Pagpapahalaga Sa Perang Kinita Pinoy's Guide to Managing Finances

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DISCLAIMER

“The views expressed in this report are strictly those of the authors and do not necessarily reflect those of

the United States Agency for International Development (USAID) and the Ateneo de Manila University”.



Abstract

This primer and workbook is part of a series of publications aimed at promotingfinancial literacy among the public. After discussing some basic ideas about savingand why it is important in our daily lives, this primer offers some suggestions regardingthe management of one’s personal finances, starting with goal setting and theidentification of what the goals entail in terms of financial preparation. Alternativefinancial instruments for making savings grow are also discussed and what they implyin terms of return, safety and liquidity. Appendices describing a number of financialproducts relatively accessible to small savers have been included.



P A G P A P A H A L A G AS A P E R A N G K I N I T A

T O M A N A G I N GF I N A N C E S

P I N O Y ’ S

G U I D E



PINOY’S GUIDE TO MANAGING FINANCES © 2007

Ateneo - Economic Policy Reorm and Advocacy (EPRA) Project

Produced by EPRA

ext : Eugene GonzalesAIKHA-Balikabayani Foundation, Inc.EPRA Research Advisory and Advocacy Group

Instructional Design and Copyediting : Patricia B. ArintoBook Design and Illustrations: Aman Santos

Copyright © by EPRA SecretariatAll rights reserved.No part o this publication may be reproduced, stored in aretrieval system, or transmitted in any orm or by any means

without the prior written permission o the Secretariat,except in respect o research or private study, or criticismor review.

Tis primer is made possible by the generous supporto the American people through the United States Agency or International Development (USAID), under Contracto Grant No. 492-A-00-04-0024-00 Ateneo de Manila.Te contents presented herein are the responsibility o EPRA and do not necessarily reect the viewso USAID or o the United States government.

For inormation on this publication, please contact:

Rm. 205, Ateneo Center or Social Policy & Public Aairs Building,Social Development ComplexAteneo de Manila University, Loyola HeightsQuezon City 1108

(632) 929-7970

Printed in the Philippines.



Preface . . . . . . . . . . . . . . . . . . . . . . . . .

Foreword . . . . . . . . . . . . . . . . . . . . . . .

A. Getting the Baic Right . . . . . . . . . . . . . . . .

1. Where does your money go?2. What is ‘consumption’?3. What is ‘protection?4. What are ‘savings and investments’?5. What are taxes?6. How important are ‘protection’ and ‘savings and

investments’ relative to ‘consumption’ expenses?7. I your employer is already doing your savings and

protection, why should you do more?8. How do you save and protect yoursel and your

amily?

B. Financial Planning . . . . . . . . . . . . . . . . . . .

9. What are amily goals and how do you set them?10. How do you set a time rame or each goal?11. How will each amily member contribute to the

achievement o the amily goals?12. What is your complete amily budget?13. Aer accomplishing the amily budget, what is le

or you to save?

C. Letting Your Money Grow . . . . . . . . . . . . . . .

14. What do you do with the money le over aermeeting your amily goals?

15. What instruments can you invest in directly?16. What should you consider when making an

investment?17. How do you balance saety, liquidity and return?18. When dealing with a bank, how do you protect your

sel rom losing your investments?19. What about investing your money in your own

business?

Appendix A : Insurance Products and Pension PlansAppendix B : Family Budget WorksheetsAppendix C : Pre-Need PlansAppendix D : ypes o RiskAppendix E : Government SecuritiesAppendix F : ypes o Mutual Funds

Reerences . . . . . . . . . . . . . . . . . . . . . . . . . .

CONTENTS4

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71



PREFACE

P roviding or the needs o onesel and amily or the present as well as the uture

is every responsible person’s concern. Te ability to keep consumption stable

through good times and bad can oen spell the dierence between escaping poverty and

sinking deeper into it. Securing uture consumption, which is achieved through saving,

is especially important because a good part o the uture is uncertain. Tus, apart rom

preparing or expenditures that are expected to be incurred in the uture, one also saves

in order to have enough resources to deal with unoreseen events.

Unortunately, while many Filipino amilies are convinced about the importance o

saving and may actually have the capacity to save, inormation about where to keep

their savings, in which orm it is advisable to save, and what returns as well as risks are

associated with the various alternatives is rarely available in a medium that is easy to

understand or the average Filipino. One result is that many savers content themselves

with the low (and, with ination, negative) rates o return on regular bank savings

deposits. Alternatively, they shy away rom the ormal nancial system altogether. It

is also not uncommon to hear stories o amilies that have attained some measure o nancial sel-sufciency backsliding into poverty because o unwise spending decisions

while “the going was good”, or aer having lost their entire savings to some nancial scam

promising unusually high returns.

Tis primer is a modest contribution to the eort to raise the level o nancial literacy

among our population. It grows out o the conviction that without savers, there will be no

resources available or the investments needed or economic growth. Indeed, no lending

and borrowing can take place amongst individuals, households and rms, whether or

business or or consumption, without saving.



Unortunately, savers, particularly small savers, are typically less the ocus o public

attention compared to borrowers who have been the target o many special programs,

both government and private. Micronance, or example, is more easily associated with

micro-credit in the public consciousness, even i the provision o deposit taking services

or small savers is an equally important unction o a micronance institution. In act,

such institution cannot hope to become viable and permanent without ever mobilizing

deposits rom the saving public.

Te act is that more people save than is readily acknowledged partly because saving

takes various orms, some o which are not easily captured in survey data. And because

not everyone borrows (whether through banks or rom inormal sources) while the act

o saving is taking place even i people are not conscious about it, savers outnumber

borrowers. Tis means that measures to improve the returns on saving or small savers

may have a ar better chance o improving more lives than the best lending programs.

But this cannot come about i savers are not adequately inormed about the alternatives

available to them, and i their hard earned savings are not reasonably protected romunwarranted risk.

Tis primer is about the importance o saving as it is about how amilies who have

savings can make the most out o their savings. Its inspiration derives rom earlier

attempts by some non-governmental organizations (NGOs) to assist overseas Filipino

workers (OFWs) and their amilies maximize the benets rom their hard earned

incomes by identiying productive and protable uses or these. While it is typical or

amilies o OFWs to want to use the income remittances received to put up their own

small businesses, operating a small enterprise requires certain entrepreneurial skills not

5PREFACE



MANAGING YOUR HARD EARNED MONEY6

possessed by everyone. For those who may not have the appropriate skills to operate their

own business, investing their savings in nancial instruments is one alternative toward

securing their uture consumption. Tis primer deals mainly with the latter option. And

the intended readership is certainly not limited to OFWs and their amilies.

Aer discussing some basic ideas about saving and why it is important in our daily

lives, this primer oers some suggestions regarding the management o one’s personal

nances, starting with goal setting and the identication o what the goals entail in terms

o nancial preparation. Alternative nancial instruments or making savings grow are

also discussed and what they imply in terms o return, saety and liquidity. Appendices

describing a number o nancial products currently on oer in the nancial market have

been included. Tis is not meant to be an exhaustive list o such products, although these

are the ones that seem to be relatively accessible to small savers.

Tis primer, it is hoped, will nd use in the various eorts by government, non-

government and grassroots organizations to improve the level o nancial literacy o Filipinos. It has been written and developed in a way that will give trainers the exibility

to adopt it, either ully or in part, according to the situation and the particular interest o

their audience.

Knowledge is power.



FOREWORD

A re Filipinos poor savers? Statistics suggest that Filipinos save much less than their

Southeast Asian neighbors. According to data rom the Asian Development Bank,

the ratio o our gross domestic savings (GDS) to gross domestic product (GDP)—the

latter being a measure o national income—was 18.8% in 2002, against Singapore’s 44.8%,

Malaysia’s 41.9%, Tailand’s 31.1%, and even Indonesia’s 21.1%. Looking at these gures,

one is tempted to conclude that a country’s level o development is broadly correlated

with—and probably determined by—its ability to save. Or could it be the other way

around, i.e. the level o development determines the saving rate? Te act that Indonesia

has a lower per capita income and yet has a higher saving rate than the Philippines seems

to weaken this argument.

Saving is measured as what gets le aer deducting all expenditures and debt payments

rom disposable income (i.e. income aer taxes). Tere are our general groups o savers

in an economy: households (private individuals) and unincorporated enterprises, private

corporations, government corporations, and the government itsel. Persistently large

budget decits have made government a non-contributor to national savings. And ourprivate saving is low compared to the rest o the region.

Why do Filipinos save so little in comparison to their Southeast Asian neighbors? Te

standard answer has tended to be, “because most Filipinos are too poor to save.” Tere

are claims that Filipinos who do save (i.e. those with higher incomes) have saving rates

that exceed that o, say, the Singaporeans. But or the majority o Filipino households who

earn barely enough to support their needs, savings can be expected to be minimal, and

thus the overall saving rate is low.



Still, others who have actually studied and worked with the poor argue that the poor do

save. Researchers have documented how poor amilies especially in the rural areas tend

to stock up on specic commodities—not necessarily durables like jewelry or appliances,

but storable groceries or example—and then sell these o in times o need or cash.

Tat is saving. It is not uncommon or poor rural households to keep a pig tied up in the

backyard, attening it with whatever kitchen reuse can be collected rom neighbors and

an occasional kilo or two o livestock eed. Te intention is to cash it in at a time o need,

as at school opening time. Tat is saving. And then there are the paluwagan schemes one

seems to nd in every squatter neighborhood, especially among the women. Again, that

is saving.

