Retire Comfortably

Us in the late 30’s, definitely we have time to build our retirement fund. Let’s break that cycle of being overly dependent from the welfare or charity to some extent from our children. It’s true, when we ask money from our kids when we are old and retired, we may be taking away investment money for our grandkids. How much do you think we need if don’t act now? even 5K a month will be 14K worth when we retire. Let’s break the cycle by building our retirement fund NOW. Fortunately Pru Life UK has #elite products which can assist us build that retirement fund for the future.

If not now, when?


Here’s a screen grab of ANC OnTheMoney post in Facebook showing Randell’s views about retirement.

Credit to both for the post and the tip.

Life Stages And How We Ought to Prepare For Them

All of us go thru different stages in life. And the starting stage here is the time when we graduate from the university with a degree that is meant to help us be ready for the future.

Rookie Years

Fresh from college, we start to build our own future from the money we earn from our first job. It’s that stage when the idea of finally being able to buy our wants (even more than our needs) coming from our own salary really excites us all. Just a year and some months earlier we might have already set our sights on the latest gadget, or that fancy restaurant, or the fancier wrist watch, or those pair of expensive shoes, or finally getting that credit card just to belong to the club of “swipers” but then ending up being downed with huge debt (I’m actually speaking about my own experience in this case). Granted. It’s the initial phase which I call the “me in control” life. And it’s fair to be getting all those from our own income as years earlier, we were at the mercy of our parents’ or siblings’ allowances which most of the time only left us a few bills and coins balance each week or month. We just couldn’t save for a single “want”.

The Dreamer Stage

Then perhaps 3 years into the job, we may already start thinking about the future. Backtracking the expenses made the past 3 years, there might be some realization that we have been “happy-go-lucky” all along, forgetting about the “saving for the rainy days” mindset, year after year. It’s because near-future wants suddenly become more expensive- we want our own house and lot, we want  to have our own car because our rich friend has started driving the latest car, we want to travel to HongKong because our neighbor was talking non-stop about his experience in HongKong Disneyland.

The Bitter Pill Swallowed

The realization that we haven’t saved that much; that we have wasted those 3 years may start hitting on us. This bad financial status could usher a brand new goal: Medium-To-Long term projects. Let us say we want to prepare for a 3D4N trip to HongKong with a 2 day Disneyland visit. So how are we going to go about it? How much are we willing to save each month? Have we already eliminated our debts? Are our 2 years in salary increase, if there are, enough to contribute to the savings? But what about emergency fund? Have we considered the possibility of losing our job and how we will source our expenditures if that happens? But what if we have a standing 18,000 debt from our best friend credit card company? The list of concerns could potentially be endless and we may not really even be ready for any Medium-To-Long term goals yet.

Financial Planning – The Foundation Phase

So before considering the Medium-To-Long term goals, let’s focus on achieving the following things, in sequence, if possible:

  1. Eliminating Debts – the hardest to achieve. Let’s target eliminating debt in the next 6 months.
  2. Emergency Fund – 3x to 6x of our monthly expense to cover for the “rainy days”. Let’s have this in parallel with item 1 but on a 70% by 20%  by 10% rule for the savings part. 70% to pay off debts, 20% for emergency fund, and 10% for “petty cash” fund. Once debts have been eliminated, savings will then be 80% for emergency fund and 20% to “petty cash”. Once the maximum target of 6x monthly is reached, we will have 100% of savings to be used for other means.  The general rule on computing for expense:  Expense = Income – Savings, where Savings equals 30% of income. The math is simple but the idea here is for us to make the Savings component a constant percentage.
  3. Protection – Are we the breadwinners of the family? Do they depend on us for their daily living? How much cash are we giving them monthly? is it 15% at least of our net income? Lower at 10%? Only 5%? Have we considered lowering our expenses for “wants” so that we can increase our contribution to them from 5% to 10% at least? Are we willing to give them more? If we are staying in the family house, should we not give them more to cover the bills and groceries?  But what if we suddenly get sick and not able to work? What worse thing could possibly happen? Death? Yes, that could certainly happen. Could we take a moment to reflect about this possibility and how it could impact our family?  I’d like to invite you to read about this post on Insurance Protection to understand better how we could potentially prepare something for our dear family should God decide to take us out of the picture.

