Financial Indepence on Retirement
Here's one article sent to my yahoogroup by Edmund Lao. I guess he got it from an Inq7.net article by Ma. Salve Duplito (Editor). Something worth sharing....
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IF you have experienced taking care of your parents who have advanced inage, 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 upand - shoot me for being too realistic - often slowly take away a little ofthe love children have for their parents, day by day. What remains is theburden of caring for the old ones.
Most Filipinos' idea of retiring and growing old is for their kids to "payback" 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 youare advanced in age?Say this out loud with me: I will do everything I can so I will never be aburden to my family when I grow old! Careful financial planning, preferablystarting the day you got your first job will ensure that your children willlove 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 childrenwill 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 youwould continue to get his services.
Financial planning is simply finding out where you stand financially rightnow, where you want to go, and coming up with a plan to go from here tothere! Simple. But remember that it must do at least five things: beatinflation, minimize taxes, manage the unexpected, provide money for specialexpenses 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 bythe National Statistics Office for 2000 for example, means your 1000 pesosin a time deposit account, will buy only 960 pesos worth of goods when youwithdraw it next year. Computed until your retirement day, that four percentinflation rate per annum can account for a substantial amount lost from yourinvestment bucket.
So make sure your financial planning strategy will include savings andinvestment 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 fortax-free investments to avoid income taxes and tax-deferred investments topostpone these tax bites. That way, your funds can grow at a faster clip.
*Manage the unexpected*. Health and life insurance are funny products in thesense that you hope never to make a claim. But they are necessary for whenthings 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 marketinghype for high-commission insurance products.
*Provide money for special expenses*. I know a couple that has doneeverything in their power to budget their income but failed to set asidemoney regularly for sudden cash needs, like tuition fees. They end up usingtheir credit card and now struggle to keep up with their monthly dues.
*Enrich your retirement*. Supplement your Social Security with a clear planon how you can finance your retirement. With a regular income even afteryour official working days have ended, visiting with your children and evenyour 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.
Here's one article sent to my yahoogroup by Edmund Lao. I guess he got it from an Inq7.net article by Ma. Salve Duplito (Editor). Something worth sharing....
==================
IF you have experienced taking care of your parents who have advanced inage, 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 upand - shoot me for being too realistic - often slowly take away a little ofthe love children have for their parents, day by day. What remains is theburden of caring for the old ones.
Most Filipinos' idea of retiring and growing old is for their kids to "payback" 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 youare advanced in age?Say this out loud with me: I will do everything I can so I will never be aburden to my family when I grow old! Careful financial planning, preferablystarting the day you got your first job will ensure that your children willlove 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 childrenwill 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 youwould continue to get his services.
Financial planning is simply finding out where you stand financially rightnow, where you want to go, and coming up with a plan to go from here tothere! Simple. But remember that it must do at least five things: beatinflation, minimize taxes, manage the unexpected, provide money for specialexpenses 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 bythe National Statistics Office for 2000 for example, means your 1000 pesosin a time deposit account, will buy only 960 pesos worth of goods when youwithdraw it next year. Computed until your retirement day, that four percentinflation rate per annum can account for a substantial amount lost from yourinvestment bucket.
So make sure your financial planning strategy will include savings andinvestment 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 fortax-free investments to avoid income taxes and tax-deferred investments topostpone these tax bites. That way, your funds can grow at a faster clip.
*Manage the unexpected*. Health and life insurance are funny products in thesense that you hope never to make a claim. But they are necessary for whenthings 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 marketinghype for high-commission insurance products.
*Provide money for special expenses*. I know a couple that has doneeverything in their power to budget their income but failed to set asidemoney regularly for sudden cash needs, like tuition fees. They end up usingtheir credit card and now struggle to keep up with their monthly dues.
*Enrich your retirement*. Supplement your Social Security with a clear planon how you can finance your retirement. With a regular income even afteryour official working days have ended, visiting with your children and evenyour 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.
