What do Motherhood, Women’s Issues and International Cooperation on Development have in common?

While the smarter lot of you mentally ennumerate the common denominator of these three most important aspects of my life, let me get ahead and share what’s on my mind: MEDDLERS. I’m thinking about meddlers.

1. Motherhood and meddlers

I’ve only been a mother for 20 months, and one thing I can tell you for sure is that there is no “one-size-fits-all” solution to the same problem suffered by babies and mothers. Despite of this fact, there are those who still insist on imposing their beliefs, recipes and answers on other people.

Generally, I’ve observed that mothers are usually open to suggestions. Yet, I can’t help but notice the initial reactions to an advice they reject: insistence, further display of proof on the recommendation’s effectiveness, openly unfair judgement and finally, criticism. Surely, one should not have to go through all these just because they decide not to follow an advice. As for the “well-meaning” purveyors of knowledge… don’t they understand the fact that each of us is molded by our particular circumstances, pasts, beliefs and aspirations? Therefore, the solutions or remedies we end up choosing are adapted to our unique situation.

I always wonder whether “wanting the best” for the mother and the baby is the real reason why some people really force their opinion on others. The way I see it, if somebody truly desires the best for the other, then there must first be comprehension: of the problem, of the context and most importantly, of the diversity. This would allow for a better flow of communication. This would facilitate the process of achieving that “best” for the person in need.

In my short experience in motherhood, I learned that happy babies (a common goal for parents) result from being well-fed, well-rested and being around happy caretakers. Equally important is the confidence with which their caretakers do their jobs: if the caretaker is relaxed, the baby is most probably also going to be relaxed. So basically for me, what would really help mothers taking care of a baby is to feel empowered, to have self-confidence and be convinced that they’re doing a good job in raising a human being. The rest can be learned from books and online fora.

I’m lucky to be living where I am, to have resources that I could tap and people who truly support me. This period of my life would be much tougher otherwise.

2. Women’s Issues: when the champions become the meddlers

Currently, I find that that the foundation of women’s rights movement from the past has been eroded in time. I’m talking about solidarity and compassion. These two characteristics are strongly present in the feminine and have fueled the fight for women’s freedom and equality (equity) with men. Lately I’ve been noticing though, that a lot of arguments supporting the advancement of women’s rights sound more of a modern-day colonization than a genuine concern for our sisters’ well-being and progress. By “wanting the best” for all of us women, the very champions for our rights and development are forgetting that even though women may have the same basic needs and rights, the manner of procuring what they need, and the way with which they exercise their rights (if ever they choose to, at all) should be delegated to them- they know better than us what it means in their own societies to advance and progress. They know better than us how they want to live their own lives.

Consider how women’s rights movements started locally, where women gathered and started the battle for a more just treatment socially, economically, and politically, to name a few. When globalization came about, it was only natural for these initiatives to be projected onto other territories, crossing the national frontiers. Even though the intention was (it still is) noble, the explanation of its necessity as well as the method of implementing it are both flawed. Flawed because I believe some activists skipped a couple of vital steps in order to practice solidarity and compassion: inquiring and then listening. One can’t help but think some simply assumed that women in Sub-Saharan Africa have the exact same concerns as the ones living in Phoenix, Arizona.

From then on, a certain type of mentality has been imposed and women who did not adhere to such beliefs were criticized and in some cases, even marginalized by those who were supposedly fighting for their sake. Ironic.

3. International Cooperation on Development: helping or meddling?

When I graduated from college, the main lesson that really stuck was: “There is not a ‘one-size-that-fits-all’ solution to the same problem experienced by two or more different groups/communities. The answer should always be adapted to the specificities of each situation. “

The goal of exerting efforts towards cooperation for international development is to redistribute resources: from those who have them to those who do not. Obviously. Easy enough to understand. Now comes the dilemma of “how” to do it.

Studies have already proven that solutions imposed by developed countries with no grassroots basis usually end up becoming a waste: of money, time, effort and natural resources. Any Developmental Economist would agree that the solutions must come from a collaborative effort between the one who’s helping and the receiving end. That’s why it’s called “cooperation”, right?

However, it has always been the donor “wanting the best”, the donor’s criteria that seemed to dominate in this field: what they believe is “just”, what they think is “effective”, and what they “know those people need”. Thankfully, times are changing and workers in international cooperation are more sensitive to this topic. More and more, the aid given to a target community takes the form of enhancing the existing, local capacities rather than imposing a foreign technique. There is still a long way to go but awareness of this issue is already a big step forward.

Conclusions

While motherhood is a relatively new event in my life, it has deepened many notions in me, and is currently opening up other aspects of my understanding that I never even thought existed. On the contrary, women and development issues have always been part of my life, having grown up in a family whose bread and butter comes from the intent to make this world a better place.

Knowing what I know, I try to believe that it is truly the sense of compassion that moves people to torturously insist on the reliability of their solutions. I try to convince myself that they simply wish to see in others the same fruitful effects of their applied techniques.

Unfortunately, no two situations are equal. So basing on this, the person receiving the advice may consider that the proposed solution doesn’t fit his situation.

In my constant need to map out methods, this idea occurred to me: within the framework of “helping”, I suggest that under the “advice” category, two sub-categories be opened in the form of advice accepted and advice rejected. Help that was given or offered doesn’t have to end in relaying an opinion and leaving it as that. A person with a real concern to help, to make a change, would see if the other would take up on his counsel or not. And in the case where it is rejected, he would try to find out why; perhaps not to annoyingly try to solve the problem, but to learn.

Advice

Learning would mean the world between the meddlers and the “legit” bearers of help. An informed person in front of another who’s in a dilemma could do more by simply listening, than one who would blindly exert an effort to achieve a change in the situation.

I encourage you to think about it.

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10 Inputs for Rookie Employees (Fresh graduates, I see you!)

As I celebrate 10 years since my first employment, please allow me, dear reader to give unsolicited advice for those who, for the first time are reveling in the wonderful world that is: the workplace.

