Why Working In A Call Center Is Great For Building Your Retirement Fund

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One Philippine corporate niche that I note that has a great potential for a worker to be able to build his retirement fund would be the call center industry.

Here are my reasons why a call center agent is in a great position to be able to save up for his retirement:

1. The salaries of Philippine call center agents are higher than the regular wages of either government or private sector employee. More money = more margin for savings.

2. The call center agent, once he gets regularized, enjoys a lot of compensation perks and benefits. The rice allowance, the travel allowance, health care, even gift certificates from Sodexho for some companies. Having these would enable the agent to create a nest egg for himself, from the benefits alone.

3. The targets-oriented and productivity-focused environment leaves the worker little room to be distracted while at work. If he does his job well, he gets to enjoy the perks of promotion pretty fast.

4. The nature of the call center job is such that one's tasks and targets should be and are wrapped up within the same shift. If you're a mere agent, there's almost no such thing as work backlog. Thus, you can enjoy the fruit of your labor in exchange for work that doesn't follow you home. For supervisors and upper management roles, however, it may be a different story.

5. Supervisors and upper management people are given great perks and higher than average salaries and benefits. This leverage alone will enable you to funnel your income into a good nest egg.

If you're in the call center industry, this may look like an ideal to you. In all truth, there are other sources of pressure for the call center worker: not hitting stats, workplace politics, slacking off on some days that lead to dire career consequences. These pressures may lead a call center worker to think about quitting or jumping to the next call center in search of ideal conditions.

Let us throw reality's cold water on you and remind you that life is not perfect. Nobody's life is perfect. That's a fact. Everyone faces duress of some sort. And what conditions you may complain about in your current call center may be the same in another. Or worse. The point is, why are you in the call center industry in the first place? If it was all about money for you, then that's it: use this part of your career as a means to an end. Build that retirement fund, invest, and think about an early retirement. Your career does not define the whole of who you are. It is just a small part of you.

What are your dreams? What are your life goals? Use this moment in the call center industry as a means to an end, not an end in itself. That way, you will be able to maximize your time there and be able to build for yourself a happy, fat, retirement fund.

Pinoy Retirement Fund Building 101

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Building a retirement fund may be a daunting task for most Filipinos. With kids in school, rent or a home loan to pay, not to mention credit card bills, utility bills, and even debts with the friendly neighborhood Bumbay, building a retirement fund may be the farthest thing from the Filipino's mind.

So most Filipino adults have one hope: their children. Being a country where kids are expected to take care of their folks when they're old, not preparing for one's retirement is the norm, a complacency that's been tolerated for generations.

However, let's try to change things a bit. Wouldn't you prefer to be the one to leave an inheritance to your grandchildren? Wouldn't you rather be able to take trips to the Caribbean in the first years of your retirement? Thus, it is high time to stir yourself to a courageous feat: tackling your retirement.

In the Philippines, we have simpler financial systems. If Americans have Social Security, 401k's and Roth IRA's, we have SSS or GSIS, Pension Plans, Insurance and savings banks.

There are a couple of financial vehicles that aren't exactly thought of as retirement fund tools. Mutual funds, bonds and time deposit accounts fetch good rates over time, but Filipinos are not taught to make the most of these. In fact, most of us fear investing because of stock market horror stories.

Thus, let's set things straight before we give you our Retirement Fund Building 101:

• The stock market can and always will fluctuate. So when it dips, NEVER PANIC. Keep your stocks or mutual funds right where they are, and let it ride out the rough market.
• The earlier you start building your funds, the better, because of the "magic" of Compound Interest. So start your retirement fund building today.

That being said, here is how to build your retirement fund, Pinoy Retirement Rx style:

1. How much is your current monthly budget? What medical conditions do you have? Add around Php 10,000 to Php 20,000 to your monthly budget and that's how much you would be needing on a monthly basis when you retire. Factor in the prevailing inflation rate.

