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Aug 4, 2017

Five Common Misconceptions about Insurance in the Philippines

Photo courtesy of Siala via Pixabay

Although life insurance is a crucial aspect of a healthy personal finance, only 2% of Filipinos have life insurance. This is mostly because of the insurance misconceptions that are rife in the Philippine society. The lack of awareness of the benefits and importance of insurance is why many have failed to take action. The following are some of the misconceptions that keep people from getting an insurance.

That you don’t need it

Yes, you need it, especially if you have people depending on you. One of the main purposes of life insurance is income continuation. This means that should you meet an untimely death, your dependents can continue having the same quality of life at least long enough for them to gain their footing and become financially independent themselves. You see it all too often on the news,  the family’s breadwinner figures in an unexpected tragedy and the loved ones are left reeling not only with the loss but because of the financial uncertainty they are left to deal with.

Photo courtesy of Geralt via Pixabay

That your HMO is enough

People often confuse their HMO coverage for life insurance. While both are great products, they serve different purposes. While some life insurance offerings include hospitalization, they generally do not cover checkups and annual physical examinations, which are the specialities of HMO. Life insurance, on the other hand, is very helpful in the event of an accident, permanent disability or critical illness. These things can be just as sudden as an untimely death, and the hospitalization and medicines they require can easily deplete whatever savings you may have, especially as you are likely to lose your job and be without the HMO insurance it provides.

While these things can be awfully scary, dealing with them head-on is crucial. It is an unavoidable fact: our time will come. And there is simply no telling if an unexpected tragedy will befall you. No one is completely immune to such things. The most you can do is to be prepared, not just for yourself but for the people you care about. 


Photo courtesy of DariuszSankowski via Pixabay

That life insurance is only for grim events

Beyond just fortuitous events, life insurance actually has other uses. It can fund your retirement, pay off tuition fees, and help you reach milestones. If, say, you retire at 65 and live 15 years more, you would need funds to live off of for the rest of your days. How would you do that if you no longer have your salary? As any financial expert will tell you, what you will receive through SSS is just not enough. Your food alone, if each meal costs Php100, would add up to Php1.6 million. How about the cost of maintenance medicines, utilities, and loans you may still be paying by this age? You will find insurance plans that provide maturity benefit that will let you withdraw the full cash value of your fund at a certain age. This will help you enjoy the same quality of life even when you no longer have an active income.

Life insurance is also great for funding your children’s education. You don’t have to be one of those people who have to downgrade their kids’ school or have them stop schooling altogether because you are going through tough times. You can avoid this by going beyond just covering the costs head on. You can put your money in a fund that will grow in time instead and keep up with the yearly tuition fee increase. You can do this by choosing plans that link insurance with investments, such as the Variable Unit Linked (VUL). This has become increasingly popular because of its ability to beat inflation.

Your life insurance can even help you reach some of your major life goals, like your dream of owning your own house, car or business. You will find plans that offer living benefits, allowing you to withdraw your funds so you can purchase or fund these things.

Photo courtesy of Jarmoluk via Pixabay

That it is expensive

Life insurance is not as expensive as you’d expect. Term insurance is by far the most affordable. A 30-year-old can have a Php500,000 coverage after paying for only Php3,000 to Php4,000 each year. That amounts to only Php300 per month, or the equivalent of two cups of coffee from a coffee shop. A VUL can cost as low as Php1,200 to Php2,000 per month. With an investment component, you get the chance to earn just enough to recover all the premiums you paid. A group or corporate insurance costs even less with some offered at a premium of less than Php100 per per year for each member of a group. Life insurance really does not have to be expensive. Mind you, you can even find plans like the Palawan Pawnshop Insurance that only require a one-time payment of Php20. 

