the choices you make. This is the hardest step to financial freedom; you become honest with yourself about how you really stand.

LBYM! Spend less by putting your money away before you see it. Pay yourself first.

It's not what you make, but what you keep. Time plays an essential role in building future wealth because the longer you contribute, the more you'll have and with time, the contributions you have already made do more work for you. The thing that makes time so powerful is our youth and compounding.

The important thing is to understand the nature of money and take the right steps to make it work for you. Recognize true wealth. People can not be measured by their net worth. Money does not make you financially free; only you can make yourself financially free.

Don't Be A Burden When You Grow Old

Don't Be A Burden When You Grow Old


By MA. SALVE DUPLITO
Editor

IF you have experienced taking care of your parents who have advanced in age, or know someone that does, you would agree that it's no joke.

Care-giving expenses, medical bills, the cost of adult diapers can stack up and - shoot me for being too realistic - often slowly take away a little of the love children have for their parents, day by day. What remains is the burden of caring for the old ones.

Most Filipinos' idea of retiring and growing old is for their kids to "pay back" their kindness as a parent by taking care of them when they grow old. Do you seriously want to be a dead weight on your children's necks when you are advanced in age?

Say this out loud with me: I will do everything I can so I will never be a burden to my family when I grow old! Careful financial planning, preferably starting the day you got your first job will ensure that your children will love you when you grow old.

Rex Ma. Mendoza, president of Philam Asset Management, Inc., points out in an interview with INQ7money that the steps to make sure that your children will fight over who will take care of you later on are surprisingly easy. They start with a commitment to plan your financial future and discipline.

Financial planning need not be uninteresting. It is only boring when you are talking with a consultant who wants to make it sound complicated so you would continue to get his services.

Financial planning is simply finding out where you stand financially right now, where you want to go, and coming up with a plan to go from here to there! Simple. But remember that it must do at least five things: beat inflation, minimize taxes, manage the unexpected, provide money for special expenses and enrich your retirement.

Beat inflation. There are several holes in everyone's investing buckets. Inflation is one of the biggest. A six percent inflation rate, announced by the National Statistics Office for 2000 for example, means your 1000 pesos in a time deposit account, will buy only 960 pesos worth of goods when you withdraw it next year. Computed until your retirement day, that four percent inflation rate per annum can account for a substantial amount lost from your investment bucket.

So make sure your financial planning strategy will include savings and investment instruments that would beat the inflation.

Minimize taxes . The way things are done at the Bureau of Internal Revenue, only tax lawyers can understand how much your tax expense should be. Opt for tax-free investments to avoid income taxes and tax-deferred investments to postpone these tax bites. That way, your funds can grow at a faster clip.

Manage the unexpected. Health and life insurance are funny products in the sense that you hope never to make a claim. But they are necessary for when things you don't expect do happen – like accidents, or fire, or even death. Listen to your agents with caution and make sure you don't believe marketing hype for high-commission insurance products.

Provide money for special expenses. I know a couple that has done everything in their power to budget their income but failed to set aside money regularly for sudden cash needs, like tuition fees. They end up using their credit card and now struggle to keep up with their monthly dues.

Enrich your retirement. Supplement your Social Security with a clear plan on how you can finance your retirement. With a regular income even after your official working days have ended, visiting with your children and even your grandchildren will be a pleasure, not a pain.

After all is said and done, developing the plan is one thing, sticking to it is another. Once you have created your blueprint, its up to you to make your plan work.