Where to invest your excess funds

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Hi All! Long time, no post diri sa business section... Anyways, I would just like to share an article from the Philippine Star under the Business Life... Happy Reading!

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Where to invest your excess funds
BULL MARKET, BULL SHEET By Wilson Lee Flores Updated February 02, 2009 12:00 AM


Anything that we can do to raise personal savings is very much in the interest of this country. — Alan Greenspan

The amount of money you have has got nothing to do with what you earn … People earning a million dollars a year can have no money and people earning $35,000 a year can be quite well off. It’s not what you earn; it’s what you spend. — Paul Clitheroe

The wisdom of life consists in the elimination of nonessentials. — Lin Yutang

This column has been receiving numerous e-mails and letters that this writer always answers, because when I was a student and wrote the late columnist and multi-awarded writer Alfredo Navarro Salanga, he not only replied but he even sent me a book as a gift!

Through the years, not a few Philippine STAR readers have asked, “Where would an aspiring young entrepreneur start if she or he had small capital or had access to loans of not more than P1 million?”

I once asked rags-to-riches billionaire and pioneer industrialist John Gokongwei Jr. of JG Summit Holdings, Cebu Pacific Air and Sun Cellular this question. The founder of Robinsons malls candidly told me he would bring that P1 million to 168 shopping mall in Divisoria, in downtown Manila’s Chinatown district, lease a stall there and be a retailer of consumer goods.

In recent months, when I kept writing that blue-chip Philippine stocks like BDO, Metrobank, SM, PLDT, Ayala and BPI are now incredible bargains due to the global economic turmoil, lots of young people and professionals e-mailed for stock market advice. I referred them to top governors of the Philippine Stock Exchange (PSE) such as Citisecurities founder Edward Lee (no relation to this writer).

Now, among the top questions young people, entrepreneurs and professionals ask is how and where to save their money, which is not yet in the millions of pesos. This writer sought out Jesus Alfonso G. Hofilena, executive vice president and head of the Sales and Marketing Group of the country’s largest Filipino life insurer, Insular Life. Thanks to him for sharing his advice with the following young people and their queries:

Q: I am a 27-year old manager, single, and earning a pretty decent income. So far, my salary goes to buying the latest gadgets and gimmicks. But lately I realize that I should start saving for something whose value will grow over the years. I have around P200,000 that I can use to invest on something. What’s the best investment I can make with it?

JESUS ALFONSO HOFILEñA: The “best investment” you can make with your excess funds will have to be based on your specific goals. What do you want to achieve most when it comes to financial security? The fact that you are still young is a great advantage as well as opportunity for you to really have a financially sound future.

For example, you may not be thinking yet about your eventual retirement from work, but it is never too early to start preparing for your retirement security, knowing that it will be so much costlier by the time you reach that milestone. If you agree, then make certain your P200,000 is kept saved by putting it away through a long-term savings or investment-oriented life insurance policy such as Insular Life’s I-Assure Max, which pays cash benefits every other year for your entire lifetime.

Life insurance can be a more effective way to preserve your cash now and make it grow to a substantial amount because it is designed not to be easily or readily withdrawn like a savings account with ATM access.

Q: My Mom’s friend is a life insurance agent who has been trying to sell me a life insurance policy. I am only 25 years old and single. I feel that at my age, I do not need life insurance yet. But she told me its better buy now while my premiums are still low. When is the best time to buy a life insurance policy? And what kind of policy should I buy at my age?

A: Your mother’s friend is correct in saying that insurance premiums increase with age; hence, the younger a person is when he or she insures, the more affordable the premiums are.

In general, it is always a good time to consider beginning your life insurance estate while you are young and can afford to get started. If so, your main purpose is to be able to waste no time in building up your financial estate. All of us want to acquire wealth during our lifetime. Certain types of wealth like real estate and other tangible assets require a greater cash outlay to purchase, and so they are not readily acquired while young. But life insurance is a form of wealth that is within your reach even now.