Who says the common people don’t save? Tey do, except that their savings never nd

their way into the ormal nancial system, or the ofcial statistics on saving. Chances

are that our low saving rate as ofcially reported is substantially understated, given these

various orms o saving actually undertaken by the poor, which, put together, wouldamount to substantial sums. What more i we can channel the daily amount many o

them stake in the illegal numbers game jueteng into savings schemes instead?

urning people’s savings into investments by enterprises requires intermediaries or

mechanisms to link the savers to the investors. In the Philippines, banks still account or

about 82% o nancial resources in the system. It is estimated that in normal times more

than hal o domestic savings probably go through the banks. But banks need not be the




only link. In other countries, enterprises have come to depend less and less on bank loans

or their nancing requirements, as other nancial market mechanisms (equity markets,

commercial paper, mutual unds, pension unds, etc.) have emerged as preerred saving

instruments to low-interest yielding bank deposits. Tere are active eorts underway in

the Philippines to correct policy distortions that have put these other mechanisms at a

disadvantage vis-à-vis the banks in linking savers to investors.

Tis manual is motivated by this concern or how to channel the substantial savings

coming rom common citizens, including rom the lower income groups, into the

nancial pool. More important, it is hoped that through this manual, common Filipinos

will be able to substantially improve their nancial welare merely by saving wisely, by

being better-inormed on how to do so. In this way, we may nd that the apparently low

saving rate o Filipinos is more o a statistical illusion than an actual act.

Cielito F. Habito

Ateneo de Manila University Loyola Heights, Quezon City

9FOREWORD





1. Where does your money go?

ick your answers rom the choices given below:

Your bank account

Support or your parent/s or elderly relatives/guardians

Your children’s education

Household expenses

Insurance premiums All o the above

Others. Please speciy.

A. GETTING THE BASICS RIGHT

Te amily o an overseas Filipino worker (OFW) in Mabini, Batangasspends on the ollowing every month:

Source: Añonuevo, 2002, p. 130

What about you and your amily? What do you spend your monthly

income on?

Table 1-1 | Monthly Expenses of an OFW from Mabini, Batangas

Others - 0.84%

Help to relatives - 2.84%

Personal needs - 2.92%

Leisure - 3.60%

Telephone bills - 5.20%

Health care - 6.12%

Debt payments - 6.49%

Furniture / Gadgets - 9.46%

Education - 25.42%

Food - 35.80%

I t e m s

Percentage of monthly income

0 5 10 15 20 25 30 35 40



What you spend your income on can be classied as ollows:

• Consumption

• Protection

• Savings

• axes

2. What is ‘consumption’?

Consumption items are items that you spend on in order to survive and advance

in your work. Except or education and inormation, once these items are used up,

they are lost orever. Tat is why they are called ‘consumption’ items.

Using the denition above, tick the items below that may be considered consump-

tion items:

Food Entertainment, such as a movie

Clothing Rent or the house you live in

axi and jeepney are Cigarettes

Alcoholic drinks Jewelry

All o the items listed are consumption items. Some items, such as ood, clothing,shelter, transportation, education, inormation and leisure, are basic needs. Others,

like jewelry, luxury items, cigarettes, alcohol and the like, are non-basic needs.

Ask yourself:• How much o my income is spent on

consumption items?• How many o the consumption items that I

spend on are basic needs? How many arenon-basic needs?




3. What is ‘protection’?

Some items that you spend on serve the purpose o protecting you and your

amily rom the negative impact o unexpected events, such as illness, an accident

or death. Tese are called ‘protection’ items.

Te ollowing are examples o payments or protection. Which o them do you

have? ick your answers.

Medical/Health Insurance (or example, PhilHealth)

Social Security System (SSS) or Government Service Insurance

System (GSIS) contributions

Lie, Accident and/or Disability Insurance

Vehicle and Property Insurance

Memorial Plan

4. What are ‘savings’?

Savings reer to that part o your disposable income (that is, your income aer

tax, or your take-home pay) that is not consumed. Some o these may be used

to purchase interest-earning nancial assets or directly invested in business. In

either case, there is a return that accrues to you, the saver/investor.

Money that you save and invest accumulates and grows or your uture use.

Examples o savings and investments are deposits into—

• A Savings Account

• A ime Deposit

• Long-erm Funds (or example, trust, pension and investment unds)

• Real Estate (a house and a piece o land can be sold at a higher price

in the uture)

Ask yourself:• How much o my income am I saving?• Am I saving enough or mysel and my

amily’s uture needs?

13GETTING THE BASICS RIGHT



5. What are taxes?

axes are payments you make to the government so that public goods and servic-

es can be provided to you and to all other citizens o the country. axes constitute

national savings. Te amount o taxes you pay is based on your income, the value

o your real property, and the value o goods and services that you purchase.

Overseas Filipino Workers (OFWs) are exempt rom income tax but not rom

other taxes. Persons who are employed within the Philippines pay all local taxes.

6. How important are ‘protection’ and ‘savings’ relative to‘consumption’ expenses?

You cannot avoid spending on basic needs. But it is equally important or you to

spend part o your income on protection and savings.

Why save and invest? You are your greatest income gen-

erating asset. You and your am-

ily depend on you to earn a living

and ensure your collective survival.

Tereore you should protect yoursel

not only by keeping yoursel t and

healthy, but also by insuring yoursel

against possible accidents and dis-

abilities.

However, no matter how well you

care or yoursel and despite insur-

ance, you will not always be young,

energetic and strong enough to earna living. You need to save and invest

part o your income now so that you

will have something to live on when

you retire.

It is very important to save or

the uture and to acquire protec-

tion against untoward events

that could deprive you and your

amily o a steady income. For

example, you should have money set aside or emergency situations

and/or sickness. I you do not

have this, you will end up having

to either orego getting treat-

ment or orego spending on basic

necessities such as ood while you

spend or treatment.

Tis is clearly not a choice where

one option is better than the

other. Tis is why the lack o sav-

ings is oen used as an indicator

o poverty. Lack o savings does




Obstacles to Saving

Despite the value o saving, ew people are able to save enough to nance

their uture needs and achieve nancial independence or reedom rom

poverty and want. Tis is true o many OFWs. According to Colayco

(2004), “Many OFWs come back with hardly enough money to retire com-

ortably aer their many years o hardship. Worse, they end up with just

the same or even less than what they had when they rst le. Many have

perhaps been mistreated and many more have been ill advised particularly with regard to the money they have earned.”

A case in point: Aer working or 15 years as a domestic helper in Rome,

55-year-old Flor was able to save Php50,000. But the entire amount was

used up aer only three months back in the Philippines. She says: “Umuwi

ako dahil kay atay ( her husband ) at dahil pagod na rin ako. Pero zero bal-

ance kami ni atay at ayaw kong umasa sa mga anak ko.” (Dizon-Añonuevo,

2002, p. 139)

Aside rom the seemingly endless and sometimes unreasonable demands

or nancial support rom amily members, what else makes it difcult or

people to save?

not give you any choice but to live with a bad situation. It also puts all o your

years o hard work to waste as all o your income goes into expenses that do not

improve your and your amily’s quality o lie.




Colayco enumerates the ollowing “obstacles to nancial reedom” that you

must recognize and then ght against.

• Procrastination – delaying savings or putting saving o or another time

instead o starting immediately

• Poor spending habits – includes spending on unnecessary items or

ailing to postpone purchases when possible; also includes impulse buy-

ing (buying something on a whim, without thinking about whether you

really need it) and buying something because it is the trend (uso kasi)

• Lack o independence/Being overly dependent on others – thinking that

you can rely on amily or relatives to bail you out o nancial trouble in

the uture

• Lack o nancial literacy – spending on liabilities (items that cost you

more in the long term) or items that decrease in value over time, instead

o assets (items that will grow in value); not knowing how to make your

money grow and work or you (instead o you working or your money)

Sources: Colayco, Francisco. 2004. Wealth Within Your Reach. Pera Mo, Palaguin Mo! Dizon-Añonuevo, Mai. 2002. Migrant Returnees, Return Migration and Reintegration. In Dizon-Añonuevo,

Estrella and Añonuevo, Augustus . (eds.) Coming Home: Women, Migration & Reintegration.

Salaried employees have “automatic” protection and savings as these items are

deducted rom their salaries by their employer and remitted to the appropriate

government agencies or social security (SSS/GSIS), health (PhilHealth), housing

(PAGIBIG), and other benets. Te situation is dierent or OFWs whose

employers do not deduct or nor provide savings and protection instruments.

Insurance companies can help you save and provide protection or yoursel andyour amily. Te Philippine Insurance Commission regulates the operations

o insurance companies in the Philippines. Visit the Philippine Insurance

Commission’s website (www.insurance.gov.ph) to see the complete list o

licensed and the best perorming insurance companies in the country. Do

not buy rom companies that are not included in the list o licensed insurance

companies.




Company Assets

1. Philippine American Lie & Gen. Ins. Co., Inc. 92,065,101,265

2. Sun Lie o Canada (Phils.) Inc. 53,041,986,2123. Insular Lie Assurance Co., Ltd. 43,007,382,294

4. Manuacturers Lie Insurance Co., Inc. 15,357,314,328

5. Phil. AXA Lie Insurance Corp. 13,923,412,385

6. Ayala Lie Assurance, Inc. 10,538,327,862

7. Pru Lie Insurance Corp. o UK 5,543,914,320

8. Great Pacic Lie Assurance Corp. 5,491,931,767

9. United Coconut Planters Lie Assurance Corp. 4,930,812,430

10. Manuacturers Lie Insurance Co., Inc. Te (Branch) 3,561,807,313

Table 1-2 | Top 10 Insurance Companies Ranked by Reported Assets as of 31 December 2005, in pesos

7. If your employer is already doing your savings andprotection, why should you do more?

Te compulsory deductions rom your salary are not enough or your protection

needs. Benets rom the Social Security System (SSS), Government Service In-

surance System (GSIS), and PhilHealth are limited. You will need to supplement

these benets with your own savings and/or insurance i you want to be able to

cover all medical expenses, acquire a house o your own, or enjoy a comortable

retirement.

