Month: February 2010

Categories
Personal Finance

Where to Invest in 2010 Series: Part 1

Last Saturday, I attended after I received an invitation from the event’s organizers. 

In the next few weeks, I’ll be sharing the lessons I’ve learned from the seminar through a series of articles.  This is part 1 of the series which tries to present the investing profile of Filipinos as well as the overall investment climate in the world and in the Philippines for 2010. 

The Filipino Investor Profile

The first part of the seminar showcased some very interesting statistics based on a survey conducted by the event organizers.  Here are some of the highlights.

  • 50% of the participants are of age 31 – 40 years old
  • 50% of the participants are single
  • 46% of the participants are just starting to invest
  • 77% of the participants want to have financial freedom

While the numbers are not reflective of the whole nation’s investing profile, it is very interesting to note that “a lot of single Filipinos in their 30’s are starting to learn how to invest in the hope of achieving financial freedom.”  This is definitely a good sign! 

Unfortunately, the reality is that only less than 1% of Filipinos are currently investing in the various financial vehicles in the Philippines.  Most are still unaware of the different options to grow their money.  Some have no savings at all.  Others are still struggling with debt. 

Whether the statistics are encouraging or not, the challenge still remains – how to encourage more Filipinos to invest and be smarter with their own money so they can achieve their dream of financial freedom.

Overall Financial Outlook for 2010

During the seminar, a speaker from Citibank noted that on a macro level, financial growth will be driven more by the emerging markets (e.g. China, South America, etc).  Developed nations such as those in Europe and the US have been hit hard by the financial crisis and their growth will not be as fast as the emerging markets. 

According to him, the Philippines is expected to grow slowly but surely, fueled by the strong domestic demand as well as the very strong remittances from Overseas Filipino Workers.  In addition, there is also some expected volatility on the market due to the upcoming presidential elections.  Stock markets may go up or down depending on the investor sentiment on who will be elected as President of the Philippines.

For those planning to invest in 2010, he offered the following tips:

  • Assess your financial goals
  • Know your risk profile: risk-averse, conservative, balanced, growth
  • Consider investing long-term to reduce volatility and risk
  • Do not time the market
  • Harness the power of compounding – reinvest cash flows
  • Invest regularly to benefit from cost-averaging
  • Rebalance regularly to reduce your risk
  • Consider managed funds if you do not have the time and expertise

Rich Money Habits Thoughts: The tips above are nothing new.  Even though it’s important to know what’s happening all around the financial markets in the world and in the Philippines, I think it is NOT as important as discovering and unleashing the investor in you.

The battle of whether to invest or not is happening only in your own mind.  The hesitancy is paralyzing.  If you want to invest, take the first step.  It’s important to learn from books and seminars, but it’s even more important to take action and actually invest.

At the end of the day, in spite of all the ups and downs of the market, your tendency will always be to turn to your own money habits.  Do you save or invest regularly?  Why not?  Make it a habit.  Start now.  Invest and be financially free.

Watch out for part 2 of the Where To Invest in 2010 Series: 5 Stages of Life Cycle Investing!

Categories
Bonds Business How To Tutorials Investing Money Mindset Personal Finance Stocks

Reader Question: What to do with an extra PhP 50,000?

I recently received an email from an avid reader of this blog.  He asked me one simple question.  He said,

“I have an extra PhP50,000.  I don’t know if I should invest it all in RTBs?  What do you think?  What is the best thing I can do with my money?”

I remember sending a quick note asking him more about his financial situation whether he has any existing debts he can pay off with the PhP50,000 or if he has saved up for an emergency fund.  If he’s financially OK with both, I then asked him if he’s willing to leave his money in RTBs for the long term (at least 5 years)? If not, perhaps he can consider using the extra money to start a small business. 

Upon reflecting on the question, I realized this is a question most of us will face at least once in our lifetime. 

The key to taking control of your own money

If you really want to be rich, one question you’ll have to ask yourself more often than anything else is —

“What is the best thing I can do with my money?”

