One of the things you need to know about building wealth is the power of making regular periodic investments and reinvesting rather than spending the profits.
The results you will with this discipline are surprising. Let’s say you start with nothing, and decide putting PhP 5000 of your income into an investment account every month, and you commit not to touch your money in investment. That means you can’t take withdraw any funds until you’ve reached your long-term goal.
The overall market, at least as measured by the S&P 500 index, returned 11.8%, on average, annually over the past 10 years. If you achieve that same return, you’d have PhP 1,140,000 after 10 years. But it gets better. You’ll have PhP 4,860,000 if you stick with the plan for 20 years and a cool PhP 17 million in 30 years.
The process described here is a combination of two powerful investing strategies:
Compounding and peso-cost averaging.
Compounding is simply reinvesting rather than spending your profits. By doing that; you capture the future returns on your reinvested profits as well as on your original investments.
Peso-cost averaging means that your fixed monthly investment buys more shares of a mutual fund or stock when prices are low, and fewer shares when prices are high. For instance, if you were investing PhP 5000, you’d get 500 shares if a stock were trading at PhP 10, but roughly 555 shares if it dropped to PhP 9.
Discipline Required. The hardest part of implementing these strategies is making the regular monthly investments. It’s easy to procrastinate adding to your account if the market is down or if you could use the cash for something else.
The best way to make sure that the regular investments happen is to automatically deduct a fixed amount from your monthly salary and directly invest it in a mutual fund account every month.
The Rule of 72
Do you want to know how long it takes for your money to double if you know the interest? All you need to do is apply the Rule of 72. Divide 72 by the given interest rate.
Example: Someone asks you to invest your hard-earned money at 8% interest per annum.
You can easily compute in your mind, 72 divided by 8 is 9. It will take 9 years before your money doubles. Then decide if this is in accordance to your personal financial objectives or not.
Do you want to know at what interest would your money double if you know the length of time your money will be invested? All you need to do is apply the Rule of 72. Divide 72 by the period.
Example: Someone asks you to invest your hard-earned money for 10 years.
Divide 72 by 10 and the results would give you 7.2. The investment should yield 7.2% per annum for your money to double in 10 years.
Links:
www.business.inquirer.net/money/personalfinance
www.pinoysmartsaver.com
www.colaycofoundation.com
http://www.apersonalfinanceguide.com/
Wednesday, December 10, 2008
Wednesday, December 3, 2008
INVESTMENT AND THE EIGHT DUH’s: IT’S NOT THE ECONOMY STUPID!
“It’s only when the tide goes out that you will know who’s been swimming naked.” Warren Buffet
It’s hard being an insurance salesman nowadays, its hard enough making new clients, you also have to pacify the old ones’ as well, more so when the company I’m connected with is right in the midst of it.(AIG-Philamlife) and since I’m into investments, like mutual Funds, the common question is always, “Is it safe?” to which my answer has always been, no, but it’s wise, which obviously puts me in a dilemma. No in a sense that, there is no safe investment (see duh no.5) crisis or no crisis, both answer still applies. Actually now would be a good time to invest (in Mutual Funds) since the value per share is low (as they say in Trading 101:”Buy when everyone else is selling, and Sell when everyone else is buying”) but I’m cautious about recommending this last one, with all these big firms folding up (Lehman Bros.) and some local banks exposure to sub-prime, everyone just wants to get out while their money is still intact. Some are willing to accept loses, while others won’t. ironically what the present crisis has taught us is-there are no new lessons, the same old rule still applies, in the end, the basic fundamental reason and consideration for investing hasn’t change, and once we deviate from its “raison de etre”, that’s when the problem starts, unfortunately, that’s what Wall Street did, (including AIG) or maybe, they’ve never learned at all, and now we’re in this mess. Below are my personal reflections, If there is really a lesson to be learned from all these, it can only be described in one word: “duh”
Meet the eight duh’s:
Duh no. 1) Never invest with a goal of “Getting Rich”.
A common mistake a lot of investors make, or you could simply call it greed (duh) that’s how Wall street got us into this mess in the first place, (and to think most of these guys are Ivy Leaguers). Here in the Philippines it’s the same thing, with some agents, fund managers, analysts and even some financial columnist, saying the same thing. Not surprising, when you consider that, two years ago, the equities market were doing annual rates as high as 72%. And a lot of agents were only too willing to overlook (instead of correct) that impression and happily oblige clients and investors, deviating from the basics: Investments and Savings (for that matter) form a part of financial planning in order to achieve specific financial goals, i.e future education for the kids, health management, retirement, etc. and while you might actually end up getting rich in the process, be specific and realistic about your goals. When you finally decide to make an investment-keep repeating to yourself…”There is only one Warren Buffet”.
2.)Yield is not all that matters.
Going back to no.1, it is always a common reaction, that every time a new investment opportunity comes along, the main question is always the rate of return, maybe it has something to do with coming from a place where it used to be that the only financial options we had were savings accounts and time deposits. Unfortunately in my experience, most of the people who invests solely on the basis of high returns, are the people most likely to fall for double your money schemes and investment scams. Another point to consider is the liquidity, hidden cost, fees and penalties for such instruments. Of what good is the promised high rate of return, when it can easily be offset by the high fees and deductions in the event of an early redemption or if they could even be redeemed at all (lock-in-periods)? And of course, there is the age old adage: “the higher the return, the higher the risk”.
3.)Never invest with the sole purpose to avoid or evade paying taxes.
Fortunately, these do not apply to us: the Hoi Polloi’s, but to High networth individuals (that’s rich to you) There are offshore investments, and there are tax havens. In the Philippines, earnings of Mutual Funds are exempted from withholding Tax, take note however that the purpose of diversifying your portfolio is to spread the risk. And a part of Wealth Management and Asset protection, should be about, helping you pay your taxes, thru savings, insurance and Estate Planning, and not avoid them. (On a personal level): its only proper to pay back what is due to the state, who has guaranteed, and protected our rights and privileges, so you can be where you are right now. (On the financial side) I have yet to hear Warren Buffet (one of the most meticulous financial analysts around) tout the virtues of investing in the Cayman Islands.
4.)Never predict nor foretell the future, with your, (or other people’s) money.
It’s called Financial Planning, not predicting, nor foretelling (hello) and leave the forecasting to fashion, the weatherman, and Actuarians. Last time I checked, they still don’t include “Witchcraft, or Crystal Ball Reading 101” in Financial Planning, Economics, Fundamental or technical Analysis, Management and Accounting. So don’t ever believe when experts tell you (those same experts that got us here) how long this recession will last, because NOBODY KNOWS, and THE END IS NOT YET IN SIGHT!
5.)No Investment, or Savings (for that matter ) is ever risk- free or Bulletproof.
You still hide your cash under the mattress? Then make sure its fireproof,
burglar Proof, ...etc. the list goes on. From the high yielding, (and higher-risk) Hedge Funds and Derivatives, to the more common savings accounts (your local bank’s exposure to Lehman Bros.) there is always a risk involve. Diversifying your portfolio is about spreading and minimizing your risk. If you are risk averse, then be conservative, and include savings plans and Insurances such as
endowments, and participating plans, in your portfolio, if you have considerable
assets, hire a professional financial planner. When it comes to investments,
the truth hurts, and the truth is: “never invest more than you can afford to lose”.
6.)That’s why it’s called “Financial Planning”.
Because, you first must have a specific financial goal in mind, And since there is no such thing as the best all-in-one investment instrument. (more so now). Each instrument should fit a specific goal,-an educational plan for your child’s future education, A pension plan for your retirement, and so on. In the end, it all depends on how much you’ll need, how much you can afford to pay, and how much time you are willing to allot.
7.)It still takes time.
Some things in life are simply that way, usually, the lasting and productive ones-the blooming of flowers, the bearing of fruits, wines and spirits, evolution,
change and most of all, GROWTH, that’s why it’s called MATURITY.
8.)Speculation is the mother of Recession.
With regards to the sub-prime fiasco, the verdict on Wall Street is out, GUILTY. The crime: GREED. Hard to believe, the CEO’s, Investment Bankers, and Fund managers of these companies, were students of economics once. Maybe they thought they were just too smart for the rules. By mobilizing these funds, securities and investments are supposed to help develop the capital markets, to finance the expansion of Industries that produce goods and services, provide employment, promote savings, and an equitable distribution of wealth, and help stabilize the stock market. By deviating from these basic, (tried and tested) fundamentals, they have violated the trust of millions of investors, who have entrusted them with their hard earned money, and of course, created the mess were in right now. It’s not the economy stupid-it’s elementary my dear Watson.
P.S. I normally don’t recommend books, but those of you who love to read good old-fashion novels might want to check out an old bestseller (circa 1977) that I have just read and enjoyed, while it’s a 70’s book, you’d be surprised at the uncanny resemblance to today’s headlines. Entitled: “The Crash of 79” by Paul Erdman. It’s a thriller and international intrigue, in the tradition of Forsyth and Le Carre’. Whose hero is a (lol) Banker.
Investment advice (By Boo Chanco)
If you had purchased $1,000 of Delta Air Lines stocks one year ago, you would have $49 left. With Fannie Mae, you would have $2.50 left of the original $1,000. With AIG, you would have less than $15 left.
But, if you had purchased $1,000 worth of beer one year ago, drunk all of the beer, then turned in the cans for the aluminium recycling REFUND, you would have $214 cash.
Based on the above, the best current investment advice is to drink heavily and recycle.
