Kabalikat Presmat 1

Usap Tayo Financial Planning
Name of Speaker
Philam Life confidential and proprietary information. Not for distribution.

Why is FINANCIAL PLANNING necessary?

This man won Php 14 Million
Bought a house
Drove a brand new SUV
Gave money ranging from
Php 1,000 to Php 850,000 to
relatives and friends
Lost Php 14 Million in 3 months
Owed around Php 500, 000

to various people
Dionie Reyes

Its all about proper financial planning.
Financial Planning
is the process of determining how

an individual can meet life goals
through proper management of
financial resources.
-CFP Board of Ethics
Being financially secure and

prosperous is not about how much
money you have. Its about how much
money you keep.

01 GOAL SETTING

Write your SMART Goals
GOALS AMOUNT TERM
Pay off Debts P100,000 Short 6 months
Buy a House in Avida P5,000,000 Medium 2016
College Education in P1,000,000 Long - 2025

UP
Farm Business P800,000 Long - 2020
Retirement Fund P7,000,000 Long - 2030

02 Know your current financial
status

Compute for your SALN
Statement of Assets, Liabilities and Net

Worth
ASSETS LIABILITIES
Liquid Assets Current Liabilities
Cash 50,000 Credit Card Balance 8,000
Savings Account 150,000 Personal Loan 100,000
Total Liquid Assets P200,000 Total Current Liabilities P108,000
Household Assets Long-term Liabilities
Home 2,800,000 Mortgage 2,000,000
Furniture 80,000
Total Household Assets P2,880,000 Total Long-term Liabilities 2,000,000
Real Estate & Investment Assets
Life Insurance 100,000
Land & Apartment 2,500,000
Total Investment Assets P1,100,000
Total Assets P5,680,000 Total Liabilities P2,108,000
Net Worth P3,572,000

Prepare a Cash Flow Statement
Dela Cruz Family Income Statement for

December 2013
INCOME AMOUNT EXPENSES AMOUNT
Salary Husband P100,000 Food & Groceries P15,000
Salary Wife P18,000 Utilities P10,000
Rental Income P10,000 Transportation P10,000
Interest Income P2,000 Clothing P3,000
Allowance, School bus P10,000
Medicines, Check-ups P2,000
Housekeeper P3,000
Loan Payments P22,000
Recreation P5,000
TOTAL INCOME P130,000 TOTAL EXPENSES P88,000
NET INCOME FOR DECEMBER P42,000

Advice Ensure a good financial position.
Stay out of unnecessary debt.
Good debt Unnecessary debt

Helps you manage cash Lets you buy things you
better, run a business dont really need
What are possible sources of unnecessary debt?
Salary
Credit Card or Cash Loan
Unpaid credit card debt can grow as high as 36% per year.

Save before you spend.
Savings
Cash you dont spend for day-to-day needs or cash you set aside for
emergency purposes and financial goals that are not immediate
Income Expenses = Savings

This is the typical savings mentality.

Income Savings = Expenses

This is the IDEAL savings mentality.
Budget for regular savings.

Have a target: 10% to 20% of monthly income depending
on your goals

03 Prioritize goals

Financial Building Blocks
ESTATE Wealth Transfer

PLANNING
INVESTMENT &
Wealth BUSINESS
Accumulation EDUCATION, HOME &
RETIREMENT
Wealth
PROTECTION FINANCIAL
Preservation
BUILDING
EMERGENCY FUND
BLOCKS
04 Find investment vehicles to match your
goals and risk profile

Level 1: Wealth Preservation
Wealth Transfer ESTATE PLANNING

Insurance and Trust Fund
INVESTMENT & BUSINESS

Insurance-Investment, Mutual Funds, Business
Loan
Wealth
Accumulation EDUCATION, HOME & RETIREMENT
Education & Retirement Programs, Home Loan
Wealth PROTECTION
Preservation Life, Health and Property Insurance FINANCIAL
BUILDING
EMERGENCY FUND
Cash, Savings and Time Deposit Accounts
BLOCKS
Secure your needs and dreams.
You need your income to finance your needs and reach your dreams.
Age Age Age

23 35 60
Man at Work Man and Money at Work Money at Work
Ideal Financial Stages
Secure your income from lifes biggest risks.

