Bank Deposit Interest Rates vs. Inflation Rates in the Philippines

Bank Deposit Rates vs. Inflation Rates in the Philippines
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Note: This was previously published in my other blog that I had already taken down.

Earlier while we’re having lunch in the Limerick (in Ireland) office, our conversation flew into financial matters and I was asked, “How much is the interest rates of banks in the Philippines?”. I struggled to say anything because I was always engrossed with Mutual Fund growth rates instead of the bank deposit rates.

I kept on blabbing, saying random small numbers that would cross my mind.

I have ignored bank interest rates because I know putting my money in the bank won’t do outstanding growth for my money. Why, you ask. Because dearie, the inflation rate of our country is double the largest deposit interest rate, which only applies if you have leave Php10,000,000.00 deposited in your bank. And, it should be untouched for a year.

So, again, I mumbled a weak blah-blah percent while thinking about the interest that is in question. Is it a loan interest? Bank deposit interest? Hah. My weakness is me talking about things that I don’t really really know. And there were foreigners with us — an Indian, a Congolese, an Irish and Filipinos.

Good thing my fellow Pinoy who is working there was able to answer that for me. He said 1%.

(Sigh of relief.)

Okay, I could have contributed much to the conversation if we’re talking about Life Insurance and Mutual Funds.

My intended ignorance was further supported by Randell Tiongson‘s Facebook status a month back. To quote,

 

So, yeah, I may have gone overboard in ignoring the deposit rates of banks here in the Philippines, but now I should be at least aware. After all, I am keeping my emergency fund in one of these banks. And, I might as well share that with you guys here.

Before you go dizzy staring at table, please know that you can SORT them out by typing in the bank or account type on the Search button on the upper right of the tables. Thank you! 

This is a compilation that I made based on the official websites of the identified banks. I’ll try to keep them updated as possible. For now, these are the interest rates as of January 2015.

Bank Deposit Interest Rates in the Philippines

BankAccount TypeInitial Deposit (Php)Minimum Monthly Amount (Php)Minimum Monthly Amount to Earn Interest (Php)Interest Rates
Bank of the Philippine IslandsSavings Account500.003,000.005,000.000.25%
BPI Family Savings BankSavings Account500.0010,000.003,000.000.50%
Banco de OroSavings Account2,000.002,000.005,000.000.25%

East West BankSavings Account2,000.002,000.0010,000.000.25%
Metro BankSavings Account2,000.002,000.0010,000.000.25%
Banco de OroPassbook Savings5,000.0010,000.0010,000.000.25%
East West BankPassbook Savings5,000.005,000.0010,000.000.25%
BPI Family Savings BankPassbook Savings10,000.0010,000.0025,000.000.50%
Metro BankPassbook Savings10,000.0010,000.0010,000.000.25%
Bank of the Philippine IslandsPassbook Savings10,000.0010,000.0025,000.000.25%
Union BankSavings Account25,000.0025,000.0025,000.000.10%

Time Deposit Interest Rates in the Philippines

Meanwhile, here are the time deposit rates here in the Philippines.