Photo courtesy of Monoar via Pixabay

That it can wait

The truth is that you should secure protection while you don’t need it just yet, and for several reasons. For one, as you move through different life stages, you will have to deal with different needs. You may be single in your 20s but would have to be married soon and have children whom you would have to provide for, then you will grow old and stop actively earning an income. Life is simply much easier when you have a sound financial foundation. Moreover, the rate of premiums increases as you age. This is because the risks associated with older people are higher, especially in terms of health. Also, people do tend to acquire illness as they grow older, which can cause insurance applications to be declined. Insurance providers do take the efforts to manage risks. Insurance companies are known to reject applications by people who are already in a critical medical condition.

Another great reason to start paying for a life insurance now is so you could leave your investment with more time to grow. You should use the power of compounding to your advantage. This allows the fund value of your VUL plans to increase over time. You also have to remember that deaths and accidents can be sudden. No one really knows when their time on earth will end. Plus, you have to be aware of the contestability period often included in policies. If an accident or death occurs within the period, the insurance company can deny the claim after duly investigation.

Learning about the prevalent Filipino insurance misconceptions is a great start at finally taking your steps toward a financially-sound foundation. The best time to work on your financial health is now.

Contributor:



Patricia Evans
Twitter: @patevans016
A mum blogger who loves travel and interior designing

Patricia Evans is a part time interior designer and a full-time mother. She has worked in Marketing before but she quit her job to pursue her true passion: fashion and interior design.



Apr 21, 2017

Why Rental Yield is Important When Buying or Selling a Property

What makes a condo, townhouse, or house and lot for sale in the Philippines a good investment? One might think that buying a property in a prime location like MakatiTaguig or Ortigas (Pasig), automatically equates to a good investment. Any real estate broker or agent will often tell you that the best property investment highly depends on the property’s rental yield. Having knowledge of rental yields will give you a good idea of how quickly you can recover or make profit from the money you’ll invest
.

How to calculate rental yield

By definition, rental yield is how much rental income a property produces each year compared to its total value. The formula is as follows:
Gross Rental Yield = (Monthly Rent * 12 / Property Cost ) * 100
The property cost should factor in the property purchase price, along with additional costs like Stamp Duty, Brokerage Fees & Renovation or Maintenance Costs.

Higher rental yields mean better investments

Once you have the rental yield for the property you want, it’s time to compare. Most people only look at affordability or location as points of comparison without thinking too much about the return. It’s a sound approach, since properties are assets that appreciate through time. On the other hand, a more serious investor would want to compare properties by their rental yields to get a better idea of how much time it would take to get the best returns out of their investment.

A comparison of rental yields in Metro Manila

The Data Science Team at ZipMatch took a look at a year’s worth of data from 75,000 Metro Manila properties for for sale and for rentlisted on its site. Out of this data, they were able to get the average rental yield for each city in Metro Manila.

This heatmap shows the best cities to invest in based on rental yield. It is important to note that at a rate of 6.51% to 7.98%, Metro Manila’s rental yields are impressive compared to the 4.2% average gross rental yield in the Asian region.
It is evident that most cities with the highest rental yields are located in the western and southern part of Metro Manila–ManilaPasayParañaque and Las Piñas. Over the past year, these cities near the coastal area of Manila Bay have surprisingly outranked the more popular business districts like Pasig, Makati, and Taguig. Besides the fact that popular tourist attractions can be found here such as the SM Mall of Asia, Solaire Resort and Casino, and the City of Dreams Manila, a newly constructed SkyWay exit has largely contributed to the massive growth of new condo developments. This accessibility has also added interest in Las Piñas as an affordable residential option for young professionals working in Metro Manila’s CBDs.
Below is a table of the average property price and average monthly rent of cities in Metro Manila with the best rental yields.

It’s interesting to note that costlier cities like Taguig and Makati provide lesser rate of rental return compared to more affordable locations. For example, when choosing between a studio unit in Makati priced at Php 4.5M and a studio unit in Manila priced at Php 2.8M, one might initially think that the former has better investment potential than the latter. By looking at rental prices for both cities–Makati at Php 28,000 and Manila at Php 20,500, it is safe to conclude that a Manila property will provide better return on investment.
Parañaque, leads the rankings with the highest rental yield of 7.98%. It also ranks as the second most affordable city to buy property, at an average sale price of Php 1.65M for a studio unit and Php 3.4M for a 1BR. The city has a total land area of 47.28 square kilometers, and is widely known for being home to Baclaran, the Ninoy Aquino International Airport, and BF Homes Parañaque–known as the biggest subdivision in Asia.