1- Just how urgent are urgent tasks?

They are pretty urgent. However, a common rookie mistake is to be stressed because their superiors would give them five tasks that are simultaneously labelled as URGENT. The more prepared interns/fresh graduates would pause and actually ask, “Okay, but which of these is the MOST urgent?”. To which the manager would respond, “All of them are equally urgent”. This is a lie. Because even if you, little grasshopper, are a wizard of all sorts and were able to finish all the tasks punctually, your manager CAN NOT POSSIBLY revise them all at the same time.

This is why I would suggest you rather ask, “Which of all these urgent tasks would you like to revise first? Could you give me a deadline for each of them?”. This means that your manager would have to sit down for 5 minutes with you and decide, say, Task 1 should be on his desk in 1 hour, Task 2 to be submitted in 2 hours, Task 3 in 2 hours and a half, etc… And if he refuses to do this, then feel at liberty to prioritize the work yourself.

Tip from my mother: If your manager DID sit down and classify the tasks with you, remember to write him an email confirming what you just talked about. This would be your safeguard against any future “misunderstandings”.

2- Gossiping is One Train You Should Not Hop On

Avoid gossip. Even if you’re only a “listener” and not a “contributor”, do not be around people who gossip. It’s a waste of time and it only brings distraction. Besides, being a “listener” is just as bad as contributing because it means tolerating trash talk about somebody who can’t give his side of the story.

If you want something cleared up, talk to the person face to face. Also, don’t criticize anyone behind their backs unless you’re 100% sure you can repeat the same words in front of them.

Most importantly: Don’t use gossip as a weapon if you’re not sure you can take the fire.

3- Doubts Will Arise

I know 40-year olds who are still not sure what they want to do with their current lives, let alone their future. So be kind to yourself and consider that as a young person starting to explore a new world, it’s only natural to feel doubtful and undecided about things.

NEVER be afraid to take a step back and evaluate your situation. If you feel the need to go back to studying, take a sabbatical, change career directions, or whatever you feel that could make you grow, go for it.

Still, it’s absolutely important that you be clear on your purpose. Ask yourself, “Why am I doing this?” Is it for the money? for personal needs? for professional fulfillment? or for sheer curiosity? Afterwards, ask yourself again, “Would this change be able to sustain me until I get my bearings back?”

4- Is it Wise to Mix Personal and Professional Life by Making Friends at Work?

Personally, I think it matters little whether this is wise or otherwise (pun intended). Human beings are social animals so whether we like it or not, we will always be drawn to gatherings, socializing and eventually consolidating one “favorite” group of people from work. What is wise though, is to choose your work friends prudently.

In this light, think 50 times over whether it’s worth “hooking” up with an office mate. ‘Nuf said.

5- Honesty Really IS the Best Policy

Be as honest and frank as possible with your direct manager. Even if she isn’t totally honest with you, be transparent with them with whatever issue you have that might affect the quality of your work.

Your manager’s lack of “honesty” could be explained by the fact that some work-related subjects should remain only in the hands of the “upper crust”. I’m not talking about this kind of honesty. Any topic that relates directly to you or your work is a topic you have the right to know about. Similarly, your manager has the right to be informed about anything that could directly affect the accomplishment of the objectives she set for you.

In my case, I opened up to my former supervisor regarding my problem when I get hungry. You might think this is an exaggeration, but “cranky” is an understatement in this case because I would suffer a complete shut down of all my systems: I become a friend of none and an enemy to all, I make bad choices, I start remembering past offenses… try to get the idea of that kind of co-worker.

6- Drop the Delegation Drama

KNOW that it is your manager’s obligation to properly train you for whatever is written under your job description. He should know that whatever mistakes you (or anybody else under his supervision) make would directly reflect on his performance. So if he’s wise, he would adequately teach you everything you need to know to deliver a quality output. If he’s not, he would hoard all the tasks while you sit on the sidelines- that way, the deliverable would be quasi-perfect and he would not risk his attention being called.

One of my former managers was like this. I described the experience in this post.

As a newbie, it would be normal for some time to pass before some major decisions or operations are to be delegated to you. But don’t lose heart: it will come. And the first step towards that direction is to reflect the seal of excellence in every deliverable that bears your name.

7- The Value of Knowing Your Place

When you argue with your boss, LET YOUR OBJECTIVE BE TO BE HEARD and not to win/change his mind/make him side with you. While you’re at it, be as eloquent, as respectful and as precise as you can be when letting yourself be heard.

Trying to get into an argumentative battle with a superior will only leave you badly wounded and demoralized. Think about it: managers have had years and years of “training”, having had more experience in almost any type of arguments in this life. Sometimes, a smile is the best response. This way, you save time which you could use later on for whatever you wish for! PLUS, you save energy and keep your happiness.

8- Commitment Issues

It’s okay for you not to love your job. However, don’t make it an excuse to under perform.

It’s very important to leave a good impression in your job, especially if it’s the first one, and you achieve this by committing to produce the best results you possibly could.

Talking to a friend the other day, we both agreed that nothing is forever. But if we want something to last, there should be a conscious effort from our side to wake up each day and make a decision to get through the day, everyday. Work-wise, it’s the same.

In my opinion, problems could arise the moment your job starts to go against your values. A friend once told me she turned down an offer from a company that manufactures weapons for war. Another one told me that he had to leave his former company because ethically, he didn’t agree with its new strategy. When this happens, thoroughly weigh your options and be realistic about how you’re going to pay the bills and fund your dreams when a regular flow of income gets cut off.

9- Understand Your Contract

Back in France: each time I signed a new contract, an HR personnel was always beside me and ready to answer any questions I might have. Even if I took my sweet time to carefully read the 12-page document, they would patiently wait without interrupting me. They would explain anything, from something as simple as the personal tax deducted each month, to something more complex such as the legislation applicable to my situation.

Even more necessary is for you to understand your paycheck or pay stub. Keep track of your monthly expenses starting with the automatic deductions from your revenues. Don’t forget, you’re “adulting” now!