BankPrincipal Range (Php)~30 Days~60 Days~90 Days~180 Days~360 Days
Bank of the Philippine Islands50K to < 100K0.5%0.5%0.5%0.75%0.75%
Bank of the Philippine Islands100K to < 1 M0.625%0.625%0.625%0.875%0.875%
Bank of the Philippine Islands1 M to < 5 MM0.625%0.625%0.625%0.875%0.875%
Bank of the Philippine Islands5 MM and over0.75%0.75%0.75%1.00%1.00%
BPI Family Savings Bank50K to < 100K0.75%0.75%0.75%1.00%1.00%
BPI Family Savings Bank100K to < 1 M0.875%0.875%0.875%1.125%1.125%
BPI Family Savings Bank1 M to < 5 MM1.00%1.00%1.00%1.25%1.25%
BPI Family Savings Bank5 MM and over1.125%1.125%1.125%1.375%1.375%
Banco De Oro1k to <50k0.25%0.25%0.25%0.50%0.50%
Banco De Oro50k to <100k0.375%0.375%0.375%0.625%0.625%
Banco De Oro100k to <500k0.50%0.50%0.50%0.750%0.750%
Banco De Oro500k to <1M0.625%0.625%0.625%0.875%0.875%
Banco De Oro1M to <5M0.750%0.750%0.750%1.00%1.00%
Banco De Oro5M and over0.875%0.875%0.875%1.125%1.125%
Metro Bank10k to <50k0.250% 0.250% 0.250% 0.500%0.500%
Metro Bank50k to <200k0.250% 0.500%0.500%0.750%
0.750%
Metro Bank200k to <500k0.375%0.625%0.625%0.875%0.875%
Metro Bank500k to <1M0.500% 0.750% 0.750% 1.000%1.000%
Metro Bank1M to <5M0.625%0.875% 0.875% 1.125%1.125%
Metro Bank5M to <10M0.750% 1.000% 1.000% 1.25%1.25%
Metro Bank10M and over0.875% 1.125%1.125%1.375%1.375%
East West Bank10,000.00 (minimum)Based on prevailing market ratesBased on prevailing market ratesBased on prevailing market ratesBased on prevailing market ratesBased on prevailing market rates
Union Bank50,000 (minimum)Fixed for chosen placement term; subject to rate adjustments if pre-terminatedFixed for chosen placement term; subject to rate adjustmentsFixed for chosen placement term; subject to rate adjustmentsFixed for chosen placement term; subject to rate adjustmentsFixed for chosen placement term; subject to rate adjustments

Inflation Rates in the Philippines

You know what inflation rate is, right? It’s the sustained increase in the general level of prices of goods and percentages, measured as a yearly percentage increase.

Our inflation rate has become steadier to 2%-4.5% over the last four years. It was worse back in 2009. It was around 7%. The lower the inflation rate is, the better. We only have an inflation rate of only  2.3% this 2015.

source: tradingeconomics.com

The Analysis

If you compare the highest deposit rate in the banks (0.50% for savings, 1.375% for a 5-M to 10-M time deposit), it would still not be even equal to the lowest inflation recorded for the past few years (2.3%)!

If you’re keeping all of your money in a jug, it’s like you’re letting water out of that jug faster than you’re letting the water in. There’ll come a time when your jug will become empty.

If you put your money in the bank, it will just lose its value in there. Don’t commit this financial mistake.

The Question, You Think About It


Will you still place all of your money in the bank now?  Now that you have seen the actual deposit rates of the banks versus the inflation rate, would you still feel safe keeping all of your money in the banks?

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How To Set Financial Goals Effectively + FREE Printable

How to Set Financial Goals Effectively
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How to Set Financial Goals Effectively

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When I ask people why do they save, they would always say, “Just because” or “Wala lang” (in Filipino).

That bothers me a bit because not having a reason for doing something is:

  • Not motivational (You are not focused on your goal and you may end up not achieving it.)
  • Ineffective (You may waste time, resources and money in achieving your goal)
  • Superficial (You are not serious about it.)

Are you sure you badly want to achieve your goals? Eyebrow raising look here

I must admit that I was one of these people before. I belong to the clan of people who dream of achieving financial goals, but not setting them effectively or even knowing what they are in the first place.

When I became financially literate, I have learned how to set my financial goals effectively. I learned to define what my financial goals are, tie each of them with a purpose, and plan on how to achieve them. Because I don’t want my goals to remain goals forever.

I just want to share with you how I set my financial goals. If you’ve back read my blog, you would know that I am a sucker of lists. I am a list freak. I cannot proceed with my day in the office without listing everything, well, almost everything that I need to do for the day.

So, right now I’m about to spill my secrets on how to set financial goals effectively. So hush and listen, or er, read.

List your goals


Oh you must have known! I’ll ask you to list your goals down as the first step. Listing is always the first thing to do. Because I said so.

Come on, you must have at least 3 major financial goals in mind. Reflect on thy life. I’ll give you a minute.

For me, I started with 3 major financial goals — emergency fund, healthcare fund and my retirement plan. Make that 4. I had my wedding fund in mind too. I am not engaged yet though. But I do intend to get married. And since I am Miss Ready, I figured I had to save a portion of our wedding fund.

Dissect your goal


You have listed your goals. Brilliant! How does it sound like?

