Are you succeeding or failing?
The truth about wealth accumulation is that one never knows he has succeeded or failed until he has reached the irreversible stage when he has succeeded or failed! And this stage is usually the time when there is no more time to make up: too old to be productive, disabled, sick, dead.
And yet this stage does not come as a surprise to everyone. It is known. It is predictable. It is even describable! Which means we can set up an accumulation machinery while there is still time to do so, stay at it with patience and diligence and discipline to make it work, and enjoy the fruits come harvesttime.
Sounds easy!? As a prose, as a song, it does, but it does not happen that way.
How are we doing? Let's location-shoot. Let's locate ourselves in the accumulation journey.
A presentation material of a financial consulting outfit offers this stimulus:
Only 3 out of 20 people reaching the age of 60 have enough money to retire comfortably!
This subtle challenge to the market's consciousness anticipates a number of possible responses: If you are one of the three, congratulations! you are a model! If you are one of the 17, and you are young, and you want to experience a comfortable retirement, you can still be the 4th or the 5th or the 6th who can possibly make it. If you are getting close to an irreversible stage, you may need to doubletime. If you are there already, you are a perfect model of what must not happen, can you please inspire others to begin while there is still enough time?
Are we one of the three or one of the seventeen?
This can be our greatest secret other people may never know! But just to give us a working idea as to how the market is profiled, let's take a handle on one aspect of our financial preparation: our level of bank deposits. A report that was published recently in a national daily carried the following information on the deposit structure in the Philippines for the year 2003:
DEPOSIT ACCOUNTS 2003
(Philippine Population: 70 Million)
Bank Balance -----------Number of Accounts ------------% of Population
P 2 Million up ------------------ 206,000 --------------------------- 0.3 %
P 40,000-P2 M -------------- 4,559,000 --------------------------- 6.5 %
P 15,000-P40,000 ----------- 2,257,000 --------------------------- 3.2 %
Less than P 15,000 ----------21,537,000-------------------------- 30.0 %
No account ------------------ 41,440,000------------------------- 60.0 %
Total ----------------------- 70,000,000 ------------------------100.0%
(Note: Population count and percentages provided by this author.)
A careful analysis of this information will lead us to the following representative groupings:
1. Only 10 in 100 have deposits of at least P 15,000.
2. Only 7 in 100 have deposits of at least P 40,000.
3. Only 3 persons in 1000 have deposits of at least P 2M.
The data did not identify the age groupings of the accountholders, but even if we assume that all of the representative groupings are adults with income sources, it is plain to see that only the last group can stop working anytime and rely on their deposits for continuous sustenance.
ONLY 3 OUT OF 1000 CAN STOP WORKING ANYTIME AND LIVE COMFORTABLY!
Are we among the 3 or among the 997?
My 36 years of experience in the insurance and financial services industry, starting as an employee, then as an agent, then as a manager, then as a marketing executive, and later and currently as a professional financial and management consultant, have led me to this advocacy I call wealth trigonomics, a time-tested system of achieving future financial sufficiency. I will share this system in this website in future posts, but to provide the appropriate springboard for that presentation, let us examine first why we fail to accumulate.
Why do we fail to accumulate?
1. Because our sense of wealth is very poor!
Many of us were born to working families, where our heritage introduced us to the mentality of scarcity, of less and not more, of poverty. Very few were born with ready money to spend, which in itself is not even good. Because of that culture, we develop the personal conviction that it is not good to be wealthy, that we deserve only little, that enough is too much, that more than enough is immoral. Nobody introduced us to the importance and urgency of the "second enough."
And this culture puts us against all odds, so to speak. First, we need to work hard to earn "enough" for the present. Which means that, if say P20,000 a month is the "enough" treshold, we need to labor for it in order to survive. So we work harder to earn more, aiming to move to our "second enough" only to realize that our first treshold has moved up as we acquire additional responsibilities, get married, beget children, shift lifestyle, buy a car, buy a house, and so on.
If we are lucky, we get to earn more than we need, but instead of thinking about the future, we are taunted and tempted by the present enjoyment syndrome which seems to say: hey, why sacrifice for the future, you don't even know what's coming, you are strong, you can manage now, you can manage then!
So we enjoy now! And the more we enjoy the present, the more our sense of future slips away. And we say, "Wait till I have an excess!"
