RevMC - Financial Literacy

Why are you an OFW?

N E E D S

D R E A M S

Common Money Mistakes Impulsive Spending

“Brand only” Mentality

Easily persuaded by Sales Strategies

Not Tracking Your Finances

Wants Become Needs

Credit Mismanagement

Building A New Industry

Part 1Steps and Concepts to a

Solid Financial Foundation

1. Increase Cashflow

6 Steps to Financial Security

Cashflow is the movement of money into or out of an account.

How do we increase our Cash Inflow? Earn additional income passive Manage your expenses

o Prioritize your needs, lessen your wants

1. Increase Cashflow

6 Steps to Financial Security

EXPENSES

I N C O M E

P O V E R T Y F O R M U L AINCOME – EXPENSES = SAVINGS

SAVINGSNEEDS WANTS DEBTS

I N C O M E

P R O S P E R I T Y F O R M U L AINCOME – TITHES – SAVINGS = EXPENSES

70% - EXPENSES10%TITHES

20%SAVINGS NEEDS WANTS DEBTS

Pay Yourself First

Consolidate Debt

2. Manage Debt

Eliminate Bad Debt

Types of debt:• Bad Debt - cash flows out of your pocket

• Good Debt - cash flows into your pocket

6 Steps to Financial Security

• To avoid debt traps, save 3-6 months of your monthly income for:

3. Create Emergency Fund

• Sudden/Frequent Medical Needs of family(visit to clinics)

• Loss of Income Source

6 Steps to Financial Security

• You and your family should not struggle to survive in case of your:

4. Ensure Proper Protection

• Total / Permanent Disability• Sudden Death

• Coverage should include both Life & Family Assets

6 Steps to Financial Security

Protection:

1. Get the maximum benefit* Healthcare* Insurance

* Short payment period* Short coverage period but with higher

returns

* Investment linkage (passive income)

2. Go for term insurance

6 Steps to Financial Security

• Acquire ASSETS (cash inflow)

5. Build Long-Term Savings / Investments

• Mutual Funds

• Real Estate

• Avoid LIABILITIES (cash outflow)• No return of investment: Consumables, Gadgets,

Expensive furnitures

6 Steps to Financial Security

What if… I die to soon?

Active IncomeYOU WORK hard for the money

Food Shelter Clothing

Education Healthcare Debts/Loans

OLDER

Retirement

STAGE 1

Passive IncomeMONEY WORKS for you

Who will take care of my family?What if… I live too long?

Who will take care of me?

Investment

Food

Shelter

Clothing

Healthcare

Debts/Loans

STAGE 2

YOUNGER

Protection

X – Curve Concept

Replacement

72 ÷ 4 = 18 72 ÷ 8 = 9Money doubles every 18 years Money doubles every 9 years

Age 4% Age 8%

72 ÷ 12 = 6Money doubles every 6 years

Age 12%

29

47

65

38

56

Php 100,000Php 200,000Php 400,000Php 800,000

Php 1,600,000

29

47

65

5359

3541

Php 100,000Php 200,000Php 400,000Php 800,000

Php 1,600,000Php 3,200,000Php 6,400,000

29

6547

Php 100,000Php 200,000Php 400,000

16X

Dividing the number 72 by the interest rate of your savings or investmentswill give the estimated number of years it will take for your money to double

4X

The Rule Of 72

Age Deposit / Withdrawal Amount

SimpleInterest

Interest Amount

Total Amount

29 100,000 4% 4,000 104,000

30 4% 4,000 108,000

31 -10,000 4% 3,600 111,600

Age Deposit / Withdrawal Amount

CompoundingInterest

Interest Amount

Total Amount

29 100,000 4% 4,000 104,000

30 4% 4,160 108,160

31 -10,000 4% 3,926 112,086

Interest Computation

Wealth Calculator

Wealth Calculator

Age Increase Per Year Tuition Fee Remarks

7 100,000

8 10% 110,000

.

18 10% 285,311.67 1st year College

19 10% 313,842.84 2nd year

20 10% 345,227.12 3rd year

21 10% 379,749.83 4th year

22 10% 417,724.82 5th year

1,741,856.28 Total Tuition Fee

Choose the Top 3 Universities, & get the most expensive tuition fee

Projection of School Fees

Time is more important, not Timing!

http://en.wikipedia.org/wiki/Inflation

is a rise in the general level of prices of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services. Inflation reflects an erosion in the purchasing power of money.

I N F L A T I O N

Projection of Expenses

http://www.nscb.gov.ph/stats/http://www.nscb.gov.ph/secstat/d_price.asp [National Statistical Coordination Board]

Month 2013 2012 2011 2010 2009 2008 2007 2006

Average 3.0 3.1 4.8 3.8 3.2 9.3 2.8 6.2

2006 – 2013

Is an Investment Interest of 4% good enough?

