Revisiting my old personal finance books [4 Images]
~ Tuesday, December 13, 2022 Blog Post ~
Since I’m on Christmas vacation mode already, I have the time to revisit my old personal finance books this month.
Among the very many titles I have got on my shelf that I had the time to review this month are “Smart Women Love Money” published in 2017 by Alice Finn and “The Secret to Saving and Building Your Future: Become Your Own Financial Educator” published in 2017 by International Marketing Group.
Moreover, I have the book “Investing Success: How to Conquer 30 Costly Mistakes and Multiply Your Wealth” published in 2004 by Lynnette Khalfani and so many more classic and new personal finance tomes.
As a voracious reader, I devour all the personal finance concepts I encounter and find relevant in my existence. I perform this measure by taking notes on my so very many journals.
As you can see, I really relish this reading hobby I’ve got. I take note of personal finance phrases, sentences, paragraphs, and other expressions I like on my journal. I also paraphrase some of these statements so I can easily digest, recall, and apply them in my life.
Besides savings and investments, some of the books I was able to revisit this week focused on the significance of securing life insurance policies. They are all informative and I found it productive reviewing them and my notes.
Anyway, today, I found the time to type some of the very many relevant personal finance concepts I gathered from my old personal finance books and post them in this blog entry. I think it would be great since I can go over them easily during my free time.
1. Make sure to act on your financial needs and make the right choices.
2. Mutual funds:
a. Are one of the most realistic investment options to outpace inflation;
b. Lets investors earn a return that is above the inflation rate; and
c. Can be an easy entry to investing as an investor does not need a large amount of money to start.
3. I can control my financial future.
4. my upgraded financial life
5. Simplify and create abundance.
6. simple yet powerful financial concepts
7. upgrade my financial wisdom
8. I was very new in my financial journey.
9. a financial revolution in my life
10. You have to be prepared for situations like getting old, your child going to college, and retirement or when you stop making active income.
11. Wealthy people take the time to invest in knowing how money works.
12. a better financial future
13. I am my own money manager.
14. Lack of knowledge and understanding about personal finance is causing a lot of Filipinos to lose money and retire poor.
15. saving the right way
16. Financial education is the key to saving a person’s future.
17. I will succeed in building my financial future.
18. creating wealth for our family
19. “Plant what you want to harvest. If you want to harvest mangoes, plant mango trees. If you want to harvest tomatoes, plant tomatoes. However, if you want to harvest money, then learn to plant money.”
20. You must be educated about personal finance, so you can decide for yourself what you need. When you are equipped with knowledge, no salesman can offer you any complicated, overpriced, or undervalued financial products.
21. Through financial education, you will buy and own a product because you understand its purpose.
22. Bill Gates: “If you were born poor, it is not a mistake; but if you die poor, it is a mistake.”
23. You should be interested and invested in your financial future.
24. It’s your own responsibility to learn the simple rules of how money works. Understanding money is a part of taking care of your family.
25. Financial education and discipline can help you become wealthy.
26. You can control and save your future.
27. properly equipped to manage money
28. Financial independence is a dream and a priority. Take control of your future by learning how to make, save, grow, and protect your money. No one one else will do these for you.
29. Statistics show that 90 percent of personal bankruptcies are due to unexpected and unforeseen illnesses.
30. Emergency fund: 3 to 6 months of your income set aside to deal with sudden changes in your job or business and to pay for unforeseen accidents or repairs.
31. Save and make long-term investments.
32. When you get sick, disabled, or die suddenly, your savings won’t last very long. Getting long-term healthcare and life insurance are the best investments.
33. A strong financial foundation will result in you having sturdier and resilient finances that can withstand any money-related storms, tornadoes, and earthquakes.
34. Following these five building blocks of a strong financial foundation (healthcare, protection/life insurance, debt management, emergency fund, long-term investment) will help build and secure your financial future.
35. Wealth is a subjective term and must be defined on an individual basis.
*The Wealth Formula:
a. BIGGER/HIGHER: Money, time, rate of return
b. SMALLER/LOWER: Inflation, tax
36. Hopefully, when you get older, you will have enough money set aside and invested, so that you will still earn even when you need to stop working.
