Falling interest rates sweeten real estate deals

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Questions:

At present, interest rates are so low that the net interest income we get is almost nothing. Is there some investment out there that we can consider without really taking tremendous risks? — Ysah

My wife and I now have a one-year-old daughter. We live in a rented place and budgets are tight but workable. My wife and I have to negotiate our lease almost yearly and that uncertainty is getting difficult to bear with our young baby in mind. We have a small piece of land but it is far from where we work and we cannot borrow much from a bank to build a suitable home of our own. Would you have any suggestions? — Mike

These two questions show us the two sides of the interest rate story that policymakers face. Seguir leyendo Falling interest rates sweeten real estate deals…

Senior citizen complains of taxes on her savings

Question:
I am now 69 years old and still working. But my saving is only P100,000. Will the government continue to impose tax on my saving in the bank? Where is the logic here? — Rose

You raise a very interesting point Rose and I am very sure that there are a lot of people out there who are asking the very same thing.

From the standpoint of government, taxes are its lifeblood. It does not really matter if we are talking national or local. The plain fact is that tax collections allow the government to provide services to its constituents. Seguir leyendo Senior citizen complains of taxes on her savings…

Dangerous thoughts on retirement: ‘Better late than never’

We all get pre-occupied by the rat race. Surely taking a few years off wouldn’t hurt my retirement plan. Or would it?

Anyone who wants to retire well needs to ask himself (1) how long do I expect to live and (2) how much time do I have before I retire?

The last thing we want is to run out of resources after we retire. We would rather bequeath what we have left rather than ask our children to feed us. That’s why the planning horizon is important. We need time to prepare.

Figure 1 in the gallery shows what happens when we have set aside P100,000 (for the lump-sum, just-in-case expenses) and then we add P50,000 each year to our retirement fund. Let’s assume that it generates a return of 5.0 percent per year. Seguir leyendo Dangerous thoughts on retirement: ‘Better late than never’…

Rising prices and the poor house

Worsening poverty plus rising food prices, and what have you got? More and more households are definitely going to the poor house if this keeps up. There are indicators everywhere that high prices aren’t likely to go back down anytime in the future. I remember what Rico Hizon said during a recent interview: We are importing inflation from the US and China. Everywhere in Asia, prices are going up.

Here are some tips from on how to make sure you’re not badly affected:

Watch out for the warning signs:

1. Uncontrolled spending and/or use of credit cards
2. Having loans you are having difficulty to pay
3. Not making and using a budget
4. Living a lifestyle you can’t afford
5. Lack of savings

To me, number five would go to number one. An inadequate buffer fund, absence of emergency stash – whatever you want to call it – should make ANYONE stop and take stock of your situation as if it’s the biggest red light on the street of personal finance.

I don’t expect those who are below the poverty line – that’s around 4.7 million families as of last count – to have any savings. That’s like trying to wring water from stone. Perhaps even the next tier won’t be able to sock away money, and that’s totally understandable.

But if you have a job, have money for make-up, movies, dinner in a restaurant, at least 10 pairs of shoes in the house, own an air-conditioning unit, have a closetful of nice clothes, I think you should at least have a one-month worth of savings in the bank for starters.

A recent survey showed that too many Filipinos who are actually in the middle-income group rack up credit card debt for non-essentials but have no savings. As the article says, simplify, simplify, simplify! Sometimes, simplifying – birthday and graduation celebrations for example – can be more fun and heartwarming. Think about it.

No matter how abundant you think your financial life is at the moment, poverty can still creep up on you. If the warning signs are present in your life right now, it’s time to take action and make some drastic changes. Take control of your money instead of letting it control you!

Poverty CAN creep up on you. I totally agree. Denial is a powerful thing.

Enrollment gets you down?

Getting ready for enrollment should have been done at least six months ago.

Not today, not in May, and certainly not a week before school starts.

A couple I interviewed once said enrollment time is their most stressful season of the year. Christmas spending may put them in debt, but the warm, fuzzy feelings ease the pain. What the heck, it’s Christmas! they say. No such thing for enrollment days. It’s just pure financial pain.

