A Good Man Leaves an Inheritance to His Children's Children

As good parents we ought to try our very best to leave inheritance not just to our children but to our children's children. But, for that to materialised in the future, the first step I guess is to educate ourselves to become financially savvy as early as possible. One thing I learned so far is that time is really valuable if not the key for it to become reality. The early we are financially educated and is acting upon it the longer the time frame our savings will work for itself. Perhaps, you don't have an idea or confused of what I'm saying right now but, once you understand how compounding money works you'll appreciate more what is TIME in relation to savings. Have you known someone who just spend 1 year worth of their salary for one grand extravagant feast? Yet, not bothered about the expenses incurred because as he or she say, that 1 year worth of salary can still be earned next year. Well, I guess it's okay if:

(1) We have accumulated enough savings already, and that 1 year is just a pinch of our savings 

(2) We are young and our parents are rich and money is not really an issue 

(3) Our time in this world is counted, I mean what for is the used of savings if by few years we are gone anyway unless of course we're saving for someone else 

(4) Though not rich, but still young and still have few years to waste for foolishness. 

But, if we are just trying to make an impression and is not one of the mentioned above, who are we fooling? I guess ourselves. Being financially educated, we're supposed to realised that at least small portion of that 1 year worth of extravagant feast could have started growing or already have grown by now. 

What's my point? If we have learned to become financially savvy after throwing the feast at a very late stage of our life, we'll have no enough time frame for our savings to grow, this time around, time is against us no matter how we try. So, we end up depending on our luck (lotto and other alike) or we depends on our children's and perhaps their children's too. 

How does this relate to the subject? If we intend as parents to leave inheritance to our children's children, we better be financially educated and ACT upon it while time is still in favour of us. Otherwise, no matter how we try later on, like what I said, we'll either depend on luck (lotto) or perhaps the government (pension) or on our children itself or ALL. 

Read How to Manage Cashflow: Click here
Read The Importance of Emergency Fund: Click here

Why I choose to Invest in PhilEquity Dividend Yield Fund

From the blog "understanding mutual funds fees" it was mentioned that the formula for NAVPS is;

((Assets - Liabilities))÷outstanding share.

Given this formula, part of the fund assets are the accumulated amount invested by the different people interested on the particular fund. So, given this fact, the more people interested and invest on the fund, the increase also in the fund asset value, thus, likely the NAVPS also increases.

One of the reason, why i choose to invest in PhilEquity Dividend Yield Fund is based on this logic. The fund is still young, more and more will invest in the future or, I think since inception many investors were and still keen to invest on this fund, probably because of its feature — which is to invest only in companies that regularly give dividends, meaning companies that have good income for them to afford to share part of the profit to their share holders (the so called Dividends) — plus the fund good management and the market good performance. Thus, increasing the asset value resulting in increase also in the fund NAVPS. This is probably one of the reason why in just few months the fund grows by 20 percent plus already.

Applying this logic, I encourage you to invest on this fund while the NAVPS is still cheap. Take note though on the fees involve. The earlier you get in or invest, the likely your share will have more room to increase in value.

Consider this, if I have PHP20,000 now and is able to subscribe or invest at 1.19000 NAVPS value, the total share that I can subscribe is 16,218 factoring sales load of 3.5%. If after few years the NAVPS becomes 5.000, assuming that since the time I invested I did not add up. The value of my 16,218 share will be PHP81,090. From 20K with the same amount of share become 81K.

But of course, its up to you. Aside from fees which was discuss in my other blog (understanding mutual funds fee) there are risk involve. NAVPS value may not increase as expected, in fact it might also go down. I cannot guarantee and also the fund has no years of historical evidence that it is performing. But, likely the once who manage PEFI are the same group of people who manage PDYF. If they are able to increase NAVPS for PEFI by 3000% plus to date since inception, I guess likely, they can do the same with PDYF but it's not a guarantee though.

All I can guarantee is that if we put all our money in the bank, inflation will eat up its value. Our 100K today will increase a bit in few years but, it is not enough to beat inflation. 

So, for me I better take the risk for the chance to beat inflation plus interest earnings.

-End-

Disclaimer: Study the fund first and the fees underlying it. Invest at your own risk and I'm not saying that investing in mutual funds is the only way, there are other of course.

How to Minimise the Risk in Stock Market Investing

Equity investing is one of the potentially rewarding investment and at the same time a high risk type of investment. But, is there a way to lessen the risk? 

