As a registered financial planner (RFP) and host of ANC’s top-rated show “On the Money,” Salve Duplito is often asked for her number one tip in having a dream retirement.
Her response has always been the same: retirement planning is not for the future but for the NOW.
Most Filipinos start thinking about their retirement only when they hit their 50s, at the time when they’ve fulfilled most of their major financial obligations—having the kids graduate college, paying off their auto loans and home amortization.
But contrary to this practice, she believes that Filipinos should actually start planning for retirement while they’re in their 20s, or soon as they start working as a professional.
“How early can one plan for retirement? You can even start as early as your teens,” she says. “Time is an important element in growing your wealth! The more time you have, the more opportunities you give your money to grow exponentially. Start now! Don’t play catch-up!”
She also stresses the importance of planning early, as she believes that what you plan now helps determine the next steps you will need to take and how you will live the rest of yourself leading up to your retirement.
Golden steps for the golden years
She outlined four (4) steps to get you started with your retirement planning:
1. Make your vision board. Put together a collage of images that represent the goals you want to achieve by the time you reach retirement — make it visual! It doesn’t matter how you put it together — you can draw, print photos, or download images from the internet. Be as creative as you can!
Salve also recommends that in coming up with your goals, make sure they’re specific and as detailed as possible. Instead of just saying “own a house,” you can specify “a two-storey house with four bedrooms, three toilet & baths, a two-car garage, front lawn, rear garden, with a lot area of at least 300 sqm, located in Pasig or QC.”
Same goes for travel goals. Instead of simply saying “travel to Europe,” you can say “go to Paris, Rome, Venice, and Vienna on a 12-day tour with my family.” With this kind of detail, it makes the next step easier.
2. Crunch the numbers. Find out how much each of your goals should cost. You can use current prices as a peg. This will give you an idea of what it will take to fulfill your goals. For example, you can check out www.avidaland.com to get an idea how much your dream condo or house & lot will cost.
3. Plot timelines for all goals. “Now that you have an idea of how much you need, you need to know how much time you have to achieve each goal,” Salve shares. She then explains how to make goals time-bound. “Do you want that European tour by your 30th birthday? Want that house by the time you turn 40? That probably means you have less than 10 years to save for that trip, and about 15-20 years to get your dream house. It helps you understand how long you have to save, and what kind of investment you will need.” Thus, a timeframe will help you determine the right financial tool for the next step.
4. Save and invest.“If there is one thing I want everyone to take from this talk,” Salve emphasized. “Is for each one to invest in a trust fund or an index fund today. It is a simple, entry-level investment that is accessible to both the rich and the poor, an expert investor or a beginner.”
She explained how index funds are funds that track or try to match or replicate the performance of a market fund — the Philippine Stock Exchange Index (PSEi), for example. “This way, you don’t have to be actively investing or buying or selling stocks on a daily basis. It’s a hassle-free way to invest.”
She continued: “More Filipinos also need to understand the ‘magic of compound interest.’” She then proceeded to illustrate how two people — one aged 25, and another 40 — save the same amount (P1,000 a month), for the same number of years (15 years), with the same interest rate (6% p.a.). By the time they each reach 65 years old, the 25-year old would’ve earned nearly a million pesos more (P1.3 million vs P550,000. “Opening an index fund opens the way for them to enjoy the wonders of compound interest.”
Salve says that starting now, is the key to having a comfortable financial future and a golden retirement. Nonetheless, she reminds everyone that life is not about who has the most money or who has it the soonest. She concludes: “Gaining wealth is not a race. It is a marathon where you compete against yourself.”
Salve recently gave a talk entitled “Think Ahead: Early or future retirement planning starts NOW!” at the Homepossible Live Ready Conference of Avida, in partnership with MoneySense.
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