The Four-Way Test for VUL

Confused which variable unit-linked insurance product to invest in? Follow these simple steps

By Rienzie P Biolena, RFP®

Life insurance and investments are like oil and water—they don’t mix well together. Well, at least that is what most personal finance gurus would say. There’s some truth to that. Term insurance in particular is designed for protection—in case you die unexpectedly, your beneficiary will receive an amount that your insurer agrees to pay in the contract.

But life insurance in general has long since evolved into all sorts of variants: whole, universal, variable, endowment, etc. Many of these have a savings component, which builds up over the years. The problem is the returns are nothing to jump at.

But now, that’s changing. Enter variable unit-linked insurance, or VUL. Simply put, it is an investment and life insurance product in one. The difference between a VUL and other forms of life insurance is that part of the premiums is invested in pooled funds which, in time, are expected to grow in value. Hence, the policyholder who is protected with insurance also has an automatic investment fund. A unique feature is that the owner can withdraw from the fund whenever needed.

There is a fixed guaranteed amount of coverage, but the real draw is that there’s a non-guaranteed variable upside. In case of death, benefits received are either the amount of coverage or the market value of the investment, whichever is higher.

Sounds good? There is a growing number of VUL products in the market offered by established insurance companies such as AXA, Ayala Life, Insular Life, Philamlife, Pru Life, and Sun Life. Before getting one, however, you must be clear on your financial goals and needs. This Four-Way Test for VULs—a series of guide questions—can be useful for you:

1. What nature of protection do I need? First assess the nature of your insurance needs. If you have a family dependent on your income, then factor in the coveronsequently, one policy that emphasizes protection coverage has a lower projected return than that oage the income that will be lost due to your death as well as the future needs of your family. Furthermore, some VULs differ in emphasis on which part of the premium payment is allotted for protection or investment. Cf one that emphasizes investment returns.

2. How much can I allot for my premiums? Check the premium payments if they fit your budget. Aside from the regular insurance coverage, you can also opt to upgrade with riders for extra coverage and benefits (such as critical illness benefits, hospitalization, benefits, etc.) for a minimal additional amount on top of the regular premiums.

Payments come in three variants: single-pay, term, or lifetime, with the last two having the option to be paid for in a monthly, quarterly, semi-annual, or annual basis.

In a single pay variant, a lump-sum premium is paid, coverage of which is usually 125% of the premium payment. Single premium minimum prices differ: P50,000 for PruLife’s PIA Peso and Philam’s Money Tree, P100,000 for Philam’s AIG Bounty and Ayala Life’s Express Unit Link, P200,000 for AXA Honey Pot, and P1,000,000 for PruLife’s Pru Millionaire.

Dollar-denominated linked funds usually start their minimum at $2,000. These include Insular Life’s Dollar Wealth Builder and Philam’s AIG Bounty and Money Tree. Ayala Life offers a minimum of $5,000 for its Express Unit Link Product; PruLife’s PIA Dollar, on the other hand, starts at $1,000.

The term payment variant specifies the number of years for premium payments. Term payment usually starts at five years to as long as 15 years. PruLife’s Exact Plus, Premier 15 Plus, and Capital Secured Plus, and Philam’s Asset Builder and AIG Bounty are among the products that offer term payments. Term payment can be as low as P33,000 per annum for PruLife’s Capital Secured Plus. Dollar products can get as low as $40 monthly for PruLife’s PruLink Exact Plus to $2,000 a year for Philam’s AIG Bounty.

Lifetime payments have premium outlays for the duration of the policy holder’s life. Peso products range from a minimum of about P12,500 p.a. for PruLife’s PAA Peso to P25,000 for Philam’s Abundance; while dollar products are offered as low as $240 p.a. with PruLife’s PAA Dollar.

Aside from these options, VUL policyholders may also apply for a premium holiday. Here, the policy owner can suspend payments of regular premium and top-ups, as long as the account value of the policy is sufficient to cover the policy charges due during the premium holiday applied for.

