Musings of Madam-wannabee · Personal Finance

Wealth Management Series: Mutual Funds

Good morning!

I think my blogging mojo is back. For the past days, I have been regularly waking up at 4:30AM feeling refreshed. The downside is by 8:30PM, even before I finish reading a book to Aki, I am already half asleep. Good luck to me later because I have meetings until 11PM.

Anyhoo, today  I will tackle the backlog that has been sitting on my head since May last year. We started our Wealth Management Project January 2013. Read more about it here. We prioritized sealing the deals for our insurance and emergency funds. One of the cardinal rules of investing is making sure you are secured before you make investments. And by saying secured, I mean you should have enough money in the bank for emergencies and that you have insurance for your family in case something happens to you. Knock on wood.

First let me make it clear that I am no expert. I am just sharing what I know which might be wrong, incomplete or not applicable. Remember, this post was supposed to be published 15 months ago. I would be happy to answer any questions but please take everything with a grain of salt. Read personal finance books and talk to the experts before signing up for a product.

One of the many questions that I asked Efren Cruz, our financial advisor, is what is the best investment tool for us. I was really hoping that he’d suggest mutual funds because that is one product that I am already familiar with. To my relief, we both agree that mutual funds is the way to go.

So what are mutual funds? The idea is that you give your hard earned money to the experts, the fund managers and let them do what they do best, invest. Mutual fund companies decide where it would be best to invest, when to pull out, when to buy etc. My mutual fund agent released an advisory a couple of months ago after the sudden dip in PSEX. They said they had been getting inquiries and complaints as to why our fund was not performing as well as the competition. She advised that they were expecting the pull out of American investors. They waited for the stock market prices to go down so that they can buy stocks at a cheaper price. Information on foreign investor behaviour and trends is something I and probably a lot of other people, don’t have access too. And to be honest, I’d rather pay experts to take on the headaches and the heartaches. I’d rather spend my free time licking mixing bowls with Aki or giving my husband a scalp massage than research about money.

There are other ways to invest in the stock market. The old school way is if you have a lot of money, you can get a broker who will trade for you. Nowadays, you don’t need be filthy rich to invest directly. Some people I know invest thru COL Financial. They are subscribed in Bo Sanchez’ Truly Rich club. They pay a small fee, 500 bucks I think, monthly for expert advice on what to buy and when to buy. Lynn of SmockExchange blogged about it here.

You can also invest in by getting a VUL insurances. These are insurance products that comes with investment components. According to Efren, this is the most expensive option because of the admin fees. He is probably right. I asked one of our MF agents for a comparison of the performance of their VUL and their stand alone mutual fund. At that time, the VUL was at 12% while the mutual fund was performing much better at 19% year to date. VUL’s I think would be an ideal product for those who are not used to regularly saving a portion of their income. With VUL’s, because you don’t want to forfeit the earlier investments made, you will be encouraged to pay the monthly/quarterly/annual fee on time.
There are also UITF’s which is similar to mutual funds but instead of dealing with mutual fund companies, you coordinate with banks. What I like about UITF’s is the convenience. Just go to your preferred bank, tell them that you want to invest in UITF, fill out the form and then come back after several days for the UITF certificate. What I don’t like about it is that there is no agent who gives updates, provides after-sale service and sends greetings on Mother’s day. Ok, the last one is not important but my point is since the money I invested is not picked from a tree, it was something I really worked hard for, I want to be regularly updated on its performance. Funny, when I was filling out the form, the customer service rep of the bank leaned forward and in a semi whispery voice, as if she’s telling me a secret,”Mam I will teach you a trick. …………Buy low and sell high”. I just smiled and thanked her but in mind I was saying, “Naman!!! Hija, my high school economics teacher taught me that back in 1998!.”

Some info that you might be interested to know about mutual funds
Continue reading “Wealth Management Series: Mutual Funds”

Maqui's Me Time · Memoirs of a Mummy · Mrs. Monologues · Vanity Project

My Vanity Project

Last year was all about money money money. Our New Year’s resolution of wealth management kept us busy for the first months of 2012. I am proud of what we have accomplished and of how we are aligned on how we plan to accomplish our financial goals. On those days when I had to drag myself out of bed to go to work, I remind myself that if I don’t have a job, I might be dependent on my children when I grow old. Before Franco and I got serious about money, we were on the opposite ends of the pole when it comes to investing. Now, I can say, we know what we want and know how to get there. I highly recommend Efren Cruz to anyone looking for an independent financial consultant.

