This is a complete guide on the financial health, performance and ranking of Insular Life. Insular Life's financial health is relatively good based on the financial statements that it published. Every year, the company publishes the financial reports in it's website so that the clients and the policy holders can be able to view the financial health of the company. Knowing the financial health of the company can help you asses if the company can be able to pay it's obligations and investments in the future. View their latest annual reports here.
We spoke with some of the financial advisors from Insular Life and asked them what makes Insular Life a great company. Here are the top 10 answers that we got:
1. The company is not mainly for profit but to help it's clients because it is the only non-stock insurance company in the Philippines.
It can be noted that Insular Life is a mutual company and not a stock company, therefore it does not have any stockholders. The owners of Insular Life are the policyholders and clients. If the company earns a profit it will declare dividends back to the traditional policy clients of Insular Life. Therefore owning a traditional policy means that you are also owning a piece of the company. Also you get to be invited to the annual member's meeting done every April/May at the head office because as a policyholder, you are the owners of Insular Life.
2. The products of Insular Life are usually cheaper because of it is a mutual benefit non-stock company.
Because Insular Life is the only mutual benefit non-stock company in the Philippines, the products charges, insurance charges and investment fund management fees are much cheaper than some other companies because it does not need to price its products much more expensive because it does not need to give profits or dividends to the stockholders. Further, it has special tax incentives and benefits because it is a non-stock company. The taxes paid by Insular Life are much cheaper than stock owned Insurance companies.
3. The fund management fees of Insular Life are one of the cheapest in the Philippine Insurance Industry.
Industry wide the fund management fees of equity funds are 2% and above. But in Insular Life, they have an equity fund that has a fund management fee of 1.75% only. Other companies charge 2%, 2.25%, 2% or even more for the equity fund management fees. Again, this is because of the prudence and financial stewardship of Insular Life. Insular Life is also one of the companies that are very transparent on how the fund performs, where the money is invested and what were the expenses incurred in the fund. Check the annual investment report here.
4. Insular Life allows you to invest not just the local stock market but also in the international stock market through it's partnership with Fidelity which is one of the largest and most trusted fund managers in the United States.
Most life insurance companies only allow you to invest in local companies but not in top performing international companies. With it's partnership with Fidelity, the clients of Insular Life can invest easily in the international stock market without the need to convert their money from peso to dollars. Insular Life makes things easier for it's clients.
5. It is the only insurance company in the Philippines that caters to all types of insurance clients whether life insurance, non-life or health card (HMO)
Did you know that Insular Life is the only life insurance company that has a life insurance (Insular Life), non-life insurance (Mapfre-Insular) and HMO (Insular Healthcare) all in one? Did you know that Insular Life is also part-owner of Union Bank? This means clients of Insular Life need not find other companies for their health card, banking, car insurance, home insurance, surety bonds and other non-life needs.
6. Insular Life won twice in a row for 2017 and 2018 the Reader's Digest Trusted Brand Gold Award thanks to the great executives and board members who are running the company
Insular Life has been bagging consistent awards locally and internationally. It has been awarded the Reader's Digest Trusted Brand Gold Award consistently as well as the Domestic Life Insurer of the Year award for 2017 and 2018. The Executive Chairman of Insular Life is no less than Ms. Nina Aguas who was an executive of Citibank and ANZ before becoming part of Insular Life. What's notable about this lady is that she became Citibank N.A.'s Country Business Manager for Global Consumer Banking in the Philippines and became it's first Filipino female CEO. Citibank for 98 years, has been directed by male expatriates. Recently Ms. Aguas also joined the roster of World Bank Group’s Advisory Council on Gender and Development. Insular Life is blessed to have Ms. Nina Aguas as the Executive Chairman.
The President of Insular Life, Ms. Mona Lisa de la Cruz is one of the best actuaries in the Philippines. Prior to become president she headed the Actuarial Divison of Insular Life. Actuaries are the people in charge of making sure that the insurance company creates great insurance products. She earned her undergraduate degree in Statistics, cum laude at the University of the Philippines and completed her Masters of Science in Mathematics, major in Actuarial Science from the University of Michigan. She is a Fellow of the Actuarial Society of the Philippines and an Associate of the US Society of Actuaries.
7. The company is the largest Filipino insurance company and the second largest insurance company in the Philippines
Insular Life despite being 100% Filipino owned is able to maintain it's ranks as the second largest life insurance company in the Philippines. Data from the insurance commissions backs this. For more information on the ranking of the top life insurance companies visit here.
8. Insular Life has a fully automated application system that gives an automated decision whether you are approved or not with your application within seconds.
Most life insurance companies are not fully automated. Meaning, they still use pen and paper in the application process. Although Insular Life still has a pen and paper process for those who prefer it, the company pioneered the first fully automated underwriting system in the Philippines. Meaning when you apply with your financial advisor for an investment or insurance, you simply input in the tablet your information and within a few seconds the system will inform the client if he is approved, rated or declined. Other companies usually give the decision the next day. Why wait the next day when you can have it in seconds?
9. Insular Life has become virtually cashless by partnering with VISA and Mastercard with it's automated application system.
When you apply for an insurance or investment with Insular Life you do not need to go to the bank and withdraw money. Just like buying a plane ticket you can pay for your initial premiums online. This makes things hassle free, easy and fast.
10. Supporting Insular Life supports hundreds of scholars in the Philippines through the Insular Life foundation.
Supporting Insular Life means that you are supporting also the scholars and students of the Insular Life Foundation. The Insular Foundation, Inc., formerly the Insular Life Educational Foundation (ILEF), was established in 1963 as one of the first corporate foundations in the country. Since then, it has served thousands of school children attain higher education and achieve a better life through scholarship grants for college and technician courses. It also helped hundreds of teachers improve their knowledge and skills through in-service teacher training, and hundreds of principals develop better interpersonal and managerial skills to run their schools.
Lastly, the company is proudly Filipino owned and patronizing Insular Life increases our country's GNP (Gross National Product) and helps improve our country's economic performance
Did you know that the a country's economy performs well if we support local companies than foreign companies? In the Philippines there are more imports than exports. This means that we are buying more foreign products and services than we are selling abroad. This creates an economic problem called a trade deficit. OFWs and BPO agents having been called as the new Philippine heroes because they bring in dollars and foreign exchange to the country. Supporting local brands will reduce our dependence on imports.
Countries with strong local brands are the one's who have a strong economy. Take for example South Korea with it's Samsung, LG, Hyundai, K-pop and more. South Korea was not as progressive as the Philippines decades ago, but now it is much more progressive.