Is it a plain, old, boring “Save a million pesos”?

Saving a million is nice. But why? What do you want it for? Where will you use it?

Again, people whom I’ve talked to (those that didn’t have an idea why they want to save an unknown amount of money) want to make that bunch of money grow just because. It’s confusing, eh? And maybe a little illogical?

So, you. Get back to your goals and dissect each.

It should have the following basic elements:

  • How much?
  • What for?
  • When will you use it?

Here are examples of well-written goals according to me (financial planner wanna be):

  • Start this month to save up Php 100,000 by April 2015 for my 19th birthday party (as if)
  • Pay Php 5,500 for my Kaiser Healthcare Insurance quarterly starting Dec. 2014 for 7 years (better to start early)
  • Secure 3 months (equivalent to Php 90,000) of emergency fund by September 2015

Inspired now, darling? Note that the above goals are fictional. Okay? Good.

Now, work on your own.

Plan on the ‘How’


Now this is the important part. Start with your goal number one. Let’s take my fictional goal for my ahem 19th birthday party: Start this month to save up Php 100,000 by April 2015 for my 19th birthday party

Planning on the ‘how':

If it’s November 2014 now, I’ll only have 5 months to save up for the party. If I need a 100,000 for that, I should save (100,000/5 = 20,000) 20,000 per month or 10,000 bi-weekly or 667 per day. So how could I save 667 per day? That’s my problem.

When you have already determined the breakdown amount that you need to save on for a specific time span, you can start planning the how.

This topic could stretch as there are several ways on working the ‘How’ out. Normally, I would recommend the following vehicles in achieving your money goals:

  • Short-Term Goals (1 yr. below) – Save up plus side hustle
  • Medium-Term Goals (2-5 yrs) – Mutual Fund (Balanced ones)
  • Long-Term Goals (5 yrs +) – Mutual Fund (Equity) or Create a Business

Hunt them down


If you’re a serial dream chaser, you know that it’s not good to just let your list sit. You need to cross the things on your list one by one until nothing is left. It’s good to track your progress. What I do to hunt my financial goals down is to include a financial section every time I join The Nectar Collective’s Weekly Wishes.

As for my financial evaluations, I have trackers on Excel. You can do your own tracking. There are financial apps and software out there like Mint, but I prefer doing everything on my own.

I hope you have learned something from this blah. Now, here’s a financial goal setting worksheet for you. Consider it a gift because you get to the end of my post. *wink*


FINANCIAL GOALS LIST

[Free to Download]

To make your list more customized, insert your name on the header just before the ‘s.

Financial Goal List


Do you have your financial goals set yet?
If no, did this post wanna make you draft one? If yes, how did you set your goals?

10 Money Mistakes I Have Learned From My Mother — And How You Can Avoid Them

Girl Crying over financial Mistakes
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Girl Crying over financial Mistakes

Growing up, I never had any issues with money. My father was a seaman, the captain of the ship even. My mother was a housewife and I was more than pampered with the addition of the care I receive from my two single aunts. Life was a breeze and everything was a-okay. I got Barbie doll houses. We go to Duty Free Philippines to shop for heaps and heaps of chocolates for me, my cousin and our other relatives. I went to a private school in elementary. I took ballet classes and art classes and speech classes. I was happy.

However, after he died, that’s where the money problems sprouted. I was only sixteen, never cared about anything but school and my childhood crushes. I was faced with the other persona of life, the cruel, difficult, b*tchy one. Nine years later, I have plenty of financial mistakes I learned from my  family. I used to think it was okay, but a financial congress and non-stop loans later, I realized that NO, IT WAS NOT OKAY.


So, let me share these money mistakes me, my family and even my extended family made. Money problems root from the family. One cannot just start with himself or herself.

Disclaimer: I loooove my family. I just feel obliged to correct the mistakes that we did and to help spread this as to make you guys aware of what not to do and what needs to be done with your finances. 


1. It’s okay not to save now.

I always went with my mother when she is going to the bank. I always sit on one of those bank chairs while she fills out the withdrawal form. It was only after my dad’s death when I sort of knew what she was doing in the bank. She was always withdrawing the allotment from my dad and never let cash flow in. Of course, we didn’t have anything when my dad died.