10- LET GO OF EXPECTATIONS

This final advice is the toughest one I’ve learned, because I’ve known it to be true for quite some time now.

I know it works for everyone who has tried it. However, I just wasn’t able to apply it in my own life. Now that I’ve started to do so, I’m much more fulfilled and happier than ever before.

The key to peace of mind is: not to expect anything. One thing is to bear in mind things like: scheduled meetings, DEADLINES, patterns of behavior and so on… but another thing is to be open-minded enough to ACCEPT THAT EVERYTHING IS SUSCEPTIBLE TO CHANGE. Remember, disappointments only exist because they were pre-determined by an expectation or two. So in this equation, the less we expect, the less we tend to be disappointed!

Adulting and Money Management (3.2): The Money That I Owe by guest blogger Gino

Foreword by Colorfulifesite admin:

Gino’s experience differs a lot from that of Edward, not only because of the generational gap but because of the way the former decided to approach his debt dilemma. The fact that he has not had time to save enough money to be considered “financially stable” is a great factor in his decision to pay his debts with another loan. Now normally, people are advised against this because as you might already guess, it does pose a risk of entering into a debt cycle from where it could then be very hard to exit. It takes discipline, focus and great will power to not fall into a credit trap. Most importantly, Gino did not only take another loan to pay his initial debt- he also made it a point to earn additional money from various sources of income. But I don’t want to get ahead of myself. Dear reader, learn and enjoy!

***

Karessa asked me why I volunteered to be a guest blogger in Colorfulifesite Blog. The truth is I’m really eager to inform people about how I somehow recovered (slowly) and survived from my personal financial crisis. I would also like to share my experience, in case it could give them options on how to solve their debts.

Resultado de imagen de debt

Image courtesy of: http://www.fitslimstrong.com/

The Backstory:

Several years ago, my friends and I set up a corporation. It was the first business venture of my life. Needless to say, I was new to the corporate world and had not even the fundamental knowledge of things. I just took the opportunity. It was a “strike while the iron is hot” kind of thing. I was excited and impulsive at the same time that I didn’t even bother to educate myself, believing that I could learn along the way. Likewise, I joined the business world without any “financial muscle” because supposedly my contribution would be my skills. (Actually, the majority of the founders didn’t have money to invest. All we had were our Information Technology or IT skills.) This was why we needed an investor to sustain the various costs of this venture: marketing expenses, logistics, employees, and so forth.

One of the founding members met a potential financier who we all thought was an angel investor. After me and my friends agreed on his participation, he gave us a big amount of money as seed funds. We divided the financial responsibility and assigned each one an amount to be paid to the angel investor when the time came. All along, we believed that we would pay him back upon the success of the company’s project. After the papers were signed, the corporation became a legitimate one.

Unfortunately, things eventually started to go downhill due to the company’s internal issues. These issues imploded up to a point where I had to personally borrow money from loan sharks just so I could pay our employees’ salaries. I was confident I could pay the loan sharks, but little did I know that a deeper financial trouble was about to blow up in our faces:

What we thought was an angel investment was actually not. It turns out we signed a document stating that he was loaning money to the corporation, not investing! Furthermore, the terms stated that the loan should be paid within a year.

To top this all off, I have acquired credit card bills as well as other personal debts to settle.

Resultado de imagen de loan shark

Image courtesy of: https://es.123rf.com

Thankfully, the debt to the “investor” was cleared by the person who invited him to the corporation. Still, I found myself looking at an important financial dent.

The Debt Story:

I had to start getting rid of the accumulated debt I still have. So what I did was that I sold everything I could and pawned some of my belongings. That gave me some “starting money” to do something about my debts.

Resultado de imagen de debt

Image courtesy of: http://www.kiplinger.com/

Likewise, I returned to my parents’ house to save on rent and started recycling some things, like my old computer. Most importantly, I got help from my family in getting a loan to pay the loan sharks. My mom helped me get loan from cooperatives (Credit Unions) that give a lesser interest rate and a longer period payment plan. Loan sharks’ conditions of payment were tougher than a bank’s, so it was of my great interest to get them off my case as soon as possible. That’s the bad thing about getting a loan that doesn’t require any type of verification such as tax declaration, employment record, etc… Anyway I paid a big part of my debt through those cooperatives.

According to Investopedia,

A credit union is a member-owned financial co-operative. These institutions are created and operated by their members and profits are shared amongst the owners.

… (They) represent an alternative to banks and possible solutions to common complaints about traditional banking institutions… (It is) a savings and loan entity formed by a group of people who share some common characteristics, such as a profession or geographic location. The members of the group pool their money to provide loans and demand deposit accounts to other members. Credit unions are not-for-profit entities that are owned and founded by their members; they function as democracies, with each member having a say in how the credit union is run.

As a matter of fact, we borrowed from 3 credit unions. On 2 of them, my mom was the account holder while the other one is under my younger brother’s name. I did this because they were the only ones who were qualified to apply for a loan.

Part of the money I used to pay the cooperatives was earned through online jobs. I had to work double shifts and with multiple employers. All of these, without counting other jobs, so all in all that required me to work for 10-16 hours a day. I went on getting local contracted jobs too, like designing small business solutions for small enterprises. The pay was small but at least I got something, rather than nothing. (It also helped me build more contacts.)

As I mentioned before, I got some money came from pawning and selling my belongings. Some proceeds from the sold stuff were used to get along with my everyday life. I’m not even talking about spending for leisure; I meant something more commonplace like buying food and paying for fare. This money also allowed me to pay some of my other personal, smaller debts.

Then my father said he will pay some of my debt from one of my mom’s cooperative account and I can pay him whenever I could, without interest. I was relieved!

After that, I got a chance to enroll in an MBA course to educate myself on how to properly run a business. While I was in school I kept on accepting online work and working for local clients mostly to pay my school tuition, my dad, my mom and my brother. To this day I’m still not 100% clear of my debt but it’s more manageable compared to what had happened to me few years back.