Do you remember the time you received your last 13th or 14th month bonus?  Maybe, about 2 months ago? 🙂 Suddenly you had extra cash to do whatever you want. Or perhaps when one of your grandmother was so pleased with you receiving honors on your graduation, she gave you a $100 gift?  Or when you recently got your first promotion as a Team Lead and got a whopping PhP 3,000 as bonus? 

All of these brought you the same thing – the sudden problem of having “too much money”.

Now, don’t get me wrong.  I’d rather have the problem of having “too much money” than the problem of “not enough money.”  

Why having too much money is a problem

As some of you may realize, having too much money is indeed a problem.  Granted, not many people are currently facing this problem, especially in this time of recession.  These days, people are more familiar with the problem of “not enough money”.

If you have this problem of having too much money, congratulations!  You have the opportunity to face a different kind of challenge in your journey to financial freedom.  The challenge is to fully utilize your extra money and ask yourself what is the best thing you can do with it.

 

How people try to solve having too much money

1) Spend it

For some, the answer is simple.  Spend it.  Spend it on something you want.  You want that cool gadget they call the “iPad" or the earlier generation and wildly successful “iPhone 3Gs”?  Now, you have the money to pay for it – in CASH! 

Or how about the smooth talking salesman offering you a limited-time-only-special-edition watch for ONLY PhP50,000?  He lets you hold the watch on your hand and shows you how it would perfectly fit into your tiny wrist. After a while, you start to convince yourself. You say “I deserve to have this gorgeous watch”.  After all, you do deserve the reward after so many hours of working hard at the office.

This is the most common way people use their extra money.  Unfortunately, the ultimate question still remains – “is that the best thing you can do with your money?”

 

2) Invest it

For others, it is more complicated than that.  Their solution?  Invest it!  But how?

There are people who define their investments with what they can put under their name.  Invest it in a car or a house, they say!  It is an asset, right?  Of course, it is an asset says your banker.  Unfortunately, he doesn’t say whose asset it is.  The truth is, it is the bank’s asset.  When you pay your mortgage every month, or your car loan, the reality sinks in and you realize that the bank is making money from you.

Other people likes risky & highly leveraged investments. The truth-they are just plain gamblers and not investors.  You will hear them say

“Never mind, give it to me.  I’ll make your PhP50,000 into a hundred million in 3 days. I’ll buy a lotto ticket and when I win, I’ll split the money with you.”

The successful investors like Warren Buffet, on the other hand, live with a different mindset from the rest.  They made their money through sheer hard work, a lot of financial intelligence, and allowing the system to work for them.  Yes, they also lose money.  But they have gained more – knowledge and experience.  After many many years of ups and downs of the market, they still ended up making a lot of money in the process. 

So, which investor are you?

 

3) Donate it

The 2 richest people in the world both donate to charities.  Bill Gates donates some of his money through the Bill and Mellissa Gates Foundation.  Warren Buffet is a big fan of tithing and in fact planning to donate most of his money as part of his last will. 

When you donate, you are allowing yourself to believe that you CAN give.  You allow yourself to believe that life’s blessing is so abundant that sharing it will make it even more meaningful. When you GIVE, you gain so much more. 

Unfortunately, while we busily try to earn a living and make money, we tend to forget that money is a gift to bless yourself and others.  A gift that reflects what is important to you and defines who you really are – God’s blessing to others.

 

In the end, deciding how to spend your extra money is all up to you.  Anyone can advice paying off your debt, save for emergency, buy insurance, or any other advice that seem wise.

The reality is, I do not know your situation.  We are all facing different circumstances.  The advise to start a business may work wonders for some, while it may lead to bankruptcy for others. 

It is only YOU who knows what’s the best thing you can with your money.  Because it’s only YOU who knows what’s important to YOU.  

 

So, what would you do with an extra P50,000?

Categories
Investing Life Updates Personal Finance

MoneySense Live’s Where To Invest In 2010

I recently received an invitation to attend MoneySense Live’s Where To Invest In 2010 Seminar at AIM Conference Center, Makati City.  As a first time investor I thought this is a good opportunity to learn more about investing, particularly the available investment options in the Philippines. 

