8th wonder

Albert Einstein - it was he who said that compounding interest is the 8th wonder of the world.

In IMG, we are taught that if you want to put your money in an institution, you need to know when it's going to double. that's why Einstein formulated the rule of 72.  It states that dividing 72 by the rate of interest will give you the number of years your money will double. Sounds simple right? Yes, it is!

In this way, you can plan for your long term goal, whether it be a retirement fund for yourself, an educational plan for your child, etc. You just need to have the discipline of living simply, not buying things you cannot afford, focus on your goal, and investing your money regularly in an institution that will give you substantial rates.

For myself, I invested in a mutual fund.  it's just like depositing my money in a bank.  Except for the higher interest I receive for my money and keeping it there for my long-term goals.

Knowing this information, I can't help but share this with my family and friends. it's sad to note that not all of us were taught the proper way of saving, more so putting our money on investments. 

Thanks to IMG, I'm on my way to financial freedom!

Never too late.  :)

Financial Literacy continued...

The second concept which was shared to me is the power of compound interest. Albert Einstein referred to it as the 8th wonder of the world.  He even formulated the Rule of 72 which states that '72 divided by the rate of interest (%) is equal to the number of years your money will double'.  
Because when we put our money, our savings, in an institution, we need to know when it will double.  To illustrate:
In simple interest
Suppose you have 100 pesos and you put it in a bank which gives 1% interest per annum (p.a.), after 1 year, you will  gain 1 peso ( which is 1% of 100).  After 2 years, 2 pesos, after 3 years, 3 pesos, and so on....so when wll your money double in value? In 100 years of course! Tsk! Isn't that too long? Will we still be alive by then? 
Now putting your 100 pesos with compound interest, applying the Rule of 72, we divide 72/1% and it gives us 72 years. See how wonderful it is? It's now 28 years less.
And of course, we will not settle for 1%.  We know there are facilities which give much more than that, we just need to look.

Financial Literacy

When I joined IMG, I was taught that a majority of senior citizens in the Philippines are dependent on their children and relatives, on the government (their pensions) and some are still working, not because they want to, but because they need to, for the sustenance of their needs.  Only a small percentage of these people are financially independent.  And it scared me to think that I will end up with the majority.  The question is, what do these financially independent people have that the majority doesn't have?  What did they do that the majority did not?
Obviously, they have the money, they had their goals and they acted on them, they had discipline, and most importantly, they had the right information.
And this was what they shared with me. 


First, I came to learn of the X-curve concept.

Our financial life , they say, is governed by two lines - the money line and the responsibility line.  At the onset, when we started working, we depend on our salaries for our needs.  Temporary and permanent needs.  These are food, clothing, shelter, debts, education and healthcare.  These needs fall on the responsibility line.  And our salaries on the money line.  These two lines make an X because we need to increase our money line and decrease the responsibility line over time.  As we grow older, our responsibility line decreases.  Our debts may have been paid by that time, and the kids have grown and finished school.  But our basic needs are still there: food, clothing, shelter and most importantly, healthcare.  And we are past our productive years, or we no longer have income to support our needs.  We come to realize that our salaries are temporary solutions to our permanent needs.
First step to increase our money line is to set a goal - how much money (BIG MONEY) do you want to have  by age 50? 60? Or whenever you wish to retire?

There are also two scenarios or "what ifs" we need to think about:
1.  What if we die too soon?
What will happen to our families?  Specially if we are the breadwinners, who will take care of their needs when we're gone?  The answer to this scenario is to have an insurance as income replacement which will help our beneficiaries until they get back on their feet.  Salaries are active income, meaning we get paid because we give service.  We are working for money.  No work, no pay.


2.  What if we live too long?
We don't want to be counted in the 98% of senior citizens , for sure!  The answer to this scenario is to have Investments, where we can live on interest alone by the time we retire or no longer wish to work.  This is passive income, where money is now working for us.
And this I will write about on my next post. 
Hang in there!

Five Equations for Financial Well-being

A colleague of mine sent me this through e-mail.  This is really awesome and worth sharing.  I have already shared this with my Facebook friends and hopefully, they will read it through and realize the need of saving for the rainy days.  

Five Equations for Financial Well-being

New years are befitting of great beginnings. As you promise to exorcise personal demons and execute a new world order, have you looked at how much you’re really worth? Ultimately, changes command financial viability – so be armed with the five financial equations below.

I. Savings » A Sustainable Bank Accounts

Proper partition of income and allowances is key to a bank account that actually grows, not merely dwindle. Here’s a simple equation:

Income – Savings = Expenditure

Or if you want to be snide about it:

Reality – Delusion x Sacrifices = Money for a Rainy day

Cutting corners is a good step towards liquidity. Substitute brand name products (clothes, food, even shoes) for cheaper alternatives. Living within one’s means should not equate to a vow of poverty. It’s more like allocating your resources properly, instead of wasting too much on unnecessary stuff.