It’s hard being an insurance salesman nowadays, its hard enough making new clients, you also have to pacify the old ones’ as well, more so when the company I’m connected with is right in the midst of it.(AIG-Philamlife) and since I’m into investments, like mutual Funds, the common question is always, “Is it safe?” to which my answer has always been, no, but it’s wise, which obviously puts me in a dilemma. No in a sense that, there is no safe investment (see duh no.5) crisis or no crisis, both answer still applies. Actually now would be a good time to invest (in Mutual Funds) since the value per share is low (as they say in Trading 101:”Buy when everyone else is selling, and Sell when everyone else is buying”) but I’m cautious about recommending this last one, with all these big firms folding up (Lehman Bros.) and some local banks exposure to sub-prime, everyone just wants to get out while their money is still intact. Some are willing to accept loses, while others won’t. ironically what the present crisis has taught us is-there are no new lessons, the same old rule still applies, in the end, the basic fundamental reason and consideration for investing hasn’t change, and once we deviate from its “raison de etre”, that’s when the problem starts, unfortunately, that’s what Wall Street did, (including AIG) or maybe, they’ve never learned at all, and now we’re in this mess. Below are my personal reflections, If there is really a lesson to be learned from all these, it can only be described in one word: “duh”
Meet the eight duh’s:
Duh no. 1) Never invest with a goal of “Getting Rich”.
A common mistake a lot of investors make, or you could simply call it greed (duh) that’s how Wall street got us into this mess in the first place, (and to think most of these guys are Ivy Leaguers). Here in the Philippines it’s the same thing, with some agents, fund managers, analysts and even some financial columnist, saying the same thing. Not surprising, when you consider that, two years ago, the equities market were doing annual rates as high as 72%. And a lot of agents were only too willing to overlook (instead of correct) that impression and happily oblige clients and investors, deviating from the basics: Investments and Savings (for that matter) form a part of financial planning in order to achieve specific financial goals, i.e future education for the kids, health management, retirement, etc. and while you might actually end up getting rich in the process, be specific and realistic about your goals. When you finally decide to make an investment-keep repeating to yourself…”There is only one Warren Buffet”.
2.)Yield is not all that matters.
Going back to no.1, it is always a common reaction, that every time a new investment opportunity comes along, the main question is always the rate of return, maybe it has something to do with coming from a place where it used to be that the only financial options we had were savings accounts and time deposits. Unfortunately in my experience, most of the people who invests solely on the basis of high returns, are the people most likely to fall for double your money schemes and investment scams. Another point to consider is the liquidity, hidden cost, fees and penalties for such instruments. Of what good is the promised high rate of return, when it can easily be offset by the high fees and deductions in the event of an early redemption or if they could even be redeemed at all (lock-in-periods)? And of course, there is the age old adage: “the higher the return, the higher the risk”.
3.)Never invest with the sole purpose to avoid or evade paying taxes.
Fortunately, these do not apply to us: the Hoi Polloi’s, but to High networth individuals (that’s rich to you) There are offshore investments, and there are tax havens. In the Philippines, earnings of Mutual Funds are exempted from withholding Tax, take note however that the purpose of diversifying your portfolio is to spread the risk. And a part of Wealth Management and Asset protection, should be about, helping you pay your taxes, thru savings, insurance and Estate Planning, and not avoid them. (On a personal level): its only proper to pay back what is due to the state, who has guaranteed, and protected our rights and privileges, so you can be where you are right now. (On the financial side) I have yet to hear Warren Buffet (one of the most meticulous financial analysts around) tout the virtues of investing in the Cayman Islands.
4.)Never predict nor foretell the future, with your, (or other people’s) money.
It’s called Financial Planning, not predicting, nor foretelling (hello) and leave the forecasting to fashion, the weatherman, and Actuarians. Last time I checked, they still don’t include “Witchcraft, or Crystal Ball Reading 101” in Financial Planning, Economics, Fundamental or technical Analysis, Management and Accounting. So don’t ever believe when experts tell you (those same experts that got us here) how long this recession will last, because NOBODY KNOWS, and THE END IS NOT YET IN SIGHT!
5.)No Investment, or Savings (for that matter ) is ever risk- free or Bulletproof.
You still hide your cash under the mattress? Then make sure its fireproof,
burglar Proof, ...etc. the list goes on. From the high yielding, (and higher-risk) Hedge Funds and Derivatives, to the more common savings accounts (your local bank’s exposure to Lehman Bros.) there is always a risk involve. Diversifying your portfolio is about spreading and minimizing your risk. If you are risk averse, then be conservative, and include savings plans and Insurances such as
endowments, and participating plans, in your portfolio, if you have considerable
assets, hire a professional financial planner. When it comes to investments,
the truth hurts, and the truth is: “never invest more than you can afford to lose”.
6.)That’s why it’s called “Financial Planning”.
Because, you first must have a specific financial goal in mind, And since there is no such thing as the best all-in-one investment instrument. (more so now). Each instrument should fit a specific goal,-an educational plan for your child’s future education, A pension plan for your retirement, and so on. In the end, it all depends on how much you’ll need, how much you can afford to pay, and how much time you are willing to allot.
7.)It still takes time.
Some things in life are simply that way, usually, the lasting and productive ones-the blooming of flowers, the bearing of fruits, wines and spirits, evolution,
change and most of all, GROWTH, that’s why it’s called MATURITY.
8.)Speculation is the mother of Recession.
With regards to the sub-prime fiasco, the verdict on Wall Street is out, GUILTY. The crime: GREED. Hard to believe, the CEO’s, Investment Bankers, and Fund managers of these companies, were students of economics once. Maybe they thought they were just too smart for the rules. By mobilizing these funds, securities and investments are supposed to help develop the capital markets, to finance the expansion of Industries that produce goods and services, provide employment, promote savings, and an equitable distribution of wealth, and help stabilize the stock market. By deviating from these basic, (tried and tested) fundamentals, they have violated the trust of millions of investors, who have entrusted them with their hard earned money, and of course, created the mess were in right now. It’s not the economy stupid-it’s elementary my dear Watson.
P.S. I normally don’t recommend books, but those of you who love to read good old-fashion novels might want to check out an old bestseller (circa 1977) that I have just read and enjoyed, while it’s a 70’s book, you’d be surprised at the uncanny resemblance to today’s headlines. Entitled: “The Crash of 79” by Paul Erdman. It’s a thriller and international intrigue, in the tradition of Forsyth and Le Carre’. Whose hero is a (lol) Banker.
Investment advice (By Boo Chanco)
If you had purchased $1,000 of Delta Air Lines stocks one year ago, you would have $49 left. With Fannie Mae, you would have $2.50 left of the original $1,000. With AIG, you would have less than $15 left.
But, if you had purchased $1,000 worth of beer one year ago, drunk all of the beer, then turned in the cans for the aluminium recycling REFUND, you would have $214 cash.
Based on the above, the best current investment advice is to drink heavily and recycle.
Thursday, November 20, 2008
MEET RICO SANTOS * THE WORLD’S RICHEST AND MOST SUCCESSFUL PERSON
He makes no money to speak of, and at the moment, is unemployed, and yet, his net worth is trifling, he is 25 year old Rico Santos. Like most everyone who comes from a comfortable middle class family, he went to exclusive elementary and high schools. The son of a Doctor, (and coming from a family of Doctors,) Rico has no interest in medicine, he recently graduated with a degree in Computer Science from a well known University.
For now, Rico has not yet decided what to do with his life, whether to work in a call centre, or an IT company, here and abroad, or maybe if he changes his mind, take up nursing as a second course(like most people he knows). But still...it’s up to him. Either way, Rico Santos has the enviable freedom to choose his path, and for the moment he has chosen to postpone his quest for the bankable variety of wealth, to pursue his passion: Surfing, A sport he took up, a few years back as a student, while on vacation in Siargao Island with his friends one summer.
Before he plans to pursue his career, he and a group of friends, plan to surf the waves of the remote islands of Batanes, and the Spratleys. Santos figures he probably will be needing around, P30, 000.00 for those trips, and he doesn’t know how to raise the money, but he has the earning potential, and with the oceans before him and wind offshore, Santos is very well fixed already.
You might be wondering how a guy like that gets to be the world’s richest and most successful person. Before I proceed to explain why, let me first introduce who Rico Santos really is. If you are between, 21-30 years old, single (no dependents), healthy, with no liabilities (walang utang) and possessing a college degree, then “YOU ARE RICO SANTOS”. that’s because you are rich in assets of another kind. You have youth, health, confidence, and a top notch education-a wealth of what economist call human capital, the kind of person Human Resource Managers look for. In addition, your obligations are nil and your options are virtually limitless, a status in life, money can neither buy nor preserve.
If wealth can be defined as independence, opportunity, and the amount of control someone has over his/her own life-and many would argue that those attributes are essential to a sense of well-being-then you, (the Rico Santos’ of the world) are the richest and most successful person today. The bad news is, you will never be much richer than you are now, your options will inevitably narrow, your responsibilities (both: personal and professional) will mount with time, and with it comes, financial liabilities: bills, loans, mortgages, tuition fees.etc. As you age, you use up human capital the way an old machine loses its productivity. Not to mention, that your single most important asset-your health” will start to deteriorate (unless you do something about it of course) only financial Capital, and more of it, can pay the obligations that grow out of work and family and accumulate as one matures.
Financially speaking, your financial capital value (assets both, solid and liquid) should increase, as your human capital value decreases. While it is “assumed” that your income will increase as you grow older, such won’t be the case when you retire. So one of the best options for you now would be to start your financial planning-on building financial wealth. So as I said earlier, your options are still open, question is-what are you going to do about it?
