Investment Linked Insurance Products

This is the continuation of my previous blog BANKS: The Only Option For Savings?

Investment linked products are Life Insurance tied up with an investment. This means that your investments are secured with life insurance coverage. And this has become the preferred choice of Filipinos over traditional life insurance nowadays because of its flexibility and value for money.

Investment linked products of life insurance companies caters yuppies, matured and even old people. There are also options for your risk appetite – low risk, medium risk, and high risk. Should your risk appetite change from time to time, it wouldn’t be a problem as you can switch funds or change death benefits. Your financial advisor should take care of the amount of the account and through assessment of your financial situation he should be able to recommend a plan perfect for you.

What is its feature?

• Flexible payment mode. Option of paying annually, semi-annually, and quarterly.
• Flexible payment years. You decide. Whether to pay regularly, only a few years, skip payments (premium holidays), or pay once.
• Withdrawal. Partial or whole. Just like the bank, you can withdraw.
• Deposit. If you want to deposit, you can do so. In this case it is called a top up.
• Very low cost of Life Insurance Coverage. It just takes 3 years to pay the coverage. On the 1^st year 100% of the premium goes to coverage, the 2^nd and 3^rd year only 50% goes to coverage and the other half goes to the investment. The succeeding years of payment (if any) will go to investment.
• Premium Holiday. You may opt not to pay as long as the insurance coverage will be covered by the fund.
• Death Benefit Option. You can switch anytime from level death benefit to increasing death benefit depending or back, depending on how important coverage would be in a certain situation of your life.
• Option of Funds. Balanced Fund which consists of equities around 30%, money market instruments around 10% and bonds around 60%. Equity Fund has around 10% money market instruments and the rest are equities. Bond Fund has around 5% money market instruments and the rest are bonds.
• Switching Funds. You are entitled to switch funds if you wish to do so. It’s just as simple as moving from Equity Fund to Balanced Fund.

So this is an investment? Yes an investment for your future. If you are trying to save up for the future this would probably be your best option.

This type of investment is a steal because while you are saving for the future, you are also covered. That surely beats savings in banks. When something happens to you, your family will get an amount plus the investments. In banks when something happens to you, it would be very hard to claim the account.

Think about it, from day one of your premium, you 20, 30, 40 thousand is already worth 400 thousand. Saving with this investment vehicle is the smartest thing to do right now. No matter how old you are, saving is always better to do NOW than later. And never forget that there is no such thing as instant growth of money, so before you get one, understand that this is a long term savings plan. This is an alternative to savings banks and you would be sure that your savings are protected with coverage. - DE

2nd photo: Taken from iStockPhoto, thus the watermark.

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BANKS: The Only Option For Savings?

Money is an object we as adults work hard for. It is a medium wherein we use to exchange for something that adds value to our life. Every people have different definition of what money is and what it is for – positive or negative or both. This allows us to have things that answer your basic needs and wants. The more money you have, the more you become comfortable mentally simply because you are assured that for the coming days your basic needs would be provided for. It really makes the world go round.

All our lives, rich or poor, educated or not, we work just to earn money. Poor people, as early as they can think, they are trained to make money in whatever way possible – begging, collecting and selling garbage, and sometimes committing crimes. For us educated people, we were trained for 16 years more or less from nursery to college also to make money. We specialize on a certain field which will turn out to be our career that would provide us high paying salaries or business earnings. At the end of our formal educating years, what do we do next? Yes, make money. Everyone does, except of course kids who don’t want to work because they have filthy rich parents.

Once we start earning money, we take care of our basic personal needs. Then when our salaries will eventually be bigger than our basic needs we now can afford things beyond our basic needs – shopping, travel, etc. But there will be a time, either right away or later, when you would realize that this wouldn’t go on forever. Thus, we start saving money for our future.

Before, saving money is very simple. Keep it in a safe place in your house which would make it very vulnerable or keep it in a bank. This traditional way of saving is still being used right now. Banks certainly bring a lot of convenience to us. Deposit in your account, and the bank would be the one to protect it. Need money? Withdraw using ATM or through the bank teller. This makes us love banks even more. But will your money ever grow with them? I don’t think so.

Savings account earns 1% minus tax. Time deposit earns you 3-5% minus tax depending on the amount of deposit. Our inflation rate sometimes reaches to 5%. TRANSLATION: Your money isn’t earning well in the bank or sometimes the value even depreciates. Not everybody understands this, but you should! Your hard earned money depreciates in value over time in the bank. What if 10 years or so of saving you still haven’t found an investment vehicle? Then your money just depreciated before your eyes.