II. Investments » Make Money Work For You

A crusade to the stock market may be cheaper nowadays, but it is not for the faint of heart. To know your investment appetite, use this formula:

Disposable Cash / Risks = Investment Appetite (Low, Average, High)

Taking in your Investment Appetite, identify your kind of mutual fund:

Investment Appetite + Purpose = Your Mutual Fund

Mutual funds are perfect for financially naïve investors, which accounts for everyone but those from the financial service sector. You not only let your money work for you, but you get the wisdom of an investment manager for a fraction of the cost.

III. Insurance » Living Protection

Long has it been established that insurance is for the living, not for the dead. Before your own financial grave starts getting deeper, keep this in mind:

Beneficiaries x Dreams = Insurance Policy

Of course, if you’re feeling a wee bit selfish:

Personal Worth / Beneficiaries = Insurance Policy

Insurance policies have already adapted to the changing times, where consumers need not wait a lifetime to enjoy its benefits. Whether you want long-term or short-term, traditional or laced with investments, you can easily find the perfect fit for your dreams.

IV. Health Plan » Best Medicine

An apple a day may keep the doctor away, and a reliable medical plan can stave off monetary destitution. Prove that your health is wealth by:

Lifestyle x History (Dependents) = Health Plan

But if a scare tactic is what drives your determination:

Vices + Virtues / Responsibilities = Health Plan

Hospital bills can easily eat up your rainy day fund. Diagnostic exams can also put a big dent to your budget. And we’re still not talking about emergency procedures due to accidents. Save your loved ones from these woes by availing of a health plan that suits your lifestyle.

V. Retirement » All of the Above

Your nest egg is that comfortable place in the not-so-far future, where the knees are weak but the pockets are still deep. No matter what equation you choose to adapt, you can finally achieve:

Savings + Investment + Insurance / Health Plan = Security

Oh for goodness sake’s, here’s a more truthful formulation:

Life – Savings – Investment – Insurance – Health Plan = Insecure You

From: http://www.itstime.com.ph/2011/02/five-equations-for-financial-wellbeing 

Idol

Why have I not heard of him when I was younger?  This man's wisdom is truly worth sharing.  Let's take it to heart.

International Marketing Group

Since I have known Robert Kiyosaki through Bo Sanchez' (or was it Jomar's?) articles, I have heard also of his board game Cashflow 101. This I read from Larry Gamboa's book 'Think Rich Pinoy!'.  I had no idea about the game, it's just that it was always mentioned in Larry's book.  Imagine adults playing this game every Wednesday night in Makati? What's with it? Larry said it is a simulation of one's financial life. The goal is to get out of the rat race (within an hour, I think) and you can do that if your passive income surpasses your expenses. Hmmm..? 
Since my life here as an OFW is not that exciting, (hehe), I am always online:  checking my emails and keeping in touch with family and friends through Facebook.  And it is through Facebook that I happen to see an advert of Cashflow 101 here in Abu Dhabi.  Of course, I will never pass up on the opportunity of playing that game which has intrigued me for so long.  I signed up for that event right away and waited for the day.  And that day came..

And did I enjoy it!  I was able to join twice but never got out of the rat race! Sad   :(.   But what that game taught me and the other players is that in life, you should take risks and grab every opportunity that will help you increase your cashflow.  You should have a passive income much more than your expenses to reach your goal - and that is to get out of the rat race.  
I am very thankful I have signed up for this event and met wonderful people, people who became friends and who will walk with me and guide me through obtaining financial freedom.  
These people are from IMG - International Marketing Group - which I consider a blessing from heaven.  To know more about IMG, check this out: 
http://www.img-corp.com/index.php
Right now, I have renewed hope,  eager to start building my wealth (yes!) and look forward to my retirement with no worries!  Cheers!

Never too late..

I'm a single mom with grown-up kids, and by that I mean, they're old enough to take care of themselves (so I think), that's why at 45, I applied for a job here in Abu Dhabi, and almost 4 years later, I still have nothing to show for all those years of work in terms of savings. Quite embarrassing, really, and frightening too.


I'm just glad I found and met people, online and real, who inspired me to do something for my future before it's too late! (I believe I still have a future!:) )
First, it was Red Denal. I don't know the guy, but he kept sending me emails about some guy named Trace Trajano, whose dream was to make millionaires out of every Filipino! And that's through real estate. Buying and selling real estate through "laway lang ang puhunan". He conducts seminars (for a fee) and teaches and coaches those wanna-be-millionaires.  But the thing is not for me, for I am here in Abu Dhabi and I have zero idea about real estate business here.


Trace and Red are somehow linked with Bo Sanchez, a preacher because I found his website through these two.  It seemed they were in the same circle or they promoted each other's websites. To make the story short, it was Bo who really inspired me. I subscribed to his website so I get a dose of spirituality and positivism every day. I joined his www.trulyrichclub.com and subscribed to his emails (Soulfood and God whispers) which really lift me up every time I read them. I even went to PICC to hear him preach every Sunday after mass when I was on vacation in the Philippines for a month. I really thank God for Bo! And from Bo, I found Robert Kiyosaki, Jomar Hilario, and Larry Gamboa. And these people have one thing in common. They are rich! 
And that's what I want to become...

Thank you Bo!