37. High level of financial responsibility: When you are younger and starting a new family, you and your spouse have big roles to fulfill, such as becoming parents and having babies, paying bills, among others. These are obligations that both of you must fulfill whether you live or die.
38. The need for insurance protection: It is quite high in the early stages of building a family.
39. more wealth, less responsibility
40. a good saver who built up wealth
41. When you have PHP3 million in cash savings, your protection needs will drop to PHP2 million.
42. Of course, when you reach PHP5 million in cash savings or investments on hand, you will no longer have the need for protection.
43. Actually you don’t own the home, the bank lender does. You own the mortgage, which is your responsibility. Until you pay it off, you don’t own the home.
44. In life, two outcomes can happen to you:
a. You live too long; or
b. You die too soon.
In any event, you should financially protect yourself and your family’s future. Therefore,
a. Have high financial protection (life insurance, savings, investments) when you are younger. It will take care of your family — children, college education, mortgage, and debts if something happens to you;
b. Save as much as you can to take care of your future. Having high financial responsibilities such as debts and mortgages results in having high protection needs even when you get older.
Two solutions:
a. If you die too soon, life insurance will take care of your family.
b. If you live too long, investment and long-term care will take care of you.
45. Life insurance protection can help you replace your income, help finance your children’s education, pay debts and estate taxes, and so on, instantly.
46. Investments will generate continuing income for you when you retire and is your money working for you.
47. Life insurance is for protection, should anything happen to you.
48. Life insurance is a critical part of your financial strategy and is important in building and preserving wealth.
49. Life insurance is the most important financial protection that can protect your family and children and should be taken seriously.
50. Life insurance insures your family’s ability to continue on without being financially devastated when you’re gone.
51. If you have health problems, life insurance companies may deny your application or charge a higher rate.
52. There are people who are not insurable because of age, disease, risky habits, and other health and lifestyle matters.
53. It is cheaper to buy life insurance when you are younger and healthier, which are the two characteristics that make you insurable.
54. DIME Method — Debt, Income, Mortgage, Education; A simple way to calculate the amount of life insurance protection you need.
55. Breadwinners need life insurance to take care of their spouse, children, parents, and siblings that they financially support.
56. The cost of insurance policies go up every year because your risk of dying is higher as you get older.
57. Mortgage Life Insurance: Also known as decreasing term insurance; If something happens to you, the house will be paid off for the surviving spouse.
58. With uncertainty about the economy and the ever-changing job market, consistency can be a challenge.
59. surplus money
60. Other investments may be able to give better rates or return, but they may also sink your nest egg.
61. Thus, consider all options to find a suitable solution for your financial needs.
62. Buy what you need and can afford.
63. Assess your financial situation. Manage your budget and cut down unnecessary expenses if you must. Then, you can make a better decision.
64. Cash build-up option that fits your savings and investment goals
65. If you have a high financial responsibility in your family but not much money, term life insurance may be a better choice for you.
66. Buying life insurance is a privilege and not a right. You buy it when the insurance company gives you this privilege.
67. 3 Rules of Life Insurance:
a. There is no free insurance.
b. The cost of insurance always increases with age.
c. All insurance are term insurance which can be bundled with a certain cash value.
68. Accidental death insurance = Double indemnity coverage
69. Most often, joint life insurance is for estate planning because the benefit is to minimize or eliminate the burden of estate tax on the heirs. The cost of this type of policy is usually cheaper than if the couple had bought two separate policies.
70. Living Benefits of Life Insurance or Accelerated Death Benefits can provide the needed money at critical times.
71. You are draining money at a much faster rate.
72. Apply the power of compounding.
73. 6 Kinds of Debt: credit card debt, personal loan, car loan, home loan, business loan
74. Spend on necessities, not luxuries. Buy only what is necessary like food, insurance, and utilities. Cut out unnecessary expenses like cable TV and high-end gadgets. Change the habit of spending to the habit of saving.
