The company I work for is holding a series of wealth management seminars this month. We just finished the first one this week, which was conducted by WFMAI (World Financial Marketing Alliance, Inc.). At first, I thought it was just going to be another sales pitch, but it turned out to be very informative and not very product-centric. For the first time, here's insurance talk that I liked and which I might even buy into. By the way, WFMAI isn't an insurance company but a brokerage firm for insurance companies.
What interested me were the variable insurance and the mutual funds. I always thought of life insurances as something only your beneficiaries will enjoy as you have to be zapped out first before your loved ones can claim the insurance. However, with variable life, you can still enjoy your earnings if and when you reach your retirement age. I think that mutual funds are also nice because they're more of an investment than an insurance and you can potentially earn more than just saving your money in the bank.
What interested me were the variable insurance and the mutual funds. I always thought of life insurances as something only your beneficiaries will enjoy as you have to be zapped out first before your loved ones can claim the insurance. However, with variable life, you can still enjoy your earnings if and when you reach your retirement age. I think that mutual funds are also nice because they're more of an investment than an insurance and you can potentially earn more than just saving your money in the bank.
Here are some lessons that I've learned:
On Saving. Saving calls for discipline. When we get our paychecks, we should pay ourselves first before we pay our other bills to ensure that we save a portion of our salaries. It also helps to think of our savings as a monthly bill and one that we must regularly pay.
Additional Income. When we get additional income from part-time jobs or side projects, we should use it to pay our debts and again save the rest instead of using it to incur more expenses. They said that our goal should be that we are debt-free (from credit cards, mortgages and other loans) by the time we retire.
Rule of 72. We can use this rule to determine how much time it takes for our money to double. According to the speaker, this rule/formula was created by Albert Einstein. Anyway, this rule says that
On Saving. Saving calls for discipline. When we get our paychecks, we should pay ourselves first before we pay our other bills to ensure that we save a portion of our salaries. It also helps to think of our savings as a monthly bill and one that we must regularly pay.
Additional Income. When we get additional income from part-time jobs or side projects, we should use it to pay our debts and again save the rest instead of using it to incur more expenses. They said that our goal should be that we are debt-free (from credit cards, mortgages and other loans) by the time we retire.
Rule of 72. We can use this rule to determine how much time it takes for our money to double. According to the speaker, this rule/formula was created by Albert Einstein. Anyway, this rule says that
72
-------------- = number of years your money will double
interest rate
For example, your money is P100,000.00 and the interest rate is 4% then
72/4 = 18
meaning that your P100,000 will double only every 18 years. This is sort of a wake up call because most banks offer only a 1% interest per annum, so 72/1=72. This means your money will double only every 72 years..OMG!
Do note that this formula can be used regardless of the amount of money. It can also be used to determine how much time it takes for your debts to double.
-------------- = number of years your money will double
interest rate
For example, your money is P100,000.00 and the interest rate is 4% then
72/4 = 18
meaning that your P100,000 will double only every 18 years. This is sort of a wake up call because most banks offer only a 1% interest per annum, so 72/1=72. This means your money will double only every 72 years..OMG!
Do note that this formula can be used regardless of the amount of money. It can also be used to determine how much time it takes for your debts to double.
Formula for Computing Wealth:
Money
+
Time
+/-
Rate of Return
-
Inflation
-
Taxes
--------------------
WEALTH
Where to Save:
Banks. Banks earn 8-12% from the money we deposit and they give us 1-4%. Hmm..no fair!
Insurance. Insurance companies earn 8-12% from our money and they give us 4-6%. Slightly better...
Professionally managed money. These companies earn 8-12% from our money and also give us 8-12% in return. I'm not very sure what these are, but I guess these are the stocks, mutual funds and the like.
Six Steps to Financial Management:
I won't bother to explain each of these, as I might get them wrong, so just read on:)
Increase cash flow.
Manage debt.
Create an emergency fund.
Ensure proper protection (in case you live too short LOL).
Build long-term asset accumulation (in case you live too long:P ).
Ensure your estate.
Well, WFMAI offers free seminars or whatcha-macall-'em to anyone who's interested to know more about these things and the products they're selling. And just because I was pretty impressed with their "seminar", here's their address for those who'd like to inquire:
3/F A&V Crystal Tower
105 Esteban St., Makati City
Tel Nos. 812-11-88 loc 115, 118, 124
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