My counter attack: Build Emergency Fund


2. It’s okay to spend on the “little things”.

Mom would always buy things that we don’t need. Jewelry. Furniture. Clothes. I even spend money on unplanned items when we’re together just because it looks so great on me. I forgot that she was my mom and everything looks great on me.

Now that I am a grown up, earning my own money, I have formed this habit of spending on the “little things”, even online. I bought books from booksales that I haven’t even read until now. I had purchased domains, the website of which I haven’t really worked on. I have always convinced myself that they were investments.

My counter attack: Budgeting, Knowing the Right Investments


3. You can always look for money.

This third mistake is the reason why my mom always believed items one and two. She was too trusting enough with a solo income stream from my dad. Seamen make lot of money and this is the very reason I deem why my mom was beginning to feel safe. She always had hundreds of thousands (I suppose) being deposited in her bank that she doesn’t need to worry where to get the next week’s food budget.

My counter attack: Create multiple income streams


  1. We cannot live without debts.

Even though my dad was a seaman, we always have debts and when I go back thinking about it, I cannot fathom why we did. I always thought, as a child, that we were okay and all that. Even up until now, she still believes that one cannot live without asking a little (financial) help from others. I beg to disagree on that though.

My counter attack: Clean up debts and avoid them


  1. Zero liquid investment policy is a good policy.

I would have known by now if my parents engaged in the stock market or if they had any mutual funds. But, no. Sadly, they weren’t. They should have taught me if they were engrossed with it and considered it as a life skill. I think a liquid investment should have a hug part of your investment portfolio. You could easily convert it to cash compared to other assets (real estate, precious metals).

My counter attack: Invest in Mutual Funds


  1. Helping others is an investment.

According to my mother, the reason why we didn’t have enough money to get us by during the hard times was that she and my dad were fond of helping our other relatives back when they were still in the abundant stage. They gave out money for education, for career start-ups, for Christmas gifts.

Unfortunately, this is the one investment that my parents have considered. Not that I have something against giving, but giving away too much ain’t advisable. How could you sustain helping others when you cannot sustain and grow your own finances? If you help others, don’t expect for them to give back. Like they say, let others borrow the amount of money that you can afford losing. You’ll never have guarantee that it’ll be given back.

My counter attack: Limit financial help to others


  1. Assets need not be protected.

Along with the death of my dad was the courage to let go of our three-story house with a rooftop. The house was almost finished when he died, but the banking loans aren’t that’s why we have to find buyers for the house and negotiate with them in order for us to stay in the house while we prepare to move out. My mom has found buyers for the house with a bad bad deal. Cheap with abusive propositions. The third floor was rented and the “new owners” already assumed the right to that mortgage even if they were just even starting to pay for the house. I really don’t know real estate laws, but I still thought it was unfair. Will update this is I found a law soon.

My counter attack: Insure non-life assets


  1. Insurance isn’t a necessity.

Dad died during his vacation at home and his company haven’t given a single dime as per my mom. I believe we were just innocent and clueless about life insurances back then. But now that I have encountered a few insurance companies, I am convinced that my dad should have been insured in one way or another. One friend tipped me to look for any signs of insurance papers on my dad’s documents. Haven’t done that though.

Dad’s death left us with no money on hand and a house to pay for. Yes, we were broke, but we survived. Thanks to my mom’s life survival skills, she mustered up the courage to be a real estate agent. And thanks to my OWWA scholarship grant which pulled me through college.

My counter attack: Purchase insurance


  1. Healthcare isn’t necessary either.

I have fully realized the value of healthcare when I started paying for my mom’s premium through my company’s HMO. I am paying more than 50% of it; my company sponsors only a little of its employers’ extended family’s healthcare. I was paying almost Php800 every payday for it, Php1,600 every month, a little less than Php20,000 annually. Mom never uses it. She’s already a senior citizen, but she’s healthy. So, the Php20,000 per year is like a giveaway to the healthcare company. I am losing Php20,000 every year, but I still continue in availing it because you’ll never know what tomorrow will bring. What if my mom would need some operation? What if she gets hospitalized? Where will I get the money for it knowing that I am an only child? I only depend on myself for our finances. Better be prepared than spend a bigger amount, right? To add to this, I still have my two aunts who are nearing the 60-ish age. They don’t have work and they would certainly need some old-age care. But this is another story.