-The End-

Colorfulifesite’s Note: Gino has long since learned his lesson regarding the need to be financially literate and equipped before entering a business venture. He is currently a Managing Partner at a couple of startups focused on helping small enterprises get the best adapted business solutions.

Sources:

  1. Credit Unions, Investopedia, available at: http://www.investopedia.com/articles/pf/08/credit-union.asp

What’s on a reader’s mind (2)

A very dear reader from Canada wishes to share his experience in “adulting” and money management.

However, before I move on to divulge his wise words, let me first mention how I have never met anybody online as kind and as frank as Mr. Edward Hillyer. We met in Facebook. We have a common friend who used to actively publish politically-flavored posts in his wall. It was in the comments’ section where we started out politely arguing about the different topics we enjoy. Now I believe that I may proudly say that we are friends… friends in the sense that I would seek his advice, and he would generously give it; friends in the sense that he would tell me nice stories about his childhood and his family, and I would ask him for more similar anecdotes.

I used to be reluctant in having a social media life but with a great discovery like Edward, I believe it’s worth all the trouble of meeting the weird and creepy people that roam around the internet.

I thank this dear friend for supporting my blog through actively participating in its Facebook page, as well as in my personal page.

I truly hope that you can learn as much from him as I do.

Thank you, Edward!

(The following comment originally appeared in the Colorfulifesite Blog’s Facebook page, dating 6th of February, 2017.)

My first comment on adulating [sic]* and money: If you have ever had a credit card, you will have noticed how a little here and a little there, (ten dollars for a pair on sunglasses, 20 dollars for a new top) will cause your receive your credit card bill with shock. How could just a few dollars here and a few dollars there add up to such a large bill? On the door to my father’s office was a quote ‘It all adds up’. You see this in your credit card bill that shocks you each month. This is the reality, it all (even small amounts) add up. With this knowledge as a given, why not be smart? It 2 +4 = 6, then 4 + 2 also = 6. This information is reversible. If you save a few dollars here, and a few dollars there, IT ALL ADDS UP, just as spending does on your credit card. This is a given. If you save money in your daily life, it will add up.

This was my reply, dating 8th February 2017:

Thank you for this simple yet monstrous truth, Edward. My personal experience with credit cards is quite nil because having been raised in a frugal household; we have always tried to avoid expenses (present and future). We only borrowed money if we didn’t have any other option at all. But I had a similar experience with my day to day life before my husband and I got married. We had good jobs and were living in the city center. So the temptation to get a beer here, have a bite there, etc… was always near. And we would usually give in to the “little” ones, until we realized that the 3x a week trips to have tapas at 2 EUR a glass of beer (we would end up having 3-4 glasses each) would sum up to 192 EUR a month! Imagine how much that would be in a year! So we started to save small coins and also stopped eating out too much. This was one of the ways we were able to save for our wedding (for my part, I was able to save for my dress, shoes, earrings and head accessory). Yes, we’re proud to say that we financed that marvelous celebration of our lives!

In a reply to one of my posts, (this time, in my personal Facebook page dating 22nd February 2017), Edward recounted an advice given to him by his father. Honestly speaking, I wasn’t prepared to be blinded by the light.

I joined Les Grands Ballets Canadiens at 17 years old as an apprentice. I was paid half the salary of a corps de ballet dancer ($75.00 a week). I managed on that fine. It was tight, but I did it. However, after three months with the company, they tore up my old apprentice contract and gave me a corps de ballets contract. I wrote to my father with excitement. ‘My salary has more than doubled. I now earn $155.00 a week!’ My father expressed his pleasure but mentioned… ‘If you got by on $75.00 a week, this means you could now save one whole salary each week.’ What a brilliant observation. However I did not follow his advice. I adjusted my standard of living to my larger salary. I had not ‘adulted’ yet. In youth, there is a tendency to spend all the money we have before our next pay day. It really does not matter what the salary is, we will be out of money by pay day. I was poor, then rich, then poor, then rich, then very, very poor, and now I am financially independent. Like others, I have been through it all. And, I learned from it all. When the endless value of money is recognized, we will prefer the money (security) to the fancy shirt, the latest shoes, the newest gadget and the expensive restaurant. I used to live in a three story house on two acres of land with a swimming pool and three cars for two people. Clearly I had far more than I needed. What do two people do with an acre of land each? Why would two people need three cars? Why would two people need three stories? I was working two jobs and was sick with the work. I felt I needed to reward myself for working myself to the bone. How very stupid of me. I earned $90,000 a year and was always broke before pay day! Now, I have no car, no smart phone, no cell phone, no television, no house, no iPad, no IPod, no MP3 player and no cell phone. What do I have? financial security and peace of mind. The value of this is far greater to me than any material thing.

*Edward’s computer would automatically and stubbornly replace the term “adulting” with “adulating”, and so he spent the whole time with the latter word. Colorfulifesite edited the rest of the typos.

-The End-

Don’t hesitate to comment on Edward’s ideas, or share your own experiences in “adulting” and money management!

Remember that you can write to: colorfulife@outlook.es, or use the Comments’ Section below, or you could also use this blogsite’s Contact Page to tell us your stories. Thank you!

Colorfulifesite Blog is looking for a guest blogger

Hello dear reader!

Colorfulifesite Blog would like to give you the chance to be guest blogger of the week. (You don’t really have to be a blogger per se. You just need to want to do it!)

The only condition is that you talk about your own experience in owing money.

Imagen relacionada

Image courtesy of: http://rank.tools/

Does that sound cool?

Please comment below, or send an email to colorfulife@outlook.es, or contact me through the Contact Page in case you’re interested.

THANK YOU!

Adulting and Money Management 2.1: The Importance of Research

Author’s note: Please excuse last week’s absence of post. I was not able to better organize my schedule between researching about this article, managing side projects and settling in to our new home. Thank you for understanding. I do hope that the practicality of this post outweighs the lack of publishing several days ago.