3. What is my attitude towards risk? The other half of VULs involves investments. And when investments are involved, risks are involved. A useful rule of thumb is the concept of risk-reward trade-off —the higher the return, the higher the risk.

At the onset of the policy, the insurance agent shall disclose the array of products to which the investment can be linked with. Options include usually a money market fund, bond fund, balanced fund, and equity fund. Most VULs allow you to choose at least two funds. AXA and Insular Wealth Builder offer up to three.

But linking funds does not mean that the investor is tied to them throughout the term. A novelty feature of VULs is that the investor can shift across and change allocation among funds. For instance, a policy holder that has a bond fund at the onset can shift 50% of his units later on to an equity fund. The number of free switches, however, has limits, with excess switches subject to fees and charges. SunLife and AXA, for instance, offer four free switches; AyalaLife, two; and PruLife and Philamlife, one.

There are also products in which the company predetermines the linked fund like PruLife’s Capital Secured Plus and, to some extent, SunLife’s FlexiLink MyFuture Funds. Allocation for these products is solely determined by the company, which by their judgment can give the best yields and protect potential gains from sharp market volatility.

4. What is my liquidity requirement? VULs provide liquidity through withdrawals of outstanding units so policyholders can cash in on their unrealized gains. Some companies, however, subject these withdrawals to specific charges or fees, with back-end charges typically ranging between 1% and 5% of the withdrawn amount.

As a general rule, VUL investors may withdraw from their funds anytime. Withdrawals, however, are subject to a minimum maintaining balance sufficient to contribute to insurance premium payments. Philamlife has a minimum maintaining balance as low as P5,000 for its Money Tree product while PruLife has a low maintaining balance of P20,000 for its PIA Peso.

Moreover, partial withdrawals depend on each company and per product. Other products also feature a premium payment lock-in with no withdrawals allowed within a specified number of years. For instance, Philam’s Asset Builder has a lock-in period of 15 years, but with an off-setting benefit of providing as much as 25 times insurance coverage for the face amount of the policy. Ayala Life’s Express Unit Link, on the other hand, has a minimal holding period of 180 days.

Although VULs provide for cash requirements, policyholders should also be aware that full withdrawals shall have the effect of nullifying the insurance policy. As such, they must be cautious that it should not be a main source of liquidity requirements.

The Two Sides of VULs

There are two components of variable unit-linked insurance products – insurance and investments. Here’s what you need to know:

Investment component

Policyholders get to choose which particular fund from a limited selection to invest in, identified at the onset of the policy. Contributions are sourced in part from the regular premiums paid or from extra contributions called top-ups. The percentage invested typically range between 15% and 100%, depending on the insurance company and product.

This amount is then used to buy units in pooled funds, at the price called Net Asset Value per Unit (NAVPU) at the time of purchase. Release of NAVs varies from company to company. PruLife, AXA, and Philamlife, for instance, release NAVs weekly, while Ayala Life and SunLife do it daily. While a weekly quotation of NAV may provide for some protection against price volatility, it may also keep the potential investor to take on a daily, tactical position on price changes.

The investments are also subject to various fees and charges. Basic to these are front-load charges, back-end charges, and management fees. A front-load fee is a charge against the face amount of the investment, usually pegged at 5%. For instance, a P100,000 investment, will only end up with P95,000 available for investment. Moreover, a company may charge a back-end fee for withdrawals, which is deducted from the amount withdrawn. Management fees, on the other hand, are deducted for the administration of the pooled funds. It is best to check the fees involved for each company and product in order to get a clear picture of the total costs.

It is also important to look up the return on investment for each fund since the death benefit is linked to the performance of the underlying funds. While past performance is not a guarantee for future results, you should still consider a consistent track record.

Insurance policy

While VULs are often marketed as investment vehicles, don’t forget that they remain an insurance product. If you’re the insured and you die a week after getting the policy, your beneficiary will receive the death benefit. It may be morbid but that kind of return on investment is unbeatable.