*The name Rico Santos is purely the product of my imagination, any reference to an actual Rico Santos is purely coincidental and unintentional
References and Links
www.pinoysmartsaver.com
www.colaycofoundation.com
www.business.inquirer.net/money/personalfinance
www.rfp-philippines.com
For now, Rico has not yet decided what to do with his life, whether to work in a call centre, or an IT company, here and abroad, or maybe if he changes his mind, take up nursing as a second course(like most people he knows). But still...it’s up to him. Either way, Rico Santos has the enviable freedom to choose his path, and for the moment he has chosen to postpone his quest for the bankable variety of wealth, to pursue his passion: Surfing, A sport he took up, a few years back as a student, while on vacation in Siargao Island with his friends one summer.
Before he plans to pursue his career, he and a group of friends, plan to surf the waves of the remote islands of Batanes, and the Spratleys. Santos figures he probably will be needing around, P30, 000.00 for those trips, and he doesn’t know how to raise the money, but he has the earning potential, and with the oceans before him and wind offshore, Santos is very well fixed already.
You might be wondering how a guy like that gets to be the world’s richest and most successful person. Before I proceed to explain why, let me first introduce who Rico Santos really is. If you are between, 21-30 years old, single (no dependents), healthy, with no liabilities (walang utang) and possessing a college degree, then “YOU ARE RICO SANTOS”. that’s because you are rich in assets of another kind. You have youth, health, confidence, and a top notch education-a wealth of what economist call human capital, the kind of person Human Resource Managers look for. In addition, your obligations are nil and your options are virtually limitless, a status in life, money can neither buy nor preserve.
If wealth can be defined as independence, opportunity, and the amount of control someone has over his/her own life-and many would argue that those attributes are essential to a sense of well-being-then you, (the Rico Santos’ of the world) are the richest and most successful person today. The bad news is, you will never be much richer than you are now, your options will inevitably narrow, your responsibilities (both: personal and professional) will mount with time, and with it comes, financial liabilities: bills, loans, mortgages, tuition fees.etc. As you age, you use up human capital the way an old machine loses its productivity. Not to mention, that your single most important asset-your health” will start to deteriorate (unless you do something about it of course) only financial Capital, and more of it, can pay the obligations that grow out of work and family and accumulate as one matures.
Financially speaking, your financial capital value (assets both, solid and liquid) should increase, as your human capital value decreases. While it is “assumed” that your income will increase as you grow older, such won’t be the case when you retire. So one of the best options for you now would be to start your financial planning-on building financial wealth. So as I said earlier, your options are still open, question is-what are you going to do about it?
*The name Rico Santos is purely the product of my imagination, any reference to an actual Rico Santos is purely coincidental and unintentional
References and Links
www.pinoysmartsaver.com
www.colaycofoundation.com
www.business.inquirer.net/money/personalfinance
www.rfp-philippines.com
Tuesday, November 11, 2008
Investing your hard-earned money
Look beyond regular savings accounts
(Ninth in a series called Take Charge of Your Money)
YOU’RE working hard with a specific goal in mind: provide well for your family’s needs today and in the future. That’s why you’re keen on saving, a key strategy in securing your financial future.
But where should you put your money? Are savings accounts enough? Savings accounts are good in that your money is easily accessible anytime, but the interest they earn can be so small that you’d be missing out on higher potential returns other investment instruments may offer. You may want to consider keeping some money in a savings account and invest the bulk elsewhere.
Here are a few suggestions on where you can invest your hard-earned money:
Time deposits. Your money will be kept by the bank for a fixed period (30 days, 60 days, 90 days or more) in exchange for an interest rate higher than that offered by a savings account. A time deposit is easily accessible, but early withdrawal may cost you a fee.
Some banks, however, have introduced time deposit products that allow partial withdrawals without touching the interest rate. For those who want to save and invest smartly, be more diligent in choosing banks.
Foreign currency. You may choose to invest in US dollar, euro or other foreign currency savings or time deposits. Be on guard though, since a foreign currency may weaken against the peso anytime. In that case, you may choose to ride out the exchange rate fluctuation or switch to another currency.
Stocks. Refers to buying shares of ownership in a publicly listed company“The stock market is very volatile therefore riskier-prices of stocks fluctuate in response to the times .but it can also be more profitable, as your returns can be anywhere from 20-30%. Stock investments should be held over the long term to ride out fluctuations. .
Mutual funds. If directly investing in money market, stocks and bonds seems tedious, time-consuming, and baffling, consider getting into mutual funds. A mutual fund gathers together investment placements from many investors, which the fund manager then invests in money market, stocks, and bonds based on their market study. It has become popular, with more investors in the US shifting from cash deposits to mutual funds in recent years. This is because mutual funds allow investors to diversify rather than just focus on one investment vehicle. Mutual funds also “have the potential for good long-term growth,” points out The Citibank Guide to Building Personal Wealth. Choose a mutual fund according to your preference — money market fund, equities fund, bonds fund, or balanced (mixed) fund.
Equity funds If results show that you are suitable for equity (stock) investments, you may want to consider investing in equity funds instead, rather than directly investing in the stock market. Equity funds are investment funds invested wholly in stocks and are run by full-time professional fund managers who watch over the portfolio and make trading decisions daily. They know which stocks are doing well since they analyze the market daily. Investing in equity funds will allow you to diversify your investments, since the fund invests in not just one stock, but in a mix. You will have access to otherwise hard-to-reach financial markets since the fund will be able to invest in equities not available to the small investor. You will also be spreading your risk, since you won’t be exposed to just one company stock. So even if one stock loses, others may gain and you will have a net gain. You will also be highly liquid since you can turn your investment into cash anytime you want by withdrawing from the fund, in some cases, at a small fee. Seen from a global perspective, equities have historically been the best-performing asset class over the long term.” Equity funds may be in the form of a mutual fund run by a financial company, or a unit investment trust fund you can access through a bank.
Bonds. A bond is a loan that you, the investor, makes -- you lend your money to a government, municipal authority, or company in exchange for a fixed amount of interest paid to you regularly. You don’t get to own a part of the lending entity. At maturity date, your investment is paid back to you at par value — the amount written on the bond certificate. Bonds have long been established in Europe and the US, where this type of investment has done better than cash investments in terms of returns. Bonds suit conservative investors since they can get a regular stream of income over a number of years. The risk lies in payment defaults, so choose bonds carefully.
Treasury Bills you loan your money to the government, to finance public expenses, for a short term, say 30 days a year, And are risk- free, since they carry the government’s full and unconditional guarantee, interest rates can go as high as 4% per annum.
Treasury notes similar to treasury bills, except that they require a longer investment-from 2 to 25 years,-but you can enjoy coupon interest payments, usually handed out in arrears, longer term equals a higher interest rate.
Derivatives. These are financial instruments based on the prices of equities, bonds and commodities. It requires more capital and investment know-how, since you deal in effect with the future prices of these assets. Trading is done in futures exchanges or privately through contracts. Financial institutions can do this for you.
Real estate. This is familiar to many Filipino investors, since a house and lot is often one of the first things we save up for. It is a sound investment, much better than renting a place where the family can stay. But there are some things investors have to consider:
1. It may not earn income if the family lives in it.
2. Maintenance costs will go higher as years go by.
3. It does not sell as quickly as other investments.
4. Its price fluctuates depending on the condition of the real estate market.
An investor is thus advised not to plunk all his hard-earned money on real estate.
Start a business you may also start a business. However, this demands much time and effort. If you don’t have the passion for it, don’t pursue. If you don’t know anything about the business you are looking at, don’t get into it. A business, to be successful, demands much of the entrepreneur.
Saving vs. Investing Money allocated for savings and deposit accounts are normally set aside for future expenses and emergencies, while cash invested in stocks, securities, or bonds provides opportunities for money to grow over time. The major difference here is that investments usually require higher risk-you either lose money or make tons of it through interest rates and changing economy.
Diversity is the name of the game
The adage “Don’t put your eggs in one basket” is a rule investors need to follow. Avoid investing solely in one form of investment. Allocate your assets to spread out your risk. How you should allocate your assets is answered by how conservative or aggressive you are in risk taking, and in how long you can hold the investment.
If you are still young and fairly willing to take on risks, consider investing more in stocks or in an equities mutual fund. You can ride out market corrections and earn a potential higher yield.
If you are conservative, or approaching retirement, experts advise you shift more to bonds or a bond mutual fund. Time deposits or money market placements are investments for the short term, which you need to have to meet any financial need arising out of emergencies. Having a good mix of investments will help you prepare for your future well.
Warning Signs
If you are being offered a proposition that seems too unusual or is promising extraordinarily high returns, stop and ask yourself a few questions.
• Am I being told that this is a once-in-a-lifetime opportunity? Is there pressure to make a decision immediately? - Investment is not about once-in-a-lifetime opportunities. These may occur in business but not in the financial markets. There is no need to make instant decisions.
• Is a very high return being guaranteed? - Some fraudsters hope that the promise of an unusually high return-for example, 10% to 20% a month return-will be so tempting that you will abandon your caution. Investments producing high returns are almost certainly risky, and don’t come with guaranteed returns. If a guarantee is on offer, further investigation will probably reveal it to be worthless.
• Who regulates the investment? - Check to see if the firm is registered and whether it is permitted to market the kind of investment it is offering. For example, a company selling securities must not only be incorporated with the Securities and Exchange Commission but must also have another set of papers from the SEC authorizing it to sell securities.