How Much Do You Need for Retirement? SSS members who retire aer age 60 and who have paid 120monthly contributions prior to retirement will receive a lie-time monthly pension equivalent to whichever is higher o theollowing:

1. Te sum o P300 plus 20% o the average monthly salary credit plus2% o the average monthly salary credit or each credited year o service in excess o 10 years; or

2. 40% o the average monthly salary credit; or3. P1,200, provided that the monthly pension is paid or not less than

60 months

Is this enough? How much do you spend now to maintainyour desired standard o living? Are you ready to lower yourstandard o living when you retire? What will be the real valueo your monthly pension rom SSS by the time you retire?

Source: Philippine Social Security System Website. Available online at http://www.sss.gov.ph/






Te Problem of Overdependence

Expecting the OFW to shoulder all o the amily’s nancial obligations puts

a great deal o psychological and nancial pressure on him/her.

“ Mukhang habang buhay na akong magkukudkod ng inodoro! Walang tigil

ang hingi sa atin! Akala mo pinupulot lang ang pera dito! ” exclaims Aling

ita, a 55-year-old domestic helper who has been working in Rome or al-

most 15 years. Indeed, many OFWs are orced to take on several part-time

jobs on top o their regular contract (Filipina domestic helpers abroad call

this “aerobics” or “kudkod ”), in violation o the laws in their host countries, just to be able to keep up with increasing nancial demands o their amilies

in the Philippines. (Valerio, 2002, p. 49)

Because they are oen the sole amily breadwinners, OFWs end up working

abroad more years than they had originally planned or. Despite their rela-

tively high incomes, they are unable to save enough money to come home

and nd alternative means o livelihood.

ita has worked abroad or 15 years. She earns the

equivalent o Php40,000 a month. But she has very little

in savings. Why? ita spends about Php15,000 or her

needs in Italy, and sends home around Php20,000 a

month to pay or her amily’s ood, school expenses,

transportation, water and electric bills. Instead

o going into her savings, the Php 5,000 le over

oen gets sent to relatives who ask her or

nancial assistance occasionally at rstand then eventually on a regular basis.

(Añonuevo, 2002, pp.129-130)

Sources: Añonuevo, Augustus . 2002. Reintegration, An Elusive Dream. In Dizon-Añonuevo, Estrella and Añonuevo,Augustus . (eds.) Coming Home: Women, Migration & Reintegration.

Valerio, Rosanna Luz F. 2002. Pag-ahon sa Kumunoy ng Utang: Te Debt-ridden Lie o Migrant Women. In Dizon-Añonuevo, Estrella and Añonuevo, Augustus . (eds.) Coming Home: Women, Migration & Reintegration.






9. What are family goals and how do you set them?

Te ollowing are examples o amily goals:

a) Education – Tis usually reers to the education o your children, or your

siblings i you are unmarried and do not have children o your own. But you

should also not orget your own education and training i you want to advance in

your career or business. Education can be through ormal schooling or through

non-ormal training programs and courses. Plan or both as one orm may not be

enough.

b) Housing – Having a home o your own is a necessity. It is also an important

investment decision. Depending on the location, design, and developer/builder

o your home, it can either increase or decrease in value through the years.

c) Health – Health is wealth, as the saying goes. Certainly, ill health can make

you poor as it prevents you rom earning a living. Fortunately, people are becom-ing more health-conscious. People want to eat the right ood, exercise, and live a

healthy liestyle. But being health-conscious is not enough. You must also have

HEALH INSURANCE. Without health insurance, you can end up spending all

o your savings, or worse, going into debt, when someone in the amily gets sick

or has to be hospitalized. SSS/GSIS and PhilHealth benets cover only a very

small portion o health insurance needs.

d) Retirement – Very ew Filipinos plan or their retirement. Many assume that

their children will take care o them when they retire. But while this is part o

the value that Filipinos place on amily, nancial dependence o parents on their

children can cause conicts within the amily, between siblings and with in-laws.

Tere are cases where the retired or unemployed mother or ather is “jealous”

B. FINANCIAL PLANNING



o their child’s dependents, such as his/her spouse and children. Tere are also

cases o spouses resenting their parents-in-law or being a “drain” on the amily

income.

In addition, it is difcult and stressul or one person to provide or the needs o

so many dependents. It is important or you to set aside money rom the income

you are earning now or your own retirement, so that you do not become a nan-

cial burden on your loved ones.

e) Protection against negative events - Te ollowing are events which you don’t

want to happen but which are oen beyond your control. Te only way you can

protect yoursel against the negative eects o these events is by preparing or

them.

• Unemployment – Your contributions to SSS or GSIS enable you to

receive benets when you become unemployed. However, these are not

enough to compensate or the loss o your salary. And they last only or

a maximum o 6 months. You need some SAVINGS to tide you over

your period o unemployment.

• Sickness, Accident, and Disability – Te best way to prepare or thesenegative events is to keep yoursel healthy and accident-ree. You should

also keep your house, car, and other properties sae rom re and other

disasters. But there is no substitute or INSURANCE. Without accident/

disability insurance, you could end up spending all o your income and

even go into debt when you get sick, have an accident, or lose your

properties.

• Death – As the saying goes, “In lie, only two things are certain—death

and taxes.” So we might as well prepare or both. You can prepare or

death by obtaining lie insurance. Without lie insurance, your amily is

le with nothing when you die. Worse, they could end up going into debt

just to pay or your uneral expenses.




Family WorkshopsTere are organizations that can help you and your amily set goals

together. An organization that acilitates 1- to 2-hour amily visioning

and goal-setting exercises or OFWs and their amilies is AIKHA

(www.atikha.org ).

Te amily workshops need not be complicated. Tey can be un while

helping amily members accomplish the important task o planning their

goals together. Family members should be able to voice out their goals

and hopes or the uture and at the same time realize that each one has an

important role in attaining these goals.

Te desired outcome is that each amily member commits himsel/hersel

to contribute to the achievement o these goals. Te contribution need not

be nancial. For children, it may be a commitment to study hard and live

a simple, healthy liestyle. For parents, siblings, and spouses, it may be to

continue or look or employment, save money, keep them-

selves healthy, or regularly pay their insurance bills.

10. How do you set a time frame for eachgoal?

Start by answering the following questions.

a) Education: When will all the children/siblings nish

high school or college?

b) Housing: When can you buy your own home or at

least make the down payment or a new home?

23FINANCIAL PLANNING



Health Is Wealth

Health and protection are very much interrelated. I you are not healthy

and you do not take care o yoursel, you can get sick, meet an accident,

get disabled, or even die.

o meet your health and protection goals:

• Get the necessary vaccinations or all members o the amily.

• Eat the right ood in the right amounts.

• Exercise.

• Get regular physical examinations.

• Get health, accident, property, and lie insurance.

c) Retirement: At what age do you plan to retire?

d) Health and Protection:

Have all the children received the required vaccinations (or example,

against DP, polio, measles, BCG, hepatitis B)?

YES NO

Do the adults in the amily have health plans?

YES NO




EDUCATION

GOAL

Put the names o the children/siblings who plan to nish college in Column A. How much does each year o education/training cost (tuition, books, uniorms, allowances,

etc.)? Put in Column D. Add the entries in D to get the otal Cost o Education, D1. How much will the other amily members contribute to your children’s/siblings’ education?

Put these in Column E. Add to get the total E1. How much will you contribute to your children’s/siblings’ education? Calculate this and put

your answer in column F. Add to get the totals D1, E1 and F1. Divide D1, E1 and F1 by 12 to get the monthly costs, D2, E2 and F2. Below are sample computations only. You and your amily should know the actual costs.

A. Name D. Cost o Education:uition, Books, Clothingand Allowance

E. Family Contribution F. Your Contribution

1. Anna 80,000 80,000

2. Edgar 60,000 60,000

3.

4.

You 25,000 25,000

Total Cost

of Education

D1 = 140,000 E1 = 80,000 F1 = 85,000

Monthly Costs D2 = D1/12 = 11,666 E2 = E1/12 = 6,666 F2 = F1/12 = 7,083

11. How will each family member contribute to theachievement of the family goals?

You need to make the goals a little more specic by asking the ollowing ques-

tions or EACH GOAL:

Who?

What?

How many?

What /How much does it take?

How will each member o the amily (including you) contribute?

Fill in each of the tables that ollow. Te same tables are reproduced in AppendixB as worksheets. You can copy the tables to a bigger sheet o paper i the space

here is not enough. Let every member contribute inormation especially about

costs, prices, expenses, etc. Tis will be a good learning experience or everyone.

Some o you may be surprised at how cheap, or how costly, some items are!

Table 2-1 | Education Goal




Some people preer to invest in pre-need

education plans. Tese are contracts that

provide or the payment o an agreed

upon amount o money or your child’s

college education, in exchange or your

payment o a specied amount years be-

ore your child goes to college. Recently,several pre-need education plans became

the subject o controversy when they

ailed to deliver the promised amounts o educational coverage as a result o their

ailure to accurately project the actual costs o tuition.