What you ought to be hoping for obviously is to live longer than that. A VUL provides death benefits based on the coverage or the market value of the underlying investment, whichever is higher. This gives the benefit of riding the market in order to further increase protection, without sacrificing the sum assured. Being an insurance product, the policy may also include riders—extra benefits in the form of hospitalization, critical care or illness benefits with an additional, usually minimal, increase in premium payments.

To sum, VULs provide the flexibility and liquidity of an investment, coupled with the protection of an insurance policy. Each prospective policyholder has unique needs and goals and must therefore match the product accordingly. It is strongly recommended that you visit an insurance agent to know the latest products and features. Or consult a professional, unbiased financial planner to assist you to plan for your financial needs as a whole.

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Posted on May 11, 2010 by moneysense

ARE YOU AT RISK OF A HOUSEHOLD SHUTDOWN?

by Efren Ll. Cruz, RFP

By the time this blog comes out, we would have hopefully seen the conclusion to the United States’ partial government shutdown and inadequate debt ceiling.

The economic issues facing the United States are very complicated to say the least and this blog is not a venue for dissecting it.  I would rather focus on how such a shutdown can be faced by an ordinary household.

A high maintenance household or one that has a lot of fixed (non-discretionary) operating expenses will always need to be in high gear when it comes to earnings. Such a state can be highly stressful and lead to greater problems like health issues. An alternative way is to focus on expenses.

One way to lessen fixed expenses is to cut variable operating expenses that appear to be fixed.  Examples would be to lessen or reduce the: a) use of expensive to operate appliances like the air-conditioner, TV and even electric fan; b) use of family car; and c) number of household help.

Another way is to sell those assets that are causing the high fixed expenses like a big engine car, excessively large refrigerator or even a large home.

It is unfortunate though that some think they can borrow themselves out of their tight financial situation. Debt in this situation is like illegal drugs; it is nothing more than a temporary fix.  When it is time to repay the debt plus interest, cash flows are going to be tighter than ever.

For any household to run efficiently and effectively, it needs to be three things: 1) profitable in operations; 2) capable of producing additional income from its assets; and 3) able to use debt mostly to grow earning assets instead of just using it to fund consumption.

Now to be all of the three foregoing things is easier said than done. Each family member must toe the line when it comes to controlling costs and increasing profitability. Making assets themselves earn involves risks because such assets would need to be invested in either non-guaranteed financial securities or businesses.  And such risks only compound when debt is used as part of the funding.

Yet, nothing is impossible.  Firstly, the family that prays together stays together. Second, there are plentiful financial planners who can help guide families along the right path to financial freedom. The expert financial planner will not only provide the guide but also be the guide post as he helps his clients monitor their progress.

So plan your finances well and avoid a household shutdown.  You want to have a household and not a house holed.

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Identify Your Needs and Wants—And Get Control of Your Money!

To be the master of your finances, you need to effectively budget. And to effectively budget, you need to be able to differentiate a need from a want.

 

A need is something that you absolutely require, e.g. groceries, fuel, utilities, work clothing. 

A want is something you simply desire, but don’t necessarily need, e.g. a top of the range LED television, a manicure for your pet dog or a miniature Louis Vuitton handbag for your three year old daughter. These are wants. They are not needs.

 

The trend today is for people to get into debt to buy such luxury items – wants.

The strong desire for these products can often confuse people, convincing them that the item is a need and not a want. And advertisers and marketers exist to convince us that our wants are in fact our needs. If you want to control your finances and achieve your financial goals, then you need to get real with yourself. You need to master the art of distinguishing your needs from your wants. When you do this, you will realize that you aren’t as poor as you may think.

 

At the end of the day, our needs are limited to just four things:

Shelter - a roof over your head to keep you safe from the elements.

Adequate food and water - to keep you healthy.

Adequate health care and hygiene products - to maintain your health.

Clothing - to ensure you are comfortable and dressed appropriately.

 

This is all we need at the end of the day, and anything that goes beyond it - the big house, the designer clothing, the premium foods, etc are wants.

 

It’s okay to treat yourself along the way, provided you have the funds to do so. What isn’t wise if you really want to master your finances, is to spend money like it’s going out of fashion. No, just because premium caviar is classified as ‘food’ doesn’t make it a ‘need’. Just because that $400 Ralph Lauren shirt is ‘clothing’ doesn’t make it a ‘need.’