Alex C. wrote:

It’s enrollment time again for my three children in grade school. Every year, I get so depressed during this season. Everything I save whole year round disappears at this time. Then I start at zero again, saving for next year’s round of tuition fees. Can you give me advice on how I can manage this time better? How can I prepare the needed funds adequately in time for next year? — Alex C. Seguir leyendo Enrollment gets you down?…

Poll: Who should bring home the bacon?

a) Who has the big muscles? Of course, it should be the husband. The wife should stay home with the kids.
b) Do you live in the middle ages? Women can and should have equal rights to work outside the home. Brawn is no longer the world’s currency. Brain is.
c) Husband: There are no opportunities for me out there. Wifey has the upper hand in the labor market. I can stay home and take care of the kids.
d) Wife: I want to work but I am kept home against my will.
e) We are having the time of our lives. We are in business together.
f) Should this be an issue at all?

Globally, the definition and boundaries of the traditional family are in flux. There was a time when there were only two choices: for the wife to work or not. But the changes have opened many options to couples. Which is the ideal? Which is the reality? Which is true in your family? Seguir leyendo Poll: Who should bring home the bacon?…

Frugality Week: Grocery shopping mistakes you think you’re too smart to make

1. Too busy to check the lowest or highest shelves.

The most expensive items in the grocery are mostly at eye level. If you want to find bargains, you have to stoop down or look up. “This may not be true all the time, but I did find that it was true in some of the grocery stores I went to,” Heinz says.

We had a good laugh at the fact that I’m only all of 4 feet and 9 inches.

2. Moving from aisle to aisle in an “organized manner”.

Heinz also says there’s a science to designing how products are situated in grocery stores. The most expensive food items are placed in the middle while those that are less expensive are in the periphery. So that’s why processed food items are always in the center! Seguir leyendo Frugality Week: Grocery shopping mistakes you think you’re too smart to make…

Frugality Week: ‘Good eats’ on low budgets

With a global food crisis hanging over our heads, should we say goodbye to ‘good eats’?

Here are some tips from MoneySmart friends for enjoying good food even with low budgets:

1. Skip the fruit shakes, juices and signature concoctions! Super mom Kitts Luna-Vibar points out that these drinks cost as much as one dish. And don’t go bottomless if you don’t drink that much!

2. Andrea Echaves of Eon even goes as far as ordering house water only. “It is healthier and more cost-efficient. Drinks cost around P50 each which means additional P250 for a family of five!” Seguir leyendo Frugality Week: ‘Good eats’ on low budgets…

Take Charge of Your Money - Travel now, pay later

Question: I came across offers from my credit card company for travel packages, which are perfect summer destinations. The offer does not only promise discounted prices, but also a fly now, pay later option. I’m not comfortable taking on credit for “want” items, but I have to admit this is hard to resist. And at 0% installment plan, I am truly hooked. Take it, or take it? — Albert C.

Answer: There is some truth to the old proverb, “All work and no play makes Jack a dull boy.” Most of us do need to work to earn a living to live our lives well, but if we all turn workaholic and just live to work, there won’t be much sense to life. Time and again, scientists and medical practitioners have also cautioned us on the perils of working too hard: We’ll be stressed, and this will affect our health, our relationships, and even our character.

So a wise person will work hard during the week, but make time for leisure at the end of the weekday or on weekends. Such times are used for me-time, or for bonding with family and friends.

After-work hours and weekends are not enough, though, so vacations are necessary to one’s sanity. There is nothing like being in a new place, away from work deadlines and other responsibilities, where you can recharge and come back to work refreshed and ready to tackle all that’s needed. Seguir leyendo Take Charge of Your Money - Travel now, pay later…

Goodbye stocks, hello art?

Did you know that a good art collector could beat returns in the stock market in both good and bad times?

Investment in well-chosen Philippine art pieces at a minimum of P100,000 to P150,000 could give a 10 percent to 30 percent in a year or two. For those who have a taste for the works of National Artists, the 1972 Bencab acrylic on paper, estimated at $19,000 to $26,000 eventually sold for $54,000, writes Giselle Kasilag in Kulay-Diwa website.

With stock, currency, bonds and commodity markets all over the world always in a state of flux, investors may find it worthwhile and less stressful to buy paintings instead of financial instruments. Or at least use this alternative form of investment to diversify his portfolio and spread his risks. Seguir leyendo Goodbye stocks, hello art?…