Then, multiply that figure by the number of months in a year (12) and the number of years from your target retirement age up to age 120. That is the total amount you need. If you need the monthly figure, just divide the total figure by the number of years between retirement age and 120, and then divide by 12. That's the amount you'd need to have in your hands every month when you retire.

2. Work with your employer with how to optimize and maximize your SSS or GSIS contributions. If you're self-employed, figure out the most reasonable amount you could set aside for SSS or GSIS in a month, and see how much it should pay out when you retire. Don't worry that it's a small amount. It's just one of your future sources of income.

3. Invest more aggressively in mutual funds, bonds and time deposits. In the US, it's recommended that they use the tax-free Roth IRA fund. Here, we have the PERA Act, but it still hasn't reached full implementation, as it was only ratified in 2010.

One good idea would be to monitor your mutual funds' growth, look for peaks in its growth, and then pull out your fund and save it in time deposits. That way, you won't be at the mercy of market fluctuations, and your time deposit accounts will be accumulating compound interest over time. As you keep working your money this way, you may be able to achieve your retirement fund targets by your expected retirement date.

4. If you're in debt, get out of it immediately. You may want to follow Dave Ramsey's Baby Steps in order to get financially stable. Remember that $1,000 is around Php 50,000, so start with an emergency fund of that size for Step 1. Read the Baby Steps here.

5. Talk to an accredited insurance agent about good pension plans and life insurance plans. Pension plans have reasonable fees and good payouts. The Philippines' most trusted include Philam Life and Pioneer. Just research on your options and choose the most stable company to insure yourself with.

Reminders:

• Separate your retirement fund portfolio from the rest of your savings and other financial allotments. Never neglect to keep saving into your retirement funds, just as you pay your bills.
• Forget about the stock market's fluctuations. Don't let fear get the best of you. Rather, observe it for peaks over time, and withdraw your dividends, or the whole account, during those moments and transfer them to CD's, for a measure of safety. Then reinvest in order to keep your money growing.
• If all of this confounds you, read more into the subject. You don't need to pay a financial adviser. Just reading Dave Ramsey should teach you fundamentals on money management and how to build your retirement fund with the right mix of risk taking and prudence.

Financial freedom is possible, even in the Philippines. What you need is wisdom, patience, and most of all, courage. Here's to you, and your future Caribbean trip, too!

Balance Between Carpe Diem And Preparing For The Future

I saw something that inspired me today: this video of a woman who lives in a 90-foot-square apartment in New York City.

I hit a challenging thought: what if yuppies lived way beneath their means, so they can live large when they retire?

It's easier said than done, especially in our commercial global culture. Everyone encourages us to spend, get things on credit, gratify ourselves NOW, not taking into consideration the ramifications of living a short-sighted existence.

On the other hand, life's uncertainties should spur a person to live his best life NOW.

Then there's a middle ground: pursue the things that make you happy and give you joy, but make sure that your happy fixes are way below the budget, so you could keep funneling your income into your retirement funds. Make sense?

Here's a great article by Fabulously Broke: Ordinary Pleasures: The Well-Kept Secret of little things that make you feel RICH. It helps a hedonistic young urban professional understand that happy fixes need not break the bank.

And the video above shows you that even the most spartan of circumstances could get enjoyable.

I believe it's a matter of learning to enjoy and savor life without needing to be show-offy or pretentious. You don't need to keep up with the Joneses in order to have a bit of dignity and self-respect. Also, buying into the culture of greed would be something you should avoid like the plague. You don't need to buy that inconsequential thing just to feel better. Remember that your retirement fund is at stake.

There's a way to prioritize the things that count, even as you enjoy little guilty pleasures this life has to offer.


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Thanks to @nidarasheed for sharing the article.

A Cursory Comparison Between American And Philippine Retirement Cultures

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Culture differs from place to place, even locale to locale. Wherever you go, a place's culture is dependent on the factors that have shaped the sociology of the area. That is why no two languages, even dialects, are perfectly alike.