Conclusion

These cases demonstrate that affordability or location might provide answers on which properties would best fit a buyer’s present needs, but being well-informed of various rental yields can certainly help in coming up with a more confident decision when investing on a property.
Contributor: 

ZipMatch The belief that Filipinos can own their dream home inspired us to innovate the real estate industry in the Philippines and make buying and selling of properties faster and easier.

ZipMatch offer information on real estate trends, investment advice, and personalized service by a network of top industry professionals, all with the easy convenience of online shopping—everything you want and need, and nothing you can’t understand, all at the click of a button.

They aid you through the homehunting process from start to finish: meticulous, client-specific guidance from the initial search (whether through our comprehensive online database or via a phone-in or email inquiry) to follow-up consultations and meetings down to all final decisions are facilitated with the help of our in-house real estate experts.

Jan 22, 2017

Ten Philippine Cities to watch this 2017



There is more to the Philippines than the typically well-known Metro Manila cities, and in 2017, it will be more evident in the continued development of these cities to watch, compiled by Lamudi Philippines

With sustained progress in the real estate industry backed by an overall economy that various financial institutions predict to grow between 6 to almost 7 percent in 2017, many places in the Philippines are becoming increasingly ideal to live and/or invest in.

Whichever reason to move: a fresh start, exploring new career and business opportunities, or a growing a family, ten of these places in the country, compiled by global real estate website Lamudi Philippines, stand out, and are worth your consideration for this year, and even beyond.

6. Lapu-Lapu City



Secondary cities continue to be in demand due to their proximity to capital or major cities while remaining relatively more affordable. In the Visayas, one such place is Lapu-Lapu City, a popular alternative to costlier Cebu City. In 2016, two-bedroom houses for sale in Lapu-Lapu City listed on Lamudi averaged Php2.295 million.

While having always had tourist opportunities due to the presence of the Mactan-Cebu International Airport and its different natural and historical attractions, local real estate stock in Lapu-Lapu looks to also increase soon, with projects like Megaworld’s Mactan Newtown, Sta. Lucia’s Arterra Bayfront Residences, and Futura Homes – Mactan by Filinvest Land. The Philippine Reclamation Authority is also set to start its Mactan North Reclamation and Development project.

7. Mandaue City



There may be no better alternative for accommodations and real estate to Cebu City than Mandaue City. The latter is located at the former’s immediate northeast, and is the ideal location for home-seekers that want to invest on a home near the Visayas capital as opposed to renting a more expensive house in Cebu City itself. On Lamudi, two-bedroom houses for sale in Mandaue average Php2.631 million.

New developments continues to enter the city, as homegrown developer Iron Wood Property Ventures topped off its Northstar condominium project at the end of 2016, while firms like PrimaryHomes, Inc. have gone on record to say they are exploring Mandaue as a location for future projects. Echoing the sentiment, Colliers said it expects condominiums in the affordable segment to rise in the city.

8. Dasmariñas



With declining developable land and increasing property costs in Metro Manila, neighboring CALABARZON continues to see an increase in real estate demand, particularly from buyers foregoing starter homes for long-term properties. Seemingly one of the most viable areas in the region is Dasmariñas which, based on Lamudi’s listings data, has some of the most affordable average prices for houses for sale among CALABARZON and Metro Manila cities in 2016.

At Php2.1 million, houses with two bedrooms or more remain reasonably priced in Dasmariñas. It seems the city also offers the most options, averaging the most listings (415 per month) for multiple-bedroom homes for sale in CALABARZON. This stock will likely be furthered via upcoming projects like Sta. Lucia’s Mesilo, 150-hectare first class development, and Alveo Land’s Ardia, a prime residential subdivision set between Dasmarinas and Imus.

