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Showing posts from May, 2017

Other Than Banks

We know that banks give an interest rate of around 0.25% per annum. So if you have P10,000 in your bank account, you will only earn P20 for the year (P10,000 x .0025 x .80 - 20% withholding tax). Will that be enough? No! That's why we need to find ways on how to grow our money. There are a lot of ways like having a business, stock market or investing it in pooled funds. However, returns are unguaranteed with these types of investments. That's why, study first before investing to make sure you are prepared for the consequences. While doing that, the following may be recommended especially if you prefer low risk investments: 1)Time Deposit -  is a fixed deposit at a bank, which you will not have access to during the agreed time period in exchange for a higher interest rate compared to a savings account. Identical to an investment account, you will be eligible to a higher premium rate as a return on your investment. Time deposit investment rates generally differ from interest ran…

Term of the Day: Sunk Cost Trap

Sunk cost in economics is any past cost that has been already been paid and cannot be recovered.
Individuals and businesses fall into a sunk cost trap when they base their decisions on past behavior and a desire not to waste time or money they have already spent, instead of cutting their losses and making the decision that would give them the best outcome going forward.

For example, your business is loosing money but you don't want to give up because of the time, effort and money you had already put in it or going to a concert even if you are sick because you don't want to waste your money.

So don't be a victim of sunk cost fallacy. "Failure doesn't mean the game is over, it means try again with experience."

Sources: Investopedia, life hack

My Take on VUL

I’ve read on Facebook a post regarding insurance and I felt sad about some of the comments. That’s why many people have negative sentiments about insurance because it is not properly explained. Also, I find a bit odd for those who are recommending VUL as an investment when in fact, it is an insurance (main purpose) with an investment part (that's why premium is more expensive compared to traditional). When I first bought my insurance (VUL), I really didn’t understand what for. I just bought it because some of my former colleagues bought also. Then one day, upon checking my fund value online, I was disappointed. So, I did my research and continuous research until I somehow understood it. It’s still a bit vague actually and I hope those who are FA’s here in this group will verify my understanding. In my opinion: INSURANCE is NOT an INVESTMENT. Purpose is more on PROTECTION. Insurance, as defined by Investopedia, is a contract, represented by a policy, in which an individual or enti…

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