 

Distinguish what your needs and your wants are, and you will be one step towards being the master of your finances. Ask yourself if it really is a need or a want, before your open your wallet! You’ll be amazed at just how much money you really can save, and you’ll see that you really aren’t as short of money that you may think you are!

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Blog by John de Ridder, 0419-427-419, john@focusyourmoney.com.au, Canberra, Australia

Prepare for Yearly Expenses – Don’t be Caught Out!

“It is thrifty to prepare for today for the wants of tomorrow” -Aesop, Writer of Fables

Yearly expenses. They look absolutely huge when we receive the invoice in the mail and if we don’t have the money to pay them, it can be downright scary.

Too many people do not plan for those big yearly expenses.

You know, things like:

• Car registration
• Car insurance
• Association rates
• Insurances
• Christmas presents

And often, people will reach for the credit card  and the nasty, high interest rates they are slugged with when they use the card.

If you have suffered the wailing and gnashing of teeth in the past that has come with not being prepared for these yearly expenses, it’s time to get organized. You don’t need to resort to emptying your savings account to pay the bill, relying on credit or living on baked beans and instant noodles for a month. You just need to be prepared and start putting away money in advance to cover the cost of the annual expenses.

Here are our tips to help you avoid getting stung by a big yearly bill you were not prepared for:

• Make a list of all of your yearly expenses: These are things like those we listed above car registration, insurances, rates and Christmas presents. List each of them out and estimate how much each will be. It is better to overestimate than underestimate. Use your last bill as an indicator and add some more to anticipate the cost of your next bill.
• 
  
• Put away every pay for your yearly expenses: Every time you get paid, put away for your yearly expenses. We recommend you have a useful savings account an account you use simply to cover essential costs. If your annual bills add up to say, P100,000 and you get paid monthly, aim to put into your useful savings account P8,500 each month.

When it comes to insurance, rates and registration costs, you do not have much control over what they will be, however, with things like Christmas presents, you do have control over how much you will spend.

You do not have to go over-board with your spending and we certainly do not encourage it. Be realistic when it comes to budgeting for Christmas gifts. Remember, it is the thought that counts. Make a list of how many people you need to buy for, and set a limit as to how much you will spend for each person. Ensure you do not go over that maximum, and put away each pay for these costs.

Stick to the recommendations we have above, and you won’t ever be stung by annual bills you weren’t prepared for, ever again! It’s so much easier to pay a few hundred dollars each month into a useful savings account, than it is to be hit with a big bill amounting to thousands all in one hit!

The key to staying on top of your annual expenses is organisation. You just need to be organised! It’s well worth the effort and you won’t have to resort to credit or living on baked beans and instant noodles for months!

Helpful Tips for You: 

• Make a list of all of your yearly expenses
• Put away every pay for your yearly expenses
• Understand you do not have much control over costs such as insurance, rates, registration, etc
• You do have control over the cost of Christmas presents, so budget modestly and stick to it

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Blog by John de Ridder, 0419-427-419, john@focusyourmoney.com.au, Canberra, Australia

How To Properly Define Your Passions & Purpose

Over the years, I’ve worked with many companies and found the ones with lucid and succinctly described visions are more likely to succeed than those with unclear or highly complex visions. Yet as individuals, we often don’t take the time to clearly articulate our ownpassions or purpose. To help you define yours, I’ve created a simple test that I call The Funnel Test.

The following is an excerpt from  Your Network Is Your Net Worth: Unlock the Hidden Power of Connections for Wealth, Success, and Happiness in the Digital Age by Porter Gale, former VP of Marketing for Virgin America.

Define Your Passions & Purpose With The Funnel Test

Step 1: Define your three greatest passions or a succinct set of words that clearly define your core interests

You can put a high priority on any type of passion, from family to fitness or education to the environment. For example, I watched my mother build a network based on her passions of volunteering, family, and fitness when, after having lived her entire life in Minnesota, she moved to California to be closer to her family. Within sixty days of arriving, my mother joined a master’s swim team, found a group of women who played tennis at the park, and became an alternate in a golf foursome. If you can find activities, work, or relationships that combine two or more of your core passions, you are likely to hit the jackpot and be more effective in and excited about your actions and activities.