Retirement is also a culture-influenced life stage. It is not as universal or cut-and-dried as most of us may have mistakenly thought. It is bound by the society's financial systems and tools, as well as the prevalent sociological perspectives.

Take for example, the difference between retiring in the US and retiring in the Philippines. When one retires in the US, the aging can still hold down a job, drive, and take care of themselves. Despite the availability of homes for the aged, most of these elderly men and women live alone. Some even need to take care of themselves and each other. A sad reality is that some of these men and women end up dying alone.

On the other hand, in the Philippines, the elderly are expected to completely stop working when they retire. Most Filipinos perceive that their aging moms and dads should be resting as they grow older. The only way that they could exercise and have a semblance of productivity is when they take care of their grandchildren. The only upside to the retirement culture of the Philippines is that the elderly get taken care of by their loved ones. Filipinos are culturally expected to take care of their parents when they grow older.

While either cultural setup has its virtues: the American setup allows the retired to be able to keep being productive, while the Filipino setup provides the retired with emotional and social support, the extremes of either paradigms could be distressing for any elderly retired person to handle. Human beings need love and support, just as much as how we need to be productive. The best paradigm may be a balance of these two retirement worlds: allow the retired man or woman to keep working and let them live with or near family who can take care of them. That, I believe, would be the best way to go.

How A Pisay Scholar Can Build Retirement Funds Using His Stipend

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In the Philippines, education is of top importance. In fact, it is even considered a status symbol in some parts of the country. Thus, finishing college is an honor, even more so if you finished college from a prestigious state university.

Because of the economic state of a good majority of Filipinos, the Marcos government added a program to the existing list of state-run high schools and universities: Philippine Science High School boasts of an education program that's tailored to the best minds of the country.

One of the perks of being a Philippine Science High School, or, as affectionately called, Pisay scholar, is the stipend that they receive. On a monthly basis, an allowance is dispensed to the fortunate scholar. In my time, the stipend ranged from Php 500 for "Special Scholars," or the scholars who were wealthy, Php 1200 for the "Partial 2 Scholars," or the middle class, Php 1500 for the "Partial 1 Scholars," and Php 2,000 for the "Full Scholars." My grandmother remarked, when I hit college, that had I saved my stipend, I would have had Php 200,000 by the time I graduated. Well, that figure is inaccurate. I was a Partial 2 Scholar, so I received Php 1,200 a month. Multiply that by 10 months of school and by 4 years of high school, I would have had Php 48,000 by the time I graduated from high school, if I didn't spend a single cent of that money.

Today, Philippine Science High School scholars enjoy stipends of Php 500, Php 1500, Php 2100 and Php 3000, respectively. Here are the breakdowns for parents who may be able to guide their children to save, if not invest their stipend:

Special Scholars: Php 500 a month x 10 months a year x 4 years Total Savings: Php 20,000

Partial 1 Scholars: Php 1500 a month x 10 months a year x 4 years Total Savings: Php 60,000

Partial 2 Scholars: Php 2100 a month x 10 months a year x 4 years Total Savings: Php 84,000

Full Scholars: Php 3000 a month x 10 months a year x 4 years Total Savings: Php 120,000

Even interest-free savings alone will allow a Pisay scholar a good nest egg by the time he graduates.

How much more if he invests it in a stable financial vehicle with great interest rates?


Time Deposit Rates (Based on Banco De Oro's Rates as of 2011):

	Term: 30 Days	60 Days	90 Days	180 Days	360 Days
Php 1,000 to below Php 10,000:	1.25%	1.375%	1.625%	1.875%	1.875%
Php 10,000 to 50,000	1.375%	1.625%	1.75%	2.00%	2.00%
Php 50,000 to below Php 100,000	1.625%	1.875%	1.875%	2.125%	2.125%
Php 100,000 to Php 200,000	1.75%	1.875%	2.00%	2.25%	2.25%

More than time deposit, if the Pisay scholar and his parents were risk-takers, they could actually make use of other financial vehicles that may be able to give better returns, like Philam Life’s investment portfolios.