75. Observe the habit of increasing cash flow.
76. Consider liquidating your savings and non-income-producing assets.
77. Prepare an emergency fund for life’s unexpected little “disasters,” and to pay for the unforeseen expenses.
78. 3 Good Options to Put One’s Emergency Fund:
a. Low-risk bond or mutual funds
b. Money market funds
c. A separate bank account without debit card or online access
79. It’s not how much you earn that counts, it’s how much you keep.
80. One of the common traits among rich people is that they are very conscientious when it comes to spending.
81. Time is money. The sooner you have, the better for your future.
82. Procrastination is the enemy of saving.
83. The high cost of waiting: Mr. Save Early vs. Mr. Save Later
84. Money is tight for a young married couple with mortgage and new expenses.
85. Don’t wait. Start to save as much as you can, as soon as you can.
86. Your 2 options:
a. Save now and enjoy later.
b. Spend now and suffer later.
87. A solid financial foundation takes time to build. Get rich slowly.
88. The magic of compound interest: Albert Einstein called compound interest the 8th wonder of the world and man’s greatest invention because it is the mightiest force ever unleashed for the amassing of wealth.
89. Wealthy people tend to spend time learning and understanding how money works. They look for advice and solutions to get better returns for their money.
90. There are no guarantees that any investment or savings program can outpace inflation.
91. Inflation:
a. Is the price increase of goods and services over time, resulting to:
b. Decrease in one’s purchasing power;
c. A major factor to consider when you build up your financial future;
d. Inflation and taxes should be beaten by money saved’s rate of return. Otherwise, you will lose money in the long run;
e. Decreases the real value of your money;
f. If you put your money in an account with zero rate of return, you will lose money in the long run.
g. You must get about 5 percent or more interest to beat taxes and inflation.
92. Have the discipline to save money regularly and consistently.
93. Your savings’ rate of return must beat inflation and taxes because you can be saving and still losing money if your rate of return is lower than inflation.
94. Securities = Stocks and bond certificates
95. Stock: An investment that represents equity ownership in a corporation; represents a proportionate claim on a company’s assets and profits.
96. Bond: An instrument of indebtedness of the bond issuer to the holders
97. Japan’s Nikkei 225, Hong Kong’s Hang Seng, and Europe’s Euro Stoxx 50: Stock market indices that track the stocks of big companies throughout the world are highly observed and have global impact, affecting not only companies but also economies all over the world
98. Stock market index: A statistical indicator; used to measure and report changes in a group of stock’s market value
99. The rise and fall of those numbers (changes in a group of stocks’ market value) on any given day provide you an idea of how the stock market index is performing and the way the market is doing in general.
100. Stock market indices are unmanaged, so it is impossible to invest directly in them.
101. Dow Jones Industrial Average or DJIA: The most widely known index in the world; measures 30 of the most powerful companies in America; does not reflect small-sized companies, though most people consider it the barometer of the US stock market
102. S&P 500: Standard and Poor’s 500; The indicator of 500 large cap companies; covers about 70 percent of the entire US equity value; These companies represent all major sectors of the US economy (manufacturing, financials, healthcare, technology, energy, retail, and pharmaceuticals); better reflects the US market than the DJIA; Is more frequently quoted by financial experts
103. NASDAQ Composite Index: Lists the stocks of over 4,000 companies in its market; Is heavily weighted toward technology stocks with well-known names like Apple, Google, Microsoft, Cisco, Intel, Tesla, Netflix, and Amazon.
104. Common stocks of listed companies; carefully selected to represent the stock market’s general movement
105. Money market: A market for short-term, low-risk securities (Example: Treasury bills, bank certificate of deposits, commercial paper, and other government or corporation-issued debts)
106. Money Market Accounts: Offered through banks; generally give better returns than savings accounts; provide easy access to money when you need it, but tend to require a higher deposit amount from participants.
107. Mutual fund; professional fund or money manager who invests the money based on the specific strategy and goal of the fund
108. A mutual fund allows the average person to have equal investment opportunities with the wealthy; lets people earn what the wealthy are earning
109. Capital gains
110. A mutual fund’s yield, share price, and investment return will fluctuate. Investors may receive more or less than what they originally invested when shares are redeemed.