The 3 steps above form what we call Foundation of Financial Planning. In the Foundation phase, we consider increasing cash flow (salary increases, promotion, new job with higher salary, other sources of income like direct selling, MLM, etc), eliminating debt, and insuring protection for the members of the family in any eventuality that would lead to us being taken out of the picture in this world. The Foundation phase could take us 2 to 3 years or even more to build. How soon we can accomplish this will really depend on our discipline, our focus, and our commitment.

Here is a post about Financial Planning for those who haven’t read.

Medium-to-Long term planning

Congratulations to us! We have built a strong Financial Planning foundation. So now that we complete the foundation of Financial Planning, we are free to establish our Medium-to-Long term goals. What is it that we want to achieve in 3 to 5 years? Is it the brand new car? the perfect home for us and our parents and/or siblings? Is it the HongKong Disneyland tour? How will we plan to achieve the goal? Do we set multiple goals? Setting multiple goals means multiple planning, saving, or investing also.

This is the Accumulation stage of Financial Planning; the phase where we start to invest our net savings. What are the ways we can invest? Let’s discuss some of them below:

  1. Savings Account – We already have this – Emergency Fund account (a must to be deposited in the bank), Petty Cash fund. Technically, this is not investment. Interest rate at 1% per year is not an investment proceed. if Inflation is 4%, the value or worth of our money is -3% each year. But we need to have savings account in a bank for our online transactions or when we have business transactions that we need to be able to quickly withdraw some money from the fund.
  2. Government or Corporate Bonds – This typically returns a fixed income either quarterly or annually and may range from 3% to 6%. This will beat inflation if returns are based on the higher band (say, 6%). However, this still is not enough for capital appreciation this is relatively safe.
  3. Stocks or Equities – Very high risk, very high potential return. That’s the mantra of stocks or equities investing. We can either invest individually thru online brokers, or we can pay some higher fee by having a human or institutional stock broker managing our fund. They can potentially return greater than 10% a year or a negative % if the performance of the stock is bad.
  4. Mutual Funds / UITF – Depending on the chosen fund, this investment medium managed by a fund manager could be bonds, balanced (bonds and equities), or 100% equities. Normally fund managers invest or trade from blue chip stocks of stable and rich companies.
  5. Insurance companies like Pru Life UK also offer Unit Linked investments to help us grow our money but with the addition of the Insurance component in it. The 4 other investment modes don’t offer the guarantee that should we be taken out of the picture, aside from the invested Fund Value (portion of our investment amount plus whatever growth after having been invested) there is a Sum Assured amount that our beneficiaries can also get when death benefit is claimed.

Preparing for Retirement

Our 3 to 5 years Medium-to-Long term goal may potentially help us achieve our immediate, “big time” dream(s). But we also may start thinking about the time when, due to old age, we quit from work and just enjoy the remaining years of our lives. That’s farther down the horizon. Having worked for 10 to 15 years, we may start feeling the need to prepare for our future – that is, considering where we could source our means for the expenses we will need in the future.  So what do we really need in the future? How old do we really want to retire? 55? 60? 65? After retirement, how many years do we think we will leave before The Lord will let us finally Rest in Peace? The formula below could help us examine our retirement needs:

  1. Monthly Expense at retirement age
  2. Yearly Expense:  Item 1 x 12
  3. Years to use expense amount: number of years before we expire after retirement
  4. Savings already made

      Retirement need: (item 3 x item 2) – item 4


  1. Monthly expense planned: 30,000
  2. Yearly expense: 360,000
  3. After retirement, years expected to live: 15
  4. Amount already saved for retirement?:  300,000
  5. Total Retirement expense need:  (360,000×15) – 300,000

So much should we prepare for our retirement? 5,100,000!!!

That’s a huge amount to save! We definitely can’t have that by saving in a bank in our lifetime. We can’t achieve that if we save it thru bonds either. So that begs the question: What investment can help us achieve 5.1M by age 65? if we are 32 right now, we only have 33 years to gather 5.1M in order to enjoy 30,000 per month worth of expenses. Is this really attainable?

There is definitely a way. Please read this Retirement Planning post.

We can compute for how long we can double our money. That’s what is called as Rule of 72. It’s important we have knowledge on what medium of investment to decide to help us reach our target retirement plan. So if we  can only invest some money for some number of years, we need to invest that money in a medium that could potentially double that amount within the number of years remaining before we retire from work.

Rule of 72

The rule states that to double our money in some number of years, we need to divide 72 by a certain % which is the rate of growth of the investment.