2. The excess never comes. Incomes increase, salaries increase but there is no remainder. Present obligations are completed, but new ones are contracted. Always, a new higher priority upstages the need to prepare for the future. And we say, "I'll try next time."
3. And next time. And next time. Until there is no more time. Until it is no longer possible to accumulate because we are 63 and we are retiring in two years. And because of the magnitude and formidability of the needed preparation and the near impossibility of making it, we accept the reality and leave everything to faith, or fate.
4. Or maybe we realized sooner or earlier. Except that, even before we can get a program in motion, early death or sickness or disability strikes. "System failure," I call. And everybody is caught by surprise, most especially the family. The spouse. The children. And everything falls out of place.
5. Or maybe we are within time. A financial advisor was able to convince us of the urgency of putting up a program right away. And indeed we got a headstart. But our conditioning was not deep enough to allow us to keep it through to completion. And present gratification takes over.
6. Or maybe we are disciplined. We kept our eyes glued to the future and even felt the future enjoyment in our veins. But our choice isn't good enough to prize us with our reward. Program closed. Program failed. Provider insolvent. And so goes the burning issue...
These are just six of the major obstacles to wealth accumulation. There may be more, and it is important to identify them and confront them head on right at the very start. These hurdles are within our capacity to manage. Even the contingencies, such as death, sickness and disability.
When we decide to begin our wealth accumulation program, we must be sure all these obstacles are properly addressed.
Let's summarize these six major obstacles:
1. Poor sense of wealth
2. Procrastination
3. Insufficient time
4. System failure
5. Lack of discipline
6. Program failure
If any one of these culprits has enjoyed your patronage in the past, it is time to deal with it, and for that matter all of them, with the stamp of discipline and conviction of a Spartan. After all,
we owe it to ourselves to savor "the good life" at harvest time, and there may not be another time for a set-up more suitable, and available, than now.
"Failure must be but a challenge to others." - Amelia Earheart
Saturday, June 30, 2007
Wednesday, June 27, 2007
How Much Wealth is Enough?
"There are only two families in the world: the Haves and the Havenots."
- Miguel de Cervantes, in Don Quixote
Wealth is relative.
Consider three people. Larry lives in a village where most of the houses are 2-bedroom bungalows. He owns a 5-bedroom 2-storey house, with an attic, on a fenced 900-square meter lot, and parks three cars in his garage. He lives alone.
Beside his property is a 2-bedroom bungalow owned by Mario, a father of two grade school kids. Mario works as an automotive shop manager in a car dealer company. He acquired his house on terms and he has religiously paid his monthly instalments for the last eight years. In his small garage is parked a 10-year old but well-conditioned bantam which his company assigned to him as a service vehicle.
Across the street is a government property that has been taken over by migrants to the city. Right in front of Larry's house is a small sari-sari store, part of the makeshift house, of Rodelio, a 40-year old father of five children, and who works intermittently as a construction carpenter.
Easily, we can see that Larry has more than Mario and Rodelio, and may not want more of the conveniences of living that the other two may relatively aspire for. But Larry is aching. His wife and children left him and he has been living alone for the last three years.
Mario dreams of buying a new car and is patiently laboring and saving for its down payment. His wife works as a cashier at a downtown drugstore and their two children attend the village school. Once or twice a month, on Sundays, he takes the whole family to the mall. At his level, he definitely wants to have more.
Rodelio may not have a regular work in his construction company but he never really runs out of job. His mastery of his carpentry skills has allowed him to take on house repair work at the nearby villages, thus enabling him to buy the necessities of living relative to his surrounding and his lifestyle. His five children are all studying at the public school and his wife manages their sari-sari store. Every Sunday, the whole family looks forward to the "cool air" of the mall. Rodelio dreams of having his own house and lot someday.
When these three heads of families walk into the mall, we can see wealth at three different levels. Wealth means differently to different people. Even as Cervantes classifies families as having or not having wealth, the distance between these two categories spans a chasm as wide and as far as our imagination can take us. The three personages presented symbolize the presence or absence of wealth at three different levels, and the relativity does not stop there. It moves from individual to individual, depending on what economic level we find him in.
Wealth has come to mean the presence in sufficient quantity of items of economic value, including the power to control such items. Such items may include money, house, land, business, proprietary possessions and personal items such as cars, jewelries, artwork and other items of worth. It is also measured by one's reference to non-financial values such as education, health, successful children, power, authority and other evidences of convenience or social elevation.