111. Consider any mutual fund’s investment objectives, risks, charges, and expenses.
112. It is important to consider your ability to continue regular purchases of shares of a securities product through different economic conditions.
113. Time, not timing, is the better ally to build wealth for your family.
114. 2 Times of Retirement Plans:
a. Defined Benefit Plan (DB): Traditional pension; pays a retiree a specific benefit based on years of service and salary level until the retiree passes away; In some cases, the payout will continue for the retiree’s spouse or the beneficiary; You know what you are going to get when you retire;
b. Defined Contribution Plan (DC): Allows the employee to make pre-tax contributions to his own retirement account. Employers make matching contributions up to a certain amount; It’s called “defined contribution” because you know what you put in, but you won’t know what you may get when you retire due to market fluctuations.
115. Estate Planning: Estate is everything you own minus your debt; House, car, money in the bank, family heirlooms, and so forth.
116. Of course, estate planning will not be on people’s priority list if they do not do much in terms of savings, investments, and insurance.
117. A will only takes effect after you die; A living trust benefits you while you are still alive and are generally revocable, allowing you to make changes to them.
118. Most people name themselves as the trust in charge of managing their own assets and can name a successor trustee in case they are unable to manage the trust.
119. Having a trust is similar to you creating a corporation where you put all your assets in it, and then you run it or have someone run it for you.
120. Proper planning with professional help can be very important for you to leave a legacy and preserve your estate for the causes you worked all your life for.
121. The government will be the one to distribute your assets if you do not have a will or a living trust to take care of your family.
122. Set up a holding corporation that will handle the preservation, transfer, or sale of your assets. The holding corporation will lessen the hassle of doing it on your own and paying for costly attorney’s fees. It can live forever despite the death of a stockholder of a corporation; Can easily transfer its assets through a simple board resolution; A way to preserve one’s wealth.
123. It is usually the very wealthy people who set up a corporation to protect their wealth, but it is a financial strategy that can be availed by everyone.
124. Right way of saving money: The interest for your savings is greater than the inflation rate.
125. Wrong way of saving money: The interest for your savings is less than the inflation rate.
126. The rich have access to the right way of saving money that the poor does not know.
127. The rich know and understand how to make money work for them.
128. Money works 24/7 and doesn’t go on vacation or sick leaves.
129. You become the master of money when you understand how it works. You become money’s boss and it will work for you.
130. You can do more of the things you want to do when you have financial education and have money that works for you.
131. Salary — Savings (Pay Yourself First) — Expenses = Lifestyle
132. All of us will have a good harvest or productive years. But we will also have unproductive years. Thus, it is very important to save and invest 20 percent of our income and spend only 70 percent.
133. We should also pay God first for more blessings and more abundance will come into our lives.
134. Time can be an ally and an enemy when saving money.
135. There should be equality. Both the wealthy and average people should earn the same rate of return, which can happen if average people have the proper financial knowledge.
a. Are you really successful if you’re the only one who succeeds?
b. Can you sleep at night, knowing that you’re saving the right way and your neighbor and friends are saving money the wrong way?
c. Are you happy when you are getting richer while your friends are in debt? Would you call this success? Is this what life is all about?
136. Highly successful people all over the world think rich and grow rich. Think of Napoleon Hill’s classic book, “Think and Grow Rich.”
137. Increase your cash flow. Make as much money as you can, while you still can. Have multiple sources of income.
138. Zero out bad debts. Interests on debts are like leaks that drain your finances.
139. Define your financial goals. Write them down. Read your goals everyday. Set strategies on how to make your goals work.
140.* FWD — Perso Global ESG Fund
141. OFW — Sa kanya na ang kapital, sa kanya pa rin ang gastos.
142. Many OFWs who work for 20 to 30 years still end up retiring poor.
143. Have proper protection. While you are still building your wealth, get insurance to give you and your family peace of mind.
144. Build up your wealth.
These are my notes from my old personal finance books. I had the time to type and post them on my blog today for my easy reference.