For example, if we invest in medium where the return is 10% annually, here is when it will double:

            Years to double = 72 / 10 (from 10%)

Our money invested in a medium that returns 10% annually will double in 7.2 years! If we want to double it in 2 years, how much should be the growth rate? 36% compounded growth per year! Anything that says money will double in 2 years, is just too good to be true. That’s either legitimate business or a  plain SCAM!

Here comes the Bride or Husband…then the son, and daughter, and son…

So it was good planning for retirement. We identified our growth prospect so that we can live comfortably in the future. Then suddenly at age 35 we finally found the urge to build our own family and to raise kids. The first of these future kids will,  at age 18 or 19, start college. We are again led to think about how we can prepare them for their future. How are we going to prepare them for the expensive high school tuition and miscellaneous fees? what about the more expensive university tuition? Have we become managers where our salary will help contribute for their education? Even if we earn a salary of 200,000 being managers, how much should we contribute to investment so that we can conveniently send our first born at least to a college which collects a total of 2M? what if the future cost is 3M? or 4M? But we have 3 kids! Fast-forward, if for example our first born is 3 years old, he has 15 more years to go before he enters the university which asks for 2M for the entire degree. Is there a way to prepare for this? how much? Please allow this post on Educational Planning to help us out.

A Life of Stages, a life better prepared

Life is Beautiful, according to a movie title. Rightfully so! Life is mean to be enjoyed, free from mental, psychological, and emotional stress, more so, financial stress. When it comes to money, especially in married life, problems arising from money needs often become the source of conflicts within the family. It is also the source of major headache. The remedy is not to be complacent about the future needs hence, the need to not take financial planning for granted. We all need to be prepared for the future. And there is much we can do to live a comfortable life, today, the near future, and the future over the very long horizon.

It’s about commitment. Our commitment to ourselves, to our family and loved ones, to our community, and to the next generation after ours. It’s a commitment to be financially free and to be financially prepared now, tomorrow, and in the far future.


Securing our Retirement Plan

We cannot be working full time forever. At some point, during retirement age, normally 65, we go on to take different needs and priorities in life – travels, maintenance medicine, a farm to till, etc.

Some people work hard and save money. Yet they spend so much that they end up getting back the savings supposedly planed for retirement. A present lifestyle, when continued in the future, will need tremendous amount of money, time, discipline for years to build what is to be a future need. There is a formula to build the need for the future and this is discussed below:

Computing for Retirement Needs

A. The average monthly expense for (travels, maintenance, medicine, etc.)

B. Future Yearly need = A x 12

C. After retirement, for how long the expense is going to be needed

D. The provisions (savings, investments) already made

E. Retirement Need:  (BxC) – D

An example will be for a 32 year old guy who plans to have a 30,000 monthly expense in the future. The computation will be as follows:

A. 30,000

B. 360,000

C. 10 years after age 65

D. 500,000 (savings in bank, bonds)

E. Retirement Need:  (BxC) – D = 3, 600, 000 – 500, 000 =  3,100,000

So to enjoy a retirement life with 30,000 monthly cash to spend, the retirement plan calls for the building of a fund that will give 3.1M by age 65 will may be consumed within 10 years.

So for a guy aged 32, investing in a 15-year plan at 5,000 per month or 60,000 a year, here’s the potential retirement benefit:

Insurance coverage:

Sum Assured: 360K

Total and Permanent Disability; 200K

Accidental Death and Disablement: 165K

low, because the intent is for Investment. Here’s the fund value at different ages:

@age 45: 1.246M

@age 50: 2.194M

@age 60: 5.616M

@age 65: 8.989M

Fund is 100% Equity Fund that may potentially return 10% per annum. Note that this is not guaranteed as Equity Fund performance may vary year on year.

What’s good about this plan is tha payment is only made for 15 consecutive years with the last 5 years earning a 10% of annual premium as  loyalty bonus. Pru Life UK company is generous to add 6K to the fund value from year 11 to 15 provided no withdrawals nor payments get lapses from year 1 to 10. While you only pay for 15 years, you will continue to have insurance coverage until age 100 provided there is enough amount left in your Fund Value. maintaining 500K should be enough to help continue your policy until age 100. You can also add investment thru TopUps. TopUps can significantly add returns to your investment. Minimum TopUp amount is 20K.

If you wish to identify your retirement need  shortfall and/or retirement plan options, send me a message and let’s discuss them.