Anyhoo, when I make resolutions, I try to accomplish them ASAP. As the months pass, I get distracted and less commited so I want to make and implement the changes that I want right away. This year will be all about vanity. I don’t plan to be a fashionista over night. I just want to look a little more presentable . I want to care about my looks. I want to step out of the house and feel giddy because I like how I look that day. I have too many clothes that are ill fitting and not enough shoes and bags. I used to love shopping. That was until I became a mom. Family comes first of course. Who has time for shopping if you have a tantrum to tame? As a working mom, I always felt guilty about spending time in window shopping. I felt like I always have to rush home because I am not spending enough time with Aki. Why buy clothes when there is so much more important things that the family needs? Well, this year, I hope to change all that. I am more comfortable spending Friday nights in St Francis Square. Besides, I owe iit to myself to spend my hard earned money on myself.  I also made a recent change in my schedule. I go to work earlier now and am extra conscious of how I make use of the time in the office. The goal is to get home while the sun is still there. From Monday to Wednesday, I try to be home before 6PM. Those days are for Aki. On Thursday, I try to finish everything. That is my mega OT day. Fridays are for Franco and myself. This is the day when we have dinner together or maybe do some shopping.

Back to the vanity project. Here is what I have done so far

– Buy a full length mirror. We only had 1 mirror in the house and it was in the 1st floor bathroom. Having a mirror forces me to have a good look at myself before leaving the house.

Top from St Francis (PhP100), Shorts from St Francis (PhP150), Necklace from a friend
Top from St Francis (PhP100), Shorts from St Francis (PhP150), Necklace from a friend

– Start using BB cream. Mega special thanks to Maggie!

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– Start using a facial wash regularly. Thanks to Maggie again for the reco!
– Buy two pairs of denim pants in Herbench. While the  skinniy jeans that I bought from Cash and Carry look good, they are not comfortable. I had not been to a Bench store for years so I was surprised to find out that their pants were reasonably priced. I used to get intimidated by the idea of buying pants from mall stores because I had this notion that denim pants cost at least 2000 bucks. Hahaha. I am really happy with my new pants and plan to buy more.
– New shoes. For the longest time, I would only wear one pair of shoes until it gives up on me.
– Have my ears repierced c/o Dra. Saulog. I love my new rubic serconia earrings. I can’t wait to buy more earrings.
– Get a new haircut.
– Accessorize. I am clueless but I am trying. I still need help on this department. What kind of necklace go with V-necks? What is the rule in mixing and matching bracelets? What are the basics? Any accesorizing 101 out there? How do you organize your accessories?   Thank you to my mother in law and to Ms DD for the necklaces!
– Got new pants, shorts and tops from St Francis. I’m such a fan of that mall! I will blog about my shopping finds one of these days.
– Buy a new bag. I got a brand new Nine West bag for one 1200 bucks from an online garage sale. Thank you, Nikki! Is there a Bag 101 guide out there? How many everyday bags does a girl need?  And is there an easy way to transfer the contents? What is stopping me from interchanging bags is that I find it such a hassle to transfer the contents from one bag to another? Continue reading “My Vanity Project”

Musings of Madam-wannabee · Personal Finance

Philippine Stocks Rose to A New All-time High For the 3rd Straight Day

Philippine Stocks Rose to A New All-time High For the 3rd Straight Day

Philippine Stocks Rose to A New All-time High For the 3rd Straight Day

Philippine Stocks Rose to A New All-time High For the 3rd Straight Day

Philippine Stocks Rose to A New All-time High For the 3rd Straight Day!!!

I AM SO HAPPY!!

 

 

Mrs. Monologues · Musings of Madam-wannabee · Personal Finance

On Emergency Funds

As I mentioned in one of my previous wealth management posts, our financial planner, Efren Cruz, clarified that the emergency fund should be worth the cost of expenses for at least 3 months. This was a major eye opener because all this time I thought the emergency fund should be basic salary times six. We are big on savings so the difference of the expenses and salary is quite significant.

What is an emergency fund?  As the name implies, it is the fund that you set aside for emergencies such as loss of a job, illness or any unexpected major expense. One of the cardinal rules of investing, I read, is to have an emergency fund first before actually investing.
One of the questions I asked Efren is that “is there a way to maximize the returns of our emergency fund?”.  Would it be wise to invest it in low risk instruments?  Efren said that the EF should be placed in a monthly time deposit so that it still earns somehow but we can pull it out anytime. We also placed several weeks worth of EF in a savings bank account that has an ATM since emergencies may take place during non-banking hours.