It can be noted that strong countries have companies that are very known world wide. The US is a strong economy because there are several companies that are being patronized by the people in the US or even outside the US. However, recently China has been selling more products to the US than the US selling products to China. This is now a growing economic concern of the US.
Always remember, supporting local companies will increase a country's Gross National Product (GNP). Having a growing GNP is a very good indicator of a country's economic health.
By supporting Insular Life you are also supporting the Philippine economy. As a Filipino it really makes sense to support Insular Life. The products are great, the prices are affordable, the fees are reasonable and the company is strong and stable as shown in the rankings and it's financial statements.
If you need a life insurance proposal from Insular Life or you if you would like to talk to a financial advisor of Insular Life feel free to fill out this form.
If you would like to know the ranking of other life insurance companies click here.
If you need a life insurance proposal from Insular Life or you if you would like to talk to a financial advisor of Insular Life feel free to fill out this form.
If you would like to know the ranking of other life insurance companies click here.
Knowing or having someone pass away is really one of the lowest times a person can have. The grief and the preparations needed for the final resting place plus entertaining guests can be physically and emotionally draining.
The physical and emotional burden may not be eased, but knowing that a person has life insurance can ease at least the financial burden. Each life insurance company has different requirements for claiming the death benefit proceeds. The requirements here are for Insular Life death benefits.
However, since most life insurance companies operate in the same way in the Philippines, the death claim process and requirements may be the same. The requirements here may change without prior notice.
It is important for the designated beneficiary to immediately notify the Company of the death of the insured through the submission of a Death Notice form, to any of its offices nationwide via over-the-counter, postal mail, e-mail, or fax.
Note:Documents marked with (*) can either be a certified true copy issued by the Local Civil Registrar, with signature and seal, or printed in security paper issued by the National Statistics Office (NSO). All documents issued or executed abroad should be translated in English and authenticated by the Philippine Consular Office located within the area where the documents originated or executed.
1.Death Certificate* of insured or any deceased beneficiary
1.1.The following are the Standard Claim Requirements to be submitted:
1.2.Birth Certificate* of insured or owner;
1.3.Claimant’s Statement Form (to be provided by Insular Life) – This has to be accomplished by each beneficiary who is eighteen years old or above, or by the Legal/Judicial guardian of minor beneficiaries (Please refer to the additional claim requirements below for minor beneficiaries);
1.4.One (1) valid government issued ID with picture and signature of each Beneficiary and Legal/Judicial guardian of minor beneficiary, if any; and
2.The following are the Additional Claim Requirements (as applicable):
2.1.For contestable claim - (death occurred within two (2) years from date of policy issue or last reinstatement): Notarized Attending Physician’s Statement Form (to be provided by Insular Life) – This has to be accomplished by every physician who has attended to the insured during or before last illness or has certified the death of the said insured.
a.For all plans claim due to natural cause – Attending Physician’s Statement
b.For claim due to accidental cause – I-Shield Physician’s Statement Form III
c.For GIO-issued policies, APS is no longer required
2.2.If the beneficiary is the spouse:
a.Marriage Contract* of insured and spouse-beneficiary
2.3.If the beneficiary is a married daughter-beneficiary – who was still single during designation as beneficiary and is now using her married name, submit one (1) government-issued ID with picture and signature bearing her married name together with any of the following:
b.Birth Certificate*, and
c.One (1) government-issued ID with picture and signature bearing maiden name
2.4.For beneficiaries other than spouse, children, parents or siblings ,combination of any two of the following to establish relationship with insured:
b.Baptismal Certificate; and
c.Notarized Affidavit of Two Disinterested Persons stating relationship of beneficiary and insured, together with one (1) valid government issued ID with picture and signature of each affiant
3.The following are the Checklists of Claim Requirement for Special Conditions:
3.1.For violent/accidental death (e.g., accident, murder, homicide or suicide):\
*Any of the following where available:
a.Certified True Copy of the Police/Barangay/NBI (and other agencies) Investigation Report;
b.Certified True Copy of the Autopsy Report;
c.Certified True Copy/ies of Sworn Statement of witnesses;
d.Certified True Copy of the Criminal Complaint or Information filed in court;
e.Certified True Copy of Hospital Records (Admitting History and Discharge Summary or its equivalent), if death happened in the hospital;
g.Driver’s license of insured if accident occurred while insured was driving a vehicle
The requirements above may change without prior notice. Other companies such as Sunlife, Phil-am Life, Manulife, PRU Life, AXA Life and FWD Life mostly likely have the same death claim procedures or requirements, but the forms may be different.
If you need help or assistance in claiming for the death claim. Feel free to call the FinancePH Hotline (0905-FINANCE) or 0905-3462623 and we are more than willing to help you claim the death benefits of your beloved ones.
Certified True and Correct from Source: https://www.insurance.gov.ph/wp-content/uploads/2018/03/Networth-of-Life-Insurance-Companies_Year-2017.pdf
Above is the list of the top best life insurance companies in the Philippines for 2018. The Insurance commission releases the top life insurance companies ranking data every year so we show data for the previous completed year which is 2017.
The best and largest top companies in the country have high net worth. A higher net worth means that the company can be able to survive financial crises because it has sufficient assets to operate should the company have years of continued losses.
The ranking above shows that the top 3 life insurance companies for 2017 are Phil-Am Life, Insular Life and Sun Life. Since the 2017 just ended the results is for the Latest Top Life Insurance Companies in the Philippines for 2018 is based on company results ending 2017.
Despite being 100% Filipino owned, Insular Life's ranks among the top life insurance companies. If you would like to get life insurance consider Filipino companies because supporting a local company would translate to greater benefits for our country.
Just look at what happened to South Korea when its citizens patronized local brands such as Samsung and Hyundai. If we reduce our dependence to foreign brands we can have a stronger and better economy which will be beneficial for us Filipinos.
Insular Life also one of the few companies who are very transparent in their operations. In fact, you can download the annual reports and financial statements of the company from their website by clicking here. You can also download the list of companies where they invest the your VUL investment money here.
If you wish to ask for a free insurance or investment proposal from Insular Life please click this form.
Read more: The 10 Reasons Why You Should Choose Insular Life
ABOUT THE AUTHOR:
Mark Joseph T. Fernandez, CPA, RFC, AFA, AWP, AEP, MDRT is the founder and head financial advisor of FinancePH. He has helped thousands of people start saving, investing and insuring. He conducts regular monthly seminars and is a regular TV and radio guest on finance topics. Reach him at email@example.com.
Technology has allowed us to do things much easier. Several industries such as the manufacturing industry has started developing artificial intelligence or A.I. The financial industry outside the Philippines has also seen the rise of robo financial advisors.