Are there any other savings tools aside from banks? My answer could create different reactions: LIFE INSURANCE. How? Through investment linked products of Life Insurance. Yup Life Insurance today isn’t just about claiming a lump sum amount when somebody dies. You can use it as a savings tool that earns 6% or more.

This savings tool is a bargain because it gives you life insurance coverage for free. The moment you open an account, not only did you simply open an account, you also are covered immediately. How’s great is that for a savings account? And just like the bank, you can withdraw and deposit.

That right there is an alternative when it comes to savings. But I am not saying that you empty your bank account and move it to insurance companies. Your bank account should be for immediate cash need purposes and Life Insurance for long term savings purposes because it out grows inflation rate and earns way bigger than banks.

So my question to you is, do you just let your hard earned money depreciate like that in banks? Or do you let it grow for savings purposes until you have come up with an idea where to invest it? What’s your pick? - DE

P.S.

Do you have a better savings tool? Comment here or contact me! Should you want to know more about investment linked products of life insurance, you watch out for my coming blog about that it. It would be a simple explanation of what it is. But if you want to know about it in full details, you can contact me through email first. Cheers!

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Think and Re-think Before You Let Go of Your Money

Letting your hand off your money is not as hard as earning it. You work your tail off the whole month, 5 to six days a week, just to receive what you are currently earning. That’s how hard you earned your money, only to spend it as fast as a flying jet plane on things you didn’t really thought about.

This results to shortage simply because of your failure to manage your money. When the time comes you are running out of money, you would think of ways how to earn extra. You then start thinking of investing in any option you encounter that could get you cash instantly. A get-rich-quick mentality would then trigger your emotions to invest in investments that you thought would yield immediately.

Usually these types of move aren’t thought about real hard. Before you invest you should think about it twice, thrice and many, many times over because you might only see the positive side of the investment which is earnings.

These are the factors you need to consider before you let go of your money:

• Earnings. This is arguably the most important factor for any investor. However, this isn’t the only thing to consider. An investor must weigh the rate of return to the length of time of return. Some investment vehicles are just too good to be true.
• Time and Effort. Before you invest, you must also look at the time you will spend for this income stream. If you plan to just make this part time or to make money work for you, consider the time and effort you would spend for this investment vehicle because your day job or business might suffer.
• Cost. Check your finances first before you let go of your money. This would serve as a parachute in case all things go bad. The amount you invest in case of loss, should hurt, but not starve you and your family.
• Expenses. Not all investment vehicles would give you big amounts in exchange for nothing. Expect expenses one way or another. Be it communication expense or travel expense, no matter how small it may seem, in time it will pile up. This wouldn’t be a problem if these expenses would generate you more income.
• Background of the person you invest in. There are a lot of bogus people out there. They are excellent in selling themselves and their bogus ideas. They would try to make you invest on the spot by saying that they have a limited offer.
• Background of the vehicle you invest in. Aside from the person who you will invest in, you must also check where he will use the money. It is important because you would want to know if your money would be invested in a high earning and legal vehicle. From there you could decide whether it would be a good idea to invest in or not.
• Length of time of return. Weigh the rate and length of time of return. Sometimes the rate of return is too low for the length of time of the investment. This could be considered a bad investment because you could have reinvested the money again in a different vehicle.
• Seek advices from people who have done it before.Opinions of people who have failed and succeeded in the path you will take would give you a guide line on how to do it properly. They could give you insights that you would encounter that you couldn’t see right away.
• Alternatives. There may be similar investment vehicle that have a better rate of return, or a better background of company, or a cheaper investment with a shorter time of return. List down their pros and cons.

When I say investments, this includes education (enrollment to MBA or specialization degree programs), purchasing plans (gym, telecommunications, insurance, etc.), stocks, and start up businesses. Before getting into something, consider the factors above.

Make your mind work, it's healthy. Thinking many times over is way, way better than impulsive decision making that would make you regret in the end. Let’s put a stop on that and make better choices, make better decisions that would give you a better and happy life in the end. No regrets!- DE

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Investing is RISKY

We would often hear this from people that are afraid or haven’t tried investing. Why do they say it is risky? If it is risky, why are there many investors who gets wealthy? They say it out of fear. FEAR OF LOSING MONEY. For now let’s just call them Courage. Now, these cowards isolate themselves from good investment vehicles that would propel them to the wealthy class. Instead, they settle for secured but very low return investments like time deposit.