Robert Kiyosaki, of Rich Dad Poor Dad, defines wealth as nothing more than a measurement of time: how long one can maintain his lifestyle when he stops working. In essence, he places a quality and time tag on the items of economic value.
Indeed, it is not our income level which defines our wealth but what remains of our income and what we do with that remainder. When the remainder is accumulated over a period of time and evaluated, it becomes our networth, which in financial terms, is the result of our asset-minus-liabilities operation.
This is the pathway of our advocacy. The wealth we mean is being in a minimum state of having "enough" of the things we need to live comfortably, even when we are no longer capable of active production.
I know that even that distinction will lead us to ask "What is enough?" or "How much is enough?" Hello relativity!
But let us not allow relativity to delay our quest for wealth. Let us define what we mean by "enough" by establishing certain tresholds. The important thing is we are into this journey, and we have the intense desire to better our present position and aim for more.
Which means we need to have a starting point.
- Miguel de Cervantes, in Don Quixote
Wealth is relative.
Consider three people. Larry lives in a village where most of the houses are 2-bedroom bungalows. He owns a 5-bedroom 2-storey house, with an attic, on a fenced 900-square meter lot, and parks three cars in his garage. He lives alone.
Beside his property is a 2-bedroom bungalow owned by Mario, a father of two grade school kids. Mario works as an automotive shop manager in a car dealer company. He acquired his house on terms and he has religiously paid his monthly instalments for the last eight years. In his small garage is parked a 10-year old but well-conditioned bantam which his company assigned to him as a service vehicle.
Across the street is a government property that has been taken over by migrants to the city. Right in front of Larry's house is a small sari-sari store, part of the makeshift house, of Rodelio, a 40-year old father of five children, and who works intermittently as a construction carpenter.
Easily, we can see that Larry has more than Mario and Rodelio, and may not want more of the conveniences of living that the other two may relatively aspire for. But Larry is aching. His wife and children left him and he has been living alone for the last three years.
Mario dreams of buying a new car and is patiently laboring and saving for its down payment. His wife works as a cashier at a downtown drugstore and their two children attend the village school. Once or twice a month, on Sundays, he takes the whole family to the mall. At his level, he definitely wants to have more.
Rodelio may not have a regular work in his construction company but he never really runs out of job. His mastery of his carpentry skills has allowed him to take on house repair work at the nearby villages, thus enabling him to buy the necessities of living relative to his surrounding and his lifestyle. His five children are all studying at the public school and his wife manages their sari-sari store. Every Sunday, the whole family looks forward to the "cool air" of the mall. Rodelio dreams of having his own house and lot someday.
When these three heads of families walk into the mall, we can see wealth at three different levels. Wealth means differently to different people. Even as Cervantes classifies families as having or not having wealth, the distance between these two categories spans a chasm as wide and as far as our imagination can take us. The three personages presented symbolize the presence or absence of wealth at three different levels, and the relativity does not stop there. It moves from individual to individual, depending on what economic level we find him in.
Wealth has come to mean the presence in sufficient quantity of items of economic value, including the power to control such items. Such items may include money, house, land, business, proprietary possessions and personal items such as cars, jewelries, artwork and other items of worth. It is also measured by one's reference to non-financial values such as education, health, successful children, power, authority and other evidences of convenience or social elevation.
Robert Kiyosaki, of Rich Dad Poor Dad, defines wealth as nothing more than a measurement of time: how long one can maintain his lifestyle when he stops working. In essence, he places a quality and time tag on the items of economic value.
Indeed, it is not our income level which defines our wealth but what remains of our income and what we do with that remainder. When the remainder is accumulated over a period of time and evaluated, it becomes our networth, which in financial terms, is the result of our asset-minus-liabilities operation.
This is the pathway of our advocacy. The wealth we mean is being in a minimum state of having "enough" of the things we need to live comfortably, even when we are no longer capable of active production.
I know that even that distinction will lead us to ask "What is enough?" or "How much is enough?" Hello relativity!
But let us not allow relativity to delay our quest for wealth. Let us define what we mean by "enough" by establishing certain tresholds. The important thing is we are into this journey, and we have the intense desire to better our present position and aim for more.
Which means we need to have a starting point.
Tuesday, June 19, 2007
How Wealth Accumulates Part 2
In an earlier post, we looked at how your P1000 a month, beginning at age 25, can snowball into more than P5 million when you retire at 65. Of course, this is made possible by this "magic" we call compound interest wherein your earnings become part of your principal as your P1000 a month rolls.