It is advisable to buy pre-need plans only rom the best perorming insurance

companies. Visit www.insurance.gov.ph to see a list o the top insurance compa-

nies and ask an agent to explain their education plans to you. (See Appendix C or

a more detailed discussion o pre-need plans.) I you decide to buy an education

plan, include the total annual payments or these under column D. You can also

choose to invest the money you wish to allot or your child’s uture education in

another investment instrument, instead o buying a pre-need education plan. Di-

erent types o investments instruments are discussed in Part C o this primer.

From lling in able 2-1, you and your amily should realize the ollowing:

Given the high costs today, it is impossible to depend on one amily

member to support everyone else’s education. Everyone must do his/her

share to pay or this expense. Working amily members should neverquit work just because there is an OFW in the amily or just because

one amily member has a relatively high-paying local job.

Having more children means higher educational expenses. Tis is one

reason why planning the size o your amily is important.

Tose who are still going to school should realize how much their

parents/siblings are sacricing to see them through school. Given that

they are not earning an income yet, their main contribution to this

amily goal is to save money, study hard, and adopt a simple and

healthy liestyle.

Remember:Te best way to nance your

children’s education is to

project the cost o your children’s

education as early as possible,

and then to save and invest part

o your income to cover this cost.




HOUSING

GOAL

I your amily plans to buy a house and lot, put the amounts or down payment andmonthly installments (total or 1 year) in column G.

I the amily is renting a house, put the 1-year total also in column G. How much will the other amily members contribute to the down payment and to the

installments? Put the answers in Column H. How much will you contribute? Put the answers in Column I. Add to get the

totals G1, H1, and I1. Divide these by 12 to get the monthly costs, G2, H2,and I2.

Below are sample computations only. You and your amily should know theactual costs.

G. Annual Payments orHouse and Lot

H. Family Contribution I. Your Contribution

Down Payment 100,000 100,000

Monthly Installments or1 year

120,000 80,000 40,000

Rent per Year

Total G1 = 220,000 H1 = 180,000 I1 = 40,000

Monthly G2 = G1/12 = 18,333 H2 = H1/12 = 15,000 I2 = I1/12 = 3,333

Renting a house or apartment all the time is expensive in the long run because

you “lose” all your payments to whoever owns the house. When you buy and

make monthly installments or a house, you don’t lose these payments because

you become the owner o the house. You are eectively paying yoursel. Later,

you can sell your house or take out a bank loan using the house as collateral.

Are all employable/employed persons in the amily members o PAGIBIG or

SSS? I not, visit http://www.pagibigfund.gov.ph/mt_faq.htmto nd out how to

become a member.

I you are an OFW and cannot aord to buy a house and lot now, at least make it

your top priority to become a member o the PAGIBIG Overseas Program. Visit

or download http://www.pagibigfund.gov.ph/sp_h2mpl_pop.pdf .

I you are newly employed locally, ask your employer to make you a member o

PAGIBIG and make sure your contributions are actually remitted to the housing

und.


Table 2-2 | Housing Goal



When buying real property:

• I your amily does not yet have an idea o the location, area, total cost,down payment, and monthly installments or the house and lot, do a

canvass and get these inormation or several houses rom which your

amily can choose your desired home. ake your time. Do not orce

yourselves to make a decision that you may regret later. Remember that

you make this kind o decision probably only once in your lietime.

Make sure you are happy with it.

• Make sure that the property you want to buy is properly titled and has

no claimants (“clean title”) other than the owner. You can nd this out

rom the Register o Deeds o the town or city where the property is

located.

• I the property is newly developed, nd out i the developer is properly

accredited with the Housing and Land Use Regulatory Board (HLURB)

and has a license to sell the property. Visit http://www.hlurb.gov.ph/ar

ticle/archive/113/ to see the “Master List o Developers and Projects in

the Expanded National Capital Region”. Te addresses o HLURB

Regional Oces are at http://www.hlurb.gov.ph/article/archive/71/ .

• Get a document in exchange or every payment you make, whether it is

an Ocial Receipt, a Contract to Buy and Sell, a Deed o Absolute Sale,

or the original title itsel. Te more o these documents you can get, the

better.

• Aer doing the above and you nd out that you can easily aord to

make a “Cash Payment” (that is, give the property’s total price in onepayment), ask or a big discount (10% or higher) because you are doing

the owner a big avor.

o get more tips, visit http://www.eyp.ph/complete.jsp?page=660&content

=2003/0526_realestate.html#1




HEALTH

PROTECTION

GOAL

Have the children received the required vaccination (against DP, polio, measles, BCG,and hepatitis B)? I not, go to the nearest government health center or consult apediatrician in a private hospital. Put the cost o vaccinations, i any, in Column J.

Do the adults in the amily (including you) get a regular medical check-up?

I not, they should get it. Do the adults (including you) have a health care plan? I not, they should

get one. A health plan usually pays or a regular medical check-up. Put theannual cost o health plans in the space allotted in Column J.

How much will the other amily members contribute? Put their contributionto vaccinations and health plans under column K.

How much will you contribute? Put the amounts or vaccinations and health plansunder column L. Add to get the totals J1, K1, and L1. Divide these by 12 to get themonthly costs, J2, K2, and L2.

Below are sample computations only. You and your amily should know theactual costs.

J. Payments/ Year K. Family Contribution L. Your Contribution

Vaccination 5,000 5,000

Health Plans 15,000 15,000

Total J1 = 20,000 K1 = 5,000 L1 = 15,000

Monthly J2 = J1/12 = 1,666 K2 = K1/12 = 416 L2 = L1/12 = 1,250

Keep in mind that:

• I you go early enough to a government health center, your children

can get all o the required vaccinations or FREE.

• Using insurance packages in the market today as reerence, it costs

only a (US) dollar a day to buy 1-year health plans or three adults!

Get a health plan or the adults in your amily (including yoursel, i

you don’t have one) so you won’t have to worry too much about

expenses when someone in the amily gets sick. Again, it is best to buy

health plans oered by the best perorming insurance companies in

the country. Visit www.insurance.gov.ph.

• I you can get a health plan that covers the children too, then so much

the better.


Table 2-3 | Health Protection Goal



INSURANCE

PROTECTION

GOAL

Do you (and your spouse, i you are married) have lie/accident/disability insurance? A memorial plan? Put the annual cost o insurance and memorialplans in the space allotted in Column M.

How much will your spouse contribute? Put this in Column N.

How much will you contribute? Put this in Column O. Add to get the totalsM1, N1, and O1. Divide these by 12 to get the monthly costs, M2, N2,and O2.

M. Payments/ Year N. Spouse Contribution O. YourContribution

Lie/Accident/Disability Insurance

Memorial Plan

Total M1 = N1 = O1 =

Monthly M2 = M1/12 = N2 = N1/12 = O2 = O1/12 =

Ask yourself:• I I die today, how much money should I leave

with my immediate amily (beneciaries) in orderor them to still live comortably?

• Tis is the basic question to ask when choosing your lie insurance plan. Call this amount Z.

• Consult an insurance agent and ask, “How much premium should

I pay or so many months and years in order to be able to leave Z

amount o money to my beneciaries?”

• I you can aord the premium, get the insurance plan that will pay out

Z amount o money to your amily. I you cannot aord the premium,

ask your agent or insurance plans that you can aord. Remember that

i you miss even a single premium payment you may oreit your pre-vious payments and your insurance! So make sure you choose a plan

that you can aord.

• You cannot be expected by other amily members to pay or their lie

insurance. By paying or your lie/accident/disability insurance, you


Table 2-4 | Insurance Protection Goal



RETIREMENT

GOAL

Do you (and your spouse, i you are married) have a retirement/pensionund or plan? Put the annual cost o payments or your and your spouse’sretirement/pension unds in the space allotted in Column P.

How much will your spouse contribute? Put this in Column Q. How much will you contribute? Put this in Column R. Add to get the totals

P1, Q1, and R1. Divide these by 12 to get the monthly costs, P2, Q2, and R2.

P. Payments/ Year Q. Spouse Contribution R. Your Contribution

Pension

Total P1 = Q1 = R1 =

Monthly P2 = P1/12 = Q2 = Q1/12 = R2 = R1/12 =

A pension und is simply a pool o money that you build through regular sav-

ings. Te company you buy it rom invests it so that it can grow substantially. It is

classied as a pre-need product and by itsel is not considered insurance. Again,

it is advisable to buy retirement/pension plans only rom the best-perorming

insurance companies.

are making sure they receive adequate monetary support when you

pass away. However, you and your spouse can discuss how the two o

you can share in insurance payments to make sure that your childrenwill be properly supported i one or the two o you pass away.

• o set the amount o insurance or your property, ask yoursel, “How

much should the insurance be so that I can rebuild my house (in case

o re and other property damage) to at least the same state it was

beore?” Ten, as above, nd out how much you can actually aord.

Ask yourself:• How much money should I receive when I

retire so that my amily and I can still livecomortably?

• Some nancial advisers suggest that you can stilllive comortably i you receive 70-80% o yoursalary beore retirement. Calculate this.Call this amount Z1.


Table 2-5 | Retirement Goal



• Consult an insurance agent and ask, “How much premium should

I pay or so many months and years so that I can receive Z1 amount o

money when I retire?”

• I you can aord the premium, get the retirement/pension plan that

will pay out Z1 amount o money to you when you retire. I you cannot

aord the premium, ask your agent or pension plans that you can a

ord. Again, make sure you choose a plan you can aord.

• For example, you are now 21 years old and you want to receive a lump

sum o more than PhP 2 million when you retire at 60 years old. Tere

are pension plans oered by insurance companies that will give you

a lump sum o PhP 2.2 million upon retirement or which you have to

pay only PhP 1,442 per month or 5 years. Tis means you pay only

a total o PhP 86,550 during those 5 years but you get more than PhP 2

million when you reach 60.