Some common Investment Terms simplified
Asset allocation refers to the method of deciding how much money to invest
And in which investment vehicle (i.e. stocks, bonds, mutual funds etc.)
Diversification A strategy where an investor puts money in several kinds of businesses
Or securities to protect his investments in case the market suffers a downturn. This could be a mix of shares in the stock market, mutual fund, or government securities like bonds and treasury bills.
Portfolio A person’s investment in stocks, securities, bonds, and treasury notes, consists of his portfolio – a term which refers to the investment collectively.
Fund manager A person who advises or helps manage an investor’s portfolio. Some financial institutions provide professional fund managers to clients as part of their investment package.
Liquidity refers to how fast investments or other assets can be converted to cash. Investments in the stock market and mutual funds are normally considered liquid because they can be easily sold to the stockbroker or issuer, while real state investments and jewelries take a while to dispose of .
Principal is the amount an investor originally uses to buy securities or stock shares. It also refers to the value where simple interest rates are computed, and so is the amount paid for the issuer of treasury notes and bills (usually the government) upon maturity.
Return on Investment refers to how long it takes to recover the amount of money an investor has put into a business or other money-making vehicles – higher returns at lesser time is ideal.
Term refers to the length of time your money has to be tied up to a deposit account or investment vehicle, which could either be for short, medium or long term. Terms could indicate the investment’s yield(interest or earnings – e.g., for bonds longer terms may offer higher interest rates) while pre termination (the withdrawal ,closing, and redemption of the investment before the agreed specified term, time deposits, and mutual funds for example ) may require you to pay a certain amount as fee or penalty.
Inflation refers to the increase in the prices of commodities in relation to the capacity of people to purchase such goods – it is said that money may no longer be able to buy in the future what it can afford today. Higher inflation rate diminishes the ability of the investment to yield higher returns. if the inflation rate is at 6-7% and your investment is earning you less than that, you’re basically losing money.
Fear Factor
By Malaya Laraya, RFP
A common sentiment I hear from people these days is that though they would very much like to invest, they are afraid to do so. They are afraid that if they invest in things like stocks, mutual funds, pre-need plans or UITF’s, they will lose their money. Consequently, they keep the majority of their funds in savings accounts or time deposits since those are the products that they are familiar with. Unfortunately, this type of thinking only ensures that an individual will never be able to accumulate enough cash or assets to ensure a prosperous life. To illustrate, let me use this brief analogy.
Let’s say you live in Fairview and would like to go to Enchanted Kingdom for a day of fun and relaxation. Ideally, the best thing to do would be to wake up early and drive there. That way you get to spend the maximum amount of time at the park before it closes. If you don’t have your own vehicle or don’t want to have to deal with the hassle of driving but still want to spend the most amount of time at the park, the next best thing would be to wake up earlier and commute to the park. I don’t think anyone would consider going to Enchanted Kingdom from Fairview by walking there. Not only would you arrive very, very late but I doubt you would be in much shape to enjoy all the attractions the park has to offer. Actually, there’s a very good chance you will be unable to reach the park at all due to sheer physical exhaustion.
Now, regardless of the method of travel you choose, there is a realistic chance that something will go wrong and you will either arrive at the park late or not at all. Your car’s radiator could overheat or the bus you are riding could get a flat tire. As a worst case scenario, the vehicle you are riding in could actually get hit by another car and mess up the trip completely. All of these events could happen and not a day goes by wherein someone, somewhere, gets a flat tire, an overheated radiator or gets involved in a collision. But would you actually let these things stop you? Would the possibility of being involved in a vehicular accident dissuade you from either riding or driving a motor vehicle forever? Would you let the fear of a possible accident determine where and what places you can go to?
Believe it or not, the process of investing is very much like the situation I just described above. To begin with, we all have our own vision of Enchanted Kingdom – the life we would like to have wherein we are free from the day-to-day cares and worries of life.
Second, the time at which we wake up and begin the trip is the time wherein we begin to invest actively for our personal goals. Simply put, the earlier you start on your journey, the earlier you will get to your destination. Furthermore, starting early gives one the luxury of taking things slowly. We don’t have to rush and can take the time to enjoy the trip. Most importantly though, starting early gives one a buffer zone that can definitely come in handy should a flat tire or some other emergency arise.
Third, the mode of transport we use equates to the investment methods and products we pick – running a business, investing in stocks are like cars (fast and expensive); mutual funds, pooled funds are like public transport (slower but cheaper) and savings accounts / time deposits are akin to walking. Of course, much as there is no intrinsically “best” form of transport, there is also no intrinsically “best” form of investment. Instead, there are “suitable” or “efficient” investments. To be more precise, much like it would be more efficient to walk short distances, so are time deposits and savings accounts more efficient than stocks for short-term needs.
Fourth, the type of transport we select determines how involved we have to be in the investment process. For example, if we regularly travel by car, it would be in our best interest to keep the car well maintained. However, as any car owner will tell you, properly maintaining a car takes time and money. It simply will not take care of itself. Running a business requires the same amount of involvement. Ask any successful entrepreneur- trader and they will tell you that maintaining a business takes quite a bit of time and money. One cannot simply enter the market and expect everything to work as they expected.
Fifth, much like something can always go wrong on a trip, no investment instrument is 100% risk free. There is always a chance that, no matter how carefully you’ve planned things out, something somewhere will go terribly wrong and mess things up. For example, let’s say you decide to drive to your destination. Now, you’ve properly maintained your car and you drive as carefully as you can. Unfortunately, there is very little you can do to prepare for the drunk driver on the other lane who decides to slam his vehicle into yours. The same thing holds for investing. No matter how well you plan your portfolio, events outside of your control can suddenly just step in and wipe out most of your holdings. (Example: Asian Financial Crisis of the 90’s.)
With all of that said, what can we then do to eliminate or minimize whatever fear we have of investing? Well, much like we would learn to drive a car or memorize the different routes jeeps and buses ply, so must we exert the effort to learn more about the business and/or stocks and other investment tools. To put it bluntly, it is only through education that we can master our fears and prevent them from limiting the kinds of lives and the kinds of dreams we can achieve.
Links:
www.business.inquirer.net/money/personalfinance
www.pinoysmartsaver.com
www.colaycofoundation.com
http://www.apersonalfinanceguide.com/
www.accounting4u.com
(Ninth in a series called Take Charge of Your Money)
YOU’RE working hard with a specific goal in mind: provide well for your family’s needs today and in the future. That’s why you’re keen on saving, a key strategy in securing your financial future.
But where should you put your money? Are savings accounts enough? Savings accounts are good in that your money is easily accessible anytime, but the interest they earn can be so small that you’d be missing out on higher potential returns other investment instruments may offer. You may want to consider keeping some money in a savings account and invest the bulk elsewhere.
Here are a few suggestions on where you can invest your hard-earned money:
Time deposits. Your money will be kept by the bank for a fixed period (30 days, 60 days, 90 days or more) in exchange for an interest rate higher than that offered by a savings account. A time deposit is easily accessible, but early withdrawal may cost you a fee.
Some banks, however, have introduced time deposit products that allow partial withdrawals without touching the interest rate. For those who want to save and invest smartly, be more diligent in choosing banks.
Foreign currency. You may choose to invest in US dollar, euro or other foreign currency savings or time deposits. Be on guard though, since a foreign currency may weaken against the peso anytime. In that case, you may choose to ride out the exchange rate fluctuation or switch to another currency.
Stocks. Refers to buying shares of ownership in a publicly listed company“The stock market is very volatile therefore riskier-prices of stocks fluctuate in response to the times .but it can also be more profitable, as your returns can be anywhere from 20-30%. Stock investments should be held over the long term to ride out fluctuations. .
Mutual funds. If directly investing in money market, stocks and bonds seems tedious, time-consuming, and baffling, consider getting into mutual funds. A mutual fund gathers together investment placements from many investors, which the fund manager then invests in money market, stocks, and bonds based on their market study. It has become popular, with more investors in the US shifting from cash deposits to mutual funds in recent years. This is because mutual funds allow investors to diversify rather than just focus on one investment vehicle. Mutual funds also “have the potential for good long-term growth,” points out The Citibank Guide to Building Personal Wealth. Choose a mutual fund according to your preference — money market fund, equities fund, bonds fund, or balanced (mixed) fund.
Equity funds If results show that you are suitable for equity (stock) investments, you may want to consider investing in equity funds instead, rather than directly investing in the stock market. Equity funds are investment funds invested wholly in stocks and are run by full-time professional fund managers who watch over the portfolio and make trading decisions daily. They know which stocks are doing well since they analyze the market daily. Investing in equity funds will allow you to diversify your investments, since the fund invests in not just one stock, but in a mix. You will have access to otherwise hard-to-reach financial markets since the fund will be able to invest in equities not available to the small investor. You will also be spreading your risk, since you won’t be exposed to just one company stock. So even if one stock loses, others may gain and you will have a net gain. You will also be highly liquid since you can turn your investment into cash anytime you want by withdrawing from the fund, in some cases, at a small fee. Seen from a global perspective, equities have historically been the best-performing asset class over the long term.” Equity funds may be in the form of a mutual fund run by a financial company, or a unit investment trust fund you can access through a bank.
Bonds. A bond is a loan that you, the investor, makes -- you lend your money to a government, municipal authority, or company in exchange for a fixed amount of interest paid to you regularly. You don’t get to own a part of the lending entity. At maturity date, your investment is paid back to you at par value — the amount written on the bond certificate. Bonds have long been established in Europe and the US, where this type of investment has done better than cash investments in terms of returns. Bonds suit conservative investors since they can get a regular stream of income over a number of years. The risk lies in payment defaults, so choose bonds carefully.