Simply stated, the compounding process works this way: If you put your P1000 in an interest-bearing instrument, say at 10%, after one year it becomes P1100. If you do not withdraw your money and its earnings and let it stay there for another year, it becomes P1210. If left for another year, it becomes P1331. After 10 years that your money is allowed to compound, it becomes P2593.74, a gain of 1593.74, as compared to a total simple interest gain of P1000.
Let's take another look at the way it works. Let's establish another treshold - this time, an accumulation goal of P1 million. How much monthly savings will you need to accumulate P1 million given a time frame? The following table will lead us to the amount corresponding to the interest we choose:
Monthly Deposits Required to Accumulate P1 million
Accumulation Period -----6%-----------------8%----------------10%--------------12%
15 years--------------------3439---------------2880--------------2422-------------2002
20 years--------------------2164---------------1689--------------1324--------------1011
25 years--------------------1443---------------1045--------------- 759--------------532
30 years---------------------996----------------666----------------446--------------286
So if you are 30, and you wish to know how much to save to make P1 million at 60, you will have to determine first your period of accumulation by subtracting your age from 60. So 60 minus 30 will give you 30. And if you select 10% as your interest earnings, your monthly outlay is P446. Amazing, isn't it? Question: How easy or difficult is it to set aside P446 a month?
Compounding is like rolling a small snowball down the slope. As it rolls, it gathers and accumulates snow and grows bigger and bigger until it reaches a point where it is lodged or wedged. The longer it rolls, the bigger the snowball. (Of course, the slope has a lot to say as to whether the snowball will roll to a smooth stop as a giant ball or will blow to smithereens. This will the the topic of a future post.)
That's the way with money, or instruments representing money, such as bank accounts, mutual funds, investment trusts, deposit certificates and investment-linked insurance contracts, which have the ability to earn given a certain period of time.
Other forms of wealth, such as real estate or jewelries or antiques or artworks, exhibit their accumulating quality over a period of time through value appreciation. Properties appreciate in value by virtue of progress or development, as in the case of real estate, or on account of increases in the market prices of the items due to demand or due to inflation, as in the case of portable possessions.
All of the forms take into consideration the critical element of time. There are no shortcuts. The longer the period we have for accumulation, the bigger the wealth we can accumulate.
When we consider this time element, and factor in the human physiology of evolving and receding, we begin to see the importance and urgency of getting started with our wealth program the sooner we can.
Truly, there is no time for waiting! The time to begin was yesterday.
Simply stated, the compounding process works this way: If you put your P1000 in an interest-bearing instrument, say at 10%, after one year it becomes P1100. If you do not withdraw your money and its earnings and let it stay there for another year, it becomes P1210. If left for another year, it becomes P1331. After 10 years that your money is allowed to compound, it becomes P2593.74, a gain of 1593.74, as compared to a total simple interest gain of P1000.
Let's take another look at the way it works. Let's establish another treshold - this time, an accumulation goal of P1 million. How much monthly savings will you need to accumulate P1 million given a time frame? The following table will lead us to the amount corresponding to the interest we choose:
Monthly Deposits Required to Accumulate P1 million
Accumulation Period -----6%-----------------8%----------------10%--------------12%
15 years--------------------3439---------------2880--------------2422-------------2002
20 years--------------------2164---------------1689--------------1324--------------1011
25 years--------------------1443---------------1045--------------- 759--------------532
30 years---------------------996----------------666----------------446--------------286
So if you are 30, and you wish to know how much to save to make P1 million at 60, you will have to determine first your period of accumulation by subtracting your age from 60. So 60 minus 30 will give you 30. And if you select 10% as your interest earnings, your monthly outlay is P446. Amazing, isn't it? Question: How easy or difficult is it to set aside P446 a month?
Compounding is like rolling a small snowball down the slope. As it rolls, it gathers and accumulates snow and grows bigger and bigger until it reaches a point where it is lodged or wedged. The longer it rolls, the bigger the snowball. (Of course, the slope has a lot to say as to whether the snowball will roll to a smooth stop as a giant ball or will blow to smithereens. This will the the topic of a future post.)
That's the way with money, or instruments representing money, such as bank accounts, mutual funds, investment trusts, deposit certificates and investment-linked insurance contracts, which have the ability to earn given a certain period of time.