• Let us say you want to use your money now or other things and you

start paying your pension plan only when you are 31 years old. Using

the same computation, you will get only around PhP 800,000 when

you retire at 60. So it is better to start building your pension und whenyou are still young. I you still have extra money aer paying o your

pension plan in 5 years, then you can buy another plan to give you

more money when you retire.

• Encourage your spouse (and your parents) to save or his/her retire-

ment even i he/she is earning less than you are. You can do this

by “matching” his/share with a contribution rom you. For example, i

he/she contributes PhP 1,000/month to his/her pension, “match” it

with PhP 500 or PhP 1,000 aside rom paying or your own pension.

Tat is i you can aord it, o course. Your siblings should be respon

sible or their own retirement.




FINALLY, compute or consumption expenses.

CONSUMPTION Family’s Monthly Expenses

Family Contribution Your Contribution Your Monthly Expenses

Food

Utilities

ransportation

Clothing

Leisure

otal S = = U = V =

Remember the ollowing:

• For Clothing Expenses, it is clearly not necessary to buy new clothes

every month. What you can do to get the monthly gure is calculate

expenses or a amily member per year, get the total or all amily

members, and then divide the total by 12. All other expenses can be

done on a monthly basis.

• Include cell phone loads under the cost o Utilities.

• Leisure is an important item to include because doing so will set alimit or budget to it. I you don’t put it there the tendency could be to

splurge because no limits were set. Te other extreme is not to spend

any time or leisure, which may put unnecessary stress on amily

relations.

You MUS:1. Encourage everyone to participate in listing, comput-

ing, and validating your list o expenses. You will havea lively discussion or sure.

2. Make a separate list o your own expenses, especially i you

are an OFW. Tis could help other amily members realize how much

you are sacricing by contributing to their expenses while spending

very little or your own.


Table 2-6 | Total Consumption



12. What is your complete Family Budget?

Fill in the Family Budget table below with the amounts you calculated rom the

previous tables.

Negotiate among yourselves the realistic amounts and contributions each mem-

ber can make. You may have to go back to the previous tables to recalculate and

renegotiate.

Remember: Each one should make a contribution no matter how small. For

children, this may mean saving on expenses and putting their money in the bank.For employable adults, this means looking or employment or maintaining their

present employment even i they are receiving only a modest salary. It also means

diligently paying or their insurance and pension plans. Aer you have negotiated

your respective contributions, you can compute the totals W, X, and Y.

Goal Amount Family Contribution Your Contribution

Education D2 E2 F2

Housing G2 H2 I2Health J2 K2 L2

Insurance M2 N2 (spouse) O2

Retirement P2 Q2 (spouse/parents) R2

Consumption S2 2 U2

otal W = X = Y =

Now that you have lled in this nal table, you have nished most o the Plan-

ning and Budgeting Process. Congratulations!

Now, do the following :

1. Get each amily member’s commitment to the Family Budget by

keeping expenses below or equal to W and by maintaining the


Table 2-7 | The Family Budget



respective contributions, X and Y. Make sure everyone has a copy o

the Family Budget to remind each one o their commitment;

2. Review the Family Budget and actual costs and contributions twice or

thrice a year to see i it is being met or whether it needs to be revised.

You may have to assign a specic member o the amily to lead this

important task.

Don’t worry i you cannot nish the Family Budget quickly. You really need

plenty o inormation (tuition ees, insurance, housing payments, etc.) to ll it up.

Just make sure you do ll it up somehow and get everyone’s commitment to liveup to it!

13. After accomplishing the Family Budget, what is left for you to save?

You have already done your saving by “paying” or your Education, Housing,

Health, Insurance, and Retirement goals beore your consumption needs. Tis is

“saving beore you spend” and “paying yoursel rst.” Your savings will help youcover your amily’s needs when you are no longer able to work.

Looking back at the amily budget, you can say that even i you and your amily

spend the amount V completely every month, you would have been able to save

an amount that is at least equal to your payments or Insurance and Retirement/

Pension. I you are paying or the purchase o education plans and a home, these

are additional savings or you.

Compute or the minimum amount that you and your amily are actually saving

per month by adding all o your payments or Insurance and Retirement. I you

are buying education plans or a home, add these also. You will see how much you

are already saving automatically without your even knowing it!






14. What do you do with the money left over after youhave met your family’s nancial needs?

I you think this excess income or surplus is going to continue or some time,

then you can increase your retirement/pension plans. Tis has the eect o

“paying yoursel more while paying yoursel rst.” Ask your insurance agent or

advice on how to do this.

I you think the surplus is going to be or a short period only, then you can invest

it directly in short-term investments.

C. LETTING YOUR MONEY GROW



Instrument Safety Liquidity Return

SAvINGS AND

TIME DEPOSITSInsured up to PhP250,000 by the PDIC

Savings accounts very liquid; time depositsnot as liquid

Very Low

MONEY MARKET

INSTRUMENTSNo guarantee; notinsured, but low riskdepending on theparticulars o the

instrument

Short-term: usually around 30 days

Low to Moderate

RETAIL TREASURY

BONDS (RTBs)Guaranteed by the PhilippineGovernment

Minimumholding periodmay be required;small penalties i withdrawn early

Moderate to High,usually moderate

UNIT INvESTMENT

TRUST FUNDS

(UITF) - inested

into other

instruments (see

Table 3-2)

No guarantee;not insured. Riskdepends on thespecic investmentinstruments in the

und

Minimum holdingperiod required; butrelatively liquid aerthat

Return is dierentor every und.Historicalperormance anduture prospects are

important guides.MUTUAL FUNDS

- inested into

other inestment

instruments (see

Table 3-2)

No guarantee;not insured. Riskdepends on thespecic investmentinstruments in theund


Return is dierentor every und.Historicalperormance anduture prospects areimportant guides.

STOCKS High risk. Noguarantee; notinsured. Riskdepends on the

perormance o thecompany issuing thestocks and actorsaecting the stockmarket.

raded in the stockexchange. Liquidity depends on theavailability o buyers

or a specic stock.

Return varieswidely. Historicalperormance anduture prospects are

important guides.

15. What instruments can you invest in?

As an individual, you can directly put your money into the ollowing:

Source: A Primer on Savings and Investment Instruments in the Philippines, 2006.


Table 3-1 | Savings and Investment Instruments



UIFs and mutual unds, in turn, are invested into:

Instrument Safety Liquidity ReturnMONEY

MARKET

INSTRUMENTS

No guarantee; notinsured, but low riskdepending on theparticulars o theinstrument

Short-term: usually around 30 days

Moderate

GOvERNMENT

SECURITIES

(RTBs, Treasury

Bills, Treasury

Notes, Dollar-

Linked Notes,etc.)

Guaranteed by the PhilippineGovernment (SeeAppendix E ora description o

dierent typeso GovernmentSecurities.)


Moderate to High;but usually Moderate

CORPORATE

BONDS/

COMMERCIAL

PAPERS

No guarantee; notinsured. Risk dependson the speciccompany issuing thebond/paper

Depends on theterms and conditionso the bond/paper

Moderate to High;but usually higherthan GovernmentSecurities

STOCKS High risk. Noguarantee; notinsured. Risk depends

on the perormance o the company issuingthe stocks and actorsaecting the stockmarket.

raded in the stockexchange. Liquidity depends on the

availability o buyersor a specic stock.

Return varieswidely. Historicalperormance and

uture prospects areimportant guides.

Source: A Primer on Savings and Investment Instruments in the Philippines, 2006.

16. What should you consider when making an invest-ment?

Tere are three things to consider when you invest: Saety, Liquidity, and Return.

While you will want to maximize all o these three things, this may not be pos-

sible at all times. One actor will always counteract another. So you have to strike

a balance among the three depending on your objective(s) in investing your

money.

39LETTING YOUR MONEY GROW

Table 3-2 | UITFs and Mutual Funds



What o Ask Before Investing

Beore making an investment, ask and get answers to theollowing questions:

Saety : What are the risks o losing my capital orthe money I invested? What is the worst thing thatcan happen i I put my money in this investment?

Liquidity : How long will my capital be tied up?Can I withdraw my capital anytime and convertit back to cash? How quickly can I withdraw my

money when I need it?

Return: What is my yield (earnings on what youinvest, or your capital) or return on this

investment? Is it higher than the ination rate?

Source: Colayco, Francisco. 2004. Wealth Within Your Reach. Pera Mo, Palaguin Mo!

a) Saety

Te rst rule o saety is to deal only with licensed agents o top-perorming

banks and insurance companies. Ask or documents proving that the agent you

are dealing with is an authorized representative o the company. You should also

ask or proo that the company is a bank licensed by the Bangko Sentral ng Pilipi-

nas (BSP) [http://www.bsp.gov.ph/banking/bspsup.asp ] or an insurance company

licensed by the Philippine Insurance Commission [http://www.insurance.gov.

ph/htm/_statistics.asp].

Next, ask yoursel this question: “What is the worst thing that can happen i I put

my money in this investment?”, or “What is the risk involved?”

Te saest investments are Savings and ime Deposits because these are insured

up to a certain amount by the Philippine Deposit Insurance Corporation (PDIC).




Right now, you can deposit up to PhP 250,000 in savings and time deposits in

any bank and no matter what happens to that bank, the PDIC will pay back your

money. However, i your bank closes down, it will take some time beore you can

recover your deposit. Also, you will not be able to recover any amount above thePhP 250,000 limit i no other bank takes over your bank.