Health coverage
Risk of getting
Cash benefits as income replacement
sick/injured HMO or health insurance plans
Cash benefits from long-term

Risk of living savings or investments
too long Offers passive income
Use for long-term goals like retirement or education
Risk of dying Life insurance coverage

too soon Income protection
Coverage based on critical years
Life insurance today can prepare you

for all of lifes biggest risks.

Retirement
Dreams
Own business
New car
New house
Travel
College education
Food Basic
Tuition
Fare/gas Needs
Bills
Rent/mortgage
Emergency fund
Life insurance is your foundation.

Computing for lifestyle continuation fund
Annual Income P600,000
Critical Years 10
Annual Income x Critical P6,000,000

Years
Existing insurance P1,000,000
coverage
Additional coverage to bridge the gap P5M

Level 2: Wealth Accumulation


Wealth Loan
Accumulation
EDUCATION, HOME & RETIREMENT
Wealth PROTECTION FINANCIAL

Preservation Life, Health and Property Insurance
BUILDING
EMERGENCY FUND
Cash, Savings and Time Deposit Accounts BLOCKS
Need for EDUCATION Funding
No. 1 expense of parents
5-15% increase in tuition fees
K to 12, 2 more years in school
Can you afford the rising cost of education?
As parents, you need to plan for your childrens education

Estimated Tuition Fees for 2013-2014
UNIVERSITY TERMS TUITION UNIVERSITY TERMS TUITION
Adamson University 2 96,000 Miriam College 2 110,000

AMA Computer University 3 102,000 National University 2 80,000
Asia Pacific College 3 150,000 Philippine Christian University 2 70,000
Assumption College 2 120,000 Philippine Women's University 3 81,000
Ateneo de Manila University 2 180,000 San Beda College 2 128,000
Centro Escolar University 2 80,000 San Sebastian College 2 92,000
Colegio de San Juan de St. Paul College (Quezon
Letran 2 94,000 City) 2 96,000
College of the Holy Spirit 2 94,000 St. Scholastica's College 2 120,000
De La Salle University 3 225,000 Trinity University of Asia 2 72,000
Emilio Aguinaldo College 2 82,000 University of Asia & the Pacific 2 170,000
Far Eastern University 2 100,000 University of Sto. Tomas 2 96,000
La Consolacion College 2 90,000 University of the East 2 82,000
Lyceum of the Philippines 2 78,000 University of the Philippines 2 40,000
Mapua Institute of
Technology 4 144,000
Philam Life confidential and proprietary information. Not for distribution. Source: www.finduniversity.ph
Other Expenses for College
ITEMS MONTHLY ANNUAL

Dorm P5,000 P50,000
Transportation P2,500 P25,000
Mobile P1,000 P10,000
Food P5,000 P50,000
Laptop P40,000
TOTAL - ANNUAL P175,000

HOW MUCH WOULD COLLEGE EDUCATION COST IN THE
FUTURE?
Current Tuition Fee at P47,600 per semester
Current Estimated Semestral TOTAL Tuition Fees
Age Tuition Fees (1st Yr) (4-Year Course)
0 326,440 3,123,919
1 291,464 2,789,213
2 260,536 2,490,369
3 232,621 2,223,544
4 207,697 1,985,308
5 185,444 1,772,596
6 165,575 1,582,675
7 147,835 1,413,103
8 131,996 1,261,699
9 117,853 1,126,517
10 105,226 1,005,819

HOW MUCH WOULD COLLEGE EDUCATION COST IN THE
FUTURE?
Current Tuition Fee at P92,501 per semester
Current Estimated Semestral TOTAL Tuition Fees

Age Tuition Fees (1st Yr) (4-Year Course)
0 618,518 5,912,216
1 552,248 5,278,764
2 493,079 4,713,182
3 440,250 4,208,198
4 393,080 3,757,320
5 350,965 3,354,750
6 313,361 2,995,313
7 279,790 2,674,386
8 249,810 2,387,845
9 223,045 2,132,005
10 199,150 1,903,575
Need for RETIREMENT Funding
Enjoy retirement, 23% continue

2% to work, 75% dependent on
relatives
Average monthly SSS

P2,553 pension;
Highest is P14,971
How much is the value of P15,000 20 or 30 years from now?

How long will your company retirement benefit last?
You are responsible for setting up your own retirement fund, no one else.

INVESTMENT Defined
A COMMITMENT of FUNDS made in expectation of a POSITIVE RATE of

RETURN
Which are investments?