This post complements the previous one (Adulting and Money Management 2: “Hooray, I have money! now what?”) that encourages channeling one’s savings into investment.

Resultado de imagen de research

Image courtesy of: http://www.vicsrc.org.au/

Introduction: “Adulting” and Research

The term “adulting” was coined to describe a group of people transitioning from youths to adults, associating the latter with a sense of responsibility, commitment, maturity and trustworthiness.

The Urban Dictionary online defines adulting (v) as:

“To do grown up things and hold responsibilities such as, a 9-5 job, a mortgage/rent, a car payment, or anything else that makes one think of grown ups.”

Research (n) has several analogous definitions, but the one I like most is from Dictionary.com:

“diligent and systematic inquiry or investigation into a subject in order to discover or revise facts, theories, applications, etc.”

I identified adulting with research because being responsible usually entails being aware the effect of certain factors, or what elements would be affected once a decision is made. It requires to be informed of the risks, costs and benefits of each resolution or judgement. As you might have guessed, the best way to achieve this is to gather as much information as possible; and if that can be done in a systematic and efficient manner, all the better.

I never really gave much thought about researching until I bumped my thick head to wall after wall of reality. After the 256th bump, I had to admit that INFORMATION IS VITAL (some say it’s power, others say it’s equivalent to money…); but to be more precise, ACCESSING THE RIGHT INFORMATION MARKS THE DIFFERENCE. Unfortunately, there is no short cut to knowing what the right information exactly is. Even if helpful peers point it out, what’s “right” for them might not be right for you. So really, the only way to do this correctly is to start making inquiries yourself.

Nobody ever told me about this- not even my teachers in college. You’d think that people in charge of molding future economically-oriented minds would consider relaying this message…

(Later on when I reviewed some of my notes, I realized how this message was indeed passed on in the form of riddles.)

Research related to investing

Anybody who wishes to get the most out of what he has to offer will not hesitate to gather the necessary data to choose the best option. They  will not stop at believing hearsay, although they will certainly consider that type of information.

Still, there are others who are too trusting, too optimistic, or simply too lazy. Just like me, they won’t be encouraged to be more diligent in researching until they’ve paid the price… because there are several steep prices for overlooking the process of research, and more so when it comes to (first-time) investing. In my case, these are:

  1. Money-wise: (the price to pay will be) the very amount of capital invested
  2. Emotionally: pride that got too bruised, discouraging any discussion about this experience with people who might actually help
  3. Psychologically: being  too traumatized to “trust” any financially-profitable opportunity for quite some time
  4. Opportunity cost-wise: having less less money, lower spirits and inferior resolve to invest once again. This could likely make one miss the chance to make money grow

What to research? How to research?

Resultado de imagen de research

Image courtesy of: http://innovationexcellence.com/

Performing an investigative task could be exhausting, especially when not used to it. Although I dare say that having one’s future at stake is surely an excellent incentive to do so.

From my point of view, I see two main aspects of research: the theoretical side (or the understanding) and the empirical side (the practical, “realistic” side). They require a lot of time and effort to be taken on, so you could be tempted to just focus your energy on one of them. But the truth is, both are too important for any of them to be ignored.

Suppose you’ve already decided how much you want to set aside to make your money grow; also suppose that you’re already sure of which type of investment you want to make; let’s also say that you’re currently convinced by a financial manager about the product/s he offers and that you’re very happy with what you’ve heard.

That’s fantastic because it means you won’t have to search for much more. Be that as it may, IT IS NOT THE SAME as not having to research anymore.

Theoretical research

In our proposed scenario, the main question to ask would be: What is the general understanding regarding the investment vehicle of your choice?

Even if you’re already content and convinced about the product that was offered to you, still it’s a good habit to read and re-read the brochure or any related document.

(Depending on the country where they operate) Most financial management companies are obliged to distribute a written communication, stating the product’s fundamental information to potential investors. This is very important because usually this is where the fine print lies.

To make a long story short: you might be interested to find out about the profitability of your venture, the different kinds of fees and commissions you’d be subjected to, how much tax you’d have to pay once you withdraw your capital earnings, what kinds of risks your investment is exposed to, etc… that is to say: by how much would your money potentially grow? How much would necessarily be deducted to your money once you’ve invested it? Is there any way to prevent it, or at least lessen the deductions to your future earnings? 

The second set of questions I suggest to be asked will surely empower those who are afraid of investing what savings they have acquired. It refers to one’s legal rights and obligations: Is there something in your country’s Constitution that would back you up, should you get into trouble (in the case of scams or bankruptcy)? What are your rights (ie: to invest and make your money grow) and obligations (ie: to pay taxes) according to the law? As for the financial services company, what are their rights (ie: to profit from rendering a service) and obligations (ie: transparency, honesty)?

In anything that you do, KNOW YOUR RIGHTS. ALWAYS KNOW YOUR RIGHTS. Consult a lawyer if you have to.

Empirical research

The most effective way to conduct empirical research would be to actually invest the money in your vehicle of choice. Just like a scientist observing a laboratory rat, you could closely monitor your investment with the help of your adviser.

Well, too bad for us- we can’t all have the luxury of “gambling” with our life savings. So for this type of research, I would mainly ask: What has been the experience of other (usually, older) people in this field?

Even if you’re already content and convinced about the product that was offered to you, talking to those who have already invested in the same product or a similar one could help. Most financial managers will hesitate to recount the negative experiences of some of their clients. So consider this: if you ask different kinds of investors (young, old, experts, newbies), they could only be too willing to warn you about not repeating the same mistakes they made. They may not share the secrets of their trade, but you could surely get some useful tips.

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Another important question to ask would be: What are other alternatives available in the market?

This question will most probably be answered by your fellow investors. But it’s always better to do your very own research. Remember that you want the best value for your hard-earned money. It’s not being greedy, it’s being wise. You’re not trying to outsmart anyone, you’re trying to educate yourself so you won’t be fooled.

Try informing yourself of the one or two better alternatives mentioned by other investors. Visit a financial service company’s office and ask all the questions you might have.

