Reasons to believe

Last month, Philippines was included in top 20 of world’s economy in terms of GDP growth prediction for 2015.  Next to China which is number 1, we are number 2!  So what does it mean to us?

The good news is that this is another great opportunity to gain more profits this year through the stock market.  If you are already an investor, congratulations!  If not, then its time to take action and to be one.

With the help of the internet technology, investing is now made virtually available to all so it’s merely an open mind, a decision and a courage to take the necessary to steps on becoming an investor.

Many people specially in social networking media like Facebook raised their eyebrows when this good news just popup despite the Mamasapano issues where we are immersed for several weeks or even more than a month now.

Some people can’t believe and expressed their views like “This is amazing but how come I see lots and lots of poor people on the street?”  and “so what’s in it for me then”.  In short, many Filipinos still don’t realize how to take advantage of this good news.

Let’s proceed and highlight what’s the deal with this good news for our beloved country.

Based on COL report, this year 2015 will boost government’s  “legacy spending” and normally happens before the change of administration takes place which will be next year.  This will mean more jobs and more projects that will benefit giant companies to name a few like Ayala Corporation, SM Prime Holdings, and other industries like banking and consumers.

Low oil prices.  Last January, the price of oil started to drop.  Although it went up after several weeks, it is still low compared from the past.  The money we save on gas will also increase consumer spending which local companies and businesses will then again benefit from these.

Philippines is also on top of BPO industry.  This means apart from the huge amount of remittances of OFWs, there’s also bulk of money circling around that will trigger spending in consumer and other businesses like real estate and banking.   More people will spend money to buy condos, cars, gadgets, travel, etc. and the list goes on and on.

The key to profit in this good economy is to participate and “ride” this great companies in its growth by buying its shares in the stock market.  The more earnings they will have means more profit for us the investors.

Now the question is, are you an investor?  If you are, then once again congratulations!  Because this year will be a great year for us all.

If you are still planning to invest and want to jump in right away, I invite you to join Bo Sanchez’ Truly Rich Club for guidance in the stock market.  To join click here.

“If you think education is expensive, try ignorance” — Derek Bok

Are you financially healthy?

Last week, I got a chance to attend our company sponsored Financial Wellness Session.  It was conducted by PRU Life UK.  It was a very enlightening discussion and fun too.

They asked us to play games that made us realize the value of investing in different investment vehicles such as stocks, business, mutual funds and real estate.

Here are some of the notes I have taken during the session.

Introducing the COL Mobile App

This morning I received an email from my stock broker COL Financial informing me that the mobile app is already available but only for IOS. The android version is still to come.

You can download the app by simply logging in to your account using a browser, in my case I used Safari. Click on the Downloads at the Home Page then follow the next instructions and voila, there it is!

When the app is launch, it will display the screen below. Just tap in the Log-In and it will take you to the login menu where you can input you account number and password then press the login button.

To view your current portfolio, just tap the Trade –> Cash Gain Loss.

You need to scroll down to view you Total Equity.

Here are few more screenshots when I navigate the menus. I haven’t used it for buying and selling stocks at the moment but by navigating through its menu I realized how easy to perform transactions.

Thank you COL Financial, you’ve done a great job for this innovation!

A glimpse of SMPH sale

Last week it was a surprise when one of my blue chip stocks, SMPH enters the “red zone” after a year of sitting in “green”.  Oh yes before I forgot, we already entered the month of AuGHOST.  Many investors and traders believe this to be the month when stock prices are getting cheaper.

You have to break the law

A lot of people (including myself before) are thinking of high salary, working abroad, winning the lotto are some of the best solutions to their money problems.

Are these really true?

Sometime in 2005, I decided to pursue my career overseas. I got my 2 years contract with one of the biggest telecom company in Afghanistan.

The company is giving me a monthly paycheck which is around 6 times of my salary. I was very happy because in my mind, 1 year of staying overseas means I can earn money which is equal to 6 years of working locally.