Investment Concept: INFLATION
Rise in the general level of price of goods and services in an economy

over a period of time.
Commodities 1988 1995 2005 2013
1 kg refined white sugar P13.10 P23.04 P29.10 P45.00
12 oz cola drink P2.88 P6.03 P9.92 P15.00
1 liter diesel P7.00 P7.00 P28.36 P45.00
1 liter premium gasoline P9.07 P9.07 P31.54 P58.00
Reference: Price Monitoring Charts, PCDSPO

Risk-Return Trade-off
Which investment will you go with?
or
5.0% p.a. 25.0% p.a.

Commercial Paper issued by Post dated checks issued by
Ayala Corp Aman Futures Grp
You may not have felt sure about getting
25% return from Aman Futures Group
Risk-Return Trade-off
What is risk?
The chance that actual

investment return will differ
from the expected return.
Risk-return trade-off:
The higher the risk, the higher
the return

Types of Investment (Financial) Instruments
Savings account
Financial vehicle offered by banks; Where the bank
keeps your cash intact
Rule of thumb: Have at least 3 to 6 months worth of your

monthly living expenses in the bank as emergency fund
Bank Advantage: Liquidity (convert to cash), convenience,

ease of use , low risk, minimum level of guarantee
Bank Disadvantage: Returns may be too low for long-term

goals (less than 1% per year)

Types of Investment (Financial) Instruments
There are generally two types of financial instruments:
Fixed income
instruments Equities
Money you lend to an issuer (can Ownership of a company that is

be the government or a big bought by you
company) Variable returns; Can vary with
Fixed returns market performance
Somewhat guaranteed
Examples: Stocks
Examples: Bonds, fixed income
securities

Advice Match your goals with your financial vehicles.
There are different kinds of financial instruments.
Type Liquidity Term Returns

Cash Equivalents High Short 1-2%
(Savings, Time Deposit)
Bonds Low - Medium Medium - Long 1-5%
Stocks Low - Medium Medium - Long varies
UITF/Mutual Funds Medium Medium - Long 8-17%
Unit-Linked Plans Medium Long 8-17%
What you will earn depends on the type of investment you choose.
Long-term instruments can offer higher returns.

Advice Do not procrastinate. Start now.
The dream: Phillip and Steve want to retire when they turn 60.
Both invest in an investment fund

earning 8% per year
30 60 Php 3.7 Million

years years
old Phillip old
Set aside Php 30,000 per year
45 60 Php 1.8 Million

years
years old
old Steve
Set aside Php 60,000 per year
They chose the same investment vehicle with the same annual return.
But the one who started immediately earned twice as much.
Advice Stay invested for the long term.
Lets look at how the two investors reacted when the market did not
perform well and went down by 47%.
December 2012:
570.00
Phillip stayed and grew his
520.00
investment to Php 1.75 Million
470.00
October 2007:
420.00
Phillip and Steve
370.00
invested
Php 1 Million October 2008:
320.00
270.00
Steve pulled out
220.00
Php 530,000
170.00
120.00
Phillip stayed committed to his long-term investment.

Advice Stay invested for the long term.
Short-Term Outlook
Long-Term Outlook
Investment performance can go up and down

depending on market conditions.
But over the long-term, it generally goes up.
Advice Diversify your investments.
Not putting all your eggs in one basket or type of asset
Save 50,000 per bank for 20 years Invest 50,000 per asset for 20 years
Bank Time Deposit Amount after Asset Ave. Amount
Interest Rate 20 yrs Annual After 20
Return yrs
BPI 0.75% 58,059.51 ATM 0.75% 56,101
BDO 0.625% 56,635.39 Time Deposit 0.75% 58,135
Metrobank 0.625% 56,635.39 Philam Bond Fund 6.00% 151,279
China Bank 0.875% 59,516.99 Blue Chip Stock 10.00% 305,795
RCBC 0.625% 56,635.39 Philam Strategic 15.00% 711,588
Growth Fund
Total after 20 yrs Total Fund after 20 yrs
P288,482
Philam Life confidential and proprietary information. Not for distribution. P1,282,898
Level 3: Wealth Transfer

Wealth INVESTMENT & BUSINESS

Accumulation Loan
Wealth EDUCATION, HOME & RETIREMENT

Preservation
PROTECTION FINANCIAL
Life, Health and Property Insurance
BUILDING
EMERGENCY FUND
Cash, Savings and Time Deposit Accounts BLOCKS
Computing for Estate Taxes
Estate Tax is Plus of the

amount
over Worth of Estate P3.5M
200K & lower Exempt Band Over P2M-P5M
Over 200K to - 5% 200k
500K Tax is P135,000
Over 500K to 15,000 8% 500K
2M
Plus 11% of 1.5M
Over 2M to 5M 135,000 11% 2M
Over 5M to 10M 465,000 15% 5M
10M & up 1,215,00 20% 10M
0
Estate Tax P300,000