One of FinancePH’s core values has always been to create innovative ways of doing our business to make us stand out from the crowd. Thus, we are proud to announce the Philippine’s first Robo Financial Advisor – Matrix.
In the past we have had Macoi, our financial advisor mascot helping us out provide financial advise to our clients and followers in the internet. He represents the human financial advisors of FinancePH. But, times have changed and Macoi needs to have a sidekick to help him provide the best possible service to our clients and so the need to create a Matrix.
Contrary to popular belief, we believe that Robo Financial Advisors will not remove the need for human financial advisors. Our belief in FinancePH is that financial advising is not just a science but also an art. The science side allows us to create the best possible advise to our clients allowing them to earn from their investments and benefit from our services.
The art side is the human side of financial advising which allows us to determine the real goals and aspirations of our clients – something that a human financial advisor can perform excellently. Imagine yourself buying a car – would you want a robot to assist you purchase that car or would you want a real human being to help you assist the purchase. The human touch makes the experience worth the purchase.
We have initially launched Matrix this week as a tool to help our financial advisors provide quality financial advise to our clients. Based on my personal years of experience in the financial services industry, one of a client’s greatest frustrations is that the financial advisor after asking the client to invest, fails to provide ongoing financial advise. Thus, most investors do not get to maximize the income potential of their investment funds.
Over the next few days, we will slowly roll out Matrix to be available for us to our clients and not just to our financial advisors. Though Matrix can perform tasks independently without the need for human intervention, there are still tasks that need human intervention. We believe that some tasks should still be done by humans and should never be done by robo financial advisors. Still, having Matrix in our roster will greatly reduce the need for our financial advisors to perform tasks that can be delegated to our Robo Financial Advisor. In effect, our advisors will not be overwhelmed by the volume of tasks being done in a given day and thus be able to focus more on creating a 'wow' experience to our clients.
Matrix will also allow us to create ways to do financial needs analysis and relay information that would allow us to provide customized financial solutions to our clients. We expect that with the introduction of Robo Financial Advisors, more clients will earn from their investments while at the same time the speed at which we process client transactions will greatly be improve. Financial advisors will also be able to focus more on meeting and servicing client needs by greatly reducing time spent in administrative matters.
We believe that Robo Financial Advisors will still be unable to replace human financial advisors. Our position in FinancePH is that Robo Financial Advisors should be used to allow the human financial advisor to perform faster and much better service to our clients by delegating certain tasks to the Robo Financial Advisor. Much like Batman has a Robin, every financial advisor can always benefit from a good sidekick. Thus, Macoi will have a sidekick which is a Robo Financial Advisor (and the first in the Philippines) in the name of MATRIX.
Our clients will surely benefit from this new technology. Stay tuned!
You may have noticed that bond funds or fixed funds NAV has been declining for the past few years. This is because interest rates in the US have been increasing since 2016. Other countries usually follow the interest rate pattern of the US, which includes the Philippines. We have a question from our FB follower which states:
Thank you for spreading financial literacy through your blogs and through your seminars. I really loved your seminar especially the one on stock market fundamental analysis. It was indeed eye opening, yet very easy to understand and digest.
Anyways, my question is that recently I have noticed that my fixed income fund investments have been going down. I was told that fixed income funds are very stable and are not volatile. If that is the case, then why is the NAV of my fixed income fund down?
Thank you for answering my question in advance and more power to you FinancePH. Keep spreading financial literacy as more and more people are empowered to be more financially literate.
Hi Kris, thank you for your kind words. First I would like to thank you for asking this question as it will clarify issues on the fixed income fund as being safe and not volatile. Yes, it is true that the fixed income fund is safer and less volatile than stocks but it does not mean that it is not prone to market price fluctuations. The person offering to you the bond may have told you that it has lesser risk but failed to inform you about the interest rate sensitivity of fixed income funds and bonds. This is because the concept of bonds and interest rates are quite difficult to explain especially to new investors. Still it is important to know why fixed income fund NAV (Net Asset Value or Unit Price) goes up and down in relation to interest rates.
Fixed income funds or bond funds are being managed by fund managers. They have the mandate to buy or sell bonds to help the investors of the fund earn decent returns averaging 1% to 8% per year. Fixed income funds increase in NAV in two ways. One is through the interest payments received from the bonds that are inside the fund. And the second is through the market value of the bonds inside the fund.
Say a you bought a P1,000 peso bond giving 4% interest rate last 2008. For the purposes of discussion it has a 20 year maturity, which means it will give 4% of P1,000 for 20 years or P40 per year until 2028. At 2028, you will receive back your P1,000 bond if you SURRENDERED your bond at MATURITY DATE (2028).
Now for example during 2018, you needed money and cannot wait till 2028 to receive your P1,000. back You decided to sell your bond. The price you can sell your bond will be dependent on what is the current prevailing interest rate for new bonds being sold in the market at the time of selling your bond.
If the new bonds in the market are giving more than 4% interest rate, then you cannot be able to sell your P1,000 bond for P1,000. To encourage investors to buy your bond giving 4% interest rate you must sell it at a DISCOUNT (lesser than P1,000 because new investors buying new bonds will give them an interest rate higher than 4%, so you must make your bond attractive to investors by selling the bond at less than P1,000 for example at P950 instead).
The opposite is also true, if interest rates are declining, the bond prices will go up. In the example if interest rates of new bonds are at less than 4%, then if you want to sell your bond, many people would want to buy it because it gives 4% interest. New bonds gives more less than 4%. Thus, you can sell your bond at a PREMIUM.
The effect of interest rates are usually medium to short term and are not long term. It usually depends on how long the durations of the bonds are in the fixed income fund that you bought. If the fund manager of the fixed income fund is holding short term bonds (bonds with less than 5 year maturity), then the effects of changing interest rates will not be significant. If interest rates are going up, the fund manager can be able to surrender the bonds he bought after 5 years and buy new bonds. In this case, the new bonds bought will have higher interest rates (since interest rates are going up) and the fixed income fund will have higher returns (since the fund manager bought bonds with higher interest rates).
The market value of the bonds fluctuate in the short term. But the bond prices always go back to its original price when surrendered. For example a bond initially issued at P1,000 may go up or down in price depending on the interest rates of new bonds in the market. However, by the time the bond matures (say after 20 years or 5 years), the bond holder will always receive what he initially paid which is P1,000. This is of course on the assumption that the bond buyer held the bond until maturity and did not sell it before the end of the maturity date.
I hope I was able to shed light on why bond prices go up and down in relation to interest rates.