This is true in figures but didn’t happen though because of my spending habits. As my income increase and so my expenses. This is one of the concepts of Parkinson’s law. Robert Kiyosaki refers this as the “rat race” that most people trapped into until their old age.

In one of his seminars, Brian Tracy says this is the reason of money problems such as debts and failure to accumulate money.

If you are seeking for financial independence like me, we all need to break this law. Knowing this law is not enough without taking actions.

So what are the practical actions we need to take to break this law?
Here are the two actions you could take immediately to start breaking this law:

Stop all unnecessary expenses especially those that are categorized as “wants”. Evaluate carefully and scrutinize each expense as if your budget is in big trouble. It is also good to make up a budget plan for the whole year to minimize and prioritize the expenses.

Save and invest at least 50% of any increase or bonus you may receive. I have done this for past 3 years and I was amazed of the result on my stock portfolio.

Always remember that “Financial independence comes from violating Parkinson’s Law.”

You have to break the law

A lot of people (including myself before) are thinking of high salary, working abroad, winning the lotto are some of the best solutions to their money problems.

Are these really true?

Sometime in 2005, I decided to pursue my career overseas. I got my 2 years contract with one of the biggest telecom company in Afghanistan.

The company is giving me a monthly paycheck which is around 6 times of my salary. I was very happy because in my mind, 1 year of staying overseas means I can earn money which is equal to 6 years of working locally.

This is true in figures but didn’t happen though because of my spending habits. As my income increase and so my expenses. This is one of the concepts of Parkinson’s law. Robert Kiyosaki refers this as the “rat race” that most people trapped into until their old age.

In one of his seminars, Brian Tracy says this is the reason of money problems such as debts and failure to accumulate money.

If you are seeking for financial independence like me, we all need to break this law. Knowing this law is not enough without taking actions.

So what are the practical actions we need to take to break this law?
Here are the two actions you could take immediately to start breaking this law:

Stop all unnecessary expenses especially those that are categorized as “wants”. Evaluate carefully and scrutinize each expense as if your budget is in big trouble. It is also good to make up a budget plan for the whole year to minimize and prioritize the expenses.

Save and invest at least 50% of any increase or bonus you may receive. I have done this for past 3 years and I was amazed of the result on my stock portfolio.

Always remember that “Financial independence comes from violating Parkinson’s Law.”

The need to invest

Before I started investing in stocks in the last quarter of 2010, I reviewed my financial life from the day I started working. At that time I realized, it’s already 10 years since I entered the corporate world and overseas as OFW but my savings are very small and nothing seems to happen.

My savings in the bank is not going anywhere because whenever it reaches a certain amount, I always find a way to spend it for something else such as new computer, mobile phone or gadgets.

Because of the frequent threats in job security (e.g. company downsizing, merging, re-org), I ask myself “Is there a way to escape this cycle?” After years of searching for answers I stumbled with the trulyrichclub team where I learn the concept of investing.

Here’s my top reasons why there is a need for everyone to invest:

Retirement

This is one of the biggest issues today that motivates me to invest. Whether we like it or not, time will pass by and we’ll get older. The question is, do we want get old poor or rich? We have to decide now.

I have a neighbor who’s going to retire this year. He works as an OFW for more than 20 years. Unfortunately his relationship with his family did not turned out to be good. Now he’s alone and still needs to work just to put food on the table. He will be receiving 6,000 pesos monthly for his SSS pension but I doubt it’s enough because he is also sick and needs maintenance meds. I pity him so much.

Inflation

Parking your money in the bank makes you a loser. Gone are the days that saving money in the bank is a smart thing to do because most banks nowadays give a 2.5% interest rate for time deposit account while 0.5% for savings. On the hand, the average inflation rate per year is around 4-5% so your money slowly “evaporates” over the years if you just let it sit and used by the bank.

Education and opportunity

When you invest your money for example, in the stock market, you will “ride” the giant companies and participate in the growth of their businesses. You will also learn their future plans and projects through their financial reports. These information is normally available for free from your broker.

