Retirement Security is among the least of our worries today but the early we prepare of it, the more equipped we would be once that day comes. I got a chance to attend the Philippine Retail Investment Conference by CFA Philippines and one key lesson is the Essentials of a More Secure Retirement as delivered by Robert Stammers of CFA Institute. I hope to share some of those lessons through this post. #PRIC2015 #CFAPhilippines #FutureFinance
Robert Stammers, CFA
Robert Stammers, CFA, is director of Investor Education for CFA Institute. Prior to joining CFA Institute, Mr. Stammers was the principal for his founded company A2O Consulting where he consulted to aide real estate owners, lenders, and syndicators, develop and analyze structured real estate investments. There he developed strategy for obtaining debt and preferred equity capital as well as created finance related marketing materials and research papers for various clients. Mr. Stammers has authored over 100 articles on various financial and investment topics for several investment periodicals such as Forbes and Investopedia. He served as a senior equity analyst with Long Term Short Term, Inc, where he was responsible for the creation of new investment tools and instructional products to provide the revenues for two new investment education companies. As a senior executive for several institutional fund managers, Mr. Stammers was the portfolio manager for a $1 billion enhanced real estate fund, a $1.2 billion private timber fund, and several pension fund separate accounts. Mr. Stammers received his Bachelors of Arts in Economics from Connecticut College and his Masters in Business Administration from Emory University. Robert became a CFA Charterholder in 1997.
Essentials of a More Secure Retirement
While about 90% of my post is about travel and fitness, finance and investment is among my comfort zone since it’s what I do on a day to day basis and it’s among the key lessons I learned earning both the Certified Public Accountant and Masters of Business Administration title. I got an opportunity to listen to Robert Stammers, CFA and the different speakers at the Philippine Retail Investment Conference and I’ll try to break down the key lessons especially on obtaining a secure retirements. I’m still ages away from retirement but it got me thinking that even though life in the corporate world gives monthly yield, there is still a need to prepare for the unexpected and the future we want to live.
- Life Expectancy has increased and Population Growth is stagnant – Because of the advances in medicine and improvement in life condition, people living way past 80 years old is normal. That means you’ll need to establish more funds to carry you through the 20+ years of retirement. With population growth also stagnant don’t expect much support from the younger generations.
- While there maybe corporate and government stipends, it would be better to start your own retirement fund.
- The future of finance starts with you – The more investors coming in, the better the market becomes in terms of returns and products available for investments.
- Planning Your Retirement – Accumulate Capital for Investment and Generate Returns to Meet Your Financial Goals
- Are you a Saver or Investor? – Savers are more conservative and would go for fixed returns with lower risk and returns while Investors think long-term and takes calculated risks that yield better returns.
- Look into the future and how much you would need once you retire and work back on how much you save based on a given yield.
- There is no formula on how much to save but try this one. Spend 50% on necessities, 30% on enjoying the present and save 20% for the future.
- Perform Budget Savings and Review
- Create Household Budget – Note down the Necessities
- Save Before You Spend – Place the savings in not easily accessible accounts (ATM accounts is like having money in your hand, passbook take more efforts and time deposits or investments would be more restrictive)
- Track your spending and work within a budget and adjust accordingly.
- Build emergency fund – If you have expected expenses set it aside in a separate fund and not in long-term funds as the need to take it away short-term can affect your long-term goals in investing.
- Keep cost of lifestyle constant – bonuses and other income can be added savings, not added expenses.
- Manage your debt – borrow only when needed and make sure it generates more returns than the borrowing costs.
- Diversify your investments – Your investments depends on your risk tolerance so if you’re using fixed income don’t put it all in one bank and if you have investment, don’t invest it all in a single industry. (E.g. if you invest everything in real estate, you lose a lot when the industry is down)
- Consistent Capital Contribution – Have your base amount of savings and make sure you do it consistently. You gain from the usual returns plus the compounding of returns.
- Purchase low cost financial product -Be mindful of the other fees when you invest.
- Think Long Term – Don’t be tempted by short term returns as retirement is a long term fund.
- Get Started and Stick to Your Savings Plan
- Open a Savings Account with reputed banks
- Make sure you have your social security
- Enroll in employee savings program if possible
- If you require help to set up a savings and investment plan, make sure and solicit assistance from a reputable financial service professional. Use the Statement of Investor Rights to help determine your service provider’s commitment to ethical business practices.
- Avoid and reduce debt.
- Invest Wisely – Diversify your portfolio by combining assets from different industries as well as investment products from other countries. Health insurance can also lower your retirement expenses.
- Retire well – Know the life you want after you retire and worth from there.