If you begin your insurance estate now, you would be maximizing your time to build your entire estate. In five to 10 years you may be able to start buying properties, cars or other tangible possessions. Hence you will only be wealthier, and you would not have wasted your time. It is recommended that you consider Insular Life’s I-Assure among your first purchases because it is a limited-pay insurance product that provides lifetime protection. By owning an I-Assure policy, you are able to own an insurance estate, which may amount to millions at a fraction of the cost.

For more inquiries, call Insular Life’s Brand Marketing Department at 771-1818 loc. 1310 and 1311 or e-mail brand@mx.insular.com.ph or visit the website at INSULAR LIFE - First and Largest Filipino Insurance Company.

[honey2723]

Share ko another article... From the same writer of Philippine Star

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Secrets of wise investing in uncertain times
By Wilson Lee Flores Updated February 01, 2009 12:00 AM


Insular Life chairman and CEO Vicente R. Ayllón: “Our people are always looking for ways to improve what we deliver to our stakeholders.”

Success in investing doesn’t correlate with IQ once you’re above the level of 25. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing. — world’s richest billionaire Warren Buffett

How do we maintain our lifestyles and ensure the most secure future for our families amid the ongoing international financial turmoil engulfing the US, Japan, Europe and other societies? How do we plan our savings and investments for best long-term benefits and safety in these challenging times of both bewildering crises and unparalleled opportunities?

Choose Firms With Track Records, Avoid Shortcuts Or Rackets

This writer recently had a chat with celebrity couple Aga Muhlach and Charlene Gonzales, and they said they prefer to be “financially conservative,” rejecting “show-off extravagance like buying yachts or helicopters if unnecessary.” Charlene pointed out how many foreign firms suffered last year.

How do they safeguard their earnings from showbiz and from endorsing Ponds, Jollibee and other brands? In these times, it is best to be safe than sorry. Aga said, “People shouldn’t be greedy, don’t go for shortcuts to profits, do not be attracted by many rackets offering high-interest but with unreliable records.” Go for credibility, track records.

This writer sought out three top executives of the Philippines’ pioneer and largest Filipino-owned life insurer — the Insular Life Assurance Company, Limited — to discuss how to safeguard and grow money during these tumultuous times. We exchanged views with Insular Life chairman and CEO Vicente R. Ayllón, president and COO Mayo Jose B. Ongsingco and EVP Jesus Alfonso G. Hofileña.

Based on our research, there are a few elite companies like Insular Life which seem recession-proof, companies with proven long histories of upholding old-fashioned core values on integrity, excellence and public service which make them impervious to the various crises throughout Philippine and world history. While banks are traditionally a good option for our savings, life insurance is another excellent option in a different way in the form of “forced savings” which are more long-term in nature.

Established in 1910 and now the third largest life insurer in an industry traditionally led by Western multinationals, conservative and rock-solid Insular Life has P60 billion in assets and P2.2 billion in profits. Like in most businesses, the 80-20 Pareto Principle also applies to the life insurance sector — the top 20 percent life companies, which includes third largest Insular Life, accounts for 80 percent of the total industry premium income.

Perhaps they have for generations stockpiled wisdom and experiences about savvy investing which they could share with us? On the resiliency and longevity of their firm, Vicente Ayllon said: “Insular Life attributes its longevity and robust growth to its millions of policyholders over the years who have kept their trust in the company. It has employed many of the best insurance pioneers, management executives and sales force in the industry. Our people are always looking for ways to improve on what we deliver to our stakeholders.”

Diversify Risks, Invest In Staggered Way, Buy Life Insurance

Mayo Jose B. Ongsingco said: “Insular Life is only one of two life companies that provide total service to the Filipino people with over 60 offices nationwide and not just in the major cities. Insular Life also takes pride on its almost 100 years of continuous service to the Filipino since 1910, surviving two world wars, the Great Depression, two Asian wars, many oil crises and several local calamities, both natural and man-made.”

