If you are from Bacolod, don’t miss this life-changing event!

Entrepreneurship, Personal Finance and Personal Excellence from 3 Great Minds! Chinkee Tan, Randell Tiongson and Francis Kong.

For an unbelievable low cost of only P250 or P100 if you are a student, you can be part of this once in a lifetime event in Bacolod.

For inquiries, please get in touch with Paul Acha at 09228244896 or 09277798866.

… con’t.

2. Gathering client data, including goals.

The financial planner should ask for information about your financial situation. You and the planner should mutually define your personal and financial goals, understand your time frame for results and discuss, if relevant, how you feel about risk. The financial planner should gather all the necessary documents before giving you the advice you need.

3. Analyzing and evaluating your financial status.

The financial planner should analyze your information to assess your current situation and determine what you must do to meet your goals. Depending on what services you have asked for, this could include analyzing your assets, liabilities and cash flow, current insurance coverage, investments or tax strategies.

4. Developing and presenting financial planning recommendations and/or alternatives.

The financial planner should offer financial planning recommendations that address your goals, based on the information you provide. The planner should go over the recommendations with you to help you understand them so that you can make informed decisions. The planner should also listen to your concerns and revise the recommendations as appropriate.

5. Implementing the financial planning recommendations.

You and the planner should agree on how the recommendations will be carried out. The planner may carry out the recommendations or serve as your “coach,” coordinating the whole process with you and other professionals such as attorneys or stockbrokers.

6. Monitoring the financial planning recommendations.

You and the planner should agree on who will monitor your progress towards your goals. If the planner is in charge of the process, she should report to you periodically to review your situation and adjust the recommendations, if needed, as your life changes.

In the Philippines, the leading organization for Financial Planner certification is probably the Registered Financial Planner Institute, a local chapter from Ohio, U.S.A. There are about  400+ individuals who have taken the program since its inception in 2005 in the Philippines. The program boasts of several comprehensive programs on Financial Planning, Investment Planning, Insurance Planning, Estate Planning and more. The local chapter also boasts of several well respected and credentialed moderators who are University Professors, Columnists, Best-Selling Authors, Corporate Executives, etc.

It is always best to check out your financial planner. Is he credible? Does he have the credentials? Does he have the necessary experience? And more importantly, does he have the right character as trust is the most important foundation in a planner-client relationship.

Be careful in choosing a financial planner but don’t dilly-dally in getting one, it really is a wise decision to make.

“The wisdom of the prudent is to give thought to their ways, but the folly of fools is deception.” – Proverbs 14:8, NIV

Appeared at the Business Mirror, 02.08.2010

You often hear the word “diversification” when investments are discussed. Diversification is important; in fact, it is considered one of the most effective risk-management tools, minimizing investment losses.

What does Investopedia (a favorite online site for investment stuff) say about diversification?

“A risk-management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique contends that a portfolio of different kinds of investments will, on average, yield higher returns and pose a lower risk than any individual investment found within the portfolio.

“Diversification strives to smooth out unsystematic risk events in a portfolio so that the positive performance of some investments will neutralize the negative performance of others. Therefore, the benefits of diversification will hold only if the securities in the portfolio are not perfectly correlated.”

Diversification is often misunderstood and its execution has always been a mystery to many. To many of us, diversification is just putting your money in different banks or buying different pieces of property in different areas. However, diversification is much more than that and here are some ways to diversify:

1)                  By asset class—Cash or near cash (savings or checking accounts, time deposits, treasury bills or money market accounts); fixed income (government securities, corporate bonds); equities (stocks); real estate; collectibles (paintings, jewelry, etc.); enterprise (business)

2)                  By time frame—short term (about a year); medium term (up to about five to seven years); long term (over seven years)

3)                  By risk—conservative, moderate, high or speculative

4)                  By liquidity—highly liquid vs. nonliquid

Above are just a few ways to consider classifying your assets/investments regarding diversification. Here are some diversification tips: vary your asset classes; combine short-, medium- and long-term investments; combine highly liquid and nonliquid assets.

By practicing diversification, you are also practicing sound risk management. A properly constructed diversification strategy will minimize the risks of your investments and, at the same time, give you better yields as compared with taking an ultra-conservative position. With a good diversified portfolio, the risk of totally wiping out your wealth is highly unlikely, but at the same time, allow you to experience better growth which will be more than inflation.

But diversification also has its downside. Sometimes, a portfolio that is too diversified can also prevent you from earning properly, as the volatility of many of the players in your portfolio can cancel each other. However, having a very risk-averse position can be just as dangerous as taking a risky option, as inflation can erode the value of your wealth. The more prudent option then would be to learn diversification.

Do not be too afraid to try out diversification, it is not rocket science. Come up with a diversified program that is consistent with your investment objective, risk tolerance and time frame and you are on the road to achieving financial peace.

I really like the way the Bible talks about diversification. Yes, the Bible is a good source of investment wisdom and here’s proof: “But divide your investments among many places, for you do not know what risks might lie ahead.”—Ecclesiastes 11:2 (New Living Translation)

Since the Bible advocates diversification, I am assured that it’s a great idea.

First ever UAP business themed convention.

For inquiries, please send an email to jcignacio.magalong@gmail.com

Catch the debut of my column “NO NONSENSE” at Money Sense Magazine, Jan-Feb issue.

Please grab a copy of the country’s only Personal Finance magazine, it’s truly worth the investment.

Thank you Lord for another blessing.

… conclusion.

For some reason, and despite the obvious importance of taxes in the daily operation of the state, it has exempted life-insurance proceeds from the ambit of tax laws, save for some exceptions, of course.