Preparing For Our Kid’s Education

We all dream of giving our kids the opportunity of a great education, sometimes to the extent of enrolling our child to a prestigious university in the hope that as he graduates and starts his career, his vast network of connection, having been affiliated with that prestigious university, will help jumpstart him into a lucrative career whether it’s employment or business. If we raise an intelligent kid who will grow up to be a consistent with highest honors or valedictorian academic excellence awardee, then we may enjoy a very good discount, even up to 100%, of tuition fee from that university. Some athletic kids may also grow up to become famous varsity players helping out to eliminate the parents’ worry on how to cover their education.

But what if our kids belong to the regulars, the remaining 20% or 30% top students? How are we going to send our children to school?

We go back to how we decide to to invest our hard earned money to prepare our kids to college education. As savings account deposit is out of the question, we are left with bonds or equity or a variable unit linked insurance which gives both an insurance component and an investment fund. Being a business owner will also help.

As I am a Pru Life Financial Advisor, allow me to explain how to prepare a good educational fund for your kid. My example would be for an insured 3 year old child whose parent is the policy owner. The 3 year old kid is planned to enter the University of the Philippines in 14 or 15 years. According to the Tuition Fee Projection, a student planning to entire the University of the Philippines needs to be prepared something like 1,066,034 for a 4-Year Course.

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Preparing this early can definitely help. There is a Pru Life UK product which is designed to help us prepare our kids future education in the university.  As our sample is a 3 year old kid, we may insure him for a limited pay arrangement, 7 years or 10 years so that the money invested will have enough time to grow.

Considering 100% Equity fund as investment fund to choose, this could potentially return an annual average of 10%. This is not guaranteed as the chosen investment fund may perform well or perform poorly in a given year. But if we have high risk appetite, we may want to consider this as Equity fund gives the a very high annual rate of return compared to the other funds. A Suitability Assessment Form needs to be filled out to determine the type of investor we are, whether we have a Conservative, Moderate, or Aggressive investor risk profile.

By limiting the number of years to pay, we pay higher premium so that the annual total amount invested early on giving more room for potential growth.  There is also a unique rider that can be attached to the policy to guarantee that the child’s premium will be paid even if the payor’s life expires hence not able to pay for the premium. This is called the Payor Waiver. The premiums will continue to be paid by Pru Life UK until the child reaches the age where he can already pay on his own should he decide later to continue the policy and make it his retirement plan. Despite the limited number of years to pay, the insured is still covered until age 100.

By age 18 or 19, the projected Fund Value shall have been enough to cover the projected tuition fee targeted for the child’s educational plan if enrolled in the University of the Philippines.

Should anything happen to the insured child, the beneficiaries including the parents will be able to recover the investment thru the Sum Assured amount plus the Fund Value at the time of the insured child’s death.

To the reader,  I can help you with your child’s educational planning. Do you think you need to consider creating an educational fund for your child this early? If your child is still 7 months old, we can already create an education fund for him or her.

If you want to know more about how to go about getting an educational policy, send me a note to

The Importance of Insurance Protection

What is Insurance and why has it been there for the past century?

Wikipedia article defines insurance as a means of protection from financial loss. An insured person creates the wealth for his beneficiaries at the start of his policy.

In our multiple stages in life, we may be at the point where we are the person being depended upon by loved ones and we don’t have families of our yet. We may be the breadwinner of the family hence our parents or our siblings depend on us on the monetary and “father-figure” aspects. We drive the family and we think about how we can sustain their financial needs apart from our own. In short, we are responsible and accountable to what will happen to them. That’s huge responsibility.

While we can set aside a portion of our net income for the needs of the family monthly, there is this level of uncertainty about how long we will still stay alive in this planet. If we are breadwinners of our own family –  a retired father with meager pension, a mother who has been a housewife ever since,  young siblings with one sister having a 6-month old son, our favorite and only nephew – what may happen to them should the Lord take us away early? Is the money we saved in the bank be enough to cover their day to day needs? maybe, but until which month or year? A 6 x monthly expense will not be enough for them to sustain their monthly needs after the 6th month. What if our company doesn’t provide life insurance coverage? good if it does. But what if when we died after we have resigned a month earlier and our next employer doesn’t have that? Would we be willing to stick to that company whatever it takes including us being asked to over-work or be forced to leave without pay because the business is bad and they need people to stop working for the time being? We may have considered investing in stocks  or mutual funds or UITFs and that’s good. But would the invested money be guaranteed to be enough at the time we are suddenly taken out of the picture?