And so, we recomputed our emergency fund, consolidated it and parked it our trusted government-run bank (let’s use TGRB, ok?). Why government-run? Someone told me that government banks are more stable than commercial banks since they run on the citizen’s taxes. Not sure if this info is true but it does make sense.

Some learnings from our experience in opening an account for our emergency fund

– Banks require two official government ID’s. Company ID’s are not considered official.
– A friendly customer-service-oriented branch manager makes the banking experience a lot better. In general, I don’t like banks.  The offices are boring and services have a lot of opportunities for improvements.  We love the branch manager and staff in TGRB, though. I only brought one government ID. Because the branch manager knows us, she allowed me to open the joint account and submit my ID on another day. I also like that she calls every roll-over date to confirm if we will retain our monthly time deposit.
– There is such a thing as aggregate interest. Franco’s parents also have savings with TGRB. The branch manager, gave us a better interest rate based on the sum of our emergency fund and hubby’s families savings.
– Don’t forget your old signature. Hahaha. Franco had an account with TGRB even before we got married. We closed that account and opened a joint one. The process got longer than necessary because hubby forgot his signature 10 years ago!
– One of the things that bother me nowadays is estate tax. When we die, our beneficiaries may not get the full amount of the investments that we will leave behind. The government will take out estate tax. Grrrr! Being a product of a state university, I am thankful to taxpayers for financing my education. However, now that I am working and see my payslip, I can’t help but wish that one third of my salary does not go to income tax. Imagine, how much more comfortable our lives would be if we get that our salaries in full? Sorry for disgressing. I asked our branch manager if there are ways to avoid paying tax estate or at least reduce it. She bit her lip and told me there are ways but she can’t tell me. Hahahaha! Can someone please tell me?
– PDIC insures deposits only up to 500K per depositor. That means if I have 300K in time deposit and 450K in regular savings, should the bank declare bankruptcy, I will only get a maximum of 500K.

Here is a very informative post on emergency funds.

Mrs. Monologues · Musings of Madam-wannabee · Personal Finance

What I Learned from Our Insurance Shopping Experience

One of the most stressful projects that we did this year was to shop for life insurances. The day after Franco semi-failed the medical exam for his insurance application, an officemate, who was Franco’s batchmate in college, passed away in her sleep. We were all shocked. It was so sudden. She even went to work the night before. Her youngest was only 10 months old. I cried for days because of sadness for her and her family and because I was worried sick for my husband. Not just Franco’s health, I also lost sleep analyzing the costs. First we asked for insurance proposals for X amount. After realizing that the cost would badly hurt our regular savings, we decided to ask for new proposals for Y amount which is equal to X minus the value of our group life insurance from work. Then, I asked for different payment schemes. From 10 year pay periods, I thought of considering the 30 year pay proposals. After Franco’s medical exam, I reconsidered the variable unit linked proposals. Since we are going to spend a considerable chunk of our annual budget to insurances, might as well pay for insurance that comes with investments. In the end, we decided to go with traditional whole life 10 year pay insurance.

We learned from Efren Cruz, our financial adviser, that the best way to compute how much insurance one needs is to imagine the worst and estimate how much time and money one will need to get back on her feet. I think I need  5 years. Franco, since he earns more and he is the more resilient between the two of us, might need just 3 years. From the 20-30 plus proposals that we reviewed and the many agents I met, here is what I learned:

– Depending on the face value of the policy, your health, you and your family’s medical history and your age, you might be required to undergo a medical exam.

– Depending on the result of the medical exam, you might get rated which will effect the premiums and coverage. Or you could be denied. Because Franco is overweight, his annual premium increase by 50%! It was also from the medical exam that we learned that Franco’s blood pressure is considered pre-hypertensive. One of the riders that was important to me, the rider that pays out once the policy holder is diagnosed as having a critical illness like cancer, stroke etc, was not granted at first. I wrote an email to the head of the underwriting department and requested for reconsideration since Franco has no history of hypertension. They granted my request but they doubled the premium for that rider. Overall, the annual premium for Franco’s insurance jumped up by 50% because of his weight and elevated blood pressure.

– Insurance companies have a shared database of the ratings of their policyholders and applicants. If insurance company A denies your application for insurance, insurance company B will most likely find out.