Mark Joseph T. Fernandez, CPA, RFC, AFA, AWP, AEP
Head Financial Advisor
FinancePH Financial Advisors
Planholders of the closed Prudentialife Plans Inc. (PPI) have until March 7, 2018 to file their claims from the liquidation proceeds of the company.
It can be recalled that Prudentialife Plans has been having consecutive years of bad financial performance. Somewhere in September of 2008, the company's assets were not sufficient to cover the requirements set by the Securities and Exchange Commission (SEC) relative to the products they were offering. To solve this problem, PPI tried to reduce the interest rate of the products they were selling. However, efforts to solve the problem were still futile causing the SEC to cancel the company's license to sell in 2009.
In the years after 2009, the company saw its liabilities exceeding that of their assets causing a negative 'Net Worth'. In 2010 and 2011, the company had significantly more liabilities in their balance sheet. Even if the company sold all its assets, it will not be sufficient to pay their obligations.
Reasons for failure
Prudentiallife Plans, may be a case of failure to properly address threats in the future, coupled by possible government regulation problems, as well the global economic crisis in 2007 and 2008. Now, only around 20 pre need companies operate in the Philippines from the 200 companies back then.
To prevent these problems from occurring in the future, the government placed all pre need companies under the supervision of the Insurance Commission through R.A. 9829 known as the Pre-Need Code of the Philippines. Prior to 2009, the SEC is the main regulatory body of Pre-Need companies which might not be sufficient to protect the public since all corporations are under the SEC. There must be a special body that will look after the pre-need companies such as the BSP looking after banks.
The Insurance Commission at that time has been quite successful in protecting the public as evidenced by a very low number of insurance companies going bankrupt. In fact, if there is one life insurance company that the insurance commission sees as having a potential financial trouble in the future, it asks a bigger life insurance company to buy the smaller life insurance company while still honoring the obligations of the smaller company. Thus, it would be wise to place the Pre-Need companies still under the umbrella of the Insurance Commision, which lead to the adoption of the Pre-Need Code in 2009.
The Insurance Commission (IC) was forced to place PPI under receivership on September 19, 2012 after efforts to rehabilitate the company failed. The IC then allowed plan holders to claim whatever is left of the company until September 28, 2017. However, since most creditors were not aware of this, the Makati Regional Trial Cout Branch 147 allowed the reopening of the period for creditors and qualified planholders to file their claims until March 7, 2018.
If you have questions on how to claim your prudential life plan benefits, you may request for a financial advise through the FinancePH Hotline at 0905-FINANCE (0905-3462623) or through (02) 750-4946. You may also email Prudential Life Plans at PPICorporateLiquidation@gmail.com.
According to PPI, the claims must be presented in writing and include the following:
Share and inform your friends to file their claims before March 7, 2018!
Many people even celebrities succumb to major illnesses such as cancer even at a very young age. In this time where stresses and fast food have abound, the chances of having a cancer may get as high as 1 in every 2 persons or 50% chance of getting one.
For the lucky ones who have thought of protecting themselves before they get a major illness, receiving a large insurance claim say P5M after being diagnosed with cancer is a big blessing in disguise. But for those who didn't have get any insurance and get diagnosed by a major illness, it becomes a source of frustration and regret.
When I was a new financial advisor, I approached my father and told him to get life insurance. Unfortunately, he did not listen to me. After several requests, I decided to give up. In March of 2015, my father got into a terrible accident that resulted into stroke. We spent almost P1.5M for the hospital, doctors and rehabilitation. If only my father followed my advice just like my mother, he could have received as much as P5M.
In the past, insuring people with major illnesses such as cancer and stroke was not possible. The only way for them to be insured is through a single premium VUL which works much more like a mutual fund. The only drawback with this is that the insurance is only 125% of investment which is quite small.
Just recently Insular Life launched a new life insurance program that guarantees a person to be insured regardless of health condition. For a limited time offer, you can now insure yourself even if you were previously uninsurable.
To know more about this product from Insular Life, request for a proposal by clicking here or calling 0905-FINANCE (0905-3462623) or (02) 750-4946.
A common question that most people ask is "Where do I invest my Christmas Bonus this year?".
You see, Christmas is in the air and of course Christmas Bonuses and Thirteenth Month Pays are coming. What better way to save your Christmas Bonus and grow it than by investing in the international stock market, right? This is the best way to spend your Christmas Bonus.
For only P5,000 per month for at least 5 or 10 years, you could already invest in the international stock market and be a business owner of the following companies:
Why invest in the bank when you will only earn less than 1% per year? Why invest in the local stock market, when you can also invest internationally? Here is the composition of where the fund invests:
Your money will be secured since the company who will manage your fund is no other than Insular Life. Insular Life is one of the largest life insurance companies in the Philippines. So what are you waiting for? Click here to request for a proposal about Insular Life's Global Equity Fund. or call us at 02-750-4946 or 0905-FINANCE (0905-3462623).
Today, I woke up with a feeling of excitement. This day will be the first time I will be delivering my a death claim check. As a financial advisor these are the once in a blue moon events where you feel the joy and satisfaction of being a financial advisor.
HOW IT ALL HAPPENED:
Around 5 years ago, I was referred to a businesswoman in her early 50s. She owns a business in the construction industry. Initially our financial planning consultations were mostly about her own personal affairs. Eventually as the years pass, and as our relationships deepen, our consultations went further into financial consultations for her business - specifically for employee loyalty and retention.
We were able to craft a financial plan that would allow her to attract better quality employees as well as retain them by creating great compensation packages and employee benefits. One of these was a comprehensive group plan or a CGP. Never did I know that the plan I suggested would allow me to feel what I have experienced today.
CPG or comprehensive group plan is a retirement program which allows companies to prepare for the eventual retirement of their employees by setting aside a small portion of their earnings in a BIR tax qualified deposit system that earns guaranteed interest several times higher than the bank. Further amounts invested here may be assigned to another employee should they resign early on.
A few days ago, I received a call from my client's secretary asking help in claiming death benefits. My heart raced as I thought, is my long-time client is already dead? Oh no! But it was not my client that needed help, it was one of her employees.
As I gave the widow her benefit check, I reminded her that this check is a gift of love from her husband. “Your husband could have named his parents as beneficiaries but he named you because he cares for you and your children.”
Tears then swelled from her eyes. I hear her whispering “it was not supposed to happen this way. It was so sudden, he was so young.” Man as I am, I did not know that my eyes were already sweating as I was listen to her stories.
I gave her a hug and said, “This check may not ease your emotional burdens but at least this can ease the financial stress that you are feeling right now, everything will be all right.”