No! As a 20% tax will still be deducted on earned interest.

Inflation Rate of the Philippines

• Ensure that everything you’ve worked for in your entire life (assets / investments) will be turned over only to your beneficiaries

6. Preserve Your Estate

• Limit probate cost

• Every breadwinner/provider should have a will

• Spouse/immediate family should be co-owners of Assets / Investments

6 Steps to Financial Security

SEC. 84 Rates of Estate Tax. - There shall be levied, assessed, collected and paid upon the transfer of the net estate as determined in accordance with Sections 85 and 86 of every decedent, whether resident or nonresident of the Philippines, a tax based on the value of such net estate, as computed in accordance with the following schedule: If the net estate is: 

Over But Not Over The Tax shall be Plus Of the Excess Over

  P 200,000 Exempt    

P 200,000 550,000 0 5% P 200,000

500,000 2,000,000 P 15,000 8% 500,000

2,000,000 5,000,000 135,000 11% 2,000,000

5,000,000 10,000,000 465,000 15% 5,000,000

10,000,000 And Over 1,215,000 20% 10,000,000

www.bir.gov.ph/taxcode/1889.htm

Estate Tax

INVESTMENTEMERGENCY FUND

DEBT MANAGEMENTPROTECTION: HEALTHCARE & INSURANCE

« BUILD IT RIGHT. BUILD IT STRONG»

I N C R E A S E C A S H F L O W

Building A Solid Financial Foundation

Live simply.

Most people are indebted.

This will help us avoid debt trapsBefore we build our wealth--

We need protection for assets and life

Get out of debts before you invest

Invest safely and correctly

Transfer inheritance to our children

6 Steps to Financial Security

Building A New Industry

Part 2International Marketing Group

and Business Partners (Service Providers, Product Vendors)

More than 25 Years in USA/Canada &15 Years in the Philippines

Is an independent marketing company whose associates, through its affiliated companies, offer a broad array of financial services and products.

http://www.img-corp.com/

http://www.img-corp.com

Make a Difference for Families

At IMG, we can help make a difference

for families by showing them a new path

towards achieving their financial goals.

No Family Left Behind

Our Mission

To Build and Provide

the Best Business Opportunity in the World

Revolutionize the financial services industry by

bringing a fresh, new approach to empower

the world on how money works.

Help people who desire to help themselves. Bring life-changing financial concepts and solutions to middle income individuals and

families who are overlooked by the financial services industry.

Our Vision

SPENDERS

Deliver the world’s financial wake-up call

Change people from:

SAVERSENTREPRENEURS

INVESTORS

Our Crusade

1. ONE STOP SHOP of all Financial Services2. By-Pass The Middle Man (earn the commission yourself)

3. Create Your Multiple Passive Income Stream

4. Have Your Own Business Franchise5. Earn Interest Income from Investments

(invest correctly and safely with high returns)

6. Earn By Helping Others to Save and Invest

What IMG Can Provide

1. ONE STOP SHOP of Financial Services2. By-Pass the Middle Man (earn the commission yourself)

3. Create Your Multiple Passive Income Stream

4. Have Your Own Business Franchise5. Earn Interest Income from Investments

(invest correctly and safely with high returns)

6. Earn By Helping Others to Save and Invest

What IMG Can Provide

YOU

BROKER

INVESTMENT

Getting An Investment On Your Own

YOU

INVESTMENT

YOU (BROKER)

Getting An Investment On Your OwnGetting An Investment Via IMG

1. ONE STOP SHOP of Financial Services2. By-Pass the Middle Man (earn the commission yourself)

3. Create Your Multiple Passive Income Stream

4. Have Your Own Business Franchise5. Earn Interest Income from Investments

(invest correctly and safely with high returns)

6. Earn By Helping Others to Save and Invest

What IMG Can Provide

Healthcare&

InsuranceAlways inform your relatives of your insurance.

http://www.kaiserhealthgroup.com/

INVESTMENTEMERGENCY FUND

DEBT MANAGEMENTPROTECTION: INSURANCE

HEALTHCAREI N C R E A S E C A S H F L O W

INVESTMENTEMERGENCY FUND

DEBT MANAGEMENTPROTECTION: INSURANCE

HEALTHCAREI N C R E A S E C A S H F L O W

Major Advantages of Kaiser Pre-existing illness:

• excluded from healthcare claims during payment period only• excluded from insurance claim for the first 2 years only

Plus Rider option – 2x insurance amount without 2x premium Healthcare coverage & investment is transferrable

http://www.kaiserhealthgroup.com/

MUTUALFUNDS

MUTUAL FUNDS

• Bank Deposits Your money is actually invested in financial instruments with higher return Interest earned is based on account agreement, regardless of how much the bank earns on your money You only own what was agreed to be given to you