Next, grab a pen and make three columns, one for each passion. Make a commitment to improve, particularly where your involvement is limited. Let’s say that if you’re passionate about photography, make a commitment to go to photography exhibits several times a year and find online communities about the topic. For example, two of my goals are to take an improvisation class as a way to nurture my interest in storytelling and to go on weekly hikes with friends to support my passion for health.

Step 2: Define your desired tone

How you want to present yourself to the world? What is your authentic voice? Are you quiet and reserved? Witty? Bold? Irreverent? To use the example of my mom again, I’d define her tone as reserved. She’s understated and is more likely to listen first and talk second.

Now fill the space below your passion circles with a selected word for your tone. Like a funnel, where the contents flows from top to bottom, envision all of your actions being influenced by your tone. Remember, simple is good.

Step 3: Define your core purpose in twenty words or less

What do you want to accomplish in life? And work? Write what is in your gut, and look at the passion words in your Funnel Test. Your goal is to write a phrase of fewer than twenty words that describes your purpose. My recommendation is to keep this as simple as possible. Some brands and companies do this, and it also happens to be a valuable exercise for self-reflection for any individual.

Fred Reid, the founding chief executive officer of Virgin America, shared with me how the airline’s purpose, “To create an airline people love”, was born: “I had written it on a paper and had thrown it into the trash. I initially thought it was too simplistic, but that is what we wanted to do. Can you imagine? Have an airline people loved?” After some deliberation, Reid and the founding team kept coming back to the simple phrase and decided it was the perfect mantra for the start-up that faced a complicated uphill battle prior to liftoff in 2007.

Sometimes we have to make sacrifices or take baby steps in the short-term to help us get to where we want to be. However, if you don’t even know where you want to go, it will be even harder to get there. Once you’ve defined your passions and developed a focused purpose, your networking efforts will be more effective and authentic.  Use this test as a filter to help you guide your activities and meetings.

Stay optimistic, stay productive, and be the best you can be. Stay focused on your purpose, but know there is potential learning in every action.

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About The Author: Porter Gale

Porter Gale is the author of Your Network Is Your Net Worth: Unlock the Hidden Power of Connections for Wealth, Success, and Happiness in the Digital Age. With over 20 years of experience working in branding, social media, and advertising, Porter’s new book will show you how to build the right network for living a rich life.

WHY SHOULD YOU PREPARE FOR RETIREMENT?

Retirement is not a matter of age but rather a matter of choice.  Retirement is not you reaching 60 but rather you have savings and investments that you can stop working at whatever age you are in.  My heart is to help you learn more about it so that you can prepare for it and make savings and investments aligned with your financial goals.  I want to see more and more Filipinos live their lives with them not chasing after money.

This is the 3rd part on our series on Retirement and I have asked fellow RFP Ge Cantor to share on Why should you prepare for Retirement?.  You may check Part 1: 10 tips to a happy and comfortable retirement and Part 2: What is Retirement to you?  by clicking the links above.

“When a man retires, his wife gets twice the husband but only half the income.” (Chi Chi Rodriguez, Puerto Rican professional golfer)

Time flies.  I just visited St. Luke’s Quezon City for a check-up.  While at the Cashier, the lady asked me if I already have a record in their hospital.  I was tempted to say, “yes” I was born here 39 years ago!  The good thing about visiting hospitals is you get to appreciate the cycle of life.  You see parents happily carrying their new-born babies.  On the other hand, you also see children accompanying their elderly parents.  Time really flies.  While you may be in your 20s, 30s or 40s, in a blink of an eye, retirement knocks on your door.   So why not start preparing for it now while you are still able and have time?