9. General Trias



While Dasmariñas can be deemed the option in CALABARZON for mid-priced and mid-sized residences, General Trias is seemingly the place for more modest properties. This Cavite municipality has one of the lowest average selling prices for smaller houses (at most two bedrooms) at Php833,992. Based on 2016 Lamudi data, General Trias on average has 70 such properties—two bedrooms or smaller—listed on the website in a given month.

General Trias has become a go-to location for developers and their innovative takes on affordable housing, with developers like BellaVita (an Ayala Land subsidiary) and Suntrust Properties (a subsidiary of Megaworld Corp.) having established such projects in the city. General Trias is not limited to the affordable housing market, however, as diverse projects like the 140-hectare Maple Grove, the 21st township project by Megaworld, will also soon be established in the city.

10. Davao City



Seemingly a result of the elections win of now-President Rodrigo Duterte, whom the Davao City Investment Promotions Center deems the “the perfect marketing ambassador for the city’s investment and tourism potentials,” Davao City has seen a surge of investments come from local and international parties. The Board of Investments (BOI)–Southern Mindanao affirmed this, reporting Php2.5 billion total BOI applications approved and registered from January to October of 2016 were poured into the city.

While increased awareness comes increased interest in Davao that will likely result in more investments in 2017, prices for homes for sale in the city for now have remained favorable, with two-bedroom houses listed on Lamudi for an average of around Php2.5 million in 2016.


ABOUT LAMUDI
Lamudi is a leading global property portal focusing exclusively on emerging markets. It offers sellers, buyers, landlords and renters a secure and easy-to-use platform to find or list properties online. Lamudi was established in 2013 in Berlin, Germany and it is currently available in Latin America (Mexico, Colombia and Peru), Asia (Philippines, Bangladesh, Indonesia, Myanmar, Pakistan, Sri Lanka) and Middle East (Jordan, Qatar, Saudi Arabia, United Arab Emirates). Within fewer than three years, Lamudi has established its presence as a key online real estate marketplace in the countries where it is operating. For more information, visit Lamudi Philippines on Facebook, Twitter, Google+, LinkedIn, and Instagram.

ABOUT MYPROPERTY
Established in September 2010, MyProperty.ph is one of the leading Philippine real estate online and print brand that brings property buyers and sellers together. The website’s main offerings are listings of pre-selling properties and properties for sale and for rent. Both website and magazine also provide relevant and updated industry news and information for its clients and consumers. And with the release of its mobile version, finding or selling a home is made even easier. For more information, visit MyProperty on Facebook, Twitter, Google+, and Instagram.

Ten Philippine Cities to watch this 2017



There is more to the Philippines than the typically well-known Metro Manila cities, and in 2017, it will be more evident in the continued development of these cities to watch, compiled by Lamudi Philippines

With sustained progress in the real estate industry backed by an overall economy that various financial institutions predict to grow between 6 to almost 7 percent in 2017, many places in the Philippines are becoming increasingly ideal to live and/or invest in.

Whichever reason to move: a fresh start, exploring new career and business opportunities, or a growing a family, ten of these places in the country, compiled by global real estate website Lamudi Philippines, stand out, and are worth your consideration for this year, and even beyond.

1. Cebu City



Ranked seventh by strategic advisory firm Tholons among best outsourcing destinations in the world due to the quality of workforce and tertiary education; relatively cheaper business cost; infrastructure network; and quality of life, Cebu is also a city to watch thanks to its considerable proximity to several of the Philippine’s best tropical destinations and affordable secondary cities.

It ranked sixth most competitive based on the National Competitiveness Council’s (NCC) survey, which measures local government units desirability based on economic dynamism, government efficiency, and infrastructure. Cebu City’s property listings on Lamudi for 2016 averaged 2,900 per month, only behind Makati (5,680), Quezon City (5,560), and Taguig (3,400). Upcoming real estate projects likes Solinea and Gatewalk Central (both by Ayala Land) and Cebu Exchange (Arthaland) are likely to boost inventory in the future.