– There is a two-year contestability period. If something happens to the policy holder, the insurance company has the right to investigate the cause of death. If they find out that the policyholder withheld important information or misrepresented facts during the application, the insurance company may opt not to pay.

Continue reading “What I Learned from Our Insurance Shopping Experience”

Musings of Madam-wannabee · Personal Finance

Nine Things I Learned from our Financial Adviser

In line with our 2012 Wealth Management New Year’s resolution, we met with a financial planner last January. Yes, I know this post is almost half a year delayed. I wanted to make sure that I have closed all our assignments before I share my learnings.

So who is Efren Cruz? Efren is the national best selling author of “Pwede Na! The Complete Pinoy Guide to Personal Finance” and “Pwede Na! The Complete Pinoy Guide to Retirement and Estate Planning”. He is a contributor for the Philippine Daily Inquirer, and MoneySense Magazine. Experience-wise, he is backed with more than 25 years, working for insurance and mutual fund companies as well as for banks. Now, he is the chairman & CEO of the Personal Finance Advisers Philippines Corp.

So why did we meet with a financial adviser? I want to think that Franco and I spend our money wisely but in terms of knowing of how to strategically manage and grow our hard earned cash, we needed help. A lot of people, mostly insurance agents, call themselves financial advisers. However, since they are representing certain products, I wanted to delay meeting them until we have a game plan.

So what happens when you consult an independent financial planner? The first meeting is mostly information gathering for Efren. He wanted to know how are we at managing our finances. It is good that I already prepared a statement of assets and liabilities and a summary of our expenses. These were not required but were very helpful in getting the ball rolling.  Efren wanted to know what our financial goals are. Honestly, we knew what were our goals but how much and when, we only learned during our meeting. Because I prepared a two page list of questions, the first meeting was actually spent doing Q&As. On the second meeting, Efren presented to us a report. The report has 4 key areas: cash management, debt management, risk management and wealth management. If you would like to know the cost of the consultation, I can send the information to you thru a personal message. Please leave a comment or send a message thru the contact page if you would like to know. Let me tell you, it is not as expensive as you think. It is a small amount to pay for information that will help you for a lifetime.

What we learned:
1) Since we are full time employees, it would be wise to let the expert fund managers grow our money. Efren stressed that we do not need the additional and unnecessary stress. Prior that meeting, I was somewhat curious about stocks. Efren made me realize how stressful the stock market is. By getting pooled funds like mutual funds, UITF’s and VUL’s, I am letting the fund managers, the experts,  handle the buying, selling, monitoring, and stress of the stock market for me.

2) It is best to get insurance with pure protection and investments separately. Variable Unit Linked insurance policies offer both insurance and investments but for a higher administrative cost.

3) Not everyone needs and is fit to go into business. Reading Colayco’s Pera Mo, Palaguin Mo, left me feeling pressured to have a business. Work is stressful enough. I don’t have time to comment on my favorite blogs. I wish I have more time with my family. What in the world will I do if my one and only lotto franchise employee goes on AWOL?

4) To know if an investment vehicle is right for you, you have to determine your financial goals first.

5) Emergency fund should be equal to at least 3 months of one’s monthly expenses for employees. This was a major wake up call for us. All this time, we thought the EF should be at least 6 months the monthly salary. Three months is good. More months would be better but one should consider that by over protecting, we are limiting our potential for growth.

6) It is possible to retire at 50 but you have to start planning ASAP. I thought early retirement is an option only for people who are already rich in the first place.
Continue reading “Nine Things I Learned from our Financial Adviser”

Gardening · Mrs. Monologues · Personal Finance

Farming in the City

I have a new hobby! In addition to being a mom, wife, menu planner, party organizer, craft enthusiast, sister, daughter, recruiter, aunt, wealth builder, playdate scheduler, Booksale loyalist, now, I am also an urban gardener . 

I have always been interested in gardening but it is only lately that I decided I want to concentrate on growing our own food. No more crafts or any decorative project for me for now because I will channel my time, energy and resources all to gardening.

These are what I have been reading

And these are what I have been collecting. If you have bottles and cans, let me know! I particularly need empty 6-liter mineral water bottles.

If you are a resident of Los Banos, you are in the best city to get into gardening. Our municipal hall buys seeds from farmers and gives them out for free. My mom said, she also got a sack and a half of compost for free! Good job, Mayor Genuino! I hope more Elbi residents would learn about your seed dispersal project.