Ongsingco advised the public on how to safeguard investments: “Investment risks are definitely heightened now because of the global financial crisis. Under any investment environment, however, the key is still diversification. It is always best to have a healthy mix of investments as to asset classes, counterparties, and tenor. It would be good to invest in companies that have good track records, sound fundamentals and which are into products and services that would be considered ‘recession-proof.’ Also, one should consider companies that provide consistent returns to investors in the form of dividends and coupons. Government securities are also considered sound investments given that these are ‘risk-free’ and pay regular coupons.”

How do people save or buy into investments whether insurance, stocks or real estate in these times of flux, what strategies? Ongsingco said: “For prudence, investing should also be done in staggered tranches or on dips as it is quite difficult to catch the market at its bottom. It would also be sensible to keep some liquid assets to avoid having to dispose of one’s holdings at inopportune times when sudden needs for cash arise. During uncertain times like now, life insurance companies offer the best options for the investor due to the strict regulation of the business by the Insurance Commissioner. Strict regulation is needed to ensure the safety of the principal and the long-term nature of the business.”

Ongsingco said: “Life insurance companies also offer the unique advantage of protection in case of the death or permanent disability of the investor. For instance, no other comparable investment can match the returns on a whole life policy if the insured dies after only a few years from the date his policy was issued. To give a simple illustration, a 25-year-old individual buys Insular Life’s I Assure with an insurance coverage of P1 million. After paying his premiums for five years totaling P150,450, he dies. His beneficiaries will get the full amount of P 1 million. Therefore his return on his “investment” is equivalent to 71.6 percent.

Four Tips

No to pessimism, be prudent, prioritize, and ask experts.

According to Jesus Alfonso G. Hofileña, there are four ideal ways to invest wisely or to change our financial situation during these tumultuous times:

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First and foremost, do not give in to pessimism, helplessness or despair. A Tunisian proverb wisely proclaims, “The difference between a desert and a garden is not water; it is man.” The problems and uncertainties in our economic landscape are man-made. Therefore, man is also the key factor in turning the situation around. In Insular Life’s 98 years of weathering the best as well as the worst of times, our experience has taught us that no undesirable situation is insurmountable. One just has to identify the problem, understand it, and be filled with unshakable faith that it can be overcome with proper resolve.

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Second, it pays to be prudent during times like these. Do not ever succumb to the temptation of seeking short-term gain but risking long-term pain. Business decisions must be premised on safeguarding future interests as well. A Harvard Business School study in the Seventies concluded that the most successful men and women in America possessed a distinct long-time perspective in that their present day actions always took into consideration future interests; thus they were well-poised to survive the storm because they suppressed the temptation for instant gratification and were willing to make sacrifices today in exchange for a more secure tomorrow.

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Third, know your priorities. Wealth management is all about making the right choices in the proper order. Provide amply first for basic security needs before going into short-term placements. Then move up to longer-term investments, and finally devote your remaining resources to growth instruments. The effect is to create a financial architecture akin to the Egyptian pyramids wherein the base is strong and enduring. As you move up this asset allocation model, the pyramid narrows, but it assures you that even as you invest at the top of that structure and are thus prepared to take higher financial risks for greater potential returns, even if you lose out in some decisions, you do not endanger your financial foundation. Doing it the other way around, that is, prioritizing the top before the bottom only results in an inverted pyramid that is simply untenable because if you lose too much at the top you do not have enough to recover from below.

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Lastly, do not attempt to do everything by yourself. As every learned specialist knows, it is best to stick to what your training and competence have prepared you to do best. For other things not within your expertise, choose the right professionals and institutions that excel in those fields. Keep your best people or hire them into your organization. Economic rough waters notwithstanding, never stay still and wait for the turbulence to go away. Have a bias for action that moves you forward, even by an inch at a time, and remember there will always be opportunities to be found amid even the toughest adversities.

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