My counter attack: Purchase long-term healthcare even if company shoulders short-term healthcare.


10. Planning your finances is not important.

My mom and I never had any of those financial planning talks. We talked about money in a different way. We talked about our debts and if she is running low on cash already. We used to live in the now moment and we never worry about tomorrow’s finances. Her motto is that God always provides. I believe in that one too, but I bet He would appreciate it if we plan on how we would allocate the financial blessings that He has bestowed upon us too. 

My counter attack: Build a solid financial plan

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Are you a personal finance freak like me? Or still planning to be one?

Let’s connect!


Loveisamutt Personal Finance ChitChats
Let’s work our way to
creating our own dream jobs,
retiring early,
pursuing our passions for the rest of our lives
and inspiring one another.
Cheers!
If you haven’t started yet, but you’re willing to give your own financial odyssey a try, then by all means,
Pursue-your-dreams-now

 


How to Waive BPI Credit Card Annual Fee

Credit Card Savings
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Credit Card Savings

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I am one of those financial advocates who isn’t allergic to credit cards. In fact, I recommend them, provided that you know how to use them.

You can actually save money, get free stuff or use “free” money when you use credit cards. However, I strongly urge you to waive off that credit card fee. It’s something that you don’t have to pay!

What is a Credit Card Annual Fee?

The annual fee is the amount your bank charge you once a year for using your credit card. They will not tell you that they have charged you for it. You will just notice that your monthly charges is more than you expect it to be. That is, if you are diligent enough to check your monthly statement accounts.

It’s great if the benefits you have reaped that year, if translated to currency, exceed the annual fee; it’s a bummer if not. So, it’s better to try not to pay these credit card fees.

How to Waive Your BPI Credit Card Annual Fee?


Upon checking my due last month, I saw a larger amount than my expected amount to pay. So, I checked my statement and saw the dreaded “Annual Membership Fee”. It’s Php1,500.00 for my blue BPI card. So, I surveyed — the internet, my colleagues, other blogs — on how they were able to waive off that fee. These were how they got away with it.

By calling the BPI hotline — 89-100.

Calling the BPI hotline proves to be a successful method in waiving the annual fee. Some of my officemates told me to do it, but I can’t connect using our office phone and I’m too lazy busy to find an outside line.

Here are tips on how to do it (basing on my research and tips from friends):

  • Tell them that you want to waive your credit card fee because your budget is tight that month.
  • If your request is denied, say your thanks, but try calling again. A different representative will entertain you for sure. If he/she is in a good mood, then you are lucky.
  • If you called twice and still they wouldn’t waive your fee, then tell the representative that your “other” credit cards don’t charge you and you will cancel your credit card subscription with them. This is like the last resort because what if that is your only credit card and the representative will really cancel your card. Bye bye credit card?

By emailing a request to expressonline@bpi.com.ph

  • I’ve seen a post that you could just e-mail the bank. If you’re not the talking type, then you could do this instead.

 By sending BPI a (love)letter

This is the method which worked for me. I went to a branch near my office and asked them how can I waive BPI credit card annual fee. Below is the letter which I have sent, of course, with the sensitive details replaced.

You can download the copy and use it if you wish. Just be sure to include the following important details:

  1. Your name
  2. Your credit card type
  3. Your credit card number
  4. The annual fee amount
  5. The reason why you cannot (or won’t) pay the annual fee (This is kind of a DUH question, but yes, you have to state it in written form.)

Credit Card Fees Letter

The representative who got my letter told me to wait for my next bank statement, but after a few  days, I have already seen the refund on my BPI Expressonline. Yipee! It’s only 50% though. I don’t know why. Should I have bothered calling them again? Maybe. The people whom I talked to told me that the first year often gets denied for the annual fee waive request.

Nevertheless, I was glad that they have refunded Php750.00 on my account. It was together with my tax-free shopping refund, so I was kind of glad that day. Maybe I’ll call them next year if they’ll charge me again.

And, oh, don’t offer to trade your points with their waive grant. They haven’t touched my points. They better don’t.