I am planning to attend the event this Saturday and share whatever I learn from the seminar to readers of Rich Money Habits.  Watch out for that in the next few weeks.

Since this event will happen this Saturday, I thought it’s a good idea to extend the same invitation to you so you too can have the same opportunity to learn first-hand from the seminar.  Here’s an excerpt from the invitation.

Learn where to put your hard-earned money to work harder for you. Attend MONEYSENSE LIVE’S WHERE TO INVEST IN 2010, the third interactive seminar of MoneySense Magazine, which will be held on February 20, 2010, 1:30-5:30pm at the AIM Conference Center, Makati City.

WHAT YOU WILL LEARN

The seminar features 4 relevant topics:

  • Where to Invest in 2010: Get an overview of and forecasts for various investment options, such as stocks, bonds, gold, real estate, and government securities
  • Life Cycle Investing: Understand how investing figures in important stages in your life and what appropriate strategy to take
  • Picking Stocks Like a Pro: Learn the various investing strategies of successful professional investors and fund managers
  • Where to Put Your PERA, How to Invest REIT: Know what these new financial products and reforms are and how to put them to your advantage

You can learn more about the seminar @ MONEYSENSE LIVE’S WHERE TO INVEST IN 2010.

DISCLOSURE:

In an attempt of full-disclosure to readers of Rich Money Habits, please note that I don’t earn anything from promoting this event other than a free-ticket to the seminar, which is nice.  :) 

Also, kindly bear in mind that I have NOT personally attended any seminar organized by MoneySense and Learning Curve prior to this event.  If you plan to attend the event, it will both be our first time. 

See you there!

Categories
Life Updates Money Mindset Passive Income Personal Finance

Rich Money Habits Gets Featured!

I’m very excited today.  Rich Money Habits just got featured at MoneyHackers.net!  Here’s an excerpt of the interview.

  • What encouraged you to start Rich Money habits?

It has been said that we are creatures of habit. Some money habits make us poor, while others make us rich. The key to being rich is knowing which is which.

My money habits growing up can be described as “working hard for money”. The only way I knew how to make money then was to work hard and and get paid at the end of each month.

Being young and foolish about money, I made sure that my “hard work” was compensated by having lots of fun. I have earned and spent my money as if there’s no tomorrow, dining out with friends, buying the latest gadget, or buying home appliances all at once, EVEN if I didn’t have the money to pay for it. I only had to use my new credit card.

When my debts piled up, I realized that my money habits are eating me alive. I even had to do cash advance on my credit card just to pay for rent. That was a wake up call for me. I realized I had better take care of my own money by controlling my own money habits or I’d end up begging for money to pay for what I eat.

That proved to be a turning point in my financial life. My journey of trying to learn how the world of money works started by discovering my own “poor” money habits and forming new “rich” money habits to help me get started in taking control of my own finances.

Rich Money Habits was born out of my desire to help people take control of their own money habits. It starts with recognizing that years and years of “poor” money habits programming cannot be undone overnight. It takes constant exposure to the financial habits of the rich, making your own financial mistakes, and having the courage to take action in spite of financial failures. More importantly, Rich Money Habits was built in the hope of cultivating a community where people can learn and encourage each other to discover and strengthen the “rich man” within each one of us.

  • How does Rich Money habits differ from other financial sites?

The main focus of Rich Money Habits is in helping you develop the mindset of the rich in the hope of drawing out the “rich man” in you to help solve your own financial problems.

Some financial sites focus on being frugal. Others focus on ways of saving. While a few concentrate on the different investment vehicles, whether it be online savings accounts, mutual funds, real-estate or stocks.

Even though Rich Money Habits will occasionally feature these topics, it is mainly to highlight the money mindset behind the financial decision and examine how and why people take advantage of these financial vehicles in the first place.

  • Does personal experiences play a key part in the content of your blogs?

My personal experiences (both successes and failures) are occasionally included in some of the articles in Rich Money Habits in the hope that it might help encourage other people to explore and discover their money habits on their own.