Albert Einstein.  The great genius considered compound interest as the eighth wonder of the world.  The money you save not only earns interest, but the interest earns interest, like your children having grandchildren.  According to the book, “The Procrastination Equation,” such is its power that if you put aside $5,000 each year between the ages of 20 and 30, you would retire richer than if you started putting that five grand aside every year from the age of 30 on.  When you procrastinate in saving money for retirement, you lose all those compound interest and potential investment dividends or earnings.

Toilet cleaner.  Manang was a 72-year old Filipino lady, who worked in a hospital in Hawaii where my Mom was confined last year.  Despite her advanced age, Manang was still cleaning the patients’ private rooms and toilets.  I recall asking her why she still working.  She just said that she cannot afford to retire yet as she has no savings and she is still supporting her children’s children back home.  One of the reasons why you will want to start saving for retirement is because you don’t want to keep on working till your last breath.  Those who are unprepared for retirement have no choice.  Is this really something you want to do?

Aging.  Mark Twain (American author and humourist) said that “Age is an issue of mind over matter.  If you don’t mind, it doesn’t matter.”  In reality, aging costs money.  As people age, they tend to have higher risk of developing disabilities and contracting diseases. Saving for retirement can help you prepare financially for long-term health care and, in some cases, for life and death situations.

Nth birthday.  According to a World Health Organization (WHO) report, Filipinos’ life expectancy for both sexes was 70 years in 2009:  67 for males and 73 for females.  Thanks to medical advances and healthier lifestyles, Filipinos may live longer. Obviously, living longer means you should save more and save earlier for retirement.

Diminishing return.  Generally, a person starts out making very little money when he/she starts working, and then gets to make more and more as he/she gains more experience and skills.  The trend to making more and more money does not typically continue especially when a person retires at some point.  That is why you should prepare for retirement, as you cannot generate income for yourself forever.

Aquino’s SONA.  In his latest State of the Nation Address (SONA), President Aquino stressed the need to increase Social Security System (SSS) monthly contributions, citing a 2011 study that warned that 28 years from now, the pension fund for private sector workers would be depleted.  This news gives you more reason why you should save for retirement as you cannot completely rely on the government to finance your retirement years.

KKK.  In “sales” lingo, KKK stands for kapamilya, kapatid, kapuso, etc.  This relates to a salesperson’s “natural market” of prospects. In some cases, KKK also relates to people you can rely on upon retirement.  In a typical Filipino family, parents feel entitled to their children’s support after providing for the latter’s education.  One of the important reasons why you should prepare for retirement is for your children.  As parents or future parents, would you really wish to put the financial burden of your retirement or eldercare onto your kids?

Actualization.  “What a man can be, he must be.”  According to Maslow’s hierarchy of needs, self-actualization refers to what a person’s full potential is and the realization of the potential. Typically, retirement is the best time to follow, pursue, or discover, your passion.  Time to do something that matters.  Time to help others and make a difference.  Marc Freedman (CEO and founder of Encore.org) perfectly sums it up when he said that “You save not to have freedom from work, but to have freedom to do the work you want to do.”

Royal blood.  Unless you are Prince George Alexander Louis of Cambridge or The Queen is your “lola”, then you should accept your fate that you need to provide for your own retirement expenses.

I’m Retired, Now What? As Jonathan Clement (British author and scriptwriter) puts it:  “Retirement is like a long vacation in Las Vegas. The goal is to enjoy it the fullest, but not so fully that you run out of money.”

Now to summarize why should you prepare for retirement?  “T.A.T.A.N.D.A. K.A. R.I.N.!”.  So should you start saving today’s money for the future, or are you still keeping up with the Joneses and spending tomorrow’s money today?

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If you’d like to learn more how to invest in the stock market and also learn how to prepare for retirement I’d like to invite you to our upcoming events:

For inquiries, registration, and payments email: clientrelations@marvingermo.com

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What is Retirement to You?