Benefits of research

Having done your research does not in any way reduce the risk of losing part (or all!) of your investment. It wouldn’t help you evade taxes either; but the results of your research will allow you to make decisions with more and better information. As a matter of fact, in the case where your decision turned out to be unfavorable, your research would’ve already provided you with enough knowledge that would orient you towards the most fitting solution.

Some might be wary of spending time to do research, even if it just meant comparing the profitability of different investment tools. Others might even think that they would do better investing their money already, instead of spending time talking to fellow investors. As respectable as this stance is, it is not advisable. Especially not to first time investors.

Undoubtedly, as you acquire more knowledge and experience about investment, you would spend less time and energy doing the basic research. By then, you would be informing yourself of different factors concerning other opportunities. You would know better who to talk to about one option or another. The task itself will not disappear, it will just take on a different turn.

Conclusions

People in the phase of “adulting” are automatically more prudent of their resources. Especially when it comes to their hard-earned savings. After all, that is the very essence of adulting: taking on more responsibilities and being more consistent with the decisions that were made.

One way to make adulting go a bit smoother is by taking time to research before going after one option or the other.

Whenever there is money involved, there is higher incentive to gather the right information. This becomes more evident when, along with the chance to make money grow, there is also a risk to lose part or all of it.

In general, there are two important aspects of research: the theoretical and the empirical. Both are equally important because they complement each other. That is to say, one cannot only mainly rely on hearsay when making an investment decision. And articles that are written in books, journals or magazines do not always play out the way they are supposed to. So one’s best bet would be to do both.

For the theoretical aspect, it would be wise to consult the documentation available in any financial services company. It is also highly advisable to be aware of the legal obligations and rights of both the investor and the investment company before establishing a financial relationship.

As for the empirical aspect, potential investors (especially the first-timers) would do good to talk to other investors. The latter group may not share their secret formula for success but they could warn about common mistakes and how to look out for scams. Lastly, it wouldn’t hurt to know what are the different alternatives that could fit an investor’s profile (those that adapt well to his current situation and future needs).

Researching wouldn’t make the risks go away. It wouldn’t lower the fees and commissions to be paid. Additionally, it doesn’t only take time and effort: some would also say it will make them miss the chance to invest immediately, thus losing money in the process. This type of opinion is respectable, but in the long run it will always prove to be worthwhile to exercise patience and diligence. Most people realize this too late along the way.

-The End-

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Adulting and Money Management 2: “Hooray, I have money! now what?”

To read the first part of the Adulting and Money Management Series, click here.

Money management becomes tricky as we grow older. To prove my point, try to remember when you were younger and you used to be so determined and focused to save whatever money you had. It could be to buy “that shirt”, “that book”, “that pair of shoes”, or even just to “put it in the bank”.

Didn’t you use to scrimp on buying snacks at school? didn’t you keep those envelopes containing cash- from your godparents- so you wouldn’t be tempted to use it? didn’t you try to outsmart your parents, siblings, or other family members to cover some of your expenses so that you could have more money, faster?

By the time we enter into adulthood, we start to be distracted from goals such as saving money or even increasing our income… There are just so many nice things to buy, a lot of delicious new food to taste, and look at all those places where we could travel- am I right?

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I don’t have the capacity to address all the above-mentioned concerns. However today, in the name of “adulting”, allow me to shine a spotlight on investment as an alternative to increase the money you have saved. And as a possible choice for investment, this post will also include a short discussion about Mutual Funds.

The completion of this second part of the Adulting and Money Management Series would not be possible without the very dependable Mr. Arnel Martil. His professional aid/opinion/words/common sense/truthslaps have truly made this post not only satisfactory, but also very beneficial to the reader.

Thank you very much, Arnel for your help!

-*-

Colorfulifesite (C): Arnel, what’s the difference between saving and investing? Which would you say is more important between the two? For instance, let’s say that I just received an inheritance or a huge bonus. Which should be my priority?

Arnel (A): The big difference between savings and investments is time.

Savings is usually money you set aside for short-term goals.

One reason you might want to save now is so you have some money to invest later. Money deposited into a savings account is usually very safe but would only earn a small amount of money in return. Another great thing about a savings account is you can get your money out of the account whenever you want.

When you say saving, you are just putting your money in a bank or as a reserve. It’s as if you’re hiding it under your pillow. It is a “parking place” where the “principal” or the amount you’ve saved is safe; it provides money for short term goals as well as emergencies.

By investing, you allow your money to grow. 

It accumulates money for long-term goals. You could lose your principal, but you have the opportunity to earn more money.

When you invest, you set your money aside for future income, benefit or profit to meet long-term goals. When you invest your money, there is no guarantee that your money will grow or increase. The earnings or losses from investments are usually more than what you would make or lose in a savings account. Investors recognize that it usually takes a long time to earn the big bucks, so most of the time they are in it for the long haul.

C: What would you say is the NUMBER ONE enemy of the people who are currently saving money? What’s the most effective technique you’ve applied to make sure you or your family could save?

A: Inflation is one of the downsides if we rely only on saving. It is an increase in price that makes a “market baskets” of goods and services more expensive over time- a silent killer of your finances. (Note: inflation reduces the value of your money because with the same amount, it can purchase less goods and services than before.)

For us to beat inflation, we should invest in investment vehicles like bonds, stocks, mutual fund, UITF or Unit Investment Trust Fund* (see Glossary at the end of the article for more information on terms with asterisks), or real estate. As an adviser, we do not discourage saving money in a bank account because you can recover and use that money 24/7 in case of an emergency. But if you want something for long term, like if you are planning for future education or personal retirement, invest in a vehicle that allows your money to grow if done right… annual returns of 50% is possible.

Regarding saving techniques, it really depends on the person’s budget; it should be such that his lifestyle wouldn’t be compromised. 