Treasury Bills you loan your money to the government, to finance public expenses, for a short term, say 30 days a year, And are risk- free, since they carry the government’s full and unconditional guarantee, interest rates can go as high as 4% per annum.
Treasury notes similar to treasury bills, except that they require a longer investment-from 2 to 25 years,-but you can enjoy coupon interest payments, usually handed out in arrears, longer term equals a higher interest rate.
Derivatives. These are financial instruments based on the prices of equities, bonds and commodities. It requires more capital and investment know-how, since you deal in effect with the future prices of these assets. Trading is done in futures exchanges or privately through contracts. Financial institutions can do this for you.
Real estate. This is familiar to many Filipino investors, since a house and lot is often one of the first things we save up for. It is a sound investment, much better than renting a place where the family can stay. But there are some things investors have to consider:
1. It may not earn income if the family lives in it.
2. Maintenance costs will go higher as years go by.
3. It does not sell as quickly as other investments.
4. Its price fluctuates depending on the condition of the real estate market.
An investor is thus advised not to plunk all his hard-earned money on real estate.
Start a business you may also start a business. However, this demands much time and effort. If you don’t have the passion for it, don’t pursue. If you don’t know anything about the business you are looking at, don’t get into it. A business, to be successful, demands much of the entrepreneur.
Saving vs. Investing Money allocated for savings and deposit accounts are normally set aside for future expenses and emergencies, while cash invested in stocks, securities, or bonds provides opportunities for money to grow over time. The major difference here is that investments usually require higher risk-you either lose money or make tons of it through interest rates and changing economy.
Diversity is the name of the game
The adage “Don’t put your eggs in one basket” is a rule investors need to follow. Avoid investing solely in one form of investment. Allocate your assets to spread out your risk. How you should allocate your assets is answered by how conservative or aggressive you are in risk taking, and in how long you can hold the investment.
If you are still young and fairly willing to take on risks, consider investing more in stocks or in an equities mutual fund. You can ride out market corrections and earn a potential higher yield.
If you are conservative, or approaching retirement, experts advise you shift more to bonds or a bond mutual fund. Time deposits or money market placements are investments for the short term, which you need to have to meet any financial need arising out of emergencies. Having a good mix of investments will help you prepare for your future well.
Warning Signs
If you are being offered a proposition that seems too unusual or is promising extraordinarily high returns, stop and ask yourself a few questions.
• Am I being told that this is a once-in-a-lifetime opportunity? Is there pressure to make a decision immediately? - Investment is not about once-in-a-lifetime opportunities. These may occur in business but not in the financial markets. There is no need to make instant decisions.
• Is a very high return being guaranteed? - Some fraudsters hope that the promise of an unusually high return-for example, 10% to 20% a month return-will be so tempting that you will abandon your caution. Investments producing high returns are almost certainly risky, and don’t come with guaranteed returns. If a guarantee is on offer, further investigation will probably reveal it to be worthless.
• Who regulates the investment? - Check to see if the firm is registered and whether it is permitted to market the kind of investment it is offering. For example, a company selling securities must not only be incorporated with the Securities and Exchange Commission but must also have another set of papers from the SEC authorizing it to sell securities.
Some common Investment Terms simplified
Asset allocation refers to the method of deciding how much money to invest
And in which investment vehicle (i.e. stocks, bonds, mutual funds etc.)
Diversification A strategy where an investor puts money in several kinds of businesses
Or securities to protect his investments in case the market suffers a downturn. This could be a mix of shares in the stock market, mutual fund, or government securities like bonds and treasury bills.
Portfolio A person’s investment in stocks, securities, bonds, and treasury notes, consists of his portfolio – a term which refers to the investment collectively.
Fund manager A person who advises or helps manage an investor’s portfolio. Some financial institutions provide professional fund managers to clients as part of their investment package.
Liquidity refers to how fast investments or other assets can be converted to cash. Investments in the stock market and mutual funds are normally considered liquid because they can be easily sold to the stockbroker or issuer, while real state investments and jewelries take a while to dispose of .
Principal is the amount an investor originally uses to buy securities or stock shares. It also refers to the value where simple interest rates are computed, and so is the amount paid for the issuer of treasury notes and bills (usually the government) upon maturity.
Return on Investment refers to how long it takes to recover the amount of money an investor has put into a business or other money-making vehicles – higher returns at lesser time is ideal.
Term refers to the length of time your money has to be tied up to a deposit account or investment vehicle, which could either be for short, medium or long term. Terms could indicate the investment’s yield(interest or earnings – e.g., for bonds longer terms may offer higher interest rates) while pre termination (the withdrawal ,closing, and redemption of the investment before the agreed specified term, time deposits, and mutual funds for example ) may require you to pay a certain amount as fee or penalty.
Inflation refers to the increase in the prices of commodities in relation to the capacity of people to purchase such goods – it is said that money may no longer be able to buy in the future what it can afford today. Higher inflation rate diminishes the ability of the investment to yield higher returns. if the inflation rate is at 6-7% and your investment is earning you less than that, you’re basically losing money.
Fear Factor
By Malaya Laraya, RFP
A common sentiment I hear from people these days is that though they would very much like to invest, they are afraid to do so. They are afraid that if they invest in things like stocks, mutual funds, pre-need plans or UITF’s, they will lose their money. Consequently, they keep the majority of their funds in savings accounts or time deposits since those are the products that they are familiar with. Unfortunately, this type of thinking only ensures that an individual will never be able to accumulate enough cash or assets to ensure a prosperous life. To illustrate, let me use this brief analogy.
Let’s say you live in Fairview and would like to go to Enchanted Kingdom for a day of fun and relaxation. Ideally, the best thing to do would be to wake up early and drive there. That way you get to spend the maximum amount of time at the park before it closes. If you don’t have your own vehicle or don’t want to have to deal with the hassle of driving but still want to spend the most amount of time at the park, the next best thing would be to wake up earlier and commute to the park. I don’t think anyone would consider going to Enchanted Kingdom from Fairview by walking there. Not only would you arrive very, very late but I doubt you would be in much shape to enjoy all the attractions the park has to offer. Actually, there’s a very good chance you will be unable to reach the park at all due to sheer physical exhaustion.
Now, regardless of the method of travel you choose, there is a realistic chance that something will go wrong and you will either arrive at the park late or not at all. Your car’s radiator could overheat or the bus you are riding could get a flat tire. As a worst case scenario, the vehicle you are riding in could actually get hit by another car and mess up the trip completely. All of these events could happen and not a day goes by wherein someone, somewhere, gets a flat tire, an overheated radiator or gets involved in a collision. But would you actually let these things stop you? Would the possibility of being involved in a vehicular accident dissuade you from either riding or driving a motor vehicle forever? Would you let the fear of a possible accident determine where and what places you can go to?
Believe it or not, the process of investing is very much like the situation I just described above. To begin with, we all have our own vision of Enchanted Kingdom – the life we would like to have wherein we are free from the day-to-day cares and worries of life.
Second, the time at which we wake up and begin the trip is the time wherein we begin to invest actively for our personal goals. Simply put, the earlier you start on your journey, the earlier you will get to your destination. Furthermore, starting early gives one the luxury of taking things slowly. We don’t have to rush and can take the time to enjoy the trip. Most importantly though, starting early gives one a buffer zone that can definitely come in handy should a flat tire or some other emergency arise.
Third, the mode of transport we use equates to the investment methods and products we pick – running a business, investing in stocks are like cars (fast and expensive); mutual funds, pooled funds are like public transport (slower but cheaper) and savings accounts / time deposits are akin to walking. Of course, much as there is no intrinsically “best” form of transport, there is also no intrinsically “best” form of investment. Instead, there are “suitable” or “efficient” investments. To be more precise, much like it would be more efficient to walk short distances, so are time deposits and savings accounts more efficient than stocks for short-term needs.
Fourth, the type of transport we select determines how involved we have to be in the investment process. For example, if we regularly travel by car, it would be in our best interest to keep the car well maintained. However, as any car owner will tell you, properly maintaining a car takes time and money. It simply will not take care of itself. Running a business requires the same amount of involvement. Ask any successful entrepreneur- trader and they will tell you that maintaining a business takes quite a bit of time and money. One cannot simply enter the market and expect everything to work as they expected.
Fifth, much like something can always go wrong on a trip, no investment instrument is 100% risk free. There is always a chance that, no matter how carefully you’ve planned things out, something somewhere will go terribly wrong and mess things up. For example, let’s say you decide to drive to your destination. Now, you’ve properly maintained your car and you drive as carefully as you can. Unfortunately, there is very little you can do to prepare for the drunk driver on the other lane who decides to slam his vehicle into yours. The same thing holds for investing. No matter how well you plan your portfolio, events outside of your control can suddenly just step in and wipe out most of your holdings. (Example: Asian Financial Crisis of the 90’s.)
With all of that said, what can we then do to eliminate or minimize whatever fear we have of investing? Well, much like we would learn to drive a car or memorize the different routes jeeps and buses ply, so must we exert the effort to learn more about the business and/or stocks and other investment tools. To put it bluntly, it is only through education that we can master our fears and prevent them from limiting the kinds of lives and the kinds of dreams we can achieve.