I’m finally back!  It’s glad to be back at writing once again after almost 10 days of trips in and out of Manila.  I just miss this aspect of what I do as it just allows me to share things and reach more people than my talks or 1:1 meetings go.  To kick things off again, we’ll continue with our retirement series where we talk about different things about retirement.  I placed an online poll over twitter and facebook as to what age would each person would want to reply.  Based on the 1451 responses almost 50% wanted to retire by their 40′s.  What amazed me was each person had his or her own take on retirement and want it meant to them along with the ages that they all wanted to retire.  There is no right or wrong age when is the best time to retire but one thing I know for sure is the earlier you prepare for it the better!  The earlier you start, the earlier you can have your money work hard for you.  If you are starting a bit later in your retirement planning don’t fret cause I believe it’s never too late to start.  Whatever you have missed out before I believe God can turn things around for good!  All is well and I believe greater things are ahead for you and your finances.

To keep up with the theme, I have requested a good friend and RFP, Edmund Lao to share his insights on what retirement is.  Enjoy!

 

What is Retirement?

Retirement, by definition of Wikipedia, is the point where a person stops employment completely.

Normally, employees retire from work at the mandatory retirement age of 60 to 65 years of age. Retirees have mixed feeling when that day comes. Some view it as freedom from corporate slavery and there are others who view it as the beginning of idleness or uselessness.

The fact is that, whether we like it or not, that day is certain to come. What our condition will be depends on what we do to prepare for it. As a Chinese saying goes: ”The best time to prepare for a calamity is when there is none”.

Personally, retirement, for me, is the day that I get my ticket to have the freedom do the things that I loved . That means that I do not have to trade my time for money anymore.  Retirement does not have anything to do with age as it is my financial condition that will determine my decision to end my corporate life.  The only reason that other retirees feel tha pain of retiring is because it is already too late that they realized the terror of having no money to support their golden years. There is truth to the second habit of effective people by Stephen Covey: “ Begin with the end in mind”.  That is the major reason why a lot of people fail financially. They forgot that in a man’s life there are only 3 stages, which are:

1. Man at work,
2. Man and money at work, and
3. Mmoney at work.

By recklessly spending the money he made on stage 1, he will not be able to reach stage 2 and  instead of having LOI, not the former First Lady, but Living On Interest, he is sure to retire broke.

Retirement has to be fun. It is the time one can spend his time with his children and grandchildren and be an asset instead of liability. In the past, I have written about the Two Kinds of Old Age  where there are two scenarions of a retired old man, and another related one is  The Tired, The Retired and The Re-tired. In both articles, the common denominator is money.

Most of the time, when people are retired by their company and they are unprepared, they feel anger or hatred. I remembered a quote which goes like this: “Love your job, not the company, because you may never know when  the company will stop loving you”. Apparently, it is not the obligation of the company to take care of  our finances. The company’s obligation is to pay us directly proportinal to the services we have rendered. It is therefore our obligation to ourselves to plan for our retirement.

For me, based on experience, retirement planning begins on the first day one get employed. It is his opportunity to build up his funds that he can use to pay for his future.

Below are practical guidelines on how to secure one’s retirement:

-Spend less than you earn  now and save more.

-Get better net, after-tax returns on your investments.

-Work longer to earn more.

The key step in retirement planning is to determine what matters most to you and your spouse . Spend a moment now, reflect on your lifestyle in retirement, and think about how it will change from the lifestyle you enjoy today.

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Lastly I’d like to thank everyone who filled up our two sessions of Stock Smarts Singapore!  Thank you all for showing up!  It was an honor to have all of you guys there!  For those who haven’t invested yet I hope that the sessions served as an eye opener for you to invest in our awesome stock market and for those that are already investing I do hope that our technical analysis workshop helped make sense of how to time your buying and selling!

I also had a fun time in the Singapore Exchange along with CNBC’s News room!

For those that emailed and asked, we will continue our stock smarts singapore modules this November!  Details to be out soon!

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If you’d like to know more about retirement and how you can prepare for it, here’s one event that’s for you: August 17^th Retire 2013 : A No NonSense Retirement Planning Workshop

If you’d like to learn more how to invest in the stock market and also learn how to prepare for retirement I’d like to invite you to our upcoming events:

For inquiries, registration, and payments email: clientrelations@marvingermo.com

Shared by Coach Amos

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