The Philam Life mutual funds have very affordable minimum investment levels, at Php 5,000 for the Philam Bond Fund and the GSIS Mutual Fund, or Php 10,000 for the Philam Life Strategic Growth Fund or Philam Fund, Inc. Should you want to invest more, you can add to your funds for Php 1,000 each time.

These are the growth rates of the most affordable mutual funds that Philam Life offers:

Philam Life Strategic Growth Fund	GSIS Mutual Fund	Philam Fund, Inc.	Philam Bond Fund
47.39%	37.02%	36.90%	5.53%
Minimum Initial Investment:
Php 10,000	Php 5,000	Php 10,000	Php 5,000

Here’s how a Pisay Graduate’s stipend funds will look like, after a year of investment:

	4 Year Stipend Savings	BDO Time Deposit, 360 Days	Philam Life Strategic Growth Fund	GSIS Mutual Fund	Philam Fund, Inc.	Philam Bond Fund
Special Scholar	20,000	20,400	29,478	27,404	27,380	21,106
Partial 1 Scholar	60,000	61,275	88,434	82,212	82,140	63,318
Partial 2 Scholar	84,000	85,785	123,807.60	115,096.80	114,996	88,645.20
Full Scholar	120,000	122,700	176,868	164,424	164,280	126,636

Take note that mutual funds like Philam Life are variable funds. Meaning, if the stock market is up that year, the growth rates will be great. If the stock market dips, or, heaven forbid, crashes, then the documented value of your money would also dip. Take note that the stock market recovers over time, so once you invest, keep it there, until you see that the value of your account is what you want, and you may withdraw that and use it, re-invest, or do whatever else you want with it.

Remember that the higher the growth rate, the bigger risk it entails. So if you’re the risk-taker type, go ahead and invest aggressively at the higher growth rate funds. If you fear the loss of your stipend, then the Philam Bond Fund or BDO’s Time Deposit accounts may be better options for you.

Here’s what your stipend would look like over time, if you put it in a BDO Time Deposit account, with their 2011 Interest rates.

	4 Year Stipend Savings	BDO Time Deposit, 360 Days	After 2 Years	After 5 Years	After 10 Years	After 20 Years	After 50 Years
Special Scholar	20,000	20,400	20,808	22,082	24,380	29,719	53,832
Partial 1 Scholar	60,000	61,275	62,577	66,652	74,041	91,368	171,694
Partial 2 Scholar	84,000	85,785	87,608	93,312	103,657	127,915	240,371
Full Scholar	120,000	122,700	125,461	134,121	149,904	187,261	365,046

The values are as-is. Meaning, we’re supposing that you won’t add to your account. See how it grows over time? That’s how much you could add to your retirement fund, if you were a Pisay scholar.

When I was still in high school, I was like any other teen. I loved movies, music and squandered my money going to movies and buying cassette tapes that I later gave away. Today, I deeply regret not being more prudent, and I wish I knew then what I knew now. Had I known all that information, I would have had a jump start on my retirement fund today.

But, it’s not too late for the current Pisay scholars. Even the kids from regular schools. If you save Php 20 a day for 10 months (school season), given that there are 25 school days in a month (or those weekends when you need to make projects or go to NSTP/CWTS/LTS), you’ll be able to save Php 5,000 a year. Php 5,000 is the minimum of the Philam Bond Fund or the GSIS Mutual Fund. In 4 years’ time, you could save Php 20,000 and you could then start your retirement fund from that. Check the values under the Special Scholar bracket and you’ll see how your money should look like, over time.

Granted, there are pressing needs and projects to pay for. But I really believe that a prudent teen can and will be able to save a hefty sum if he is determined. In fact, for only Php 20.00 a day, a teen can start a good fund by the year’s end already.

As they say, when it comes to compound interest, time is your ally. The sooner you start, the better it is for you. In fact, most financial gurus say that the guy who starts earlier will trump up the funds of the guy who starts later, even if he invests aggressively.