  • Where do you get the ideas for your blogs?

Ideas are a dime a dozen. I’ve read hundreds of personal finance books, magazines, blogs, attended financial seminars and coaching, designed software solutions to major financial services companies but nothing beats jumping in and experiencing how to solve your own money problems. Listening to other people’s money problems also allows me to tune in and understand why people do what they do with their own money. My goal is to extract the valuable financial lessons from all these sources and effectively communicate those gem of money ideas to readers of Rich Money Habits.

  • What are some key concepts to keep in mind when creating a budget?

One thing I learned about a traditional budget is that it doesn’t work – at least for me anyway. I don’t keep a detailed list of all transactions that I make. What works for me is keeping an overall picture of where my money is coming from, where is it going out, and more importantly, if I’m keeping any of it at the end of each month. If I need to know where my financial life is, I can check my accounts and instantly get an idea if my money is growing or not. I’ve learned to stay flexible and treat a budget like a plan that has to be continually refined as I go.

  • What is some financial advice you could give our readers?

Keep learning. Keep dreaming. Keep building your own rich money habits.

Thanks to Lydia @ MoneyHackers.net for the interview.  The original article got published @ http://www.moneyhackers.net/465/interview-with-allan-from-rich-money-habits/.

Categories
Business Investing Personal Finance Stocks

How to Invest in the Stock Market in the Philippines in 3 Easy Steps

Investing in the stock market is scary for a lot of people.  Others like Warren Buffet love it and end up making a lot of money in the process.  But everyone who wants to be rich through the stock market needs to know some basic things.

Here are the 3 easy steps I followed in getting started on how to invest in the Philippine Stock Market.

Step 1:  Open a stock brokerage account.

To begin investing in the stock market, you have to have a broker.   As for my case, I used an online stock brokerage firm in the Philippines, mainly because of the convenience of doing it all online, at the same time, taking advantage of the relatively lower fees.

A few months ago, my wife and I opened an online stock brokerage account with CitisecOnline.com.  It was after many many months of thinking about it.  I already wanted to open an account even when I was still in Malaysia but I always found an excuse not to do it.  I’d say, it’s hard to open an account since I’m out of the country-Philippines. But the reality is, I can actually fax or mail the application forms to Citiseconline if I really wanted to and they’d be able to open the account for me. 

I came across CitisecOnline.com again when I attended Bo Sanchez’s Truly Rich Financial Coaching Program after coming home to the Philippines last year. I got to know more about the company and the stock market in the Philippines.  I was pretty convinced this was something I wanted to get involved into so I picked-up the application forms and brought it home with me.  However, taking action on the investment opportunity is a totally different story.  The only thing I had to show for it after a few weeks is the unfilled and un-submitted application forms on my hands.

Getting frustrated with myself for taking a long long time to decide, I finally filled-up the forms and decided to mail it to CitisecOnline.com the next day.  My wife, being the thoughtful person that she is, tried to call up CitisecOnline.com to inquire how we can submit our application forms.  She was pleasantly surprised because CitisecOnline.com offered to pick up the forms for us.  It meant we didn’t have to pay for mailing the forms ourselves after all! So far, so good. 🙂

Step 2: Activate and fund your brokerage account

The CitisecOnline.com agent came to our office that same afternoon to pick up the forms.  He took a quick look at the forms to make sure everything was filled out properly.  After confirming that everything is in order, he smiled and thanked us as he went on his way to file our application forms. 

The application process went on smoothly and after a day we got an email and a call from the COL agent that our application has already been approved and ready for funding. 

Normally, COL requires a minimum amount of P25,000 to fund an account.  For CitisecOnline Easy Investment Program (COL EIP), however, you can open an account for as little as P5,000 minimum. 

We decided to fund our account with P5,000 first.  We went through the nearby BPI branch and deposited the amount to CitisecOnline account number provided to us by the COL agent.  Afterwards, we then faxed the receipt to the agent and waited for our account to be activated. 

