Gotcha!

Here’s a snappy secret from publishers. Use words like “how to get rich in ten simple steps” or “secrets of wealthy people” in title and promotional materials. Never use “retirement.” Malayo sa bituka. (Far from the gut).

Like everyone else on this planet, Filipinos don’t like to think about the future. But think of this: it wasn’t too long ago when Bill Gates was a young upstart who started Microsoft in his garage at 17 years old. Yesterday, he clocked in his last full day of work at the office after 33 years of building that icon of technology.
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State-owned Landbank of the Philippines’s sweet deal for OFWs launched yesterday is described in this article.

An annual interest of 7.0% and a maturity of 5.5 years is not bad for anyone’s portfolio. Experts always tout diversification and to do that properly, the risky part should not overshadow the secure and boring part. How to cut the cake exactly depends on personal risk appetites, of course.

It is a fact of life that stocks are sexy and deposits and bonds are boring. ☺ Most of the times, boring is good.
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Johnny Noe Ravalo explains this in figures, already doing the math for us. hoping nobody gets him wrong.

To some extent, we can still play a catch-up game in planning for retirement, he says. But there’s a point where it becomes too late.

Read his article here. Below is an excerpt and the graphs he prepared. Click on them for a bigger, clearer version. Enjoy reading!

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(Photo from AFP)

Johnny Noe Ravalo continues his online bestseller last week on preparing for retirement in the Philippines. This made me wonder whether retirees are ready for rising medical and travel costs:

Food and utility bills will be the baseline but they will not figure prominently in the total cost scheme. What you need to be very realistic about is medical expenses. Maintenance medicine and periodic check ups are never cheap.

If diabetes runs in the family, for example, you will have to dish out over P5,000 in monthly medicines plus the annual check up which can run up to P10,000 if all the laboratory tests are included. That’s P70,000 per year — minimum — for an ailment that has no cure and has to be paid when you are no longer enjoying both a regular salary or your company’s medical plan. Complications also add to the expenses. Any hospitalization will set you back in the tens of thousands for as short as a day or two of confinement. You need to estimate a portion for monthly medical maintenance plus set aside a lump sum for the “just in case” part.

Some of MoneySmart’s regular readers are in their 30s but are already planning for their retirement. A lot of you are working and living abroad and are planning to come home for your golden years. It’s relatively easy to figure out the lifestyle part for me, personally, but medical cost is very much a puzzle. How do you know what medical problems you will have to prepare for, huh? (trying out a sultry, vampy voice) Can’t I just be young forevah?

Noet brings me back to earth. Okay, okay, the medical cost fund should be extra, extra fat. And since every Pinoy is a tireless “lakwatsera”, the travel fund should be, too. We’re all dreaming of visiting every beach in our 7,000 plus islands so we gotta raise the travel fund too what with the rising cost of oil and all. Sigh. There goes the upgrade to Macbook Air.

No matter what we may all think about crazy Filipino drivers and crooked public officials, a lot of Filipinos who have lived most of their productive lives abroad still believe “there’s no place like home.”

The ultimate dream still seems to be coming home to the land of smiles. But how to prepare for it? That’s a common question we receive here at INQUIRER.net.

Should you invest here in the Philippines or in the country where you live? Which will give you better returns in the end? Should you convert your money into pesos now and invest here in the country or keep them in dollars/euros/yen etc. and convert when you are about to retire?

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(Sleeping lizards don’t go anywhere, but they don’t grow too. So like putting all of one’s savings in low interest-bearing savings deposits. File photo from Agence France Presse)

I picked up several things from Noet Ravalo’s column today:

For those that still offer some interest, the lowest that I have seen is a rate of about one-tenth of one percent and this is still taxable at 20 percent withholding tax. At this rate, your monthly return for an outstanding balance of P50,000 comes out roughly to about P3.33 — an amount small enough to miss out among your transactions but big enough to be a nuisance if you try to balance your books before you get your printed statements. The other way of looking at this interest rate is that you have to set aside and keep untouched a balance of P400,000 in your account so that your net interest affords you a small-sized serving of French fries from a popular burger franchise every month.

I would tell the bank to shove the French fries up his nose (no funny words here please), but that’s just me. The owners of more than P3 trillion of deposits out there are still parking all of their money in bank deposits.

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Check out my article on the Philippine results of an 11-country Citibank survey on financial intelligence. The results were very revealing, and quantified in figures what we all suspected.

Here’s the link: 8 out of 10 Filipinos worry about bleak retirement–survey

And here’s an excerpt:

MANILA, Philippines – Eight out of ten working, middle class Filipinos believe they face a bleak retirement and more than half expect to be supported by their children in their old age, results of a Citibank survey showed.

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If you haven’t received your Christmas bonus yet, you probably will in the next weeks. You’ll probably be getting anywhere from P50,000 to P100,000. How are you going to spend it? Do you have a good tip on where to put that kind of money?

We gotta plan, or else even P100,000 can vanish without a trace.

Hot money, hot Pinoy seafarers (were you thinking of hot Pinoy hunks? Tsk tsk), hot business opportunities in medical tourism – everything’s hot today except the weather. We are expecting another typhoon…sigh. It’s always like that before or after my birthday. EVER since I was born 21 years ago. (Did you just do a double take?)

The Philippines attracted $274 million net “hot money” last October, the Philippine Daily Inquirer reported today. That’s quite a huge jump from $35.8 million in September, and totally deserves a blog post.

In this post,  I wrote that hot money refers to short-term investments by foreign investors in local stocks, bonds and money market instruments. While they influence the local financial market, we need to remember that they are very speculative and can leave our shores at the touch of a button. The long-term growth of our stock and bond markets, in fact, will depend on whether domestic investors (that’s you, me and our OFW friends and relatives abroad) will begin to invest in the domestic market. Policy-makers hope a wider base of domestic investors will not be as jumpy as foreigners.

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When I was in my early 20s, I longed to retire at 30. Now that I have reached that marvelous age (plus several years), I realize I need more time. Besides, I can’t imagine not doing what I’m doing now. I would probably be lost without my writing that constantly defines and affirms every day who I am and what are the little things I can do to leave my little mark in this world.

A retirement survey by HSBC called The Future of Retirement in fact showed that many Filipinos would like to work even after they retire.

Boy Javier, an advertising executive, on the other hand, decided to get off the train early. And he is having the time of his life, according to this MoneySense article in the personal finance section of INQUIRER.net.

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