Sir Ante and BOG's : A Non gun related views i need before i buy Philam life insurance , medyo nadala na kase ako due to CAP and Pacific plans which both company screwed up my investment for my children...Any views comments will be very much appreciated. thanks

Just wanted to share, my uncle works there but I would not buy their prices are too high and the return is too low. Hindi ko lang mai-cite yung exact situation but it happened sa isang proposal niya sa akin na pension 5 years to pay aabutin yung premium payments ko ng 380K then and coverage nung pension is only 500K parang ganito so 120K lang halos kinita ng pera ko for 10 years kasi 5 years paying 5 years waiting. Kaya hindi ako kumuha plus the fact that I got screwed by CAP as well at may isa pa akong fully paid with CAP na hihintayin ko na lang ang maturity kung andyan pa ang CAP by then. Cross my fingers.

Philamlife is a solid, legit company. It's not just a glorified pyramid scheme like CAP and Platinum and a number of others. On insurance - the only way to beat the insurance company is to die fairly soon. In the early years of an insurance policy, the insurance company will lose if you die. Towards the later years, you lose (you have already paid enough premiums so that the insurance company has made a profit, including the returns it earned on those premiums you paid.) In "whole life" insurance, there is a savings aspect, and you get some "cash surrender value" if you cash it in. BUT, the return is only 7%-8% annually or thereabouts. It really makes sense if you need to be FORCED to save money (because the premiums you pay force you to save money.) But if you do have the discipline to save money, you can get a better return than 7%-8% annually by investing your savings yourself. So in that case you can just get "Term" Life Insurance, which is pure protection, no savings aspect, and you don't get any cash surrender value at all. It's just like insuring your car. The premium is cheaper than the premium of whole life insurance. Sorry to hear about your loss in CAP.

I'd rather buy Sunlife. I have PhilAm and my wife have Sunlife so I can compare these 2 companies. Yung Sunlife after certain year you can make a loan against your premium. You can also do that with PhilAm pero barya lang compared sa Sunlife. vega

Philamlife is our fiercest competitor. But i must tell you that it is the biggest insurance (life or non-life) company in the country. It is a wholly-owned subsidiary of the AIG group, the biggest insurance conglomerate in the world. Billions ang reserves nyan. Mas mayaman pa kaysa 'pinas.

Do you have any idea magkano ang initial placement sa double your money in 5 years ng Metrobank? Or any other offerings from other banks, I'm seeking your advice on this one kasi medyo nawala na ako sa circulation diyan sa atin. Peso ang iinvest ko pero sana with a bank na sigurado or yung gaya nga ng explanation mo ma-beat ko man lang kahit konti yung 9% inflation yearly masaya na ako roon huwag lang mag-loose value yung pera ko ng walang kalaban-laban diba. Honestly dami ko natutunan dun sa posting mo na yun, naka-archive na nga sa PDA ko in PDF format para ma-review during my long stop overs sa airport. Thanks.