Well, I think there is, it is called "Money Cost Averaging". It is an investing strategy where you invest fixed amount of sum at a regular interval over a long period of time. The amount of money invested at each interval remains the same over time, but the number of shares purchased varies based on the market value of the shares at the time of a purchase. When the markets are up, you buy fewer shares due to the higher cost per share. When the markets are down, the situation is reversed and you purchase a greater number of shares. It's a strategic way to invest because you buy more shares when the cost is low, so you get an average cost per share over time, meaning you don't have to invest the time and effort to monitor market movements and strategically time your investments. Having said that, this strategy then works well with mutual fund investing. This is because in mutual fund the fixed sum is simply divided with the cost per share to get the number of share bought, whilst when you are directly investing in equity, there is a minimum lot to buy depending on the cost per share. Of course, you can choose to buy or sell through odd lot but, you might find it difficult to buy or sell as few only trade in it. Using this strategy in direct equity investing will result to often have remainder on the fixed amount invested. Thus, the core concept of the strategy to which it will invest with a fixed amount at a regular interval is hardly meet. Keep in mind though that, unless the mutual fund NAVPS you invested in is increasing fast enough to compensate the investment fees involve, it might take a while before you appreciate the result. 

Below is the illustration of how money cost averaging supposed to works to lessen the risk given the 3 scenario in equity market. (Click to Enlarge)

Click the Image to Enlarge

Click the Image to Enlarge

First, when the market or the NAVPS is suppose to be in bullish trend. With this scenario, you probably wish you have invested huge amount early on so as to gain more but, keep in mind that equity market is not always in bullish trend. The gain may be reduce but then so as the risk in this scenario.

Second, when the market is suppose to be moving sideway. As seen in the illustration, even though it's moving sideway, still the result yield to be favourable.

Third, when the market is suppose to be in bearish sentiment with up trend bias. As you can see, with this scenario the result still yield to be positive.

In all the scenario, the result may seem like always favourable but this strategy requires discipline to stick to it over a long period of time. It may seem easy but when emotional thinking kicks in like say for instance when you speculate that the market is going to be bullish, you are probably tempted to invest more than the planned fixed amount to be invested at a regular basis, and when at bearish trend, fear will probably kicks in and will reduce or not fund the investment yet. So, to avoid this, keep in mind the core idea of this strategy and, most importantly study the fund you are planning to invest in, understand its feature and know the fees involve. The illustration shows only the sales load but there is another visible fee which is the exit fee, that's if you plan to withdraw your investment within the allotted holding period. 

Investing in Mutual fund in Philippines comes with a cost, Click: (Understanding Mutual Fund Fees), know how much will it affect your gain because, I'm sure for the first few months you will not appreciate your investment result as it will be dragged down by the visible fees involve, unless of course the fund you invested in grow fast enough to compensate the investment fees. You'll realise this if you monitor your investment closely factoring the fees involve and inflation. This probably is another reason why it is most advisable to invest long term in mutual fund following this strategy diligently.

Why Consumer Price Index is more Accurate in Monitoring Our Investment Against the Real Value

A sample of how CPI and Inflation are computed (Click to Blow Up)

I realised that monitoring CPI from the day we started investing is much more accurate and useful than averaging inflation rate. Say for instance, if I started investing last 2006 up to until June 2014 and if I simply average the inflation starting from that year to June 2014, I could probably get more or less 8% only. But, if I based it from CPI last 2006 to June 2014 and calculate the rate of change, the result would be 39.6% which means my total capital investment since that year lost its value by 39.6%. 

Advantages of Getting One Type of Mutual Fund in Philippines

Below are some of what I think the advantages of getting just one type good mutual fund.

1. My investment capital will not be diluted, meaning, if the NAVPS of the mutual fund I subscribe increases, my gain will be much more higher but of course the risk is that, if the NAVPS goes down the more also is my loss. That's why I study first the funds I intend to invest in so that, I can confidently choose what type of mutual fund will fit my goal and risk appetite.

2. I don't need to "mamangka sa dalawa o tatlong ilog" which means in this case if I were to endorse mutual fund, I will have to endorse only one, the one that I invested in. So that, those who might be interested and subscribe also will likely not dilute their capital investment. Though it may sound bias nevertheless, the fund that I invested in speaks for itself in terms of performance and feature. With this logic, I and those who were encourage to invest will help increase the asset of the fund, in return will also increase the value of the NAVPS therefore, likely, the value of my share will also increase. Remember the NAVPS formula ((Asset-Liabilities)÷Outstanding Share).