Insurance protection is really a form of risk management wherein our loved ones are not left out of the cold should anything happen to us. This will give time for any of our beneficiaries to find means to support on their own, if the protection is not enough.

Nowadays, a 32-year old can be diagnosed with stage 4 terminal lung cancer even if he does not smoke. We are in a ear where canned goods are becoming the source of multiple diseases that could kill us. The rise in petty crimes can cause our death either by us becoming a victim or just an unintended victim in a crossfire. Or simply be a victim of an unfortunate and fatal accident.

Life is full of uncertainties, and because of that, there must be that sense of urgency in us to find means of protecting the future of our family. We cannot allow to leave our family suffering if they depend on us a lot. And protecting them need not be very uncomfortable on us who buy that policy.

As I am a financial advisor from Pru Life UK, allow me to present an example of a protection plan that is geared to allow our beneficiaries not just the Sum Assured or the insurance amount they can get when the claim after we die but can also give them whatever the amount of invested money is in the Fund Value at the time of death. So by paying a monthly premium, and after insurance charges have been paid (normally after the 3rd year), the yearly premium is likewise the investment amount in a fund that could potentially grow by 10%. The growth is not guaranteed as it will depend on the fund where you elect to be the investment medium.

My example will be for a guy, 32 years of age. He is paying a monthly premium of 3,000 or 36,000 per year.

Nowadays, what is 3,000 for us? When we eat at a restaurant, do we spend 300-400? We take a cab that will bill us 150 for a short trip. We buy stuff that will cost about 1000. We may be watching movies per week or every other week.  If we total them, would it be near 3,000 already? Can we stop for a moment and reflect about how far a 3,000 can go about protecting our family? If we can spare 3,000 from our 8,000 pesos monthly savings, would it be a nice opportunity for our family to be potentially receiving 3M when we die?

Allow me to give an EXAMPLE:

Guy 1, 45, saves 3,000 in a bank monthly. Unfortunately he got disabled and eventually died  due to complications. If we compute his savings, he had save 468,000. For the sake of simplicity, his family received the full amount. But his family depended on him for the 30,000 monthly expense. Hence, the family will be able to use up the amount in about year and 3 months. Father, mother, or sibling(s) may not be able to find work that will give them 30,000 a month. So they will have to settle for 5,000 per month.

Guy 2, 45, was in that same accident, got fully disabled, and also eventually died. Guy 2, had a Pru Life UK product policy called PruLink Assurance Account Plus and he had been paying 3,000 month premium since age 32. His death was a total loss for the family. But because he had protected their future by creating that wealth at age 32, they were able to make a buffer while father, mother, or sibling(s) all tried to find ways to continue living after his loss. In fact, the buffer is really big that it didn’t make the life of finding other means of income difficult.

Since Guy 2 had a 3,000 monthly premium for PAA+ with Pru Life UK, he was able to prepare the following:

  1. When he got disabled, the insurance company advanced 1M due to his total disability. Hence, the 1M will help the family, which by now had to be frugal with expenses and has brought down monthly expense to 20,000, potentially 50 months or 4 years.  With a 1.5M coverage, a balance of .5M remained after the 1M was advanced.
  2. Since Guy 2 eventually died, the balance of .5M was also provided to his family.  This eventually terminated Guy 2’s policy.
  3. Since Guy 2 met an accident and his policy included a rider that will give 1M for death due to disability and/or accident, the family also received another 1M.
  4. Since Guy 2 has been paying for his policy since age 32, his fund value has grown that it reached 552,422.50. That too, the family received.

That’s insurance protection. While we never want to be taken away early, but we must protect our loved ones and their welfare on any eventuality.  That’s our last gift for them.

The family of Guy 2 received 1.5M + 1M + 552,422.50 potentially from the fund value at age 45 (assuming also this was the actual Fund Value at the time of death). This is based on a 10% projected growth. This is not guaranteed as the performance of the chosen fund will give the actual growth rate.

Had Guy 2 lived and reached the age of 65 before dying due to accident, his loved ones would have potentially received a death benefit total of: 6, 314,638.54

Likewise, since Guy 2 had been adding premiums of 3,000 from year 1 to 10 without missing a premium pay, Pru Life UK gave him a bonus of 10% of his yearly premium from year 11 to 20.  That’s 100% of yearly premium given for free by the insurance company by year 20.

For the reader, if you wish to know more how you can also protect your loved ones, write me a letter at

I would be happy to assist you with planning and creating wealth for them from the time you buy a PAA+ policy with Pru Life UK.