As I left the office of my client today, I recounted the lessons I learned from my first death claim. And here are the top 5 lessons I learned:
1. Life Insurance is most appreciated when someone dies
Before the widow and I parted ways, I may have heard more than 10 repetitions of the words, thank you. She even said that she will never forget the company where her husband worked and Insular Life. These are the times when you feel an all-time high. When you feel that you are close to being the national hero of the Philippines. I had to taste and feel this moment. Often, our job as a financial advisor are filled with No’s and rejections. But today is different.
2. No matter how young you are, you still need to be protected from Life’s risks
His husband was only 45 years old. He never showed any signs of sickness at all before he suddenly dropped dead due to a stroke while driving his boss’ company car. Death knows no age and no time. Anyone who feels invincible should know that the mortality rate is still at 100%.
3. Having a good relationship with your financial advisor can make your life easier
Imagine if my client did not have any trusted financial advisor who took care of her. Or she did not select the right financial advisor who can service her needs in the long run. The claims process could have been very long and tedious for them. When I learned about the incident, I sent my staff to get the necessary claim documents immediately from my client. In fact, the client or the beneficiary didn't need to visit our office to process the claims. Me and my staff handled it well. In fact, I was the one who delivered the claims to them in their office. This is because I valued my client and they valued me. So, I am very willing to give extra mile service at no additional cost on their part.
4. The best way to treat a life insurance benefit claim is to reinvest 80% of it back for your future.
During my short conversation with the widow, I realized that she works as a store attendant of fast food store. She also mentioned she had 3 kids and one is in senior high, about to go to college. I realized that if I advised my high net worth client to be financially healthy, I should also advise her to be financially healthy as well. So, I told her to reinvest 80% back in the form of managed funds. I told her that this money is a memory of the hard work from your husband and must be used for you and your children’s future. She went silent for a bit, probably thinking and thankfully she said yes.
5. Never share to your friends and relatives that you have received a life insurance benefit check unless you plan to reinvest it.
During our conversation, I told her to not tell anyone that she received a benefit check if she does not plan to reinvest it. I explained to her the risks of exposing it to people even to closest friends and family members. She must not even show a hint of a large spike in her lifestyle, lest others will notice and wonder. Good thing she decided to reinvest the check so she need not worry.
Being a financial advisor is one of the toughest jobs in the world. As they say, we eat rejections during breakfast, lunch and dinner. But as I reminisce today’s events, I realized that all the years of melancholy brought by this job is then quickly erased by the sight of a widow hugging you. Visualize for a second a widow crying tears of joy. For one moment you feel sad, but suddenly you realize... events like these make our lives worth living for.
I was one of your attendees during your Income Tax 101 Seminar held in Makati and I thank you for your advocacy to help small time businessmen like us by providing affordable seminars. I admire your team's dedication to your advocacy of erradicating poverty in the Philippines through financial literacy.
During the introduction part, I heard that Mr. Mark Fernandez was invited by the Senate to discuss about Estate Taxes. He also gave his opinion saying that the proposed tax changes may increase wealth inequality and may create more poor people. I would like to clarify this.
So my question is, will the proposed tax changes by the Duterte administration reduce the poverty gap? Or will it create more poor people? I am just confused because the news and the media says that the proposed tax changes will be good for the Filipino people.
Thank you and more power. I hope to attend more of your seminars.
Thank you for your patronage to our seminars and for your encouraging words. Rest assured that we will continue to spread our advocacy to more Filipinos in need. My answer to this question is merely an opinion based on how I see the proposed tax changes. Others may disagree but here is my humble opinion:
First, let us identify what are the proposed tax changes:
1. Plan to reduce personal income tax (taxes paid on money that individuals and sole proprietors earn.)
2. Increase excise taxes (taxes paid on some items that we buy)
3. Reduce estate tax (taxes paid upon death)
With the proposed changes the minimum amount of income per year needed for you to be taxed will now be increased to P150,000 per year or P250,000 per year. This is would be good since this means lesser taxes to be paid and more take home pay.
However, this will be bad for the minimum wage earners because they themselves will not be benefiting since they are exempt from paying taxes. Thus the proposed reduction in income tax will benefit the upper and middle class but not the lower class.
Second, let's look at the proposed excise tax increase on - automobile, sugar, fuel and LPG. This would mean more expensive cars, higher transpo cost, more expensive food and beverages with sugar and other ripple effects due to higher oil prices. Thus the proposed increase in excise tax will not benefit the upper, middle and lower class.
Now, let's look at the proposed reduction in Estate Tax. This means that amount of taxes that the heirs will pay from the inheritance they receive will be reduce from 20% to 6%. The proposed reduction in Estate Tax will greatly benefit the upper class.
So in summary, the proposed tax changes will benefit the following:
Upper class - Will benefit from lower Estate Tax and Income Tax but will pay more Excise Tax
Middle class - Will benefit from lower Income Tax but will pay more Excise Tax
Lower class - Will not benefit at all from the proposed tax changes. No benefit due to lower Estate Tax, lower Income Tax and higher Estate Tax
If you belong to the upper class, then the proposed tax changes will be good for you. Your heirs will be paying lesser Estate Taxes from 20% to 6% on the inheritance they receive.
Minimal to no effect for the middle class because despite the reduction in income tax, the prices of commodities will be expensive due to excise tax.
The hardest that will be hit are the minimum wage earners. They will not benefit from a reduced income tax, a reduced estate tax and will be paying more for prices of commodities and transportation.
Hopefully this sheds some light to your question. This is just my humble opinion, I'm sure the Department of Finance, our honorable senators and congressmen have their own reasons why. Feel free to comment below and let me know your thoughts too.
Mark Joseph T. Fernandez, CPA, RFC, AFA, AWP, AEP
Founder of FinancePH
I have been following your Facebook page for more than a year now. Recently, I attended one of your seminars and I was very happy to have attended. I also seemed to enjoy what the financial advisors are doing - conducting seminars, discussing about investments, helping people be more financially healthy and doing one on one financial coaching. Currently I am employed and is earning around P25,000 per month. But I feel that I have stagnated and I want to earn more because I believe I am very hard working and I even spend overtime regularly. Unfortunately, some of it are without pay. Also, I feel that my job is not anymore challenging. I want to do something new and grow.
My question is, how much do financial advisors earn and do you think a person like me with little financial background can also become a successful financial advisor?
Thanks for answering my question and more power to FinancePH.
Your avid FB follower"
Thank you for reaching out to us to clarify about this issue. With regards to your question as to how much financial advisors earn, there seems to be no definite answer. In the Philippines, financial advisors earn commisions and variable income. They do not earn a fixed income. This is different from financial advisors in developed countries where they charge a specific consultancy fee or management fee to their clients. Unfortunately in the Philippines, that set up may not happen in the near future.