3. Based on how I understand mutual fund, if I get more than one but the same type of mutual fund, I am not diversifying actually. Like say for instance, If I subscribe equity funds at company "A" and equity fund also at company "B" and the same with company "C". If the equity market goes down, likely, all of the mutual funds I subscribe in will also go down since they all invest in equity. Another is that, aside I guess from their investment strategy and fund managers, one of the reason perhaps why the same type of mutual fund is better than the other one is simply because that mutual fund has built in a good reputation and is more popular. Thus, more are interested to invest therefore increasing the asset value more compare to the other mutual fund resulting to increase in NAVPS and, finally increase also on the share value.

4. If I invest in more than one MF and since, I'm working abroad and don't have the bank account on the mutual funds I subscribe in, I will have to spend extra more on the remittance fee so as to add fund separately as, every mutual fund has different account number. I find it not very convenient at all.

By the way I invest in PDYF Click the link:  Why I Choose to invest PhilEquity Dividend Yield Fund. And, since I opened the account, to date the sales load has already been more than compensated.

Understanding Mutual Funds Fees

Depending on the company and fund we plan to invest, the percentage of fees varies:

1. Sales Load- Based on the fund I invested, the applicable sales load is 3.5%, it will go down a bit once the total investment amount reach 100K and so on. This means that by default, starting from my initial investment up to all my additional investment, the actual amount creditable for NAVPS  subscription will drop by 3.5%.

Say, our initial investment is PHP20,000 and the NAVPS by this time is around 2.000. Because of the 3.5% sales load, instead of acquiring a total of 10,000 subscription, it will drop to 9,650. This process will be the same on all our additional investment irregardless whether the fund is losing or gaining. 

In conclusion, if we sum up all our investment capital, the initial value will actually drop by the sales load rate charge and it also means that our capital will need to work 3.5% more for it to just break even.

This is just one of the factor that need to be considered before investing in mutual funds. The question I guess that we need to ask ourselves before we invest on a certain fund is whether it increases historically to a certain percentage where the sales load is way more than just being compensated.

2. Exit Fees - In the mutual fund that I invested, it charge 2% if I withdraw an amount within 1 year and 1.5% after 1 year to 2 years. Only after the 2nd year, if I plan to withdraw from my investment I won't be charge for the exit fee.

Should it happen that the fund is losing and we need to withdraw the amount within the two years of holding period, we're still going to be charged. That exit fee will add up to our loses.

3. Management Fee - The NAVPS value is derived from the formula:

 (Assets - Liabilities) ÷ outstanding shares ; this is calculated everyday. The management fee based on the mutual fund I invested is calculated as part of the liabilities. So, if the say they charge 1.5% management fee annually, in mathematical terms it can be expressed as: 

(Assets - (All other Liabilities+1.5% of Assets))÷outstanding shares. 

This is charged everyday irregardless whether the fund is losing or not but, I guess we won't feel this fee that much since it's part of the NAVPS computation where subscription is also based on.

Bottom line: Understand these fees before investing, these are usually shown in the mutual fund fact. By doing so, we can decide properly which type of fund we're going to subscribe that can possibly compensate these investment fees plus earnings .Take note though, I haven't factored in the effect of inflation, which is one or perhaps the most important factor in choosing the right mutual fund.

Disclaimer: This may not necessarily applicable to all mutual funds available in Philippines, this is based on the fund I invested which is from Philequity, the Dividend Yield Fund.

What We Need to Ask Ourselves when Assessing our Cashflow Considering the Increase in Price of Goods in Philippines

Cumulative Inflation Rate In Philippines From DEC 2006

From this illustration, at least 5 question we have to ask ourselves when assessing our cash flow.

• If our cash inflow is based alone on salary and in reference to the day we start working, did our salary increases more than the rate of which the price of goods also increases? 
• From the day we decide to put our money in the bank, did it grow sufficient enough to compensate the cumulative increase also in price of basic goods? 
• In reference to the day we start investing, is it already earning more than the cumulative increase in price of goods from the day we start investing? 
• Did the net income of our other source of income such as business increases more than at least the rate of increase in price of basic goods? 
• What are the available investment vehicle today that can possibly outweigh inflation and compensate all other investment fees? 

