Making money and spending it

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Who is to criticize how one wishes to spend one’s money? You make it, you spend it, who cares—it is no one else’s business and don’t let anybody tell you how to spend your money. In discussions and presentations about how to deal with money, there is always the need to emphasize that personal spending is one’s personal business. Spending money for example on property, cars and luxury toys is anyone’s game, after all it is the right and prerogative of the one who earned it. If the spending is for investment and savings purposes, then it’s a totally different story.

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Peddled on the streets by aggressive agents waving brochures of condo projects for your “investment, sir,” these projects are, mind you, not an investment but an expense. With high vacancy rates now prevailing in the market for residential housing, especially in odd, remote locations, investing in such property with the intention of renting it out is like reaching for the moon. Coming with the burden of astronomical association dues, these condos turn out to be a monthly expense in the end.

Savings? What is there to save when our banks offer no more than a third of one percent? We need to remember that the inflation rate to date stands at 3.9 percent, which is now down since January from 4.1 percent. The average since the 1950s is at 8.9 percent. This all means that for every year you hold your money in what they call “savings” you lose its value based on the staggering inflation rate. Finance is no rocket science and it shouldn’t be. Common sense and basic arithmetic should be enough to guide you. Now if the state was a more responsible and protective complement of the banks—regulations such as the introduction of bare trusties should be in place. Sadly they are not.

A bare trust, also referred to as a naked trust, exists where a person, the trustee, is merely vested with the legal title to property and has no other duty to perform or responsibilities to carry out as trustee, in relation to the property vested in the trust. The sole duty of a bare trustee would be to convey legal title to the trust property on demand of and according to the instructions of the beneficiary as provided for within the trust instrument. The bare trustee does not have any independent power, discretion or responsibility pertaining to the trust property. In such cases, the beneficial owner retains the right to control and direct the trustee in all matters relating to the trust property. Therefore, a trust will not be considered to be a bare trust where the trustee has other duties set out in the trust instrument, which involve independent or discretionary powers and responsibilities. The trustee in a bare trust situation may be a nominee corporation.

In case you are looking for the right investment to park your money (e.g. generation of income to address inflation) you may contact us.

harry.tambuatco@superbrands.com

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