I started my career as a financial advisor when I was age 21 right after college. I first started as a part-time advisor while working as a CPA in one of the big accounting firms in Makati. Usually meet my clients after work or during Saturdays. At that time I was earning an average of P15,000 to P20,000 per month from my sales.
As the years progressed, I started to become less shy and started to be more confident of my job. Eventually I started to earn P35,000 to P50,000 per month. The key here is to take care of your existing clients and continually serve them so you will have repeat business.
Globally there is an international organization called the Million Dollar Round Table or MDRT which is one of the best honors that a financial advisor can achieve. Unlike certification courses such as the Registered Financial Planner (RFP) or the Certified Wealth Planner (CWP) where you study and take an exam to be certified, the MDRT designation can only be achieved if you reach certain level of income every year. This means that you can be an MDRT this year and next year you are not.
The income requirements to be part of this organization can be found at the website of MDRT at https://www.mdrt.org/membership/requirements/. Currently the income requirement for 2017 to be part of MDRT is at Php 2,094,300. Which means that if you earn at least Php 2,094,300 you are eligible to apply as member of MDRT. This amount changes every year to adjust for inflation.
Reaching the MDRT status as a financial advisor is one of the greatest dreams for most financial advisors. This translates to not only income but several company rewards, fame and free travel incentives. Because of my job as a financial advisor I normally travel out of the country at least twice a year and most of them are for free. But don't think that this is easy to achieve. MDRT financial advisors represent only 5% of the total financial advisors all over the world. Most MDRT financial advisors take time to build up their skills, confidence and client base to be able to achieve an MDRT status.
As to your second question if you need to have financial background to be a financial advisor, the answer is no. In fact some of the top financial advisors that I know have not take any finance classes when they were in college. The key there is to attend regular training and have a mentor who is also an MDRT.
If ever you wish to know more about the career please visit www.financephcareers.com. If you are not yet decided and wish to attend an orientation to know more details kindly contact us at 0905-FINANCE (0905-3462623) or firstname.lastname@example.org.
Hopefully I answered all your questions.
Mark Joseph T. Fernandez, CPA, RFC, AFA, AWP, AEP, MDRT
President of FinancePH
Looking for tips on how to save transportation expenses? Here are some of our helpful ideas that can guide you to lessen your daily transportation expenses.
When it comes to personal finance, we are all looking for ways to save more money. Our daily budgets are filled with both big and small expenses that we imagine can be cut out to save us extra cash and in the very least, can be spent elsewhere to more important things. Here are some tips to save your wallet from transportation expenses:
One of the things you can highly consider most especially if you are travelling quite a distance is using public transportation. But if you will choose to ride a Public transportation vehicle, the first thing that you have to do is to plan your route and know what PUV is the most appropriate to use. Why? To avoid spending more on PUV fares of course, and to avoid getting lost. Getting lost means spending more money, and we don’t want that now, do we? So you really have to plan which public transportation vehicles will help you cost you less but will take you exactly to where you want to go.
The case is a little different when it comes to PNR. The PNR fare is ranging from 15 pesos to 60 pesos. It’s a bit expensive than the LRT and MRT because it runs and covers more distance than the two technologically advanced railways. It has stations from tutuban up to Calamba, Laguna. PNR is a big help because it is cheaper than riding several jeepneys which is completely hustle and very time consuming.
Author: Christian Leika Paug
Many people invest in stocks but end up losing money because they don't study first. Nowadays, in what we so-called as the Technology or Information Age, people are slowly gaining the awareness about the value and benefits of stock investing. This is true to the fact that investors aged 18 to 44 comprised the bulk or 73.9% of online stock account users. Quoted from the Business Word University Edition November 5-18, 2015, Mr. Hans Sicat, PSE President and CEO, said that “The growth in online accounts continues to be impressive and validates our strategy of expanding the retail investor base through this platform.” He added, “Online accounts now compromise 27% of total stock market accounts from a mere 6% share in 2009.”
Worth noting indeed. However, despite the high returns one can get in stock investing, there is this big CAVEAT or warning also given the risks of losing, the fluctuations, the bearish periods, the heresies or hypes that can make your heart palpitate and your head go nuts. But do not fret for these things can be minimized if not totally avoided and here are some tips that you may consider:
1. Know Your Investment Goals/Objectives
It is important that one knows what his/her investment objectives are. These should be assessed carefully because it can help in the determination of what particular type of asset or fund would suit your reasons. Some of which may be any of the following:
a) Capital Preservation – This is considered as the conservative approach towards investing since the aim is to avoid risk of loss with the hope of gaining yields overtime;
b) Capital Appreciation – As the term implies, this objective deals with the accumulation or growth of capital. This may enable one to gain higher returns but note that there are higher risks too. The same goes with the investment adage, “the higher the risk, the higher is the return.”
c) Dividend Accumulation – The goal is to gain earnings through dividend declarations from companies or other business organizations, and
d) Current Income – This mode is to seek for the fastest yields to one’s investment. Said returns may not be extremely high but are just adequate to cover up for one’s regular expenses.
2. Research about the Stock Market
Of course, as any other important reminder, know what you are getting yourself into. From the Frequently Asked Question (FAQs) of Philippine Stock Exchange (PSE) Academy, stocks are shares of ownership in a company. When you buy stocks of a publicly listed company, you become part owner of that company. As a part owner, you participate in the company’s growth and future profits. Conversely, you may also lose if the company suffers a loss or performs below market expectations. Now what is a stock market? The stock market is a place where stocks are bought and sold or a place where people can invest in publicly listed companies through the Philippine Stock Exchange, Inc.
3. Determine Your Risk Appetite/Profile
Basically, one has to evaluate his/her levels of tolerance for losses. As what financial consultant and stock market trader, Mr. Marvin Germo, said “Your investment strategy should reflect on the stock you are buying.” He further explained that there are volatile stocks that have the great potential to go higher but also have the possibility to go down significantly. There are also stocks that are steadily growing while the market is going up and gets down steadily as the market turns otherwise. In order for one to identify his/her risk profile, he or she should attend trainings or seminars about stock trading. Another option is to watch training videos or read books to gain insightful knowledge and strategies.
4. Allocate Investible Funds in Stock Investing
In a nutshell, one must only invest funds that he or she can afford to lose in the stock market. Never go with your daily operational or living funds, or even pension funds in stock investing because the risk of losing is very real. Though losses in the stock market are considered “paper losses”, others can’t help but feel worried, especially for most newbies, since the funds they poured into the stock market are at times hard-earned money which can be used for other purposes. In addition, make sure that you have emergency funds and savings because there are no guarantees that there will be returns all the time.