Perhaps, by asking these questions when assessing our cash flow planning, we can project somehow the needed earning or cash inflow in order to compensate one of the unavoidable economic factor "The Inflation". Of course, it's not enough to just realized this fact, I guess the hardest part when we realize something is actually whether we act upon that realization. Otherwise, it is as good as just a stored knowledge.

The Third Step: Emergency Fund, The Importance of It

Why do we need to understand the importance of EMERGENCY FUND before proceeding to investment?

Perhaps, one of the reason is to avoid touching our investment intended for long term. 

Consider this, let's assume we manage to make our cash flow positive and able to manage our debt but then decided to jump right away to long investing without really understanding the importance of EMERGENCY FUND. And, let's assume that at this time, we decided and make it a goal to retire with sufficient savings to cover for our own expenses at the age of 65. 

During the 12 years of working and investing we were satisfied with our investments earning. Assuming that our investment from PHP100,000 at an average of 12% compound interest ballooned to 400,000. However, about this time an unexpected emergency happen, perhaps we lost our job or one of family or ourselves got sick. 

Where do you think is obvious choice to fund our emergency? Say, we only needed PHP300,000 to settle our emergency and decided to get that from our investment earning. We didn't lose, right? Since we still manage to retain our capital. 

Yes, indeed our capital will be retained at this point in time but, our biggest lose will be the 12 years of letting our money compound for itself. At that point in time, we just LOSE 12 YEARS towards our retirement age goal.

Another obvious importance of emergency fund is that it will serve as our buffer fund whenever we encounter an unexpected circumstance in life such as temporal lose of Job or minor medical needs that requires immediate liquidation of cash. This is why it is advise to just place this fund in a savings account for easy liquidation, we just need around 3-6 months of our expenses to be place in a savings account for our buffer fund. Now, for major emergencies this fund may not be enough especially like hospitalisation need or expenses, we certainly don't want to top up this fund using credit to settle such emergencies. It would be wise therefore for us to get a medical insurance, this will back up our emergency fund or, perhaps our emergency fund will not be touch as usually, if we know how to pick a medical insurance properly, it would be enough to cover such emergencies. Once the 3-6 months worth of expenses has been save in a savings account, the rest should be diversified to other investment vehicle like say mutual fund, property, insurance, stocks and business.

Click: Different Investment Vehicle Available 

Quotes by Warren Buffett On:

Earning: “Never depend on single income. Make investment to create a second source.”

Success: “You do things when the opportunities come along. I’ve had periods in my life when I’ve had a bundle of ideas come along, and I’ve had long dry spells. If I get an idea next week, I’ll do something. If not, I won’t do a damn thing.”

Spending: “If you buy things you do not need, soon you will have to sell things you need.”

Saving: “Do not save what is left after spending, but spend what is left after saving.”

Risk: “Never test the depth of river with both the feet.”Investment: “Do not put all your eggs in one basket.”

Expectation: “Honesty is very expensive gift. Do not expect it from cheap people.”

Humanity: “If you’re in the luckiest 1 per cent of humanity, you owe it to the rest of humanity to think about the other 99 percent.”

Different Type of Investment Vehicle

Below are some of the investment vehicle available in Philippines that I'm familiar with.

1. Savings Account - It is advise that 3-6 months of our expenses or salary should be reserve for emergency fund. Placing it in a savings account should be ideal since it's easy to withdraw incase of emergency. Though the real value may be dragged by inflation, at least we are sure that however small is the interest, it's gaining somehow and it serve the purpose. The rest should be diversified to other investment vehicle. (See: Emergency Fund, The Importance of it)

2. Insurance- This serve as a protection against uncertainty of life not for us, but for our dependents while our assets are not yet sufficient enough to cover for their needs. Now a days, Insurances offer different packages. Some offer a combination of life insurance, healthcare and investment where, after certain period in time it will yield interest, it may not be that much but still will serve the purpose plus additional benefit. (See: Insurance, Making Sense of it)

3. Real Estate - An investment that I guess expensive but worth it. We all needs a place we can call our own home whereby, should the zonal value of the property goes up at least we have the option to sell it, or perhaps rent it out later to generate passive income or it can be part of our will to be pass on to our next generation. Take note though, unless our cashflow is way more than enough to venture on property investing alone, we better just get a property for the purpose of buying ourselves our own home, this is because, gaining from property requires a lot of time moreover, the capital venture requires huge amount. Installment for downpayment and amortisation may be sufficient but it's not all that there is in a property investing. There maybe a lot of unexpected expenses that we are not aware of after buying, before handover or even when already handover. Or, should we plan to rent it out later on, the monthly rental payment may not be sufficient to cover the amortisation and other fees or worst we might not able or will have a hard time finding someone to rent the property. (See: Checklist Before Buying Real State in the Philippines)