With these “need to invest”, I hope I have given you great reasons to start your way in investing. If you are still struggling which stocks to buy, you can follow COL’s model portfolio in their monthly report called “COLing the shots”. Below table is the latest one.

Happy investing!

How to invest in UITF?

More than 3 years ago, I learned how to invest in the stock market. At first, I was hesitant to pour in my money into my broker’s account (COL Financial) to directly invest in stocks. I did it slowly because in my mind it could be a scam and besides I don’t even know somebody who invests in stock market. In short, I was really scared.

Since I’m comfortable with the banks, I decided to move some of my cash and buy UITF. So I told myself “It’s just a test”. Actually I really don’t know UITF back then because I asked the bank’s counter for mutual fund. They told me that banks don’t offer mutual funds but UITFs. By the way, the bank’s representative I asked is from BDO.

So what are UITFs?

UITFs are investment products where investor’s funds are pooled and invest in government bonds, stock market or a combination of both. The funds are being managed by professional managers so you don’t have to worry about them.

In UITF, you buy NAVPU (Net Asset Value Per Unit) based on current market price which is also a fluctuating value based on the market performance. This is similar to “shares” in stock market. So when stock market is down, this NAVPU is also lower.

Types of UITF

When I asked for UITFs, the banker offers me four types which are described below:

• Balanced fund – investment is mixed with equities (stock market) and fixed-income securities (bonds)
• Bond fund – an investment in fixed-income securities such as government bonds or a giant corporations such as Ayala
• Equity Fund – an investment fund primarily in stock market. If you are going for a long-term investing, this is the best choice. For example, I choose this for my daughter’s college education.
• Money Market Fund – investment fund in short-term which has a maturity of one year or less

Today, when I visited BDO website, there are a total of 9 different types of UITFs available. Some of them are in dollar denomination.  BPI is also offering UITFs.  Probably the main advantage of BPI UITFs is the removal of the holding period.

So how do you invest in UITFs?

Investing in UITFs is pretty much easy I would say. In my case, I just drop by to the branch where I opened my savings account and told them that I want to invest in UITF. I was assisted and my fund was moved from savings to the appropriate fund of my choice and that’s it. The minimum fund to invest in BDO UITF is 10,000.

Take note, BDO UITF has holding period. In case of Equity Fund, the holding period is 30 days. If you decide to pull your money out within the 30 days holding period, 1% of original amount will be deducted. If you are a long-term investor, you can ignore this policy.

How do you earn in UITF?

Below is my BDO Equity Fund certificate. I invested 20,000 pesos with a total of 84.5944 units and a NAVPU of 236.4221. It’s easy to do the calculation if you want to know how much you earn.  To compute for the current market value of this investment, multiply the total number of units (84.5944) by the current market value of NAVPU.  The value of NAVPU is updated daily and available in BDO’s website.

 

At the time of this writing, the NAVPU for BDO Equity Fund is equivalent to 414.6993. So the current market value of my investment is already 35,081.23. Wow! That’s a profit of 15,000 pesos after 3 years which is around 75%. That’s a huge amount of earnings compared to savings or time deposit.

So if you’re comfortable investing your money in the bank and you’re tired of being a saver, start investing in UITF now!

Any thought? Ideas?  Feel free to comment below.  If you find it useful, consider sharing it in facebook so others won’t be left behind.

How to spend your money wisely?

“More people should learn to tell their dollars where to go, instead of asking them where they went” Robert Babson

When I was still an OFW, I’m earning around 5 times of my salary as local employee.

But after a year of working overseas, I looked into my depleted dollar bank account and asked myself “Where did my money go?”

I believe this is one of the frequently asked questions among employees – myself included. Because a lot of people failed to plan how to spend their money, 1 week (or more) before the next payday comes, the budget is already gone.

If you notice, there’s a massive campaign attracting us when the calendar is approaching the 15th or the 30th of the month. This week alone, I received a call from a famous casino resort and home shopping network offering their products and services. I have no idea how these people get to know my mobile phone number.