• Mutual Funds Ownership: You’re a co-owner of the company Number of shares is more important than the cost per share Long-term investment: Higher gain

Mutual Funds vs Bank Deposits

http://www.pifa.com.ph/advantages.html

STOCK/EQUITY FUNDP8+$1 BALANCED FUNDP9+$4

BOND/FIXED-INCOMEP11+$8+€2 MONEY MARKET FUNDP5

Types Of Mutual Funds

TYPE COMPOSITION OBJECTIVE AVERAGE RETURN*

MONEY MARKET FUND

SHORT-TERM FIXED-INCOME INSTRUMENTS

STABILITY + MINIMAL GROWTH

BOND/FIXED-INCOME FUND

FIXED-INCOME INSTRUMENTS

STABILITY + REASONABLE GROWTH

BALANCED FUND STOCKS & FIXED-INCOME INSTRUMENTS

MEDIUM TO LONG-TERM FOR MODERATE

INVESTORS

STOCK/EQUITY FUND SHARES OF STOCKS LONG-TERM CAPITAL GROWTH

2%

6%

12%

18%

Type Of Mutual Funds

1. Professional management: One of the main attractions of mutual funds is that it affords its investors the services of full-time professional managers whose job is to analyze the various investment products available in the market.

2. Low capital requirement: Direct investments usually require substantial capital. In contrast, most mutual funds in the Philippines require a minimum initial investment amount of only Php5,000.00 and minimum additional investments of Php1,000.00.

http://www.pifa.com.ph/advantages.html

Reasons To Invest In MUTUAL FUNDS

3. Potential Higher Returns: Very few individual investors can match the experience and skill of full-time professional fund managers who can select those that would give the best possible returns.

4. Liquidity: Liquidity is the ability to readily convert investments into cash. While the law provides that redemption proceeds must be given within seven (7) banking days from the date of the redemption request, most funds are able to pay the redemption proceeds within a day.

PRIMARY REASONS TO INVEST IN MUTUAL FUNDS

http://www.pifa.com.ph/advantages.html

Reasons To Invest In MUTUAL FUNDS

5. Diversification: investing in variety of assets; here is a saying that goes, “Do not put all your eggs in one basket.” When people invest in a mutual fund, they achieve instant diversification.

http://www.pifa.com.ph/advantages.html

Reasons To Invest In MUTUAL FUNDS

Stocks

6. Safety: Mutual funds are highly regulated by the Securities and Exchange Commission under the Investment Company Act(RA 2629).

Reasons To Invest In MUTUAL FUNDS

Mutual Fund Company

Independent Auditor

3rd Party Custodian Bank

You $$$

$$$

Reasons To Invest In MUTUAL FUNDS

7. Convenience: The popularity of mutual funds in the Philippines is fast catching up. Investment application can now do online and additional investment/s can now deposit thru banks’ online banking fund transfer facilities.

http://www.pifa.com.ph/advantages.html

Reasons To Invest In MUTUAL FUNDS

Are gains in mutual funds taxable?

oNO. Mutual fund “gains” are exempted from taxes based on the Comprehensive Tax Reform Program (CTRP), Section 32 (B) (7) (h). This was done to promote long-term savings in the country.

Reasons To Invest In MUTUAL FUNDS

Why invest in MUTUAL FUNDS and not in INDIVIDUAL STOCKS?

o If you’re not a good stock picker.o If you don’t have time to follow and track your

investments actively.o If you can potentially become an emotional

investor if you handle your investments too actively.

Reasons To Invest In MUTUAL FUNDS

Investment Scenario: Buy P100 worth of mutual fund shares for 6 months

Cost Averaging for Mutual Funds

REAL ESTATE

18341954

2007

Real Estate Business Partners

1996

PERSONAL USE Family residence

SAVINGS Has the potential to offer higher return than bank

BUSINESS Place of business Can be resold at a higher price Can be used as a collateral for loan Can generate rental income

Reasons To Invest In REAL ESTATE

Options for acquiring products/services:1. CLIENT - you don’t join as an IMG member but you get timely updates from the companies (i.e. pricing, offerings, regulations)

2. MEMBER - you join IMG and you become an agent of these products / services which will help you reduce the cost of your own investments using the commission - earn overrides

Personal or Business?

Commission Rates

Membership LevelKaiser

(premium)Mutual Funds(Sales Load)

Real Estate(i.e. Vista Residences)

Associate 20% 20% 2.25% Field Leader 30% 30% 2.35% Asst. Marketing Director 40% 40% 2.45% Marketing Director 50% 50% 2.75%

Glimpse Of Passive Income

Financial Independence is not a dream. It’s a decision!