Links:
www.business.inquirer.net/money/personalfinance
www.pinoysmartsaver.com
www.colaycofoundation.com
http://www.apersonalfinanceguide.com/
www.accounting4u.com
Monday, November 10, 2008
THE LAWS ON BUILDING PERSONAL WEALTH
It’s better to look ahead and prepare, than to look back and despair
When my grand-father, the late Go Ling Guan (Leon Go-my namesake)
migrated from china in the mid-1920’s, he was like most Chinese migrants-penniless. However unlike most of his countrymen, he was western educated, he had a high school education from a school run by Spanish monks (not Jesuits-in China)so he could speak fluent English, Spanish, and a little French, besides Chinese(Mandarin and Fukienese) of course. My Grandfather worked odd jobs, to survive, until he was able to save enough to help his younger brother, Go Sio Hong (Dionisio Go) follow him. Unlike most Chinese, my Grandfather was not much of an entrepreneur, but because of his High School Education (which was a big deal at that time) it was easy for my Grandfather to find employment, eventually he was hired by a fellow Chinese (and distant relative)-the late Carlos A. Gothong (of Gothong Lines) who was then building a ferry company.
On the other hand, his younger brother who was not western educated could only speak Chinese, so getting employed was out of the question, as most of the big business at that time was not yet owned by the Chinese, so he ended putting up his own business, (with the help of my Grandfather) a fishing supply store. And as a familiar twist to a story goes, my grandfather (supposedly the western educated one) ended up being an employee all his life-he rose to become Jefe de Viaje (the equivalent of a branch manager today) of Gothong Lines, before he retired, while his younger brother’s fishing supply store, has grown up today to become a multi-million business, with interests in Marine Engines/supplies, fishing supplies, hardware and construction, gasoline retail and shipping.
My point here is that, while my Grandfather was never an entrepreneur nor a businessman, he had a trait common among the Chinese-he had the discipline to save. Such that, he was able to provide for his family a comfortable life, until it was rudely interrupted by the Japanese occupation, but whose life wasn’t? and even then-after the war he was able to send my father (the eldest of 9 siblings) to Med-School (UP and Southwestern Univ.) and his sister (the 2nd child) to business school, (USC) where she became a CPA, true to tradition , both of them then pitched-in to help the rest of their siblings, finish school. It was savings that helped them succeed. I can never over-emphasize the value of savings, when it comes to building financial wealth-it is the most important, and yet underrated thing. Read any rags to riches success stories, especially those concerning tai-pans, they will always tell you the usuall, hard work and perseverance (sipag at tiyaga) what they always omit to say is that the most common trait among successfully wealthy people is their discipline (some say-iron will) to save, and sacrifice. This is not to belittle the virtues of hard work, but look around you, there lots and lots of people who have been working their asses off, but they still can’t seem to make ends meet. It’s savings... below are some of my compilations of different articles of strategies that work.
1.) Start early (Start right now!) It’s not how much you save, but how
early you start saving. Or investing
2.) Plan at least 5 to 10 years ahead,(see above) When she turned 21, Sharon Cuneta took financial control of money earned since her first record, “Mr. DJ,” was released several years earlier. By all accounts, the singer/actress has since managed her money well- spending less than what she earned, investing wisely her surplus funds, and planning a more than comfortable future for herself and for her daughter, KC Concepcion, that included regular trips abroad and schooling in the best possible schools. At any given point, she knows how much she is worth.
Today, Cuneta has two other daughters, both of pre-school age, which she has now included in her financial plans and (KC) Concepcion studied in Paris.
3.) Get College covered (refer to no.2) and please remember that tuition fee is only 30% of total college cost; the other 70% is for misc. fees.
If you’re still single and don’t have children refer to nos. 1 & 2
4.) Hedge against long-term disability. Get an accident and health insurance. Your money amassed should be enjoyed, and not used to pay for hospital bills.
5.) Get a life insurance policy. Your loved ones shouldn’t be financially
displaced in the event of your untimely death. Or you, in the event of a
disability
6.) Keep it simple something you can easily grasp and understand
7.) Keep your asset allocations current (i.e.: keep your accounting/auditing updated and make savings automatic)
8.) Live below your means (earn more-spend less)
9.) Never buy on credit yes it’s true, you don’t get interest when you use your plastic, but that’s what’s going to tempt you to buy more than you need in the first place.
10.) Don’t rely on your instincts; they’re probably wrong.
P.S. If they were right. We would have had lots of winners in that popular TV game show “Deal or No Deal”. - Nards
PS: Actually we can go much farther than savings, and that is investment. Too bad my grandfather never had that option. Come to think of it: Warren Buffet, one of the world’s richest man, and the greatest investor of all time, started investing when he was 14, in 1965 and he wished he started much younger.
References and Links
www.pinoysmartsaver.com
www.colaycofoundation.com
www.bestlifeonline.com
www.business.inquirer.net/money/personalfinance
http://www.accountingtips4you.com/
http://www.apersonalfinanceguide.com/
When my grand-father, the late Go Ling Guan (Leon Go-my namesake)
migrated from china in the mid-1920’s, he was like most Chinese migrants-penniless. However unlike most of his countrymen, he was western educated, he had a high school education from a school run by Spanish monks (not Jesuits-in China)so he could speak fluent English, Spanish, and a little French, besides Chinese(Mandarin and Fukienese) of course. My Grandfather worked odd jobs, to survive, until he was able to save enough to help his younger brother, Go Sio Hong (Dionisio Go) follow him. Unlike most Chinese, my Grandfather was not much of an entrepreneur, but because of his High School Education (which was a big deal at that time) it was easy for my Grandfather to find employment, eventually he was hired by a fellow Chinese (and distant relative)-the late Carlos A. Gothong (of Gothong Lines) who was then building a ferry company.
On the other hand, his younger brother who was not western educated could only speak Chinese, so getting employed was out of the question, as most of the big business at that time was not yet owned by the Chinese, so he ended putting up his own business, (with the help of my Grandfather) a fishing supply store. And as a familiar twist to a story goes, my grandfather (supposedly the western educated one) ended up being an employee all his life-he rose to become Jefe de Viaje (the equivalent of a branch manager today) of Gothong Lines, before he retired, while his younger brother’s fishing supply store, has grown up today to become a multi-million business, with interests in Marine Engines/supplies, fishing supplies, hardware and construction, gasoline retail and shipping.
My point here is that, while my Grandfather was never an entrepreneur nor a businessman, he had a trait common among the Chinese-he had the discipline to save. Such that, he was able to provide for his family a comfortable life, until it was rudely interrupted by the Japanese occupation, but whose life wasn’t? and even then-after the war he was able to send my father (the eldest of 9 siblings) to Med-School (UP and Southwestern Univ.) and his sister (the 2nd child) to business school, (USC) where she became a CPA, true to tradition , both of them then pitched-in to help the rest of their siblings, finish school. It was savings that helped them succeed. I can never over-emphasize the value of savings, when it comes to building financial wealth-it is the most important, and yet underrated thing. Read any rags to riches success stories, especially those concerning tai-pans, they will always tell you the usuall, hard work and perseverance (sipag at tiyaga) what they always omit to say is that the most common trait among successfully wealthy people is their discipline (some say-iron will) to save, and sacrifice. This is not to belittle the virtues of hard work, but look around you, there lots and lots of people who have been working their asses off, but they still can’t seem to make ends meet. It’s savings... below are some of my compilations of different articles of strategies that work.
1.) Start early (Start right now!) It’s not how much you save, but how
early you start saving. Or investing
2.) Plan at least 5 to 10 years ahead,(see above) When she turned 21, Sharon Cuneta took financial control of money earned since her first record, “Mr. DJ,” was released several years earlier. By all accounts, the singer/actress has since managed her money well- spending less than what she earned, investing wisely her surplus funds, and planning a more than comfortable future for herself and for her daughter, KC Concepcion, that included regular trips abroad and schooling in the best possible schools. At any given point, she knows how much she is worth.
Today, Cuneta has two other daughters, both of pre-school age, which she has now included in her financial plans and (KC) Concepcion studied in Paris.
3.) Get College covered (refer to no.2) and please remember that tuition fee is only 30% of total college cost; the other 70% is for misc. fees.
If you’re still single and don’t have children refer to nos. 1 & 2
4.) Hedge against long-term disability. Get an accident and health insurance. Your money amassed should be enjoyed, and not used to pay for hospital bills.
5.) Get a life insurance policy. Your loved ones shouldn’t be financially
displaced in the event of your untimely death. Or you, in the event of a
disability
6.) Keep it simple something you can easily grasp and understand
7.) Keep your asset allocations current (i.e.: keep your accounting/auditing updated and make savings automatic)
8.) Live below your means (earn more-spend less)
9.) Never buy on credit yes it’s true, you don’t get interest when you use your plastic, but that’s what’s going to tempt you to buy more than you need in the first place.
10.) Don’t rely on your instincts; they’re probably wrong.
P.S. If they were right. We would have had lots of winners in that popular TV game show “Deal or No Deal”. - Nards
PS: Actually we can go much farther than savings, and that is investment. Too bad my grandfather never had that option. Come to think of it: Warren Buffet, one of the world’s richest man, and the greatest investor of all time, started investing when he was 14, in 1965 and he wished he started much younger.
References and Links
www.pinoysmartsaver.com
www.colaycofoundation.com
www.bestlifeonline.com
www.business.inquirer.net/money/personalfinance
http://www.accountingtips4you.com/
http://www.apersonalfinanceguide.com/
Thursday, October 30, 2008
A TALE OF TWO GIANTS: JESSIE LIVERMORE AND WARREN BUFFET
By Salve
10/30/08
Posted under Investing
Yesterday’s “Pesos and Sense” seminar at the Makati Sports Club was, in my opinion, very successful and extremely interesting. Speakers Chinkee Tan, Randell Tiongson and Francis Kong drew up a crowd and not only talked about dealing with debt, investing and saving, but also kept money issues in perspective. One of the seminar participants even flew in from Cebu, fly-in-fly-out style.