Other forms of wealth, such as real estate or jewelries or antiques or artworks, exhibit their accumulating quality over a period of time through value appreciation. Properties appreciate in value by virtue of progress or development, as in the case of real estate, or on account of increases in the market prices of the items due to demand or due to inflation, as in the case of portable possessions.
All of the forms take into consideration the critical element of time. There are no shortcuts. The longer the period we have for accumulation, the bigger the wealth we can accumulate.
When we consider this time element, and factor in the human physiology of evolving and receding, we begin to see the importance and urgency of getting started with our wealth program the sooner we can.
Truly, there is no time for waiting! The time to begin was yesterday.
Sunday, June 17, 2007
How Wealth Accumulates
Because we are evolving beings, to accumulate wealth, we need first to create enough to sustain us. Passing this treshold of "enough," we move to "a little more than enough" to generate a remainder. This is where we create the seed of our accumulation.
Accumulation is like planting the seed of a fruitbearing tree and growing it. First, we choose our fruit variety, then we plant our seed or seedling on rich ground, initially in a small pot so we can care for it and protect it from the elements. Then, when it has adapted to its environment, we move it to bigger ground, and there, water it, nurture it, weed it, protect it, until it grows big and mature enough to bear its sweet fruits.
We can plant and grow as many seeds or seedlings as we can, or as we want, depending on our capacity for nurturing, making sure that every seedling planted receives the care and attention it needs to become a fully-grown fruitbearing tree.
Wealth accumulation is a process of saving for the future, carried out with a little more diligence, discipline and imagination. It is saving with a definite purpose, method and time.
Consider money, the most articulate representation of wealth.
I will assume that we are a typical wealth-searcher, not one in line to succeed a multi-millionaire patriarch. We've been through the early stages of infancy and adolescence, have finished a college course, and are ready to take on the world in our palms, so to speak. So, world, here we come!
So we begin to look for, and find, and earn the money, where it used to be given to us by our parents. "Nice, sweet scent of money! By my brow! My earnings!" As a token of our labor's fruits, we may frame the first P500 bill we receive (No, just the reproduction!).
So, we savor our first official expenditure. Isn't it good! And we find that spending is such an enjoyable activity. Is something left after? Of course, there is none! Paydays will come, and more paydays will come, and this pattern will be repeated, over and over again: earn, spend, earn, spend. Saving, or more so, accumulating, never becomes part of that pattern because we are concerned chiefly with creating and enjoying our earnings.
Will somebody give us a wealth shot?
Wealth begins in the mind, says Peter Daniels, a multi-millionaire who lived a life of earn-spend for so many years before he realized he was going nowhere.
Got a P1000 bill right now?
If you will examine the paper bill, you will find on one side a picture of the Banawe rice terraces, considered one of the wonders of the world. The terraces are a perfect model of the accumulation process: step by step, little by little, one at a time, until you reach the top. You can build your wealth terraces beginning today by seeding that P1000 bill you are holding right now! Seed another P1000 next month, and another next month, and another next month and so on. Do you know how much you will have after a while?
If you are diligent and resourceful in your choice as to where you plant your seeds, your money will grow to any one of these figures:
Growth of P1000 Monthly Deposits starting at age 25
Compound interest------------------------ At 60------------------------ At 65
3% ----------------------------------------------- 725,544 -------------------- 904,615
6% --------------------------------------------- 1,337,217 ------------------- 1,857,143
8% --------------------------------------------- 2,067,801 -------------------3,108,678
10% --------------------------------------------3,252,292 ------------------- 5,311,110
What your P1000 undergoes is compounding growth at selected interest rates. It's almost like magic! In fact, even Einstein described compound interest as the most wonderful discovery of the 20th century!
I will do another treat of compound interest in the next post. Meanwhile, if you have any comments or questions about this post, and the previous ones, please post them and I will diligently answer them the best I could.
Accumulation is like planting the seed of a fruitbearing tree and growing it. First, we choose our fruit variety, then we plant our seed or seedling on rich ground, initially in a small pot so we can care for it and protect it from the elements. Then, when it has adapted to its environment, we move it to bigger ground, and there, water it, nurture it, weed it, protect it, until it grows big and mature enough to bear its sweet fruits.