Charlie, you mentioned doubling your money through one of those advertised schemes. If you have no better investment alternative, yes this is a reasonable thing to do. However, there are factors to consider. I wrote a column on this matter earlier this year. Might be useful to you : "Double Your Money? You look in the newspapers and see an advertisement from a bank which screams : "If you invest your money with us, we will double your money in five years!" Is this the answer to your problems? Not so fast. A deal like this may not turn out to be so good for you, even assuming that you absolutely will double your money in five years, net of all taxes, and that you will absolutely collect all that money (no credit risk at all ). The "problem" is inflation. "Double Your money" deals like this rely on the power of "compound interest ". We covered compound interest in this column two years ago, but basically it means that the interest you earn is converted into principal (the act of turning interest into principal is called "compounding"), and then this entire now-bigger amount of principal-PLUS-interest, earns interest AGAIN , so you earn "interest on interest". Your money therefore grows like a snowball rolling downhill, accumulating bigger and bigger amounts of snow with every roll (earning bigger and bigger amounts of interest every year of compounding). (By contrast, in "simple interest", the principal never gets bigger, the interest never gets converted into principal - so it's like a pea rolling down your plate.) God has given us, by an interesting mathematical quirk of His universe (Einstein once said : "Compunding is the greatest secret of the universe"), the "Rule of 72". Here is how that Rule works : if you want to double your money by year "x" , you simply divide 72 by "x". That simple calculation will give you an approximation of the annual compound interest rate that you need to earn, to double your money by year "x". (The real calculation is more complicated and involves exponents, but the "Rule of 72" works well enough as an approximation in most cases. Try using it at a cocktail party - people who don't know it will be amazed at your brains.) So, the bank in the advertisement promises to double your money in 5 years, and that will be net of all taxes. Therefore, by the "Rule of 72", 72/5years = 14.4%. In other words, if the bank promises you that your money will double in five years, implicitly that means your money will earn 14.4% after-tax every year. Is that good? Well, first of all, think of those sheiks in Arabia with their big swords slashing at you : in other words, think of INFLATION. Inflation in the Philippines is now about 9%, to a great extent because of the sustained high world prices of petroleum and the pass-on effect of these high energy costs (in transportation costs, electricity, manufacturing costs etc.) . So the REAL (net of inflation) increase in your wealth if you invest your money in the bank for five years will be not 14.4% but only 14.4% - 9% inflation = 5.4%. So the actual increase in the PURCHASING POWER of your money will only be 5.4% per year. The rest will be eaten up by inflation ( alas, it is not likely that oil prices will drop significantly in the future.) Is that 5.4% after taxes and inflation good enough? Depends on what are your alternatives. If your alternative is the money market, you will get about 11.5% if you invest your money in a 5-year Treasury Note now. Then subtract the 20% final withholding tax and you get only 11.5% X 0.8 = 9.2% after-tax . But wait! You must express this on an after-inflation basis, so that you can compare it to the bank's after-inflation 5.4% return. . OK, so that's the T-Note's 9.2% - 9% inflation = 0.2%. So YES! The bank's 5.4% after tax and inflation beats the 5-year T-Note's 0.2%. So go for the 5-year plan? Well, first worry that if you must - for some family emergency or whatever - have to preterminate your 5-year investment with the bank, the bank will hit you with a heavy pretermination penalty , and that penalty will destroy any doubling of your money. Are you sure you can leave your money in the bank for five years (you have enough cash elsewhere so that you will not have to withdraw funds out of this placement)? If you are not sure, then don't do it . Look, let's face it : inflation is like the biblical "thief in the night" - it steals the purchasing power of your money even while you are sleeping. Any fixed-return-per-year investment you make gets hit badly by inflation. But of course it could be worse - if you keep your money in your mattress at home, then your money will decline in purchasing power by the entire 9% inflation rate every year. It's better to get + 5.4% from the bank after inflation, or even just +0.2% (from the T-Note), than -9% (you get poorer by 9% every year) if you keep your money at home. Then there's the stockmarket, but that's high risk; and we'll talk more about the stockmarket next column."

Sir toxic, also, don't easily be tempted by high interest rates. For anything that you deal with, banks, insurance companies, etc. remember, these companies have to earn too. So how do you expect them to earn (legit) if they offer you high interest rates? Some banks do give high premium on there placements, and it silently shouts...hey, we need cash...! ASAP! Are they into something illegal? Not quite, they might have stumbled on something to invest with, local or offshore (most likely offshore...)which is too good to let go. So I suggest, turn your sights off high interst rates and put more weight on stability of an institution. If you can, try reviewing the past 3 or 5 years of the company's annual report. If you will invest in something considerably big, going through them (annual reports) will show you the true picture...(Kahit doctorin pa nila financials nila, lalabas din yun and you'll see the inconsistencies quite well...) Good luck sir!

Thanks for the views BOG's..in this time and age its really difficult for us the CITIZEN on where, how we can invest our small savings..ill keep in mind all your opinions and will use them wisely.^c

It's another New Year. Time kills us all in the end. When? Try this website : http://www.deathclock.com/ P.S. I hope you bought your term insurance, toxic.

;G Aside from SSS, OWA, Philhealth. Bibili na ko ng insurance natakot ako sa Death Clock mo Sir Ante.;G