Payable in Cash
To be filed & paid 6 months after the date of death
If delayed , 20% interest, 25% surcharge
Financial Building Blocks


Loan
Wealth
Accumulation EDUCATION, HOME & RETIREMENT
Wealth PROTECTION
Preservation Life, Health and Property Insurance FINANCIAL
BUILDING
EMERGENCY FUND
Cash, Savings and Time Deposit Accounts
BLOCKS
Financial Planning Steps
Set goals with the family

1
Know your current financial status

2
Prioritize Goals
3
Find investment vehicles to match your goals and your risk

4 profile
Implement your financial plan

5
Evaluate and adjust your plan as needed

6

Philam Life Financial Solutions
ESTATE
Family Provider
PLANNING
Estate Taxes
INVESTMENTS &
MoneyTree
BUSINESS
Investment & Own Business
Insurance-Investment & Business Loan
EDUCATION, HOME &
Bright Future Invest & MoneyWorks
RETIREMENT
Education & Retirement
CASHProvider,
Family FOR EMERGENCIES
Health Invest
Life Insurance
Savings, & Health
Checking & Time Deposit
FINANCIAL
GOALS, NET WORTH &
PROTECTION BUILDING
FINANCIAL
Life, HEALTH
Health, Property Insurance CHECK BLOCKS

Thank you.

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Usap Tayo Financial Planning

Philam Life confidential and proprietary information. Not for distribution.

Philam Life confidential and proprietary information. Not for distribution.

Owed around Php 500, 000

Philam Life confidential and proprietary information. Not for distribution.

is the process of determining how

-CFP Board of Ethics

Being financially secure and

Philam Life confidential and proprietary information. Not for distribution.

Philam Life confidential and proprietary information. Not for distribution.

GOALS AMOUNT TERM

Pay off Debts P100,000 Short 6 months

Buy a House in Avida P5,000,000 Medium 2016

College Education in P1,000,000 Long - 2025

Retirement Fund P7,000,000 Long - 2030

Philam Life confidential and proprietary information. Not for distribution.

Philam Life confidential and proprietary information. Not for distribution.

Statement of Assets, Liabilities and Net

Net Worth P3,572,000

Philam Life confidential and proprietary information. Not for distribution.

Dela Cruz Family Income Statement for

NET INCOME FOR DECEMBER P42,000

Philam Life confidential and proprietary information. Not for distribution.

Stay out of unnecessary debt.

Good debt Unnecessary debt

What are possible sources of unnecessary debt?

Philam Life confidential and proprietary information. Not for distribution.

Save before you spend.

Income Expenses = Savings

Philam Life confidential and proprietary information. Not for distribution.

Income Savings = Expenses

Budget for regular savings.

Philam Life confidential and proprietary information. Not for distribution.

Philam Life confidential and proprietary information. Not for distribution.

ESTATE Wealth Transfer

Philam Life confidential and proprietary information. Not for distribution.

Wealth Transfer ESTATE PLANNING

INVESTMENT & BUSINESS

Age Age Age

Man at Work Man and Money at Work Money at Work

Ideal Financial Stages

Secure your income from lifes biggest risks.

Philam Life confidential and proprietary information. Not for distribution.

Cash benefits from long-term

Risk of dying Life insurance coverage

Life insurance today can prepare you

Philam Life confidential and proprietary information. Not for distribution.

Life insurance is your foundation.

Annual Income P600,000

Annual Income x Critical P6,000,000

Additional coverage to bridge the gap P5M

Philam Life confidential and proprietary information. Not for distribution.

Wealth Transfer ESTATE PLANNING

INVESTMENT & BUSINESS

Wealth PROTECTION FINANCIAL

No. 1 expense of parents

5-15% increase in tuition fees

K to 12, 2 more years in school

Can you afford the rising cost of education?

As parents, you need to plan for your childrens education

Philam Life confidential and proprietary information. Not for distribution.

UNIVERSITY TERMS TUITION UNIVERSITY TERMS TUITION

Adamson University 2 96,000 Miriam College 2 110,000