We can plant and grow as many seeds or seedlings as we can, or as we want, depending on our capacity for nurturing, making sure that every seedling planted receives the care and attention it needs to become a fully-grown fruitbearing tree.
Wealth accumulation is a process of saving for the future, carried out with a little more diligence, discipline and imagination. It is saving with a definite purpose, method and time.
Consider money, the most articulate representation of wealth.
I will assume that we are a typical wealth-searcher, not one in line to succeed a multi-millionaire patriarch. We've been through the early stages of infancy and adolescence, have finished a college course, and are ready to take on the world in our palms, so to speak. So, world, here we come!
So we begin to look for, and find, and earn the money, where it used to be given to us by our parents. "Nice, sweet scent of money! By my brow! My earnings!" As a token of our labor's fruits, we may frame the first P500 bill we receive (No, just the reproduction!).
So, we savor our first official expenditure. Isn't it good! And we find that spending is such an enjoyable activity. Is something left after? Of course, there is none! Paydays will come, and more paydays will come, and this pattern will be repeated, over and over again: earn, spend, earn, spend. Saving, or more so, accumulating, never becomes part of that pattern because we are concerned chiefly with creating and enjoying our earnings.
Will somebody give us a wealth shot?
Wealth begins in the mind, says Peter Daniels, a multi-millionaire who lived a life of earn-spend for so many years before he realized he was going nowhere.
Got a P1000 bill right now?
If you will examine the paper bill, you will find on one side a picture of the Banawe rice terraces, considered one of the wonders of the world. The terraces are a perfect model of the accumulation process: step by step, little by little, one at a time, until you reach the top. You can build your wealth terraces beginning today by seeding that P1000 bill you are holding right now! Seed another P1000 next month, and another next month, and another next month and so on. Do you know how much you will have after a while?
If you are diligent and resourceful in your choice as to where you plant your seeds, your money will grow to any one of these figures:
Growth of P1000 Monthly Deposits starting at age 25
Compound interest------------------------ At 60------------------------ At 65
3% ----------------------------------------------- 725,544 -------------------- 904,615
6% --------------------------------------------- 1,337,217 ------------------- 1,857,143
8% --------------------------------------------- 2,067,801 -------------------3,108,678
10% --------------------------------------------3,252,292 ------------------- 5,311,110
What your P1000 undergoes is compounding growth at selected interest rates. It's almost like magic! In fact, even Einstein described compound interest as the most wonderful discovery of the 20th century!
I will do another treat of compound interest in the next post. Meanwhile, if you have any comments or questions about this post, and the previous ones, please post them and I will diligently answer them the best I could.
Friday, June 15, 2007
The Need for Wealth Accumulation Part 2
We accumulate wealth because we must live. And we must live well.
Our mandate is to make the best of our lives. And the best life, says St. Augustine, is a life lived for others. What is the value of wealth if we cannot share it with others? What is life if it is lived alone?
No man is an island, so goes the poetry. Behind the majesty of those words, our reality is, at the time of our birth, we complete our triune creation. By virtue of this empowerment, our birth becomes a triune birth. We become a co-creator of life, and therefore we cannot escape our multi-personal character. Our gregariousness takes us to the level of procreation, which means we cannot be happy alone. This also explains why at the right time, we leave our fathers and mothers to become one with another. We must let others live. And well.
Hence, our wealth accumulation for the purpose of sustaining us into the future should consider these "others". In fact, for most of us, our family is the main reason we toil and strive so hard. For some others, it is more than family; it includes employees and workers, or even the underprivileged. Isn't it a beautiful coincidence that in our bell curve, our productive time and the time we begin a family are almost simultaneous events? Our taking responsibility for others goes with the rise in our productivity.
And so with our physical strength.
This is one reality we must face. As we evolve and recede, our sustenance becomes not only a matter of food availability but of our system's ability to be sustained. The bell curve indicates that our physical strength reaches a certain crest at the ascent, and then gradually recedes to a point of settlement at the descent. The system will stop predictably according to a predetermined time in the future but may equally stop without notice. We evolve, we recede, we go. And this "going" can be anytime.
What all these mean is that we know what life is all about, its extent, its nature, its follies, its joys, its lows, its peaks, its beginning, its ending. Though we were given this life with nothing in it, we nevertheless have the empowerment to fill it up with the meaning we want it to have. If we want to live it to the fullest, we must take care of our health, be continually productive for ourselves and for others, prepare for the future via a well-thought out wealth accumulation program, and enjoy life as it is!