C: The most typical advice is the 20-60-20 rule, where 20% of a person’s income should go to savings and investment, 60% on essential expenses and 20% on discretionary expenses a.k.a. wants, rather than needs. (For some insight on budgeting and saving, see Colorfulifesite Blog’s post on making ends meet, here and proving that you could save, here.)

A: Just remember that the bottom line is saving for your future.

C: Suppose I’m now ready to invest- will it make sense for me to borrow the money I would put in the investment vehicle of my choice?

A: As an adviser I would say, before you decide to invest, you should settle your debts first.

You must start paying off the ones with small interest, and little by little, proceed by paying loans with bigger interest. The reason for this is you might have difficulties if you prioritize the debts with bigger interest, because there’s a tendency it might be too much for you and it could lead to you not being able to continue paying.

Once the debt is settled, you can then start to save and invest.

C: In my opinion, borrowing money can be a useful tool for money management. But it can also spell disaster for anyone who misuses it. Under the context of making your money grow, I believe that it only makes sense to take a loan when:

You are 100% sure that you could pay it off, interest plus principal, without sacrificing neither your current lifestyle nor your future prospects. (More of this on this series’ next post!)

A: You can be financially independent at any income level, but one should develop a certain behavior and discipline when saving and not to spend too much. However big your monthly salary is, even at 100 thousand per month, if your mentality is all about spending and spending, the end result will be an impoverished you.

C: Now, I noticed that mutual funds have been “a thing” for quite some time. What can you tell us about it?

A: Mutual funds are pooled investments which everyone can participate in. In the Philippines, it could be with capital as little as Php 5,000.00 (Colorfulifesite advises for you to consult your bank or financial adviser for the minimum capital requirements in your country).

It is a good investment option because they do not require much effort and time compared to others (e.g stocks, one’s own business). A professional fund manager handles your mutual fund. All you need to do is put in the money. In a mutual fund, you will become an investor, part-owner or shareholder of blue chips- nationally recognized, well-established and financially sound companies- where a mutual fund company has invested in.

Where I work, or in any mutual fund, historically in 5 years’ time, investment has been seen to double.

That’s why, we advice to lock in 5 years if people want to invest in a mutual fund.

C: I guess the time has come for me to share my own investment experience. You see, I invested a little money that I had before. Just like in a mutual fund, I was asked to lock my capital for a minimum of 5 years. I could put in more money, but I couldn’t withdraw it until after that period. However, when time came for me to recover my investment, I simply got the capital back! I was told by my adviser that it was due to the financial crisis. Now, what was I supposed to do with that? Of course I was happy I got the whole of my capital back, that I didn’t lose any money. But what a waste! I could’ve invested it in another product and at least earn 5% from it.

A: Maybe the investment you did at that time had an insurance added-on.

There is a product called a VUL** or Variable Universal Life Insurance where, aside from saving for your future your principal earns interest and it offers protection. It’s a sort of 2 in 1 product: life insurance ***plus mutual fund.

It is also a good investment since the money you save will grow and accumulate. The advantage of investing in any VUL products is it offers insurance or life protection, so in case the family breadwinner or the income generator has suddenly run out of time, his remaining family members would not suffer.

May I ask which company you invested in? How come the result was only a break even after 5 years?

C: The truth is, I remember which company it was, but I don’t remember the conditions. I think the problem was, I didn’t take it too seriously at that time… (facepalm)

A: Before you choose any type of investment, you must first do a background check of the company: their historical performances, how many years have then been operating- is it at least 10 years or 20 years?- so you could avoid scams. There’s no investment where you could earn money speedily, like let’s say, double your money in 2-4 weeks. There is an investment principle where we are advised to apply the RULE of 72****.

C: What can you say about my experience? Or worse, what can you say to those who lost money in their investments? Undeniably, many people are afraid of investing, and are afraid of the term “finance”, due to the crisis that hit us…  

A: As an adviser, I would say that before entering any investment scheme like stocks, mutual fund or UITF, you should first build the foundation of your investment by securing a life insurance, because the return on the investment tools I’ve mentioned is not guaranteed… In the case where a person secures a life insurance, if something happens or let’s say he or she will be “taken out of the picture”, there’s assurance for the surviving family members or beneficiaries that they wouldn’t be burdened or worried about how to go on with their financial life.

Life insurance could also help pay loans and other liabilities. It could be used to fund obligations like college education, car loan, house or lot… at least there will be money to pay them off. If the insured breadwinner dies, at least there will be resources to supply his surviving family’s needs.

C: That is a very interesting concept you introduced there, Arnel. In fact, an article I read explained it like this: When you don’t have assets built up (as young people do in their early-work life), you are most vulnerable. In case of an emergency, your family will have nothing to fall back on. So a life insurance is a good way to provide financial protection to your family even in your absence.

In another article, I learned that one of the wealth-building strategies we didn’t know about is to incorporate the use of whole life insurance as a strong basis for a solid investment plan. In fact, Investopedia defines this just the way you explained it:

Whole life insurance is a contract with premiums that includes insurance and investment components. The insurance component pays a predetermined amount when the insured individual dies. The investment component builds an accumulated cash value the insured individual can borrow against or withdraw.

A: If your investment of choice includes an insurance feature, it’s hard to say that you end up “losing” or “earning less”. There’s a guaranteed face amount***** or insurance amount in case of death, plus you can avail of riders****** or additional benefits like critical illness, hospital expenses and disability benefits. You could benefit from it in the long run.

C: Going back to my mishap… Needless to say, my experience made me afraid to invest again. So I just keep my money in a bank. However, it does make sense to also invest some of it especially if I were to increase the value of my money.

What are my other options? I’ve thought about bonds and stock options. But the truth is I know nothing! What advice could you give me?

A: All investments involve taking risk. It’s important that when you go into any investment in stocks, bonds or mutual funds you have a full understanding that you could lose some or all of your money in any one investment. There is really risk in investment, and there’s no guarantee.