Although savings and time deposits up to PhP 250,000 are guaranteed and are

thereore sae investments, they also give you the lowest return on your invest-

ment. Tis is an example o how the dierent actors aect each other. In this

case, increased saety brings about low returns. It is difcult to nd a highly sae

investment that has very high returns at the same time. Tat is why when a bank

or nancial institution oers you very high returns on their savings and time

deposits, BEWARE! It is highly likely that there is a great danger or risk that they

are not telling you about.

Occasionally the Philippine Government oers Retail reasury Bonds (RBs) to

the public. RBs are investment instruments guaranteed by the government that

oer returns higher than those rom savings and time deposits. However, they are

oered only once every 1 or 2 years. You may also have to pay some penalties i

you withdraw your investment beore the date o maturity (which is 2-5 years or

more). Ask your bank i it is accredited to distribute RBs and nd out how youcan invest in them.

Tere are other investments that can give you a higher return but which involve

higher risk. Tese investments will be discussed in the next section. Te dierent

types o risk are explained in Appendix D.




b) Liquidity

“How quickly can I withdraw my money when I need it?” Tis is a question about

liquidity.

Again, savings deposits are the most liquid instruments. You can withdraw rom

them anytime i you have access to Automated eller Machines (AMs). ime

deposits cannot be withdrawn until their term is nished. Tese may be 30, 60,

90 days or longer. Again, the disadvantage o these relatively liquid investments is

their low return.

Fortunately, there are now investments that can give you greater liquidity and

higher returns. Banks, especially the large ones, oer Unit Investment rust

Funds (UIF). Although you cannot withdraw them during the prescribed mini-

mum holding period (which can range rom 30 to 90 days), you can withdraw

rom them anytime aer that subject to certain conditions.

However, unlike savings and time deposits, UIFs are not insured or guaranteed

by any institution. So, theoretically, you can lose most, i not all, o the money

you invested. Also, UIFs, even within one bank, have dierent returns. Some

perorm well and others, poorly. You have to choose the UIF that ts yourrequirements and expectations. You need to know and understand what instru-

ments the UIF is investing your money in. We will discuss these in a later sec-

tion. Again, ask your bank about UIFs and their individual perormance.

Mutual unds are invested and managed much like UIFs. However, banks are

not allowed to sell mutual unds. You can invest in mutual unds through insur-

ance companies and investment houses.

c) Return

An investment is something that should give you a return on your money. In

short, investments help your money earn. Interest, dividends, and rent payments

are dierent orms o earnings that give you a return on your investment. Appre-




ciation in the value o the asset you invested in, such as land, buildings, or oreign

currency, is another source o return on your investment.

Interest earnings are a common orm o return on your investment. Let us say you invested PhP 100,000. I you earn interest o 10% p.a. (“per annum” or per

year), then you will receive an interest income o 10% o PhP 100,000 or PhP

10,000 or every year that your investment is active. Tis income may be paid to

you in quarterly, semi-annual, or annual installments. In this kind o investment,

the value o your investment (called “principal”, in this case) remains the same at

PhP 100,000.

I you invest in UIFs or in mutual unds, you will not receive interest payments.

Instead, your PhP 100,000 may grow or lose value across time. I investments are

managed well, you may not have to wait or a year or your money to grow to PhP

110,000. However, i the unds are poorly invested, your money may go down in

value to, say, PhP 90,000. See Appendix F or a description o dierent types o

mutual unds.

In comparing the returns on dierent kinds o investments, it is very impor-

tant to consider the taxes applicable to both the returns and the investment. For

example, i you invest in land or buildings, you have to pay annual real property taxes. I the value o the land appreciates and you sell it, you have to pay several

taxes and ees. With a ew exceptions, all income rom investments handled by

banks is subject to taxes and ees. Ask your bank to show you the return on your

investment net o taxes and ees.

17. How do you balance safety, liquidity and return?

Begin with your investment objective(s). At this point, we are assuming that youare investing an amount that is over and above what you already planned and

budgeted or your and your amily’s Insurance, Retirement, Education, Health,

Housing and Consumption needs. In other words, the amount you wish to invest

is the surplus you generate rom your income aer you deduct your monthly

contribution, Y, and your monthly expenses, V, rom your monthly income.




CAsE 1

Let us say your investment objective is: “o save and invest money to be able to

buy a home in 5 years.”

First, make sure you are a regularly contributing member o PAGIBIG. Your

regular contribution is the main oundation o your savings and investment

objective.

Saety is the main consideration in attaining your stated objective. You want your

savings and investment to be intact so that you can make a down payment or, at

most, ully pay or your dream house at the end o 5 years. You won’t mind i the

investment is not too liquid because you won’t need it beore the 5 years is over.O course, the return on your investment matters but you are ready to sacrice

some o it or the sake o saety.

Your best options are retail treasury bonds (RBs), i these are available. I

RBs are not available, UIFs or mutual unds invested mostly in long-term

government securities are another option. Your bank should inorm you what

instruments their UIFs are invested in. Tere are high-risk UIFs which have a

signicant amount o investments in stocks. Tere are more conservative UIFs

that are invested mostly in government securities. You should choose the latter.

You should also ask your bank to show you the historical perormance o these

UIFs. Some banks post graphs o the past perormance o their UIFs. You

can see rom these graphs whether the UIFs are increasing or decreasing in

value or whether their values

are uctuating or have remained

steady. You would want a UIF

that is growing steadily. Tegraph on the right shows a und

that is growing steadily.




You can also consider investing in a mutual und. See Appendix F or the

dierent types o mutual unds. o be on the sae side, invest only in the best

perorming mutual unds. Below is a list o the op 10 Mutual Funds in the

Philippines.

COMPANY ASSETS MARKET SHARE

(%)

Ayala Lie Fixed Income Fund 19,131.0 43.0

Philam Dollar Bond Fund (AIG) 8,720.8 19.6

Philam Bond Fund (AIG) 6,851.1 15.4

Sun Lie o Canada Prosperity Bond Fund 4,413.9 9.9

ALFM Dollar Bond Fund 2,139.9 4.8

GSIS Mutual Fund 1,002.1 2.2

Philippine Index Fund 341.5 0.8

Philam Strategic Growth Fund (AIG) 308.5 0.7

Mutual Fund Company o the Philippines 307.7 0.7

Sun Lie o Canada Dollar Advantage Fund 307.0 0.7

otal Market 44,497.0 100.0

Still, you have to know the UIFs’ and mutual unds’ terms and conditions

(minimum investment, ees, taxes, holding period, etc.), historical perormance,and the instruments it invests in. Only then can you orm an idea o the saety,

liquidity, and return o such unds.

CASE 2

Another possible investment objective is: “o make as much money as possible in

the shortest possible time.” Return and liquidity are the main considerations here.

You would want to make investments in short-term (30-60 days) instruments

that give the highest return. You can look or UIFs that are invested in stocks

(you can also invest in individual stocks but you will need a stock broker or

this) which have a denite growth prospect in the short term. However, the most

important guide would be the UIF’s historical and recent perormance.

Source: Economist Intelligence Unit (2004)


Table 3-3 | Top 10 Mutual Funds Ranked by Reported Assets as of 31 December 2003, in million pesos



Is the value o the UIF growing rapidly? Has it not yet reached its peak?

Unortunately, you can never get 100% correct answers to these questions.

And that’s where the risk (or lack o saety) lies. Rapid growth can suddenly be

reversed by rapid losses in the stock market. Below is the graph o a und thatgrows and alls rapidly. Analysts call this und “risky” and “volatile”.

How much o your investment are you prepared to lose? I you are not prepared

to lose any o it, then you might want to rethink and revise your investment

objective to: “o make as much money as possible in the shortest possible time

rom low to moderate risk instruments.”

I you change your objective to this, then look or UIFs with a short holdingperiod (30-60 days) that have been showing signicant growth but which are

substantially invested in government securities. Te latter moderates the risk but

also brings down the return. However, in lie as in investing, you can’t win them

all.

From beginning to end, what you need to be able to balance saety, liquidity,

and return is INFORMAION. Te bank or nancial institution oering you

investment products should give you all o the inormation you ask or about

these products. Tey should also give you inormation about how their company

itsel is perorming nancially. I they are not willing to give you inormation

about the perormance o their products and their company, DON’ DEAL

WIH HEM.




Table 3-3 | Top 10 Philippine Commercial Banks Ranked by Reported Assets as of the 2nd Quarter

of 2006, in million pesos

You should also get independent inormation rom the Bangko Sentral

ng Pilipinas (BSP) [http://www.bsp.gov.ph/banking/bspsup.asp ] about the

perormance o banks, and rom the Philippine Insurance Commission [http://

www.insurance.gov.ph/htm/_statistics.asp ] about insurance companies.

COMPANY ASSETS

1. Metropolitan Bank & rust Co. (MBC) 593,899

2. Bank o the Philippine Islands (BPI) 536,818

3. Equitable PCI Bank (EPCI) 323,389

4. Land Bank o the Philippines (LBP) 316,233

5. Banco de Oro (BDO) 286,7166. Philippine National Bank (PNB) 234,321

7. Development Bank o the Philippines (DBP) 228,621

8. Citibank N.A. 211,923

9. Rizal Commercial Banking Corp. (RCBC) 199,738

10. Union Bank o the Philippines (UBP) 171,581

Source: Business World , August 16, 2006

18. When dealing with a bank, how do you protectyourself from losing your investments?

Here are some tips or dealing with banks rom the Philippine Deposit Insurance

Corporation (PDIC):

Know the bank’s reputation. Investors and depositors should read

newspapers and sur the bank and Bangko Sentral ng Pilipinas

websites to nd out about the bank’s capitalization, ranking, nancial

statements, income projection, and products and services.