Our Tax Code recognizes the role and importance of insurance to the family of the person insured. It also exempts insurance proceeds from garnishment, attachment and execution of judgment-creditors. For those who have accumulated a hefty estate, life insurance can do wonders for them.

Most, if not all, estates left and brought into the inventory of the Bureau of Internal Revenue (BIR) are comprised of illiquid assets. If the typical Filipino would put it, the heirs are already in their advanced ages before they step into the succession, and the grateful recipients are not individually willing to shell out money for the settlement of estate tax and money claims of creditors. Others do not simply have the means.

In one case, the Supreme Court sustained the BIR when it assessed and collected the entire tax due from one of the heirs among several even if it means that all he had inherited would be dissipated in the process.

This need not happen unless we forget that life-insurance proceeds can be used to pay the taxes and claims and, in the process, keep the assets intact. A person can also use insurance proceeds to provide for his illegitimate descendant who may be left out of any shares in his estate. An illegitimate child gets the equivalent of half of the share of a legitimate child, and that share will be taken from the free portion, if any.

In other words, life insurance can promote “equitable” sharing. Most important, for a person with modest earnings, life insurance can provide an estate as big as his millionaire neighbor who did not believe in his insurance, the latter probably has very little or none at all.

Life insurance is just one of the tools for your estate plan. To emphasize its importance, Black’s Law defined estate planning as “the preparation for the distribution and management of a person’s estate at death through the use of wills, trusts, INSURANCE POLICIES and other arrangements, especially to reduce estate-tax liabilities.”

Do not just plan on the aspect of accumulation, plan for its conservation and distribution, for in the latter is where your absence will be.

Life insurance is not the only way to go about estate planning, it is just a tool among many. However, life insurance is a very powerful and cost-effective tool.

“A good man leaves an inheritance for his children’s children, but a sinner’s wealth is stored up for the righteous.” – Proverbs 13:22, NIV

…con’t.

Christianity has modernized our mystic concept and infused it into our laws. “Birth determines [legal] personality. Death extinguishes it.” You, as the owner of the estate, may be about to leave this mundane world, but your legacy may be passed on to your heirs and for generations to come, and that’s what makes you immortal.

People have been looking at ways on how to distribute wealth to their heirs—hence, estate planning. This is a concept that is looked at as a design, a scheme, to help a person avoid the impact of heavy taxes on a person’s “privilege” of accumulating wealth and passing it on to his heirs.

Yes, the Tax Code will tell you that what you have is a mere privilege. Settling taxes first is the operative act before the family can acquire the properties left to them.

Is inheriting automatic? How automatic is “automatic”? my beloved professor so loves to ask.

Technically so, inheriting your parent’s or grandparent’s properties is not simply “automatic” even when the law says “by operation of law.”

Estate planning is much more than simply avoiding taxes. Tax is not always the main consideration when one looks at estate planning.  This writer believes that estate planning is all about supervision, conservation and distribution. Tax avoidance is just an incident of what planning brings to him.

There are many tools for planning one’s estate in the aspect of conservation. Let us, however, focus on the most simple yet effective of them all—that is, life insurance.

Taxes are the lifeblood of the state. Its collection should not be in any way delayed. It cannot be overemphasized how important taxes are. The Supreme Court says in a myriad of cases that if there is doubt on whether or not to grant tax exemption, the doubt shall be resolved against the taxpayer.  Avoiding taxes and grant of exemptions are frowned upon. Nonpayment of taxes even merits a criminal offense. The Tax Code also assesses the taxpayer, “whichever is higher.” … (to be continued)

Catch Part 3…

Many Filipinos are unaware of estate planning. Many would have vague ideas of what estate planning is, and to those who do, they would automatically associate estate planning with inheritance taxes.

For those who do some form of estate planning, we notice that many of them forget one estate-planning tool: life insurance.

I have asked my good friend, a legal expert on financial services, lawyer Carlo Carino, to help me write this article. Carlo is also a recent graduate of the Registered Financial Planner’s program and is one of the featured experts at www.income-tacts.com.

Let’s try to have a more powerful (and creative) introduction for today’s article (wink).

Thousands of years ago, and up to the relative present, man has always thirsted for immortality. This has been his greatest quest. The Egyptian pharaoh believed he can achieve it and, thus, prepared for his next life by bringing his riches, women and faithful servants with him into the grave. Hundreds are taken along with him, his riches and favorite earthly possessions delivered in his grandiose and mythical grave.

Chinese emperors, likewise, held this devotion.  The fountain of youth, however, was nowhere to be found, albeit Madonna, with her youthful looks and stunning dance repertoire, may have found it.

Now, immortality is achieved figuratively through halls of fame or burning a page in the annals of history. Some try to achieve immortality by writing songs, as Barry Manilow puts it. Some write poetry, poems, literature.

To thwart history and immortality, Xerxes of Persia threatened to erase the Spartan king Leonidas by burning every Spartan literature, cutting the tongue of every Greek and sentencing to death any person who spoke his name. That probably never happened because I just saw the movie on HBO.

I also remember a movie starred by Peter O’toole entitled The Wings of Fame. The movie is set in a limbo-like place where those who were famous remain in this limbo until the mortals forget their name. Once forgotten, he or she disappears, never to be seen again.

Fortunately, our law has brought forth a similar solution for man’s quest for immortality: succession.

Our law on succession helps a man achieve immortality through the passage of wealth from one generation to another. A person’s wealth is just like a hero in a movie. It is the same character, but the actors who portray it have been several…

Catch part 2

A great event for Bacolod. For those who are interested, get in touch with Paul Acha at 0922-8244896