Have you tried waiving your credit card annual fee?

Or have you any more tips for me? Or perhaps some questions? Drop them all in the comment section below!


Are you a personal finance freak like me? Or still planning to be one?

Let’s connect!


Loveisamutt Personal Finance ChitChats
Let’s work our way to
creating our own dream jobs,
retiring early,
pursuing our passions for the rest of our lives
and inspiring one another.
Cheers!
If you haven’t started yet, but you’re willing to give your own financial odyssey a try, then by all means, start now.
Get started with a FREE Financial Literacy Seminar.

Pursue-your-dreams-now

 


Starting an Emergency Fund with Your Soon-to-be Partner

Couple Emergency Fund
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It has been a while since my boyfriend and was prodding down the road towards financial freedom. We are already pretty close to reaching our initial goal for our emergency fund, but I always thought that the amount was a little small for us. It’s just like a three and a half times our monthly income (our income is almost similar since we work in the same company).

But, he would tell me that the amount is fine since there’s two of us in that account. He said I was literally taking the financial rule book. He said

.

When I thought of it, he has some points right in there, but I still believed that we have to increase the amount of our emergency fund soon. Let’s go dissect our emergency fund setting here, shall we.

Couple Emergency Fund

What is an Emergency Fund?

An emergency fund is this stash of money you get if you are caught up in an emergency. And by emergency, I mean the real life emergency — you got laid off, your mom suddenly needs extra medication money or any similar income-threatening issue.

No, “emergency” clothes or car shopping doesn’t count. Do you really have to ask that?

Also, the emergency fund should be accessible at all times so you could get the money in the earliest time possible and in the most convenient way possible.

You should either place it in ATM banks or save-up accounts. In our case, we placed it in a pass book of a bank which have branches located inside the malls. It is an OR JOINT pass book account.

Why do we need to have one?

The emergency fund buffers a lot of things. It can:

  • protect our assets from being pulled out when there’s an emergency
  • allow us to live the same lifestyle that we have for a couple of months during job transitions
  • alleviate our stress when the real emergency comes

Why did we decide to put our fund into one account?

Basically because we wanted to speed up our finance building and we have other priorities on the line. We also figured that a relationship is a give-and-take process and if one is in the pit, the other could just raise the needy one up. We did just that a couple of times already (financially speaking) and it went well. And, it is most unlikely that we will be having both emergencies at the same time, so we both agreed that 3.5 months x monthly income is enough. For now.

I still have plans of doubling our emergency fund in the near future after some priorities have been accomplished and when our responsibilities do widen (think of future kids). I am also thinking of tweaking the way we store our emergency fund. This brings us to the next point of this discussion.

Tweaking out our Emergency Fund

Remember I told you how we would argue that we should not place a whole lot of money in our emergency fund because it doesn’t grow? Well, I had this idea when I was browsing through some financial articles. (Shame for not remembering the link). We could finish saving up to the amount that we have agreed on our passbook. That amount would be like equivalent to 60% of our ideal emergency fund. The other 40% can be placed in another bank’s UITF. That UITF is a money market account, the safer ones. This account has no holding period so I could just withdraw the amount anytime that I want it.

So again, let me repeat the important tweak notes that you could use for yourself:

Divide your emergency fund into two — a savings account and a bond fund.

A save-up account can be a good place for the second portion of your emergency fund as it offers life insurance basing on the amount that you have on that account. (Read more: BPI Save-up account)

A unnecessarily large amount of emergency fund can harm you too. It gives little yield when placed in a safe place like your ATM account so you’re like losing money when you just leave extra cash in there.

Would you consider pooling your emergency fund with your partner?

With my points presented, are you convinced to share your emergency fund with your partner yet? Maybe you are. Maybe you aren’t. However, before thinking about this move, you should be sure that you and your partner have serious plans on living your lives together. Talk about your relationship first. And if you’re both sure of each other, then it’s time that you talk about money. Start with your emergency fund. It’s the first step.

Disclaimer: Financial tips found on this blog shouldn’t be taken as a sole substitute to a financial adviser’s advice. Suggestions are based on the author’s experience as a financial literacy advocate and associate financial planner.
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