Goodbye ornamentals, hello vegetables. I like the idea of having my own herb garden but the truth is, we don’t use a lot of herbs when we cook. No more marjoram, sage and vietnam mint for now. Instead, I want to grow my own kinchay, green onions and kangkong. These are the okra, eggplant, tomato and squash that we planted a few weeks ago. They are big now. The squash plant is almost as tall as I am.  Continue reading “Farming in the City”

Musings of Madam-wannabee · Personal Finance

One Weekend, Four Agents

After months reading at least 30 proposals and checking out reviews of different pooled funds, last weekend, we finally decided and opened accounts. This is in relation, of course,  to our  2012 family new year’s resolution which is wealth management. I blogged about it here.

These are Vicky and Tita Beng, our agents for our life insurances.

Jen, our agent for our retirement, Aki’s education, honeymoon and car funds


The guy on the left is Kevin. He is our agent for our retirement and baby # 2’s education fund. To answer your question, no, I am not preggers. Continue reading “One Weekend, Four Agents”

Musings of Madam-wannabee · Personal Finance

Our 2012 Family Goal: Wealth Management

That is my fancy term for save more, spend less and investly wisely. Doesn’t  “wealth management” sound more motivating? Every time I pass by MiniStop and get tempted to buy another cheesecake ice cream, I silently say “wealth management” to myself and then walk away. Same case when were eating out last Saturday. Simply saying “wealth management” made that  all-meat pizza seem less appetizing.

Here are our specific steps to  get closer to our 2012 goal.

1.  Review our Finances. We made the following files
– Statement of Assets, Liabilities and Net Worth
– Summary of Constant and Variable Cash Flow
– Mutual Fund and UITF performance trackers

2. Organize our financial documents.  Should something happen to one of us (knock on wood!), this expandable folder will make it easier for the bereaved spouse to move on.

3. Go back to budgetting. I am proud to say that Franco and I are very good at staying on budget.

4. Learn more about financial planning
– Read books – check! I highly recommend these two books.


– Subscribe to financial planning blogs. I did not just put them on my favorites. I subscribed to the blogs via email so I won’t miss a post.
–  Attend a seminar. This is still a question mark. I think we know the basics already. What we need would be guidance on how to invest.  Enter specific step # 5. Continue reading “Our 2012 Family Goal: Wealth Management”

Memoirs of a Mummy · Musings of Madam-wannabee · Personal Finance

Gifts for Aki: It’s all about the money!

 
As I mentioned before, Aki already has a looooooot of toys. His playroom is filled with so many play things that he gets overwhelmed and hyper, jumping from one toy to another.
 
So for Christmas, we decided not to give him any toys since he’d surely get a lot anyway. What we gave him were instead money and money saving habits. Franco and I are the biggest cheapskates. We try to live, not within our means, but below our means.  Our hope is for Aki to grow up like us who try to save as much as we can and spend only on what really matters.
 
Gift # 1: Sputnik aka Niki Endaya, Aki’s first piggy bank. Remember Mong-ki? He is the first coin bank but since he is too cute and kinda fuzzy, we decided to display him on the playroom, beside cute little Baby Glorie. Everytime I come home from work, I give Aki a couple of coins for him to feed Niki. After every successful coin drop, we give him a round of applause. It is almost automatic for him to clap after hearing the clanking of the coins inside.
 
 
Gift # 2: Crisp New Old Bills. As many of you may have already heard, Bangko Sentral already printed the first batches of our new brightly colored bills. Slowly, they will phase out the bills that we grew up getting from our godparents every Christmas. Since I am a sucker for memorabilia, we kept a hundred, a fifty and a twenty peso bills for Aki’s future reference. For a minute,I contemplated if I should also save a 500 and a thousand peso bills. But then again, 1500 is 1500. Spending that much on a memorabilia would be against what we are trying to teach. Aki’s 170 peso aguinaldo are now safely kept in his keepsake box.
 
Gift # 3: His first bank account. This gift is kinda late. We got it only last week because Christmas was hectic and we were yaya-less. We chose Metrobank because one, the nearest branch is right outside our village. And two, Metrobank Fun Saver’s Club offers the most perks compared to other kiddie bank accounts.
 
 
These are the perks
    – PhP 50,000 Educational Trust Fund should something happen to me.
    – Personal Accident Insurance  amounting to twice the daily average balance of account.
    – a welcome gift which was an insulated lunch bag.
    – a membership card which will allow me to avail discounts from their partners.