Pinoy Fund Runners

This procedure or formula is often used to determine the fund needed for your retirement, children's education, or life insurance coverage.

Ingredients:

• 12 pcs. of "Monthly Expenses" = CurrentAnnualExpense
  
• 1 pc. of "Average Inflation Rate" = i
  
• Nth year you wish to know = n
  

Materials needed:

• sphygmomanometer or blood pressure meter (just in case your blood pressure rise up once you've known your future annual expenses)
  

Step #1 Mix all ingredients under one bowl using the following formula:

    FutureExpense on the nth year = CurrentAnnualExpense*(1+i)^n

    i.e. Calculate your annual expense 20 years from now given

        average inflation rate = 5.5%

        Current Annual Expense = 240,000

    Future Expense = 240,000(1+.055)^20

            = P700,261 a year

   

Step #2 Measure your blood pressure. If it went up, go to your nearest Financial Advisor and ask for recommendations on how they could help you plan for this.

There is a quote that I would like to share which is very applicable to financial planning:

The plant only requires the owner to save a small amount of water and let the nutrients of the earth and time to grow to a full-grown tree. This story has inspired several investment companies including Sun Life. In the matter fact, all of the branches of Sun Life are named after a tree, because it symbolizes growth and prosperity.

In analogy to financial planning, the discipline of saving a small amount could reap great benefit in the future. And if you invest it at the right time and at the right place, it will even grow even faster.

When is the right time? Yesterday, last month, last year even.

My point is that the earlier you invest, the greater the opportunity of growth.