2. Las Piñas



While Metro Manila’s current real estate market seemingly favors condo-seekers the most, Las Piñas remains a good option for buyers in search of houses. The city’s inventory of houses in 2016 averaged 680 per month, the third highest number in Metro Manila after Quezon City (2,800) and Makati (930), and the average price of two-bedroom houses in the city was Php2.8 million, compared to Php3.68 million in Quezon City.

While the city stands out among most of its Metro Manila neighbors in terms of availability of mid-priced residences, property values in Las Piñas may soon catch up as a result of major developments taking place in the city. Projects in Las Piñas include Alabang West, a mixed-use development by Megaworld featuring a Beverly Hills-themed lifestyle concept, and a yet-to-be-named 3.4-hectare property owned and being developed by 8990 Holdings Inc.

3. Iloilo City



While not as gaudy in name as Cebu or Manila, Iloilo City has grown to rival the two in overall livability. A regional center for academic excellence, it is home to about 30 colleges and universities that produce an estimated 15,000 graduates each year. Its well-educated workforce has contributed in the city jumping four spots to 91 in Tholons’ survey of best outsourcing destinations in the world.

According to real estate services firm Colliers International, this is driving demand for office space and worker accommodations, while the increase of workers’ disposable incomes, combined with the influx of tourists, continue to attract major retailers. Seemingly in time for property investors are the rise of several developments in Iloilo, led by the continued expansion of Megaworld’s Iloilo Business Park, and the initial establishment of Ayala Land’s Atria Park District.

4. Cagayan de Oro



Real estate pundits are seemingly in agreement that apart from supply and demand, property developers are now looking at local assets, such as tourism, as another facet to consider in expansion. This may be most evident in Cagayan de Oro, a city well known for its natural and historical attractions, now in being the midst of several development launches and project turnovers. Lamudi saw residential listings in CDO lessen toward the end of 2016, indicative of the increased occupancy in the city.

According to local business monitor CDODev, key commercial projects scheduled to open in 2017 are the SM CDO Downtown Premier, which will be the second SM mall in CDO, the Seven Seas Waterpark and Resort, and a CityMall in Bulua. The Bonbon area will see a new community fish port scheduled to open later in the year, while the city proper will see the continued progress of projects like Avida’s Aspire Tower, Camella’s The Loop at Limketkai, and Cebu Landmasters’ MesaVerte Residences.

5. Bacolod City



A constant in surveys naming the best places to live in the Philippines, Bacolod is becoming additionally notable for a growing business process outsourcing (BPO) and knowledge processing outsourcing (KPO) industries, which continue to attract businesses to the city. The IT Council and the Bacolod City Government predict the industry’s current 24,000 full-time outsourcing employees to rise to 60,000 by 2022.

This has played a hand in local retail and residential growth, evidenced by upcoming developments such as Capitol Central by Ayala Land, Northill Town Center and Upper East Township by Megaworld, and CityMall Goldenfield by DoubleDragon. If looking for investment properties, Colliers recommends worker accommodations such as studio and one-bedroom apartments. Availability for these is presently limited, as evidenced by the number of modest listings for such spaces on Lamudi in 2016.



ABOUT LAMUDI
Lamudi is a leading global property portal focusing exclusively on emerging markets. It offers sellers, buyers, landlords and renters a secure and easy-to-use platform to find or list properties online. Lamudi was established in 2013 in Berlin, Germany and it is currently available in Latin America (Mexico, Colombia and Peru), Asia (Philippines, Bangladesh, Indonesia, Myanmar, Pakistan, Sri Lanka) and Middle East (Jordan, Qatar, Saudi Arabia, United Arab Emirates). Within fewer than three years, Lamudi has established its presence as a key online real estate marketplace in the countries where it is operating. For more information, visit Lamudi Philippines on Facebook, Twitter, Google+, LinkedIn, and Instagram.