4. Mutual Funds - The idea of mutual funds if we think of it is really simple. It’s an accumulation of funds via different people in order to come up with a lump sum amount to be invested in stocks, bonds, fixed security and others. These funds are within the care of mutual fund managers and regulated by SEC. The idea is the same as with banks, SSS, PAG-IBIG, cooperative and alikes , only that they provide different type of services and return. Depending on which company and what type of funds we are getting, the gain from it can actually be rewarding as historically, it earns way more than beating the inflation rate. Besides, earning from mutual funds are tax free. Take note though that there are certain fees such as sales load, management fees and exit fees (See: Understanding Mutual Fund Fees) which we need to understand before investing because, these will drag down our suppose gain and will add up to our loses as these are charged whether the funds are losing or gaining.

5. Stock Market - This is when we decide to put our investment in equity via our own hands. No need to pay fees such as sales load, management or exit fees. But, if we think that it's as simple as buy and sell without really knowing what we are buying or when to buy and to sell. Well, kinda but, with this kind of approach we probably are gambling. It really is not as simple as we think, we have to have an idea at least how to read the balance sheets of the companies we are interested in and how to read technical indicators. One thing I realised in stock market is that, it's not all about the company performance but also about the psychological and emotional behaviour of each and everyone involve or participants of the stock market. (See: Psychology in Stock Market)

6. Business- Probably a good source of passive income but, it requires a certain potential idea or concept where consumers are likely willing to avail or buy and, it needs perhaps a huge amount of capital to realise that idea or concept.

So far, these are the different type of investments vehicle that I'm familiar with where we can possibly diversify our investments.

-end-

Note: These are just my own impression of those investment vehicles that I'm familiar with.

X-CURVE FINANCIAL CONCEPT DISSECTED

Let me share to you a concept we called the X- Curve, this concept basically simplifies our personal financial planning. 

Lets start with this line and call it our age line, the left side will be our  younger years and right as our older years. Now, during our younger years which probably where we at now. This is the point in time where we usually have huge responsibility, and also the point in time where we usually work so hard for the money, our paycheck or income usually goes to these responsibilities and basic needs such as food, shelter, clothing. About this time also we start to build our own family, we get married  have children and for that we oftentimes acquire Debt, Loans and mortgages. Education for our children is also part of that big responsibility, same as family health care of course. 

The red curve line as shown is our responsibility line which should decrease the older we get. Ideally, our responsibility such as debt, mortgages, children education should have been fulfilled by this time to such that we have no more responsibility other than our basic needs. During our younger years, usually we have no savings because as I said, at this point in time we have big responsibility and that our income are often enough to cope up with this responsibilities. The green curve line as shown is our wealth or saving  line, ideally, our wealth if we build it wisely and correctly should increase over time. And when we get older, we would want to have big savings. At this point in time, what we wanted is that money should already be working for us. Meaning, we live on interest, exceedingly enough to cover our basic needs such as food, shelter and clothing. Even more than enough to cover our retirement, healthcare and should already be debt free. 

Going back to our younger years, at this time, we are less secure. As life is full of uncertainty, anything could happen along the way, we could lose our job or get sick. That is why we need to create an emergency fund that will serve as our contingency plan whenever those kind of situation occur. As recommended by most financial adviser, 3-6 months of our salary should be our emergency fund. And this fund should be easy to liquidate. 

Another problem while in the process of building wealth are facing the so called two "if's" of life. What if, we die to soon? Most often than not, we are building our wealth not for us but for those who matters to us. And in that sense while we are building our wealth, if we don't get a protection not for ourselves but for them and something unfortunate happen to us, we might just end up defeating our own purpose . We should make sure then, that the life of those people who matter to us if something unfortunate happen should still continue as we intended it to be, after all, they are our strong emotional reason why we have strong desire to be truly rich. Unless of course, we intended to be rich for our sake alone, in that case, it's pointless to get an insurance because, though you are insured, who's going to benefit if we already perish ? Right? We came in to this world with nothing and surely, the only certain in this life is that we will also exit empty handed. No argument with that for sure. 