Randell Tiongson, president and chief operating officer of Personal Finance Advisers Phils. Corp., made a very interesting comparison between two giants in the world of finance: Jesse Livermore and Warren Buffett.
Jesse Livermore was a master of the art of speculation. He was first and foremost a trader and a technician who preached never to “fight the tape.” One of his rules was to cut your losses when your losses reach 10%.
He was famous for shorting the market during two crises and earning tons of money. First during 1907 when he bagged $3 million (guess how much that’s worth today!), and the second time in the 1929 crash when he made $100 million. He lost both fortunes after the market crashes.
Livermore lived in luxury—houses around the world, yachts, limousines and he could also be called “Lovermore” with five marriages. He died at 62 when he walked into a New York hotel room and shot himself.
Warren Buffett can be described as an investor, and not a trader. He doesn’t like Wall Street and says that openly. He doesn’t buy stocks; he buys businesses and holds on to them for the long-term. He doesn’t care about the economy. He likes businesses that survive despite economic downturns. Now at 72, he is the world’s richest man and gave away bulk of his money to charity a few years ago.
Buffett has a grandfatherly air, drives his own car and picks up his own guests at the airport. He owns five houses but still lives in his first home in Omaha and his car tag says “Thrifty.” I am currently reading the only book about him that he authorized: The Snowball: Warren Buffett and The Business Of Life and so far, it has been an intensely interesting read.
There is no question which one most people would like to be. And yet, why do most people who love Warren sometimes end up doing a Livermore?
Source/Link:http://blogs.inquirer.net/moneysmarts
10/30/08
Posted under Investing
Yesterday’s “Pesos and Sense” seminar at the Makati Sports Club was, in my opinion, very successful and extremely interesting. Speakers Chinkee Tan, Randell Tiongson and Francis Kong drew up a crowd and not only talked about dealing with debt, investing and saving, but also kept money issues in perspective. One of the seminar participants even flew in from Cebu, fly-in-fly-out style.
Randell Tiongson, president and chief operating officer of Personal Finance Advisers Phils. Corp., made a very interesting comparison between two giants in the world of finance: Jesse Livermore and Warren Buffett.
Jesse Livermore was a master of the art of speculation. He was first and foremost a trader and a technician who preached never to “fight the tape.” One of his rules was to cut your losses when your losses reach 10%.
He was famous for shorting the market during two crises and earning tons of money. First during 1907 when he bagged $3 million (guess how much that’s worth today!), and the second time in the 1929 crash when he made $100 million. He lost both fortunes after the market crashes.
Livermore lived in luxury—houses around the world, yachts, limousines and he could also be called “Lovermore” with five marriages. He died at 62 when he walked into a New York hotel room and shot himself.
Warren Buffett can be described as an investor, and not a trader. He doesn’t like Wall Street and says that openly. He doesn’t buy stocks; he buys businesses and holds on to them for the long-term. He doesn’t care about the economy. He likes businesses that survive despite economic downturns. Now at 72, he is the world’s richest man and gave away bulk of his money to charity a few years ago.
Buffett has a grandfatherly air, drives his own car and picks up his own guests at the airport. He owns five houses but still lives in his first home in Omaha and his car tag says “Thrifty.” I am currently reading the only book about him that he authorized: The Snowball: Warren Buffett and The Business Of Life and so far, it has been an intensely interesting read.
There is no question which one most people would like to be. And yet, why do most people who love Warren sometimes end up doing a Livermore?
Source/Link:http://blogs.inquirer.net/moneysmarts
Wednesday, October 29, 2008
THE TROUBLE WITH PHILAMLIFE
And BDO, and Metrobank and UCPB and. … and the economy as a whole. as a financial adviser (Mutual Funds, Insurance) connected with Philamlife, I’ve been bombarded with questions from apprehensive, panicky and quite a few, angry, clients/investors and policy holders with regards to their money invested in Philamlife, and most of my time these past two months have been spent reassuring them, notwithstanding the statement released by the company assuring investors and policy holders of the company’s ability to meet all its present and future obligations. So I’m posting a column here of Dr. Ravalo, an economist. While this column was posted last year (Aug.2007) it is very timely now, in lieu of the events unfolding caused by the US sub-prime crisis-Lehman Bros. Merrill-Lynch, and of course AIG(our mother company) and since he is not connected with any company, financial or otherwise, that should make his views objective. Dr. Ravalo here explains clearly, what’s really going on with the economy and how it affects Philamlife and other financial institutions in particular and all of us in general. Note: letters in blue are my own opinion, additions and comments for further clarification, and is not part of the original column.-Nards
After stock market routs, can shares become worthless?
By Dr. Johnny Noet Ravalo*
INQUIRER.net
Last updated 08:48am (Mla time) 08/22/2007
Questions:
I am new to investing in the Philippine stock market. I am wondering how the other markets affect the position of our economy especially when China's market went down last February and currently the US market is declining. -- Mr. WannaKnow
I am an OFW, a “greenie” in stock market and have just bought some IPO shares recently. (Knock on wood). At what point will my shares be considered of no value. Say if bought at P5/share and value goes down, at what price level will my share be considered lost and gone? If for instance after some time the price rebounded, will I still be considered as a shareholder of these stocks? -- Jim Francisco
And of course that other lingering question that I’ve been ask-which I’ll answer at the end of the column: If Philamlife is as strong (its no.1 in case you’re not aware) and profitable as it claims, how come it’s for sale?-Nards
I wanted to talk about these issues when this column started almost six months ago but like most voluntary to-do lists, it somehow got lost in the shuffle. Now, I don’t have any good excuse to postpone it since the issue is central to what is currently happening in the market.
Stock markets are unique in the sense that shares of stocks are not debts created by the company. The issuing company is not borrowing the investors’ funds but is taking in the investors as owners of the company and the shares are just the proof of ownership.
The “unit of analysis” for stocks is the company itself. Whatever affects the fortunes of the firm is supposed to be reflected in the share price. The share price is the future revenue stream of the company translated into today’s prices (i.e., it is discounted). If something boosts or impairs that income stream, then share prices are supposed to rise or fall respectively.
We are talking about the “future” fortunes of the firm. Expectations are critical and someone has to set that bar. Analysts typically do that based on what the company projects as its future income stream, together with the analyst’s own views. If the bar is set too high, the company will always underperform and share prices fall. Yes, there are “models” out there for such valuation but stock analysis involves a fair amount of crystal-ball reading.
To answer Jim’s question, remember that there are many shares of stock that have been issued by the firm. The value of each share then reflects both the expected fortunes of the firm and the number of shares that have been issued.
I like to think of it as a pie. Some pies just don’t taste good so no one buys them even at low prices. The better pies are of higher value but if there are 1,000 slices, each slice may just be worth 50 centavos. If the firm shuts down, obviously there isn’t any future to speak of so that the theoretical price is zero. But I have seen shares whose value in centavos is so small that you need a lot of shares to be meaningful.
All these go back to the intrinsic value of the pie. That part is the most absolute concept you will get: YOU deem it either good to buy, passable to hold (just in case) or bad enough to dispose. But if you intend to trade stocks (rather than be an owner) then the views of analysts, commentators and the media count only because these views move markets. The views aren’t always fair but they are the market’s handles of reality unless new views prove otherwise.
The fortune of the firm is not totally dependent on the firm’s projections or its management’s decisions. If the whole economy goes into a rut, that will show at the level of all firms (of course, some worse than others). If the industry to which the firm belongs has a breakthrough, that will lift the industry as a whole. And since discounting future income is involved, one would generally see falling share prices as interest rates rise, all things equal.
How then would the misfortunes of country XYZ (or for want of a better example let us change those letters to U S A) be a boom to shares in the Philippines?
Theoretically, that is possible if firms in country USA are producing goods that are substitutes for the output of firms in the Philippines. If for some reason drinking tea falls out of fashion (as far as I know the Philippines does not produce tea), that may be good for coffee manufacturers or distributors here if tea-patrons (and there are millions-were talking about the U.S. market here, as an example) shift their consumption (and their wallet use) into drinking coffee instead.
For similar reasons, investors in developed countries like the US are known to invest in the financial markets of Asia. This is just the old adage of not putting your eggs in the same basket. So if the US financial market goes into a downturn, there is the rising fortune of Asian financial markets to offset the losses (and vice versa). Finance has a fancy term for this and it is called “diversification”. Every student of macro-financial economics is taught of the virtues and financial gains from diversifying one’s portfolio.
So if the US dollar was weakening, wouldn’t you expect the peso part in the peso-dollar rate to strengthen ... always? With the US market reeling from the credit woes of its subprime market, shouldn’t that be a boom to our markets? As you can see, it doesn’t always work that way.
So, how come their loss is our loss and our loss is ... well, still just our loss?
Fortunately, this is not one of those “only in the Philippines” things. When the US market closes, Asia is just waking up to go to work (actually, we’re waking up so that we can beat the 6:15 EDSA traffic). Instead of feeling perky about the possibility of funds shifting into Asia, market players in Asia go into defensive mode and reinforce the US shock with another Asian shock.
Why do we do this? Good question.
In principle the credit woes in the US subprime market is a US issue. But it affects the rest of the world for several reasons. First, the US Fed can and has altered its interest rate benchmark and that will directly affect exchange rates and economies with money board arrangements. Second, US institutional investors may pull out of their Asia investments, taking profits to offset losses in their subprime bond holdings.