How are you doing?
Our mandate is to make the best of our lives. And the best life, says St. Augustine, is a life lived for others. What is the value of wealth if we cannot share it with others? What is life if it is lived alone?
No man is an island, so goes the poetry. Behind the majesty of those words, our reality is, at the time of our birth, we complete our triune creation. By virtue of this empowerment, our birth becomes a triune birth. We become a co-creator of life, and therefore we cannot escape our multi-personal character. Our gregariousness takes us to the level of procreation, which means we cannot be happy alone. This also explains why at the right time, we leave our fathers and mothers to become one with another. We must let others live. And well.
Hence, our wealth accumulation for the purpose of sustaining us into the future should consider these "others". In fact, for most of us, our family is the main reason we toil and strive so hard. For some others, it is more than family; it includes employees and workers, or even the underprivileged. Isn't it a beautiful coincidence that in our bell curve, our productive time and the time we begin a family are almost simultaneous events? Our taking responsibility for others goes with the rise in our productivity.
And so with our physical strength.
This is one reality we must face. As we evolve and recede, our sustenance becomes not only a matter of food availability but of our system's ability to be sustained. The bell curve indicates that our physical strength reaches a certain crest at the ascent, and then gradually recedes to a point of settlement at the descent. The system will stop predictably according to a predetermined time in the future but may equally stop without notice. We evolve, we recede, we go. And this "going" can be anytime.
What all these mean is that we know what life is all about, its extent, its nature, its follies, its joys, its lows, its peaks, its beginning, its ending. Though we were given this life with nothing in it, we nevertheless have the empowerment to fill it up with the meaning we want it to have. If we want to live it to the fullest, we must take care of our health, be continually productive for ourselves and for others, prepare for the future via a well-thought out wealth accumulation program, and enjoy life as it is!
How are you doing?
Thursday, June 7, 2007
The Need for Wealth Accumulation
There are four reasons we need to accumulate wealth:
1. We must live.
2. We must live well.
3. We must let others live.
4. We must go.
All life is but a sustaining process, says Herbert Spencer. We must eat. We must live. We must eat to live.
Unfortunately or fortunately for us, sustenance has come to be directly associated with the presence or absence of wealth. The invention of money, as the most common form of wealth, has enabled us to "store food" far into the future. The more we are able to store, the more we are assured of continued sustenance.
But our ability to store food rests in our ability to "create food" in sufficient quantity. Imagine a bell sitting on its rim. Our life is somewhat like that bell.
From the moment of birth to the time of death, we undergo an evolution and regression process. Our physiology allows us to experience infancy, childhood, adolescence, adulthood and old age before we finally make our exit. Our ability to create wealth coincides with that physiology: playtime, schooltime, productive time, and retirement time. Note that the period during play and schooling at the ascent is matched by the retirement period at the descent. During our play and schooling times, we depend on our parents for sustenance, then we create our own food during our productive period, but at retirement time, we fall back on what we have stored for the future, if we have any.
Do you have any?
That's why, we need to store enough, or accumulate enough, if only to make sure that we live comfortably when we are already too old to create wealth. But to store enough, we need to create sufficient output in the present time so that we can have a remainder, and at the same time, are able to enjoy life as it is.
And this is where our problem lies. Most of us do not store enough because our output is not enough for the present, or so we think or feel. And even if the output is good, we are buried too deep in our enjoyment of the present that we put forth the need to prepare for the future. What we don't realize is that no matter what level of output we have for the present, short or full, we can always set aside some amount for the future, if we want, without substantially upsetting our present level of comfort.
Are you short or full?
1. We must live.
2. We must live well.
3. We must let others live.
4. We must go.
All life is but a sustaining process, says Herbert Spencer. We must eat. We must live. We must eat to live.
Unfortunately or fortunately for us, sustenance has come to be directly associated with the presence or absence of wealth. The invention of money, as the most common form of wealth, has enabled us to "store food" far into the future. The more we are able to store, the more we are assured of continued sustenance.
But our ability to store food rests in our ability to "create food" in sufficient quantity. Imagine a bell sitting on its rim. Our life is somewhat like that bell.