Another "if" of life is what if we live to long? This time we should have prepared a long term  investment. If we are to invest long term, it is important to consider economic factors such as Inflation and interest rate, because if we don't consider this factors especially inflation rate and invest with a return less than this rate, our investment intended for long term will depreciate overtime. Therefore, choose investment vehicle that will yield higher rate than inflation rate, and I'm pretty sure bank is not among of them. 

Long term investment is intended for us to be secure and cover ourselves  from  our living expenses after our retirement exceedingly enough so that we don't disturb the financial planning of those people who matters around us. Lucky for us, if our children have more than enough to cover for our living expenses. But if they are struggling financially, we might end up in the home for the aged, telling others about our wits, exploits, experiences and profession during our younger years and yet, all but history and at the end of the day, we still can't cover our own expenses. We don't want that to happen, right?

Basically, the X-curve tells us to work hard now and relax later. It doesn't mean we deprived ourselves from enjoying sometime.  But at least, keep track our expenses and know our priorities. One question though, do you think this is the reality now? Well, for some, Yes! Those were the wealthy people who realize early how to build wealth wisely and correctly over time. Most often than not, like what I said earlier, our senior citizen at the age where they are force to retire have no enough money to cover for their living expenses especially healthcare. Do you agree that if we live to long our health will eventually fade? Do you also agree that health care will be a very big chunk on our living expenses when we get old? Who do you want to pay for it? Do you want to depend on our  children later on? Do you expect that your responsibility now to your children financially be returned later on as if your children owe you?  For me, I will never view my responsibility to them as such and, I definitely don't want to disturb their personal financial planning just because I cannot cover my own expenses. It's definitely better for me to take care of myself financially later on. But, how Am I going to that? 

This is where the IMG's 6 steps to financial security comes to play.

Life Insurance, Making Sense of it

First, I want to ask 2 question:

Does anyone of you here have no dependents (wife/children/parents) and enough asset to pay off your debt and the cost of dying ( funeral, estate lawyer's fees, etc.)?

How about with dependents (wife/children/parents) and have enough assets to provide for them after death (investments, trusts, etc.).

If anyone of you are in this situation, insurance is probably an unnecessary expense for you

However, if we have dependents (especially if we are the primary provider) or significant debts that outweigh our assets, then we likely will need insurance to ensure that our dependents are looked after if something happens to us.

Allow me to show you a sample on how an insurance suppose to help our dependents and how much ideally should be in our policy.

Say we are the primary provider at the time of accident and unfortunately the total balance amount to be paid in our mortgages and car loan are around 500K and 100K respectively.

At this point in time, we would wish that the total debt balance has been paid off. We certainly don't want the burden to be pass on to our dependents right? Therefore, we would wish that our lump sum policy coverage is at least 600K (add a little bit more to cover the debt interest). This only covers our debt alone.

How about our income, we surely wish that our dependents after the accident will have continues stream of cash inflow, right?

Now,  say we have a net income amounting  600K annually. We would wish that this cash amount will continue to flow in yearly right? So, we would wish that our dependents will invest in such that the investment will yield 600K per year. If we don't trust that our dependents will invest, we might want to hire trustees or financial planners to do it for them. Say, our dependents/trustees/financial planners somehow knew where to invest that will possibly yield 10% every year. To replace our income, they will need at least 6M when the policy pay off and a little bit more to guard against inflation. This 6M if invested at 10% annually will yield 600K yearly, enough to replace the lost income.

So now, to cover our total debt and to replace our income we will need at least a policy that will pay off at least 6.6M. 6M for investment that will replace the income and 600K to payoff the total debt.

These are just 2 factors in considering the amount of policy we need to have, others would be like when we want our child to study in a university which we need to consider the cost also. Say we need 3M for his/her study. We would wish to add it up to our policy.

Maybe now, insurance make sense to us. But for me, we don't need a life insurance that need to pay premiums throughout our lifetime. So long as we strive to be financially secured someday, what we should get is a renewable term insurance. Remember my question number 2? That's the situation we intend to be in. Our goal is to increase our assets in a certain period where these assets are sufficient or even more than enough to provide for our dependents. When we reach this point in time in His grace, insurance is the least of our worries. By this time, our worries should already be diverted on how to make sure that these assets will be pass on rightfully to our dependents otherwise it will be all for nothing. 

-end-