I also got an SMS offering cash loan and to my surprise my credit card was upgraded to Gold without my consent with a highlight on my new credit limit and a 5-digit advance cash feature. Wow! Similar things such as these are encouraging voices telling us “Hey c’mon, spend your money on us and enjoy!”

Just to clarify myself, I am not against these promotions. Actually these promotions are good especially for credit card; you can use it to your advantage if you just know how. So how are you going to avoid these temptations?

Well based on my personal experience, one of the simple solution is to create a plan on how to spend your money. But before doing that, you have to know first how much is your total monthly expenses. You can do this first by tracking where your money goes.  As William Edwards Deming said “You can’t manage what you can’t measure”

So take a small notebook and list all your expenses everyday (meals, jeepney fare, etc). The monthly regular bills like house rent, electricity, water, grocery items, tuition fees and the like are easy to quantify. In so doing, you will identify your basic needs and if your budget permits, you will be able to allot some of your cash for your “wants” or entertainment but I suggest put your excess money in investments like mutual funds or stocks.

After 1 or 2 months of doing this, you can now create your plan on how to spend your money. Personally, I have a 12-month budget plan where all the expenses are laid out including the excess money which I am free to invest or spend on leisure or the “wants”. You can use Microsoft Excel to do this and the computation is easily done by this tool as well.

Upon completing this task, you’ll be astonished when you see all of your planned expenses for the year. This will allow you to adjust your budget easily in no time and create strategy to manage your cash. You will get to know which month of the year you have excess cash (month when bonus is paid) and the month you are short (enrollment month).

Given this scenario, chances are small that you will be tempted to spend those excess cash when the bonus month comes in.

How will you segregate the budget?

You can do this by opening an online account where you can move your cash from your payroll. I’m using BPI Express Online banking facility to do this so all transactions are done using the internet including the bills payment. I used to combine my expsenses for utilities (electricity, water, internet, and cable) so during payday i just transfer the total amount to the other account. For other expenses, i use envelops to store the budget where my wife can easily access them for our day to day needs.

That’s it! Now the next time you receive your salary, you will not be sad when it leaves because you spend it wisely. So gain control of your money and never allow your money to control you!

Plant in the spring or beg in the fall

Have you heard about the real story of Lola Penny and Lola Pilar?  If not, let me share with you this inspiring story of Bo Sanchez about two Lolas. I really love this story. It’s actually the story that keeps me motivated and one of the main contributors why I develop the habit of investing each month for my retirement.

The 1st half of 2014 is almost over so time flies really fast, so act now! As Jim Rohn said: Plant In The Spring Or Beg In The Fall.