Know the bank’s products. Depositors should determine whether a

particular bank product is a deposit product. Tey may conuse

deposit products with investment schemes not covered by PDIC.




Know the current market interest rates. Depositors should be

cautious about overwhelmingly high interest rates. Unusually high

interest rates compared to market interest rates may mean liquidity

problems and higher risks.

Read the fne print. Depositors should also be careul to read the

ne print—tiny words, phrases, or sentences in the passbook,

certicate o time deposit, or any document that need to be signed.

Secure and update bank records. Depositors must secure a passbook,

AM card, certicate o time deposit, checkbook and other bank

records. Tese records serve as proo o the deposit accounts.

Check or signs that the bank may be in trouble. Depositors should

be wary when they cannot withdraw their money on demand or i

they can withdraw money only on a schedule given by bank ofcers.

Tey should also be cautious o aggressive solicitation by bank

marketing personnel. Finally, depositors should take note o their

bank’s past due loan ratios. High levels o unpaid debt may cause a

bank to have difculty in servicing withdrawals.

19. How about investing your savings in your ownbusiness?


First, you must understand that although your own

business is a good way to earn an income to live on

when you return rom work overseas or aer years o

being just an employee, not everyone has what it takes

to run a successul business.



What Successful Entrepreneurs Have

• Achievement ClusterAbility to seek and identiy opportunities

or going into business

Persistence

Commitment to work

Ability to take manageable moderate risks

(that is, risks where there is a good chance

o recovery and success)

Eciency and commitment

to quality standards

• Planning Cluster

Goal setting

Inormation seeking

Systematic planning and monitoring

• Power Cluster

Ability to persuade and network Sel-condence

How many o these qualities do you have?

I you think you have what it takes to become a successul business person, then

it’s time to plan your business.

First, think about what business you can engage in. Look around you, identiy

the business opportunities, and evaluate the business options. Do a situational

analysis, in which you identiy the strengths, weaknesses, opportunities and

threats to your proposed business.

Source: UP Institute or Small Scale Industries. 2002. 13th Start Your own Business Course Module.




Ask yourself: What type o service or product do I want to oer?

Will my proposed service or product satisy a needor want? Do I have a market or your service or product? Are

there people willing to pay or my service orproduct?

Will my intended market continue to patronize my business or years and years to come?

Are there others oering the same service orproduct? Are they able to meet the demands o themarket? Do I have a competitive advantage over

these others? Can I sell my service or product at a prot? Am I competent in this eld o business? Do I have the necessary resources—capital, supplies,

equipment, skill, technology, and labor—or thistype o business?

I you answer “No” to any one o these questions,think over your business idea or give it up

altogether.

Once you have satised yoursel that your business idea will work, then it’s time

to write out a business plan. A typical business plan includes the ollowing:

A. Introduction and General Background o the project

• why the project was chosen;

• its objective(s);• the nature o the project’s outputs and its uses

B. Marketing Plan

• product range

• product specications





• product mix

• projected demand

• target market

• competition• selling strategy

C. Production Plan:

• land and building requirements

• location and layout o store/plant acility

• process

• equipment needed

• power requirements

• utilities requirement

• store/plant capacity

• sources o raw materials/goods

D. Organizational Plan

• stafng complement – number o sta and required skills

• business organization, including duties and responsibilities

E. Implementation Schedule: timetable showing when dierent phaseso the project are to be carried out

F. Financial Plan:

• calculation o initial investment required

• operating requirements and costs

• working capital estimate

• projected sales and production program

• total project cost

• project nancing sources

• protability at 100% capacity utilization

• breakeven analysis

• projected Balance Sheet

• Income Statement and Cash Flow




Why You Need a Business Plan

▷ It assures you that all relevant questions have been answered.

▷ It enables you to organize and begin your business operations in an

orderly way.

▷ It gives you more condence in what you will do.

▷ It provides you with the general direction or your business; it gives you

a sense o where your business will go tomorrow, in a week’s time, in a

month’s time, or in a year’s time.

▷ It is a useul basis or making decisions through critical expansion and

diversication periods.

▷ It shows how much money is needed, what it is needed or, when and

or how long it is needed in the business.

▷ It can help reduce the risk o ailure due to undercapitalization, early

cash fow problems, excessive and unplanned expenditures.

▷ It enables you to set targets and later evaluate your business peror-mance against these targets.

▷ It is a requirement or taking out a business loan or or persuading

others to invest in the business.

Source: UP Institute or Small Scale Industries. 2002. 13th Start Your own Business Course Module .




Why Businesses Fail

According to Rhodora Hizon o the Center or Small Enterprises (CSE), a

nongovernment organization specializing in providing technical assistance and

training to small enterprises worth over a million pesos, more than 75% o or-

mer OFWs who sought CSE’s advice ailed to make their enterprises grow.

What causes a business to ail or to go bankrupt?

Hizon says one reason is lack o skills related to the business. Another reason is

poor choice o business to engage in. According to Colayco (2004, p. 177), “Ex-

cept or a really entrepreneurial minority, most…go into businesses that are easy

to enter…[such as] sari-sari stores, FX taxi business, [and] tricycle business…

[Tese are} businesses that are very oen already crowded. Tey end up going

aer small markets that cannot sustain too many sellers such as hot pandesal,

sago drinks and sh balls.”

Other signicant causes o ailure in business are:

• Poor management – maniested or example in the lack o accounting

records• Poor attitude towards business and lie in general – or example,

lack o condence in ability to succeed, inability to compete,

bahala na attitude, impatience/lack o willingness to work hard

and wait beore reaping rewards

I you have the right attitude and the skills, lack o capital is a problem that you

can easily solve.

What about having too many dependents or relatives? It depends. I your depen-dents or relatives can provide loyal, cheap and reliable human power, then they

can contribute to the success o your business. However, i your dependents are

poor workers, unreliable, and unwilling to earn their own keep or pull their own

weight, then they will pull your business down.







A P P E N D I x A

Insurance Products and Pension Plans

What is an insurance product?

An insurance product is a guarantee o certain benets in the event o anything

untoward. I you are insured, your lie insurance company pays your beneciaries

(usually your spouse or immediate amily members) the amount insured (or

example, PhP 2 million) ollowing your death. Non-lie insurance covers re,

casualty, and accidents.

o be insured, you must regularly pay your insurance company monthly, quar-

terly, or annual “premiums”. Insurance companies invest the premiums they

receive rom you and other clients in selected nancial instruments in ways that

are regulated by the government through the Philippine Insurance Commission

which is under the Department o Finance. Some commercial banks with univer-

sal licenses also oer insurance products. (Ateneo-EPRA Project, 2006)

What are pension unds?

“Pension unds provide retirement income through regular payments to employ-

ees covered by a pension plan. Funds are obtained through contributions rom

employees or employers. You may also want to buy your own pension plan rom

lie insurance companies i you have extra income that you want to save or your

retirement.

“Te Government Service Insurance System (GSIS) and the Social Security

System serve as the largest pension unds in the Philippines. Tese two govern-

ment-administered unds invest in government securities, the stock market,

commercial papers, and property development. Teir income usually comes rom

salary and housing loans, interest income in investments, dividends, and oreign

exchange gains. (EIU, 2004) Apart rom GSIS and SSS, there is another smaller



government administered und: the Armed Forces o the Philippines Retirement

Separation and Benets System (AFP-RSBS).

“At present, GSIS and SSS are experiencing difculty in meeting their redistribu-tion goal. Specically, benets paid to members have outpaced the amount o

contributions o members. Meager returns on investments, poor compliance and

enorcement in payment o premiums, low collection rate on loans, huge losses

rom housing programs, and the lack o regulatory institution are threatening the

viability o GSIS and SSS. Nonetheless, there have been initiatives to reorm the

country’s pension system and enhance its role in capital market development.”

(Ateneo-EPRA, Project, 2006)

wo In OneTere are now many insurance products that combine lie insurance

with pension plans. Study these well and ask yoursel the same questions

as above to help you choose the right product. Te advantage o these

combined products is the ease o payment. For one payment, you get two

benets—your lie is insured and you continuously build up your retire-

ment/pension und.

APPENDIx A56



A P P E N D I x B

Family Budget Worksheets

EDUCATION

GOAL

Put the names o the children/siblings who plan to nish collegein Column A.

How much does each year o education/training cost (tuition,books, uniorms, allowances, etc.)? Put in Column D.

Add the entries in D to get the otal Cost o Education, D1. How much will the other amily members contribute to your

children’s/siblings’

education? Put these in Column E. Add to get the total E1. How much will you contribute to your children’s/siblings’ edu-

cation? Calculate this and put your answer in column F. Add toget the totals D1, E1 and F1.

Divide D1, E1 and F1 by 12 to get the monthly costs, D2, E2and F2.

A. Name D. Cost o Educa-tion: uition, Books,Clothing and Allow-ance

E. Family Contribution

F. YourContribution

1.

2.

3.

4.

You

otal Costo Education

D1 = E1 = F1 =

Monthly Costs D2 = D1/12 = E2 = E1/12 = F2 = F1/12 =

Worksheet 1: Education Goal









A P P E N D I x C

Pre-Need PlansTe Rules on Pre-Need o the Securities and Exchange Commission (SEC)

denes pre-need plans as contracts that provide or the perormance o a uture

service(s) or payment o an agreed upon amount o money at some time in the

uture, in exchange or the payment o the plan holder o a specied amount. It

includes lie, pension, education, internment (burial/memorial plans), and other

plans that may be approved by the SEC.