So to Pisay Scholars: make the most out of your allowance and stipends. It’s never too early to start building your retirement fund. Don’t wait until the clock starts ticking and old age is looming. Here’s one for prudence.



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Credits to:

Arthess Castor, former Registrar/current Supply Officer, PSHS WVC
Marjorie Halique, Professor, UPV-Miag-ao Computer Science Dept.
Lionel Miroy, former PSHS Scholar and CPU Psych student

Retirement In The Philippines -- The Key Is PREPARATION

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The Philippines is among the best places to retire, for a lot of foreigners. The tropical weather seems to be suited for tired ageing bones, and the cost of living in these islands is far more affordable than that in first-world countries.

The average Pinoy dreams of working in foreign shores and then retiring here. Still other Pinoys dream and think about living and retiring in another country. It's sad, considering how fortunate we actually are in these shores.

I see your incredulous eyes widening in disbelief. With the state of the Philippine economy, could I dare say that this (seeming) hell-hole is actually a great place to retire?!

Well, let me debunk your mindsets with a few things worth noting:

• It is more affordable to buy and own real estate in the Philippines, especially if you compare it to the US Real Estate Market. (Read: Why I Am Never Going to Own a Home Again by James Altucher)
  
• If you were wise with your income as an employee, by the time you're 65, you'd already have a sizeable nest egg, especially if you invest in mutual funds.
• It's easier to get a college degree in the Philippines, which would allow you to find better career prospects, which would then allow you to be in a better position to save, invest and gather assets for your retirement.

Filipinos seem to have been conditioned that the only careers worth dreaming of are becoming an OFW or a movie/TV star. That is why Filipinos leave this country in droves. That is why star search contests are all the rage, and kids like Jan-Jan get exploited in crass shows like Willing Willie for the sake of entertainment.

But I digress.

My point is that if only a Filipino were wise with his resources, he would be able to create for himself a good nest egg by the time he turns 40.

How much is the average salary of a BPO worker? Php 20,000? Let's see how this could work out:

• Rent or Mortgage -- Php 5,000
• Food -- Php 7,000 (Php 75 a meal, for 3 meals a day, 30 days a month = Php 6,750)
• Transportation -- Php 3,000 (Php 100 a day)
• Forced Savings -- Php 5,000

Reality bites, however. This is pretty much a Spartan budget, with all the other expenditures of an average Filipino yuppie crossed out. In reality, the Filipino BPO worker most likely spends this much:

• Rent or Mortgage -- Php 10,000
• Food -- Php 10,800 (Php 300 a day for 16 days a month, Php 500 a day for 12 days a month; Filipinos love eating out)
• Transportation -- Php 9,000 (We added Php 6,000 for Taxi rides)
• Cellphone Load or Plan Bill -- Php 1,500
• DSL + Landline Phone Monthly Bill -- Php 1,200
• Credit Card Debt -- Php 5,000
• 
  
• Grand Total: Php 37,500

And savings hasn't even been factored into that yet. Clearly, the problem of the Filipino worker is not that the money is too little; most Pinoys really just spend too much.

So, how does one deal, in order to be able to start building a nest egg for retirement?

1. Get a "sideline" or a way to earn extra income.
2. Pare down the budget to the bare essentials.
3. Force savings first and then live on the rest of the income.
4. Look for a job with better compensation.
5. Become an OFW and save and invest like crazy.

And do all of these THE SOONEST POSSIBLE TIME. If you read this while you're still finishing up with College, congratulations. Start putting away money for your retirement today. If you read this in your 30's, no problem, it's never too late to start. The point is, the sooner you start, the better your chances of being able to set aside a good nest egg for retirement.

As you can see, it all boils down to strategy or prudence. Whether you like it or not, living in the Philippines is still a great thing. We have all the amenities needed, at a fraction of the cost. The only thing we have to do is to manage our resources properly, and we will be able to build a retirement that's comfy.