5. Devote time for Stock Investing
They said that investing in stocks is much like going to school or a college course wherein the funds that you placed are your tuition fees for learning. In order for one to be successful in stock market or in schooling, he or she should commit time to study and be more aware of the mechanics of the market. Allocating time in stock investing does not necessarily mean that you have to watch how the market goes every minute in a trading day but you can set your own time in monitoring. The same can be done on a daily, weekly, monthly, quarterly basis, or whatever mode you are most convenient with. One can even align his/her monitoring time with his/her preferred strategy, be it long term (buy-and-forget), regular (peso-cost averaging) or short term (daily trading).
Truly, investing in the stock market is yet another means for building wealth. It is in one way or another that it can also alleviate poverty among our Filipino Kababayans given the proper knowledge and training. Noting that fear or ignorance immobilizes success, let us be informed, be engaged, and begin investing in the stock market. Cheers to investing!
Insular Life's brand endorser, Ms Lea Salonga has always believed that planning early in life can go a long way in helping you reach the bright future you want in life.
Today, we will discuss to you one of Insular Life's best selling investment products available in the market today - The Wealth Secure Investment.
Wealth Secure is a 3 in 1 investment program that provides the following:
1. Investment - the amount after 5 years of contribution can be withdrawn partially or fully
2. Life Insurance - the beneficiaries can receive a death benefit plus the unwithdrawn investment of the client
3. Health Insurance - the client can receive up to P5M lump sum should the client be diagnosed of any of the 35 dreaded diseases (ex. cancer, heart attack, stroke, kidney failure and major organ transplant).
FREQUENTLY ASKED QUESTIONS:
So much do you need to invest to receive the benefits above?
Simply invest at least Php 2,000 per month for at least 5 years or 10 years and you can receive the benefits above. You can invest also quarterly, semi-annual or annually.
How to start investing?
Simply contact us so we can schedule a meet with you. To contact us please contact an Insular Life Financial Advisor by clicking here. Or you may text us at 0905-FINANCE or 0905-3462623 for more information.
Why should you trust in Insular Life?
Insular Life is the largest insurance company in the Philippines in terms of Net Assets/Net Worth. To know more about Insular Life's standing versus other Insurance companies please visit www.financeph.com/blog/top-largest-life-insurance-companies-in-the-philippines-for-2016
How much is the expected return on investment?
It depends on the type of investment you choose from. You can choose from 5 different types of investment each with different expected returns and risks. The returns can range from 4%-25% per year on an average it is around 8-12% average return.
Contact us and we would be love to schedule a meeting with you and discuss your investment options.
To contact us please click here. Or you may text us at 0905-FINANCE or 0905-3462623 for more information.
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Investing gives us more than we could analyze, not just by receiving the fruits of our investment but also the non-financial benefits and values that makes us greater individuals for ourselves and our community.
Just like investing, there are several valuable lessons that we can learn over the course of our lives. Have you ever asked the following questions:
Why do we need to go to school when the things that we need to learn are in the internet?
In my opinion, we go to school not just only to learn and obtain knowledge but also to learn the value of perseverance. Each day is filled with challenges, home works, projects and extracurricular activities that at times can be hard to handle. But by waking up each day, we are in effect saying to ourselves that someday, all the hard work will be rewarded by that graduation toga. If we don’t persevere we won’t be able to graduate, it’s the same for investing: if we don’t persevere to learn investing, we won’t become successful investors.
Why do we have to learn complex mathematical computations when we don't really need it in real life?
Have you ever had times in college or high school where you thought, how can learning the surface area or the limit of x be useful in everyday life? Unless you are an engineer, college math may not be as useful in real life at all. But the act of practicing how to solve complex math problems doesn't just enhance our problem-solving skills, but also helps us realize that no matter how difficult the problem is, there’s always a solution. Sometimes when we invest, there may be times that we will feel lost. Sometimes the investing formulas, financial statements and financial ratios just don't make sense. If we apply the same patience that we did when we were learning complex problems in school, we can also apply it in learning investing formulas. Be patient and keep learning.
Why we should we participate in physical education and sports, when it's not important in the real world at all?
Do you remember the days when you were studying how to play a sport in elementary or high school or college that when you graduated, you already forgot how to play the sport? Or have you ever had times when you realized that learning sports doesn't improve our financial life at all. Shouldn't it be an optional subject and not mandatory? But if we look at it, physical education not only improves our physical heath, helps us learn new sports, but to teaches us to socialize and cooperate. In life and in business, intelligence does not always mean financial success. Sometimes relational and emotional success can also spill the difference between successful people and failures. In physical education and in sports, we learn the value of cooperation and team work. In business and investing, we also need to seek out friends and mentors who can help us and guide us to be successful investors.
As investors, we care for our future and the future of our family. We invest to generate passive income to reach our financial goals. We also invest to avoid financial risks such as being disable or getting sick so that we will not be a burden to our family.
Investing may be difficult at first. But the investor that never gives up on learning will eventually win. It allows us to assess whether our goals are really important to us or not. Investing allows us to identify our values in life. Are we persistent, patient and do we seek mentors? Should we quit or should we hold on to our goals? Should we lower our goal because of challenges or should we rise up and set higher goals?
There are a lot more values we can obtain when we invest. But the bottom line is that investing makes us a better person. It allows us to help our family, our economy and also to become a better you. So, the next time you invest, think not only of the financial benefits of investing but also its non-financial benefits.
If you wish to learn how to invest, feel free to contact me or contact FinancePH at 0905-FINANCE.
Did you know that less than 1% of Filipinos are investing and actively participating in STOCK MARKET?
Why there’s only few?
The main two reasons why is that we normally:
Most Filipinos are natural hard workers. They know how hard it is to earn money. That is why most Filipinos have a stronger emotion when it comes to losing money than when it comes to earning money. They would rather put their money on something that is safe such as the bank than put it on something that would earn more such as the stock market, but has no certainty.
Most Filipinos tend to look at the immediate outcome that it wouldn’t work without even thinking about the process on how the money is used to earn more money. Again, this is the result of the two reasons stated above.
What is the STOCK MARKET?
It is simply where the stock/shares are bought and sold. Stocks change in value everyday depending on how the investors view the company representing stock. If the investors perceive that the company has good strategies for the future and that they believe that the company will earn in the future, the stock price will most likely rise because there will be more buyers than sellers. The opposite is also true.