After a few days, COL advised us through phone that our account has been activated and our the login name and password have been sent to our registered email address.

Here’s where I encountered a few problems.  The email containing the password was tagged as a spam.  Since the email client I was using then was very old, I went through a lot of trouble trying to un-tag it so I can read the password. With no luck, I requested COL to re-generate the password again. Unfortunately, the new email containing the re-generated password got tagged as a spam too.  Back to square one. 

Starting to get frustrated, I then requested to have my email address changed.  The COL agent sent the application form for changing my email address.  I quickly filled up the form and faxed it to COL. 

Eager to check my account, I waited for their reply everyday, expecting that they generate the new password to my new email address.  But after a week, there was still no response.  This time, I sent an email to follow-up and shared my frustration. 

That same day, I received my login and password via email and was able to view my COL account online. 

Now, we’re getting somewhere! 🙂

 

Step 3: Buy stocks using your brokerage account

After reading the book Rule #1 Investing by Phil Town, I learned that the basic idea of investing is buying a $1 worth of stock for half the price-$0.50.  But calculating the value of a stock is not a very straight forward process, and to some degree, it is more of a guess than anything else.    

I tried to calculate the value but it took a lot of effort digging up historical data.  Fortunately, CitisecOnline provides about 3 years worth of a company’s financial performance but it’s just not enough.  Looking at the negative growth rates in 2008, when stocks and businesses were hit by recession, it is even harder to make a reasonably accurate guess of the company’s future. 

At this point, I had a dilemma. I realized I needed to learn more. However, until I have some money actually invested in stocks, I would not be able to learn through experience.  This meant I had to invest another way, for now.

Enter COL Easy Investment Program (EIP).  The program takes advantage of the Cost Averaging method of investment.   The idea is to invest a fixed amount of money on a regular basis (weekly, monthly or quarterly) on premium growth stocks and take advantage of the power of compounding to grow your money in the long term. 

Since your investing the same amount every week/month/quarter, your money will buy more shares when the market is down.  If the market is up, the value of your shares will also go up.  So in essence, you’re making money both ways.  The only disadvantage is that you have to have the discipline to invest the same amount on a regular basis and leave your money for the long term (COL suggests at least 5 years) and not get carried away by your emotions.

For those investing through COL EIP, you can even choose to invest on the recommended companies/stocks listed on the COL site.

Here are the 3 main advantages of using the COL EIP method of investment. 

  • You don’t have to worry about constantly watching the stock market. 
  • For as low as P5,000, you can invest on solid growth companies.
  • Simple to use, regardless of age, income, or investing experience.

To gain valuable learning experience, I figured this is a great way for me to start investing in the stock market.  Without the necessary experience, I won’t have the knowledge to properly analyze a company and I won’t be able to make an educated assessment of the value of the stocks I want to invest in.

Besides, the Philippine stock market only has a limited number of companies at the moment, so I might as well invest in the most stable of companies for now, those that I think will still be in business for the next 10 years.

I know that P5,000 is a very small amount for some people.  However, it is an amount I’m comfortable
investing in into the stock market.  I may decide to invest more in the future as I gain experience in learning the world of stock market investing, but for now, I’ll stick to investing at least this amount on a regular basis.

How about you?  Have you started investing in the Philippine stock market?  How’s your investing experience been so far? 

Categories
Life Lessons Personal Finance

Funny math video-are you cheating yourself?

Here’s a funny video I came across about the tricky world of Mathematics. 

So, who do you think is the better Mathematician? 🙂

While watching the video, I learned that anyone can easily manipulate numbers to prove what he or she believes in, even in the seemingly accurate & precise world of Mathematics. 

The danger happens when we use the same tactics to deceive ourselves and make excuses instead of facing our money problems with honesty. 

You might say “I’m not interested in money”.  But the reality is, you’re willing to do anything to get a job and earn some money. 

Or you can say “I saved 50% off when I bought this new pair of shoes on sale!” The reality is, if you didn’t buy anything, you would have saved 100% of your own money!  🙂

How about you?  What “excuses” have you been telling yourself lately?