“Low risk, low return. High risk, high returns.” This has always been the statement when it comes to investing. And this is how investing will always be. Then why is investing risky for Courage? It’s simply because they know nothing about that vehicle. Not only that, they refuse to know and are too lazy to study opportunities. Worst of all, they influence other people not to invest. They not only take the opportunity out of their hands but also from other people who could benefit from it.

When you do not know about an investment vehicle, you become uncomfortable, thus, believing it is risky. Investments aren’t for the faint hearted. Courage simply hates being uncomfortable. You have to be tough mentally, emotionally and financially because investing is a money game. You have to be ready to lose some money because it is part of investing. With every failure, you gain knowledge and experience, thus making you tougher in investing.

Henry Sy

So what do you have to do when you encounter risks? One word:STUDY! That is the only secret to lower the risk. Think of it this way, Henry Sy is already a master when it comes to building malls. But before he went into real estate developing, it was risky for him. How did it become less risky? By studying it!

Another example? How about Warren Buffet? Do you think he’s a genius when it comes to picking stocks and buying companies since birth? NO! He studied what he needs to know about stocks and companies, and then took ACTION. Though he did not earn instantly, his failures lead him to become more knowledgeable about stocks. You see, he took the risk of investing in stocks at a very early age.

Through mistakes they learned then eventually mastered it. But it starts with studying what you don’t know. Fail to succeed. For it is the best way to learn. -DE

Warren Buffet

“Risk comes from not knowing what you're doing.” – Warren Buffet

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THIS IS YOUR LIFE by Moony

Where is the purpose in your life
Where is the truth, do you remember your hopes, your dreams
They are no longer your own
This day is for living your own life
Don't let this world capture your heart
Your passion lost to a thousand themes
Surrendered to the screen

What do I want to happen in my life?

This is not a story, this is not a book
This is your life
And this is not a play, some TV show you've seen
This is real life, you know that
This is your, this is your life, hey hey hey
This is your, this is your life

You act like a child playing games now
Play and pretend, art of disguise
Alone and lost in all your lies

There is no rehearsal, no second chance
No false start, no better circumstance,
THIS IS REAL LIFE!

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Time Depositors Aren't Real Investors

Time deposits could be one of ways to earn money. All you have to do is to deposit your money in a bank for a specific span of time, with interest. However, those interests aren’t enough to make you big bucks. You will feel the growth of money if you deposit at least a million.

Simple Sample Earning from TD per annum

The illustration above is a sample earning from time deposit. 5% interest rate is a very good rate that you can rarely find, but if you do, it requires you to deposit very big amount of money. However 3% and below is what you will usually find in banks.

Let me give an example, imagine you’ve deposited Php 100,000 and the bank gave you 3% interest rate per year. You would earn a puny Php 3,000 minus income tax! How lame is that?

Time deposit would not be very significant unless of course you have tens, hundreds of millions of excess money to put aside. Time deposits doesn’t give you the privilege of being lazy! Saying “right now it’s the only option I can think of “ or “risks in time deposits are low” are very lame excuses. You’re either too dumb to see/know that there are other opportunities or you’re a chicken – scared of risks. You want very low risks for your money, you will definitely get small returns. Hate to break it to you pal! You’re not a real investor! You don’t even have the right to call yourself an investor if time deposit is the only thing you do.

Now, I am not saying that you shouldn’t place your money in time deposit. All I’m saying is that time deposits is a tool to give you money ONLY if you know how and when to use it. And time deposit are intended for excess (I mean really many) money you can set aside for a specified time.

The good thing though, you still have time to explore other ways to earn passive income. All you have to do is delete the poor mindset of yours and change it to a wealthy mindset. You’d surprised how many opportunities passes us by each day. -DE

To a wealthier mindset and brighter future ahead! Cheers!

“Only those who will risk going too far can possibly find out how far one can go.” – T.S. Elliot

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Have You Asked Yourself?

A lot of people don't realize that almost all schools train us to be excellent employees. What you're doing right now is only a weapon you can use to make money. Millions of people taking a path that only accommodates one position. Have you seriously thought about that? Nor your future?

Yes you're excellent academically, you may have a master's degree, and you’ll definitely make money. But would that make you rich? Moreover, would that make you happy?

Read on, you might relate your life to my blogs. And hopefully you would get to ask yourself these:

• Do I have a clear/defined goal?
• AM I HAPPY?
• Would what I do get me closer to that goal?
• Would this make me rich?

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