The Story of Lola Penny

I have a friend who retired 7 years ago.
Let’s call her Lola Penny.
Actually, her real name was Lola Penang. She took a vacation in America, when she came back, she was now called Lola Penny.
Lola Penny is a widow with 4 children and 6 grandkids.
For 38 years, Penny worked as an accountant, crunching the numbers for her company. Because she was such a good accountant, she was promoted many times and became the manager of the entire department.
And she was earning very well.
But Penny told me that even if she was earning very well, she was living from paycheck to paycheck.
Which brings me to a very important principle:Income does not equal Wealth. It’s not how much you earn that makes you wealthy. It’s how much you investfrom what you earn that makes you wealthy.
Yes, she saved some money. But like most Filipinos, she saved only for the big expenses: She saved to buy a house. She saved to pay for the schooling of the kids. She even saved for the wedding of the kids. But she failed to save for the biggest expense of all: Retirement.
Like many, she totally depended on the retirement package from her company.
When she retired 7 years ago, Penny got P3 million.
For the first year, it was heaven on earth.
Every Sunday, she brought her grandchildren to the mall to buy them toys.
And when her children needed money, they’d run to her.
“Mommy, can we borrow money to repair our car?”
“Mommy, we lack P20,000 for Junior’s tuition fee. Can you help?”
“Mommy, your apo (grandson) will compete in a swimming competition in Singapore. Can you pay for his plane fare?”
But very quickly, her money ran out.
After 7 years in retirement, Lola Penny was penniless.
This Isn’t Just A Story;
This Is Harsh Reality
Today, Lola Penny totally depends on her 4 children to give her money. But she knows that they have financial problems of their own.
One time, she overheard her daughter arguing with her Kuya (older brother) on the phone. What she heard tore her heart.
With anger in her voice, her daughter said, “Kuya, it’s your turn to give money to Mommy! I’m the one who takes care of her at home! I’m the one spending for her food everyday! And I’m the one buying her medicines. Last week, I spent P3000 for her meds! My husband is already complaining why we always don’t have money!”
When Lola Penny heard her daughter complaining, she began to cry.
The painful words she heard that day were like many knives stabbing her chest.
Lola Penny felt she was just a burden to her children.
And she wanted to die right there.
Here’s the irony: All her life, as an accountant, Penny was very good at managing the money of her company—but she never managed her own money.
This is not just a story.
This is harsh reality: According to surveys, 98% of people aged 65 and above are just like Lola Penny.
They depend on their kids, or they depend on their tiny pension, or they depend on charitable institutions, or they have to keep working—or they have nothing to eat.
Only 2% of people aged 65 and above are financially free.
Like Lola Pilar.

The Story Of Lola Pilar

You can retire in two ways.
You can retire like Lola Penny or you can retire like Lola Pilar.
Penny is a pseudonym. That’s not her real name.
But Lola Pilar is no pseudonym.
Pilar is my mother.
She is 85-years old.
Today, I give my mother a nice monthly allowance.
I do it not because she needs it, but because I need it. I need to show my love to her.
But in reality, my mother doesn’t need my money.
Let me tell you why.
Many moons ago, my mother worked in a small music store as a Cashier. Her salary was P120 a month. After working for 19 long years, she received a separation pay: A whopping P2000!
She invested that P2000 in the Stock Market.
The year was 1966.
And whenever she had extra money, she’d invest in very well known companies. My parents bought the stocks of giant companies of their time: San Miguel. Ayala. Etcetera.
My father retired at the age of 65. He passed away at 88. For those 23 years, my parents sold a portion of their stocks–little by little—for their big expenses.
After Dad passed away, Mom announced, “I’m selling all my stocks.” I was surprised that she still had P1 Million from that last sale—even if they were already withdrawing their cash from there little by little.
I asked her, “Did you sell everything?”
Mom said, “Yes, I did. Well, I left the crumbs…”
Crumbs?
“What crumbs?” I asked.
She explained, “Oh, I left the very little investments scattered in various companies. They’re very tiny. Nothing much.”
That conversation took place three years ago.
Just two months ago, I told her, “Mom, you’re 85. You better sell whatever you have left in the Stock Market. Yes, I know they’re crumbs. But just collect them anyway.”
She agreed. She called up her stockbroker and said, “Can you sell all the tiny stocks I have left?”
She was expecting P10,000. At most, P20,000.
But she got the shock of her life. The stockbroker told her, “Mrs. Sanchez, your stocks are worth P1.2 Million.”
Mom turned to me and said, “Bo, I’m rich!”
I told her, “Mom, you’ve always been rich. You just think you’re poor.”
Forty-five years ago, my mother planted P2000 in the Stock Market. And through the years, she planted little seeds of P50, P100, and P200 in giant companies.
Because she planted in the spring, today, she isn’t begging in the fall.
In her whole life, my mother never received a huge amount of money. She never inherited money. She never won the Lotto. She only built her wealth slowly.
Remember this truth I heard from David Bach:Wealth is not built in days; Wealth is built in decades.
There are two ways of retiring in life: Are you going to be a Lola Penny or a Lola Pilar?
God places the two roads before you.
Penny Poverty or Pilar Prosperity?
You choose.