It is often said that the greater the risk, the greater the potential reward in investing, but taking on unnecessary risk is often avoidable. An investor’s best alternative to protect themselves against risk is by spreading their money among various investments, hoping that if one investment loses money, the other investments will make up for those losses. This strategy, called “diversification” which can be neatly summed up as, “Don’t put all your eggs in one basket.”

Once you’ve saved money for investing, consider carefully all your options and think about what diversification strategy makes sense for you.

Diversification can’t guarantee that your investments won’t suffer if the market drops. But it can improve the chances that you won’t lose money, or that if you do, it won’t be as much as if you weren’t diversified.

Just don’t put “all your eggs” in a bank because imagine if you have 2 million Philipine Pesos (Php) saved in a bank then all of a sudden, it gets bankrupt. Take note that the maximum loss that could be covered by banks in the Philippines is 5oo thousand pesos…

Or suppose that a depositor has millions of money in a bank during times of economic and financial uncertainties. Imagine if the bank discovered that the depositor died- accounts will automatically be frozen, no cash withdrawal could be done and to top it all, the money is subject for estate tax. 

I must say that it would be the main difference between investing in a bank or in a financial services company like where I work (he he): one advantage about investing in a financial services firm is that the client has the possibility to choose that all proceeds may be free from whithholding and estate taxes. Unlike in banks, where the gains an investor acquires are subject to those two taxes, aside from the “normal” ones the government would require.

This is not to discredit banks, but just to put things in perspective with your readers.

C: Let’s say I finally dare to invest in mutual funds. Should I also diversify according to my objectives? For instance, I want to save for a down payment to buy a house? Or I’m thinking of saving for my son’s college education? That’s already 2 objectives.

Won’t I end up paying more than I should, or in other words: won’t I end up earning less than I could? 

A: The answer depends on when you will need the money, your goals, and if you will be able to sleep at night if you purchase a risky investment where you could lose your principal.

For instance, if you are saving for retirement, and you have 35 years before you retire, you may want to consider riskier investment products, knowing that if you stick to only the “savings” products or to less risky investment products, your money will grow too slowly—or, given inflation and taxes, you may lose the purchasing power of your money. A frequent mistake people make is putting money they will not need for a very long time in investments that pay a low amount of interest.

On the other hand, if you are saving for a short-term goal, five years or less, you don’t want to choose risky investments, because when it’s time to sell, you may have to take a loss. Since investments often move up and down in value rapidly, you want to make sure that you can wait and sell at the best possible time.

Time is money.

As we would say in my company, “The best time to invest was yesterday, the next best time is today. And the worst time is tomorrow. Because sometimes tomorrow becomes never.”

-The End-

Mr. Martil is a financial adviser in a leading international financial services company. He is a loving husband and father to his family. Likewise, you were able to witness what a kind and reliable friend he is- generous enough to spend time with Colorfulifesite Blog and answer some of the very basic questions about investment and mutual funds.

Glossary:

*UITF- Unit Investment Trust Funds (UITFs) are ready-made investments that allow the pooling of funds from different investors with similar investment objectives. These funds are managed by professional fund managers and are invested in various financial instruments such as money market securities, bonds and equities, which are normally available to bigger investors only. (Source: http://www.bdo.com.ph)

**VUL-Variable universal life insurance (VUL) is a form of cash-value life insurancethat offers both a death benefit and an investment feature. (Source: http://www.investopedia.com)

It is a life insurance policy that combines the features of variable life insurance and universal life insurance. Where the former constitutes a fixed premium insurance policy that provides a return based on the income performance of an investment portfolio. While the latter combines the benefits of an adjustable premium, adjustable coverage term life insurance, and a savings account. (Source: http://www.businessdictionary.com)

***Life insurance- Insurance cover that serves two major purposes: (1) to substitute for the insured’s income if he or she dies, and (2) to qualify the insured for favorable tax treatment. The policy holders buy insurance cover from an insurance company, and pay specific periodic amounts (premiums) for the term (duration or life) of the policy. If the insured dies before the this term is completed, a guaranteed sum (the face amount of the policy) is paid to one or more named beneficiaries. If the insured survives the term then, depending on the type of the policy, he or she may receive the full or a part of the face amount of the policy. (Souce: http://www.businessdictionary.com)

****Rule of 72- The “rule of 72” is a simplified way to calculate how long an investment takes to double, given a fixed annual rate of interest. You divide 72 by the annual rate of return you receive on your investments, and that number is a rough estimate of years it takes to double your money. For example, $1 invested at 10% takes 7.2 years (72 divided by 10) to turn into $2. (Source: http://www.usatoday.com)

*****Face amount- Sum of money for which an insurance cover is obtained, usually shown on the top sheet (face) of the policy. In life insurance, face amount is the sum paid on the policy’s maturity date, on the death of the insured, or (if the policy terms permit) on his or her total disability. (Source: http://www.businessdictionary.com)

******Riders- Additional clause, document, or slip of paper that adds, alters, amends, or removes the provisions of an associated or attached agreement or contract (such as an insurance policy) or a negotiable instrument. (Source: ww.businessdictionary.com)

Sources:

  1. Investopedia
  2. Business Dictionary
  3. “How Do You Make Money from UITF Investing?”, by Fitz, Ready to Be Rich Blogsite, available at: https://fitzvillafuerte.com/how-do-you-make-money-from-uitf-investing.html
  4. Unit Investment Trust Funds, available at BDO website: https://www.bdo.com.ph/personal/trust-and-investments/unit-investment-trust-funds
  5. “Doubling Your Money: The Rule of 72”, by Wes Moss, Advice IQ, USA Today, available at: http://www.usatoday.com/story/money/personalfinance/2015/04/25/adviceiq-doubling-your-money/26339307/
  6. “The #1 Wealth Building Strategy You Don’t Know About”, by Paradigmlife Blogsite, available at: http://paradigmlife.net/blog/the-1-wealth-building-strategy/
  7. “Are You Building a Strong Foundation for Creating Wealth?”, available at: http://www.firstpost.com/investing/are-you-building-a-strong-foundation-for-creating-wealth-2682980.html