Where to invest to insure a secure future

Wide diversification is only required when investors do not understand what they are doing. — Warren Buffett

Don’t spend your life working for money; save money and hire it to work for you. — Dr. John Demartini

A penny saved is a penny earned. — Benjamin Franklin

Spend money wisely, be resourceful, work harder, continue to invest in the economy but also be conservative and seek advice from the experts. Fernando Fernandez, the Argentinian chairman and CEO of Unilever Philippines, told me that the best way to respond to economic crisis is to work harder and satisfy customers better than ever.

Thanks to all the readers who e-mailed their questions about money matters, investments and savings in response to our linking up with the topnotch financial experts from the Philippines’ largest homegrown life insurance giant, Insular Life. If you wish to keep your names confidential, we can do so, but feel free to send in your queries. These challenging times should not stop us from planning for financial independence; in fact, crisis often opens up numerous unparalleled opportunities for tremendous success and even wealth.

Thanks to the Rotary Club (Makati Buendia) for inviting me to speak. Thank you also to reader Manuel Cantos for inviting me to share our ideas on “entrepreneurial opportunities in these times of economic crisis” on Feb. 28, Saturday, at 10 a.m. To follow as the next speaker is dean Dr. Ed Morato at Ka Entrep Micro and Small Entrepreneurs Organization of the Philippines and the Center for Small Enterpreneurs. The venue is La Consolacion College Manila on Mendiola beside Malacañang Palace, coincidentally where I have been invited to teach history, advertising and literature classes since last year. The site was offered by a dean who is chairman of the consortium of business schools in the Recto-Mendiola area, which includes San Beda, Holy Spirit College and Centro Escolar University. Though the audience shall be mainly the entrepreneurs as well as business students of Mendiola, the public is also welcome to join.

Here are two readers who e-mailed their questions, and the replies from the financial experts of Insular Life:

I was wondering, what advice can you give a 27-year-old professional working in sales in a consumer goods company on where I can invest my disposable income? Right now I’m saving around 20 to 30 percent of my monthly income in the bank, and I’m really looking at where I can grow it for the future. I’m currently based in Cavite but my company’s headquarters is in Makati City. I’m planning to buy a house or condo unit in the near future within Metro Manila so I can stop renting out since I’m originally from Cotabato/Davao.

I commend you for thinking beyond ordinary savings. A real estate investment is a good option and saving up for that dream home/condo requires a long-term investment view. How much time are you giving yourself to build the nest egg necessary to acquire this real estate investment? If you are looking at a 10-year horizon, I recommend investing your money in Insular Life’s Wealth Builder. The Wealth Builder is a variable unit-linked product that provides life protection and allows you access to the bonds and equities market. Depending on your appetite for risk (if you aim for high returns, we recommend equity placements but if you’re the type who wants to play it safer, the fixed income fund may be right for you). Stocks are grossly discounted nowadays and you may just be able to maximize your returns over a 10-year investment horizon, during which we could expect financial markets to recover and/or resume hitting peak levels.

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What insurance policy is recommended in these uncertain financial times to ensure the future of families with children who are still studying? — From a 41-year-old business owner

Thank you for this question. We noted that you have children who are still studying. What are their ages? As a parent with children still going to school, you should be concerned about the fact that the biggest risk your children face is the loss of a parent’s income while they are still studying. This is the reason why life insurance is absolutely essential, and the appropriate policy is one that provides the greatest amount of coverage for the premium that the parent can afford to pay.

Investment-linked insurance products, or those that attract clients because of potential high returns, are not appropriate for purposes of this nature. When one needs to have sure funds available in case of untimely death, whole life or term life insurance is most appropriate to ensure the continuation of income against the most tragic uncertainties in life. For this reason, we would recommend that you consider Insular Life’s I-Assure. This is a limited-pay product payable in five or 10 short years, but provides lifetime protection, thereby ensuring you that whatever happens, your family is well taken care of.

If you already have a life insurance policy similar to I-Assure, that is very good. The next step would be to set up an education funding endowment policy for your children to make sure that no matter what happens, they will have financial resources for a good education. Insular Life’s I-Excel provides guaranteed cash for education-related expenses like college tuition fees and other non-tuition expenses. It also provides insurance protection for the child and the payer. Through this feature, you are assured that when the payer passes away, the child has the financial means to complete secondary education and pursue college.

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For details on the products mentioned in this column, visit the Insular Life website at www.insular.com.ph or e-mail brand@mx.insular.com.ph. You can also call Insular Life’s Brand Marketing at 771-1818 loc. 1310 and 1311.

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Thanks for your letters, all will be answered. Comments or suggestions are welcome at willsoonflourish@gmail.com or my Facebook account.