Pre-need plans can be open-ended or xed value. Open-ended, actual cost,

or traditional plans pay the actual cost o the need that you paid or, such as

education or burial expenses. A number o pre-need companies have been

unable to pay open-ended plan holders because the actual costs (or example

o education) have increased unexpectedly and substantially in the last 10

years. Now, only xed-value education plans are being oered by the pre-need

companies. (Padojinog, 2005)

In the Philippines, pre-need pension plans usually have the ollowing eatures(Aquino, 2002):

It usually takes ve years o regular monthly, quarterly, or annual

installments to complete payment o a pre-need plan.

You can choose whether you get the benets o your pension when you

reach a certain age (or example, 60 years old) or a number o years (or

example, 20 to 30 years) aer you complete your payments. When you

get your benets is called the maturity date.

You can choose whether you get the benets o your pension in lump

sum or in installments or both.

In case o your death beore the maturity date, pay-out will still be

made at maturity date to your chosen beneciaries.



Pre-need companies are required to contribute to a rust Fund that is unded

rom their collection o their clients’ payments. Several pre-need companies are

subsidiaries o banks or insurance companies. Pre-need rms are regulated by

the SEC and are not subject to liquidity requirements imposed by the CentralBank. However, some o the big pre-need companies have experienced nancial

difculties and have ailed to ulll their contractual obligations to their clients.

(Adapted rom Ateneo-EPRA Project, 2006)

APPENDIx C62



A P P E N D I x D

ypes o Risk(Te information below is adapted from the Primer on Savings and Investment Instruments in the

Philippines, 2006, Ateneo-EPRA Project.)

a) Interest Rate Risk . Changing interest rates can have a major eect on xed-

income investments, such as treasury bills. I you invest in treasury bills at a

xed rate o 7% per annum (per year) and the interest rates in the market

later increases to 10% per annum, then you lose the opportunity to earn the 3%

dierence. You don’t actually lose money. What happens is that you could have

earned more money but didn’t.

b) Business/Event Risk . Tis reers to unoreseen circumstances that may

adversely aect a specic company or industry. I you invest in commercial

papers o a specic company and the business o that company aces big

problems or are aected by a natural disaster, the value o your investment may

be aected.

c) Credit Risk (or Deault Risk). Tis is the possibility that the issuer o a bond

(or example, a company or a government institution) will ail to make timely

payments o interest and principal to investors in the bond. I the bond is part

o a mutual und or a UIF, the risk will certainly aect the net asset value

o that und. For stocks, credit risk is the likelihood that the company issuing

the stock may have nancial problems that may cause it to cut or suspend its

dividend payments.

d) Market Risk . Tis arises rom the ups and downs and sentiments o the

markets, which may aect the prices or value o bonds and stocks.



e) Purchasing Power/Infation Risk . Tis happens when the nancial return on

an investment loses purchasing power due to a general rise in the prices

o goods and services. o deal with this risk, a person must ensure that the

investment rate o return exceeds the rate o ination.

) Political Risk . Political risk stems rom changes to the political and socio-

economic conditions o the Philippines that may aect market sentiments,

business prots, and investment returns.

APPENDIx D64



A P P E N D I x E

Government Securities

What are government securities?

From time to time the Philippine National Government or its agencies, such

as the Department o Finance (DoF), issue debt securities to nance decits

and development projects. Tese debt securities, commonly reerred to as

Government Securities or GS, can be alternative orms o investments. Because

they are either directly or indirectly backed by the Philippine Government,

they carry lower interest rates compared to those issued by private companies.

(Ateneo-EPRA Project, 2006)

1) reasury Bills

reasury Bills (-bills) are direct and unconditional obligations o the national

government. Tey are issued by the Bureau o reasury (Br) o the DoF, to

mature aer one year or less. Tey can also be traded in the secondary market

beore maturity. As an investor you can choose between -bills that mature in 91,182 or 364 days. Banks, which comprise majority o the Government Security

Eligible Dealers (GSED), bid or -bills in the weekly auctions held by the Br.

Te banks then resell the -bills to investors.

Strictly speaking, -bills do not bear interest. Tey are issued and sold at a

discount rom their ace value and are redeemed at maturity or their ull ace

value. For example, i you buy a 364-day -bill with a ace value o PhP 100,000 at

a discount o 12%, you only pay PhP 88,000 or it. Aer 364 days, you get repaid

PhP 100,000, giving you a gain o PhP 12,000. (Ateneo-EPRA Project, 2006)







and a decline in the price o that bond. Downgrade risks reer to the possibility

that a credit rating rm (such as Fitchratings, Moody’s, or Standard and Poor’s)

will lower the rating o a bond. Downgrade risks are closely associated with credit

spreads risks. (Ateneo-EPRA Project, 2006)

APPENDIx E68





In the Philippines, banks are not allowed to sell mutual unds because it gives

“the impression that the investor is dealing with the parent bank” (USAID-

AGILE, 1999). Mutual unds are distributed and sold by insurance companies

and asset management companies and regulated by the SEC under theInvestment Company Act. In February 2001, the SEC allowed Philippine-

registered mutual unds to invest 20% o their portolio in oreign unds or

securities in response to weakness in the local equities market. (EIU, 2004)

Since mutual unds are proessionally managed, investors need to pay specic

ees called sales ee/load. Like UIFs, the actual price o each share is calculated

in terms o the Net Asset Value Per Share (NAVPS), which is the value o all

assets held by the und (less any liabilities) divided by the number o shares sold.

o realize earnings on a mutual und, an investor should compare the current

NAVPS o the und with its NAVPS at the time he/she bought it, and also take

account o cost o sales and redemption ees. Te NAVPS o mutual unds is

regularly published in BusinessWorld , Philippine Daily Inquirer , and Philippine

Star .

APPENDIx F70



R E F E R E N C E S

Print MaterialsAñonuevo, Augustus . 2002. Reintegration, An Elusive Dream. In Dizon-Añonuevo,

Estrella and Añonuevo, Augustus . (eds.) Coming Home: Women, Migration &Reintegration. Balikabayani Foundation Inc. and AIKHA Overseas Workers andCommunities Initiative, Inc.

Aquino, Emilio. 2002. Private Pension Schemes in the Philippines: Regulatory Practices.OECD, Korean Financial Supervisory Service, Korean Ministry o Labor, andInternational Network o Pension Regulators and Supervisors (INPRS) Conerence on

Private Pensions. October.

Ateneo de Manila-EPRA-USAID Project. 2006. A Primer on Savings and Investment Instruments in the Philippines.

Bagatsing, Valentino. 2005. Government Securities. Introduction to Financial Markets andDevelopment by Ateneo-EPRA USAID Project. 31 August.

Bernardo, Romeo. 2005. Introduction to Pension Systems. Introduction to FinancialMarkets and Development by Ateneo-EPRA USAID Project. 31 August.

Bautista, Ernesto. 2005. Philippine Financial Institutions and Instruments. Introduction toFinancial Markets and Development by Ateneo-EPRA USAID Project. 30 August.

BusinessWorld Research. 2006. BusinessWorld 2nd Quarter Banking Report . August 16.

BusinessWorld . 2005. Unit Investment rust Fund: Investors trust anew. 1 August.

BusinessWorld . 2005. Guide to Bonds and other Fixed-income Instruments. 30 May.

Colayco, Francisco. 2004. Wealth Within Your Reach. Pera Mo, Palaguin Mo! Colayco Foundation or Education, Inc.

Dizon-Añonuevo, Mai. 2002. Migrant Returnees, Return Migration andReintegration. In Dizon-Añonuevo, Estrella and Añonuevo, Augustus . (eds.) Coming Home: Women, Migration & Reintegration. Balikabayani Foundation Inc. and AIKHAOverseas Workers and Communities Initiative, Inc.

Economist Intelligence Unit. Country Finance 2004. Philippines.



Mendelson, Lewis. 1999. A Strategic Vision: Strengthening Mutual Funds and Improving the Public’s Perception o Tem. USAID-AGILE.

Mishkin, Frederic. 2001. Economics o Money, Banking, and Financial Markets. Adison

Wesley Longman.

Padojinog, Winston. 2005. Pre-Need Industry: Profle, Perormance, and Issues.Introduction to Financial Markets and Development by Ateneo-EPRA USAID Project.31 August.

Philippine Daily Inquirer . 2005. Looking or Seminars on Mutual Funds. 24 January.

Philippine Daily Inquirer . 2003. Sins Committed in the Name o Diversication. 4November.

UP Institute or Small Scale Industries. 2002. 13th Start Your own Business Course Module.

Valerio, Rosanna Luz F. 2002. Pag-ahon sa Kumunoy ng Utang: Te Debt-ridden Lie o Migrant Women. In Dizon-Añonuevo, Estrella and Añonuevo, Augustus . (eds.)Coming Home: Women, Migration & Reintegration. Balikabayani Foundation Inc. andAIKHA Overseas Workers and Communities Initiative, Inc.

Web ResourcesAsiaweek. 2001. Asiaweek Agenda Personal Finance. Risk and Reward . Available online

at http://www.asiaweek.com/asiaweek/97/1017/aa1.html.

Bureau o Internal Revenue Website. 2004. Available at http://www.bir.gov.ph.

Eastern Michigan University. 1998. Basics o Savings and Investing (A eaching Guide) .Available online at http://apps.nasd.com/investor_Inormation/tools/teachers/basics_savings.asp.

Money Market Association o the Philippines Website. 2003. Available athttp://www.mart.com.ph.

Opiniano, Jeremiah. 2006. Ex-OFWs, advocates conront business realities. OFW

REFERENCES72

Documents

Pagpapahalaga Sa Perang Kinita Pinoy's Guide to Managing Finances