ABOUT MYPROPERTY
Established in September 2010, MyProperty.ph is one of the leading Philippine real estate online and print brand that brings property buyers and sellers together. The website’s main offerings are listings of pre-selling properties and properties for sale and for rent. Both website and magazine also provide relevant and updated industry news and information for its clients and consumers. And with the release of its mobile version, finding or selling a home is made even easier. For more information, visit MyProperty on Facebook, Twitter, Google+, and Instagram.

Jun 16, 2016

Investing 101: Investment Types and How They Work For You


This article is first published at http://blog.pawnhero.ph/investing-101-investment-types-and-how-they-work-for-you/

There was a time when Filipinos viewed investing as something that was only for the wealthy. Buying stocks, trading, or buying and selling were activities thought of as something only the foreign nationals living here did. In recent times, however, more Filipinos have become more open to investing. PawnHero looks at different kinds of investments and how you can maximize what you get from them.

Filipinos took great pride in these investments because now they can call themselves entrepreneurs and business owners instead of just being plain workers. Many years after, small investments became the name of the game with the arrival of multi-level marketing companies.

Networking and Investing

Popularly known as “networking,” this type of investment enticed young people, as well as those who were easily lured by the promise of easy cash and significant returns. Alas, only a handful do succeed, and many feel that they have just thrown away the money they invested.

Truth be told, the world of investment does not operate in such a simplistic way. If you really want to learn how to invest, take a look at these investment types and see which one is best suited for you.

Let’s break them down into three main categories namely ownership type, lending, and cash equivalents.

Ownership

Ownership investments are things that you buy as an asset, which are kept with an expectation that they will increase in value. This is the broadest investment category because it includes investing in different things for profit or resale purposes.
  • Stocks – Filipinos are becoming more interested in trading in the stock market. Ordinary folks are now buying stocks from large companies, and trading and selling them for profit. You don’t need a big investment to start here, as even a few thousand pesos will do. This is the reason why even college students are able to try investing in stocks. You also don’t have to be very knowledgeable about it since there are financial advisers whom you can turn to for advice.
  • Real Estate – This is for people with large sums of money to spend. Buying land, houses and lots, or condo units is a lucrative trade, but you would need a large capital for it. Also, you must be very patient because selling pieces of property takes longer than say, jewelry or appliances.
  • Precious metals, Art, Collectibles – You may not realize it, but the “buy and sell” business falls under this category too. Some people buy jewelry and sell them at a markup, well this is like that but on a couple of levels higher. Gold, silver, diamonds and precious art are bought and sold to interest parties. Investment is also big here, but very rewarding.
  • Business – Opening a company selling a product or service is always a good way to invest.

Lending Investments

Lending Investments is also a good way to earn returns, and you won’t have to wait that long to get your money back. This is a low-risk and low-reward investment that includes bonds, certificates of deposits, and other types of loans.

Here, the investment is purely cash, and there are no items or physical products that are bought or sold. Because of the lack of something physical that needs to be maintained, the expenses with this type of investment are negligible. Just be careful of who you lend to and make sure that you protect yourself.

Cash Equivalents

Cash equivalent investments are also low risk and little return. These include treasury bills, bank notes, corporate commercial papers, and more money market instruments. One important thing to note is that this is actually a relatively secure type of investment especially if you go for those backed by the government. Not a lot of people go into this kind of investment here in the Philippines though.

Filipinos would rather go with ownership and lending investments because they can immediately see, or at least project, how much they will be making. While the little return might put you off, it’s certainly higher than what most banks offer. This makes for a great alternative to a purely passive savings account.

As with any investment, there are highs and lows. In case you need extra cash to top up your capital for your online store or food business, don’t hesitate to check out PawnHero, the first online pawnshop in the Philippines. They accept appliances, gadgets, and other items allowing you to meet your short-term cash necessities right at the comfort of your home!

Contributor:

PawnHero – the 1st online pawnshop in Southeast Asia, will solve this problem of expensive credit and interest rates. We provide an easy, fair and convenient way of overcoming short-term cash needs. This is a completely new way of doing business in the industry, truly revolutionary, created by genuine visionaries.

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