MOST PEOPLE SAY:
Did you know that you can start being a stock investor by just knowing the basics of investing in the stock market?
Did you know that investing in the stock market is not as hard as you think but will be very rewarding if you invest in it?
So, what are the benefits of investing in the stock market?
Here are some benefits that you can obtain when investing in stock market:
So how do I start investing then?
The very first thing to do is to learn the basics on how the stock market works. There are so many articles, blogs, seminars, and webinars on how to invest in stocks. You may also check FinancePH’s seminar on how to invest in the Philippines Stock Market by visiting www.financeph.com/seminars.
“WE MUST PUT AN EFFORT TO LEARN FOR US TO UNDERSTAND THE BASIC OF INVESTING IN STOCKS”
Second, if you already know the basics, you have to determine if you are a long-term investor or a short-term trader. For beginners, I suggest you go long-term. This is also true if you are busy on your job and just want to have your money work with minimal effort.
Is there any way to invest without so much effort?
You want to invest but you are too busy to learn these things by yourself.
I recommend talking to a financial advisor since they can give you options on how to invest in managed funds. As the term implies, you will not be directly selecting and managing the stocks but you will leave it in the hands of professional fund managers who will be the one to make your money grow in the stock market.
Talking to financial advisors may also allow you to learn the basics of investing in the stock market and would allow you to ask questions. After all, it would be much easier and safer to go in the stock market if you have a financial advisor guiding your way.
“NOW THAT YOU ARE INFORMED ABOUT STOCK MARKET, ARE YOU READY TO JOIN THE 1% AND BE CALLED AS A STOCK INVESTOR OR A TRADER?”
Adult life is like sailing on the ocean. A vast array and breadth of wonderful opportunities vis a vis the adventure story you’ll create makes it full with excitement especially for the possible things that we can do. Yet, we do know that this same feeling may also turn into sorrow easily as storms keep on passing by.
That is why we probably opt not to sail on the ocean of life too far by taking things slowly like still living with or near our parents, until we feel confident about our savings. Or perhaps we are the aggressive type: living wild and free, sailing wherever the wind takes us. Nonetheless, whatever we do, having a Variable Life Insurance should be one of the things we must have to attain a better future, and here are the five reasons why:
As they say, Y.O.L.O! So what are you waiting for? Try to contact a financial advisor now and let them help you start sailing in the ocean of life confidently!
What are stocks, bonds, mutual funds? What are GDPs and GNPs? If you do not know these terms, then maybe you need to start investing in financial literacy. In this article, we will discuss what is financial literacy and its importance in our financial lives.
In my opinion, financial literacy is the acquisition of financial knowledge to improve one's financial health. This may mean acquiring knowledge on how to manage your earnings to save for the future. This may also mean learning different financial jargons so you can make better financial decisions.
Have you ever wondered why there are so many hard-working people that end up having no savings at all? It is because they lack financial literacy. Some only know how to save in banks but they don’t know that there are more methods which give more returns than a bank.
As we broaden our knowledge about financial literacy we get to encounter more terms, methods, and techniques to help us make better decisions for our future. If applied properly, it will help us improve the way we spend, save, protect and invest our money.
I know of people who have high paying jobs but have low financial literacy. In my opinion, in 5 to 10 years’ time they will still be working on the same job and will not have any savings at all because they did not invest in financial literacy. These is because some people make the wrong financial choices, like upgrading their lifestyle quickly when they receive salary increases.
Some people have bank savings which is good, but having financial literacy will allow you to have direction in your savings. Like saving for an emergency fund, educational fund or retirement. But more than that, saving in a bank doesn’t really give you that much returns right? If you improve your financial knowledge you will be able to invest in stocks, bonds, insurance policies, managed funds and other investment vehicle which will give higher returns that will be very beneficial for you in the future.
ALWAYS REMEMBER It’s not about how much you earn but how much you keep”
The more we invest in financial literacy, the better will be the quality of the decisions we can make for ourselves and for our family.
“An Investment in knowledge pays the best Interest”
Every time we invest there will always be a risk involved. There is no such thing as zero risk, even when we go out to work, there is always a possibility that we can get into an accident.
Some people say that investing is like gambling. Actually its not. It's because gambling is wagering something of value with an uncertain outcome. In investing we expect to earn something and the probability of earning is usually higher than the probably of losing.
In order to understand risk, we must first define it.
Risk is the potential of gaining or losing something of value. The higher the risk the higher the should be your expected return. This means that if you want to invest in a business, you should expect for a higher return than if you just invest in the bank. However, sometimes even when the risk is high, the actual return may not be equal to what you expect the return to be. This is because of the different risks in investing.
So what are the risks to consider when investing?
Protect your income as early as now. Talk to a FinancePH advisor so you can come up with a good financial plan - whether retirement, educational planning for your children, estate planning and travel or business planning.
On June 1, it was reported that the Securities and Exchange Commission (SEC) has come up with a draft memorandum circular for the increase in the public float of Philippine-listed companies. But, what is a public float? And what does this entail? Allow me to explain.
A float denotes the shares of a company which are freely bought and sold to the public. These are regular shares that companies issue to the public which in turn are available to be traded by investors. A company will usually identify their float by deducting their restricted stocks, which are shares that cannot be bought or sold absent a special permission from the SEC and are usually issued only to executives and directors, from their outstanding shares or shares that the company has actually issued.
However, a company must first know how much shares they are capable of issuing or how much authorized shares they have. To further understand these let’s take as an example Company QRS which has 1000 shares to be issued. The Company decides to hold an IPO (initial public offering) offering 200 shares and while at the same time providing another 200 shares to its executives.
In the example, the company has a total of 1000 authorized shares and 400 outstanding shares. The 200 shares they provided to their executives are the company’s restricted shares. Now, if we deduct the said 200 restricted shares from the 400 outstanding shares, we will get 200 shares of the company as the float which was offered in the IPO.
From this illustration, we can infer that a float is a very important number. It is how an investor in the stock market will know how many shares are actually available to be sold and bought by the general investing public.
Now that we have an idea what public float really means, this news about its planned increase is really a great opportunity. The SEC said that the memorandum circular, once approved, would hike the current public float from 10% to 20%.
The measure, in particular, will make “those planning to list their shares for the first time to comply immediately with a 20% minimum public ownership requirement, while those already listed will be required to increase their public float to at least 15% on or before the end of 2018, and then to at least 20% on or before the end of 2020.”
Therefore, this wonderful chance allows us investors to be able to buy more shares in the stock market. What’s even better is that the SEC is eyeing for it to start on the month of July! So, what are you waiting for? You better save up and be ready to buy more shares!
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