From the moment of birth to the time of death, we undergo an evolution and regression process. Our physiology allows us to experience infancy, childhood, adolescence, adulthood and old age before we finally make our exit. Our ability to create wealth coincides with that physiology: playtime, schooltime, productive time, and retirement time. Note that the period during play and schooling at the ascent is matched by the retirement period at the descent. During our play and schooling times, we depend on our parents for sustenance, then we create our own food during our productive period, but at retirement time, we fall back on what we have stored for the future, if we have any.
Do you have any?
That's why, we need to store enough, or accumulate enough, if only to make sure that we live comfortably when we are already too old to create wealth. But to store enough, we need to create sufficient output in the present time so that we can have a remainder, and at the same time, are able to enjoy life as it is.
And this is where our problem lies. Most of us do not store enough because our output is not enough for the present, or so we think or feel. And even if the output is good, we are buried too deep in our enjoyment of the present that we put forth the need to prepare for the future. What we don't realize is that no matter what level of output we have for the present, short or full, we can always set aside some amount for the future, if we want, without substantially upsetting our present level of comfort.
Are you short or full?
Sunday, June 3, 2007
Where Are You In The Wealth Range?
Some guys are really lucky. Even before they are conceived, wealth is already available for them to use the moment they are born. And the reason we who are unlucky cannot complain, even if all of us are heirs to the wealth of the world, is that we were not born all at the same time. We evolve, we get born progressively, one at a time or a number at a time. And because of our free will, and our progressive evolution, not everybody will make it in the same way.
Which explains why some are rich and some are poor. The wealth we own or possess is a consequence of our individual and kindred effort. We're in luck if our family heritage is endowed; then, we can begin with some wealth in our hands. Otherwise, we shall begin to build our own family heritage by the wealth we accumulate in our name during our lifetime.
So where are we in the wealth range? Knowing where we are right now in our journey towards financial sufficiency will let us determine exactly what to do and how to do to reach the level of "the good life."
Let's choose our lane in this starting line:
l______l_______l_______l_______l_______l_______l_______l_______l
negative / zero / little / some / enough / a little more / more than / too much
How do we read that? In absolute terms, the labels could mean our levels of wealth in all its forms. As money is the most common form, they could represent the net value of all our accumulations as of the present time:
in debt / 0 /$ 1 - $4k /$4k-$20k/ $20k-$40k/ $40k-$200k/ $200k-$lM/ $lM -$ 2M/ $2M up
The amounts you read are all my personal assessments! You may have your own, and I will not argue with your valuation. What is important is we have a range where we can plot the developments in our journey towards our financial sufficiency goal.
If you will closely examine the starting line, you will note that as much as it locates the starting point for different individuals, it also represents the range or the extent to which we wish to become self-sufficient. So from where we are, we can aim for some wealth, or enough wealth, or even too much wealth. I am not of course advocating wealth accumulation beyond what we will need to enjoy "the good life." I believe any wealth beyond what is necessary will become a problem during and beyond our lifetime.
In my next blog: The need for wealth accumulation, or why most of us fail.
Which explains why some are rich and some are poor. The wealth we own or possess is a consequence of our individual and kindred effort. We're in luck if our family heritage is endowed; then, we can begin with some wealth in our hands. Otherwise, we shall begin to build our own family heritage by the wealth we accumulate in our name during our lifetime.
So where are we in the wealth range? Knowing where we are right now in our journey towards financial sufficiency will let us determine exactly what to do and how to do to reach the level of "the good life."
Let's choose our lane in this starting line:
l______l_______l_______l_______l_______l_______l_______l_______l
negative / zero / little / some / enough / a little more / more than / too much
How do we read that? In absolute terms, the labels could mean our levels of wealth in all its forms. As money is the most common form, they could represent the net value of all our accumulations as of the present time:
in debt / 0 /$ 1 - $4k /$4k-$20k/ $20k-$40k/ $40k-$200k/ $200k-$lM/ $lM -$ 2M/ $2M up
The amounts you read are all my personal assessments! You may have your own, and I will not argue with your valuation. What is important is we have a range where we can plot the developments in our journey towards our financial sufficiency goal.
If you will closely examine the starting line, you will note that as much as it locates the starting point for different individuals, it also represents the range or the extent to which we wish to become self-sufficient. So from where we are, we can aim for some wealth, or enough wealth, or even too much wealth. I am not of course advocating wealth accumulation beyond what we will need to enjoy "the good life." I believe any wealth beyond what is necessary will become a problem during and beyond our lifetime.
In my next blog: The need for wealth accumulation, or why most of us fail.
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