The first two reasons are out of our hands, the third reason is one that is squarely our own doing: the tendency to go with the herd.
Some people have described this as a room full of panicky traders. Perhaps, but I still think that the root cause of that panic is that “market awareness” is often an oxymoron for almost all individual investors and unfortunately, as it turns out, even for some market practitioners.
I am not saying that investments are a fool’s gamble. To the contrary, investments have a very clear role in improving the economy. But nothing is guaranteed and since it’s our savings, diligence on our part is an absolute must.
I think the Chinese summarize it best. Their character for risk contains two components, the first literally representing “danger” while the other represents “opportunity”. What makes investing work is maintaining that balance.
And yes, I still think “market awareness” is an oxymoron. At least for now.
And may I add another reason, just like its US counter-parts, some of our banks also diversify and invest in the financial markets of the US for the same reasons, which explains BDO’s, Metrobank, UCPB, and others’ exposure to Lehman Bros. a big Investment/Financial company. Still that decision is with the banks and beyond our control. Luckily for depositors, their exposure was not that big (1% as they claim) to pose a risk. And presents another good argument for diversification-not putting their eggs in one basket.
In answer to the third question: There is a law that prohibits a mother company from taking out the profits and assets of its local subsidiary-to raise capital, nor pay off its debts. it can only do so by selling parts or the whole of its subsidiary, which is what AIG is doing right now: selling Philamlife-to pay off its (now) more than $100b loan to the federal government)AIG has decided to divest itself of its prized, and profitable foreign holdings (of which Philamlife is one) because it’s only logical, to dispose companies that are desirable,(with its assets and value intact) so it can attract lots of potential buyers, can command a much higher prize, and more important, it can dictate the terms of the sale (you can read the no. of interested buyers in Philam from newspapers)
And going back, to that Chinese character for risk containing two components, danger and opportunity, isn’t NOW the best time to actually invest in the financial markets, when its share value is low? Just asking. Nards
*((Noet Ravalo is the first Filipino to earn a PhD in Economics from Boston University and is a macro-financial economist by practice and profession. He was chief economist of the Bankers Association of the Philippines until 2002 and has since been doing consulting work for multilateral and foreign agencies. His current engagements are with the Bangko Sentral ng Pilipinas and the PDS Group. Over the past 12 years, he has been asked to provide technical inputs to both the Senate and the House of Representatives on various economic and financial legislation, some of which will have big impact on Filipinos’ personal finances.)
After stock market routs, can shares become worthless?
By Dr. Johnny Noet Ravalo*
INQUIRER.net
Last updated 08:48am (Mla time) 08/22/2007
Questions:
I am new to investing in the Philippine stock market. I am wondering how the other markets affect the position of our economy especially when China's market went down last February and currently the US market is declining. -- Mr. WannaKnow
I am an OFW, a “greenie” in stock market and have just bought some IPO shares recently. (Knock on wood). At what point will my shares be considered of no value. Say if bought at P5/share and value goes down, at what price level will my share be considered lost and gone? If for instance after some time the price rebounded, will I still be considered as a shareholder of these stocks? -- Jim Francisco
And of course that other lingering question that I’ve been ask-which I’ll answer at the end of the column: If Philamlife is as strong (its no.1 in case you’re not aware) and profitable as it claims, how come it’s for sale?-Nards
I wanted to talk about these issues when this column started almost six months ago but like most voluntary to-do lists, it somehow got lost in the shuffle. Now, I don’t have any good excuse to postpone it since the issue is central to what is currently happening in the market.
Stock markets are unique in the sense that shares of stocks are not debts created by the company. The issuing company is not borrowing the investors’ funds but is taking in the investors as owners of the company and the shares are just the proof of ownership.
The “unit of analysis” for stocks is the company itself. Whatever affects the fortunes of the firm is supposed to be reflected in the share price. The share price is the future revenue stream of the company translated into today’s prices (i.e., it is discounted). If something boosts or impairs that income stream, then share prices are supposed to rise or fall respectively.
We are talking about the “future” fortunes of the firm. Expectations are critical and someone has to set that bar. Analysts typically do that based on what the company projects as its future income stream, together with the analyst’s own views. If the bar is set too high, the company will always underperform and share prices fall. Yes, there are “models” out there for such valuation but stock analysis involves a fair amount of crystal-ball reading.
To answer Jim’s question, remember that there are many shares of stock that have been issued by the firm. The value of each share then reflects both the expected fortunes of the firm and the number of shares that have been issued.
I like to think of it as a pie. Some pies just don’t taste good so no one buys them even at low prices. The better pies are of higher value but if there are 1,000 slices, each slice may just be worth 50 centavos. If the firm shuts down, obviously there isn’t any future to speak of so that the theoretical price is zero. But I have seen shares whose value in centavos is so small that you need a lot of shares to be meaningful.
All these go back to the intrinsic value of the pie. That part is the most absolute concept you will get: YOU deem it either good to buy, passable to hold (just in case) or bad enough to dispose. But if you intend to trade stocks (rather than be an owner) then the views of analysts, commentators and the media count only because these views move markets. The views aren’t always fair but they are the market’s handles of reality unless new views prove otherwise.
The fortune of the firm is not totally dependent on the firm’s projections or its management’s decisions. If the whole economy goes into a rut, that will show at the level of all firms (of course, some worse than others). If the industry to which the firm belongs has a breakthrough, that will lift the industry as a whole. And since discounting future income is involved, one would generally see falling share prices as interest rates rise, all things equal.
How then would the misfortunes of country XYZ (or for want of a better example let us change those letters to U S A) be a boom to shares in the Philippines?
Theoretically, that is possible if firms in country USA are producing goods that are substitutes for the output of firms in the Philippines. If for some reason drinking tea falls out of fashion (as far as I know the Philippines does not produce tea), that may be good for coffee manufacturers or distributors here if tea-patrons (and there are millions-were talking about the U.S. market here, as an example) shift their consumption (and their wallet use) into drinking coffee instead.
For similar reasons, investors in developed countries like the US are known to invest in the financial markets of Asia. This is just the old adage of not putting your eggs in the same basket. So if the US financial market goes into a downturn, there is the rising fortune of Asian financial markets to offset the losses (and vice versa). Finance has a fancy term for this and it is called “diversification”. Every student of macro-financial economics is taught of the virtues and financial gains from diversifying one’s portfolio.
So if the US dollar was weakening, wouldn’t you expect the peso part in the peso-dollar rate to strengthen ... always? With the US market reeling from the credit woes of its subprime market, shouldn’t that be a boom to our markets? As you can see, it doesn’t always work that way.
So, how come their loss is our loss and our loss is ... well, still just our loss?
Fortunately, this is not one of those “only in the Philippines” things. When the US market closes, Asia is just waking up to go to work (actually, we’re waking up so that we can beat the 6:15 EDSA traffic). Instead of feeling perky about the possibility of funds shifting into Asia, market players in Asia go into defensive mode and reinforce the US shock with another Asian shock.
Why do we do this? Good question.
In principle the credit woes in the US subprime market is a US issue. But it affects the rest of the world for several reasons. First, the US Fed can and has altered its interest rate benchmark and that will directly affect exchange rates and economies with money board arrangements. Second, US institutional investors may pull out of their Asia investments, taking profits to offset losses in their subprime bond holdings.
The first two reasons are out of our hands, the third reason is one that is squarely our own doing: the tendency to go with the herd.
Some people have described this as a room full of panicky traders. Perhaps, but I still think that the root cause of that panic is that “market awareness” is often an oxymoron for almost all individual investors and unfortunately, as it turns out, even for some market practitioners.
I am not saying that investments are a fool’s gamble. To the contrary, investments have a very clear role in improving the economy. But nothing is guaranteed and since it’s our savings, diligence on our part is an absolute must.
I think the Chinese summarize it best. Their character for risk contains two components, the first literally representing “danger” while the other represents “opportunity”. What makes investing work is maintaining that balance.
And yes, I still think “market awareness” is an oxymoron. At least for now.
And may I add another reason, just like its US counter-parts, some of our banks also diversify and invest in the financial markets of the US for the same reasons, which explains BDO’s, Metrobank, UCPB, and others’ exposure to Lehman Bros. a big Investment/Financial company. Still that decision is with the banks and beyond our control. Luckily for depositors, their exposure was not that big (1% as they claim) to pose a risk. And presents another good argument for diversification-not putting their eggs in one basket.
In answer to the third question: There is a law that prohibits a mother company from taking out the profits and assets of its local subsidiary-to raise capital, nor pay off its debts. it can only do so by selling parts or the whole of its subsidiary, which is what AIG is doing right now: selling Philamlife-to pay off its (now) more than $100b loan to the federal government)AIG has decided to divest itself of its prized, and profitable foreign holdings (of which Philamlife is one) because it’s only logical, to dispose companies that are desirable,(with its assets and value intact) so it can attract lots of potential buyers, can command a much higher prize, and more important, it can dictate the terms of the sale (you can read the no. of interested buyers in Philam from newspapers)
And going back, to that Chinese character for risk containing two components, danger and opportunity, isn’t NOW the best time to actually invest in the financial markets, when its share value is low? Just asking. Nards
*((Noet Ravalo is the first Filipino to earn a PhD in Economics from Boston University and is a macro-financial economist by practice and profession. He was chief economist of the Bankers Association of the Philippines until 2002 and has since been doing consulting work for multilateral and foreign agencies. His current engagements are with the Bangko Sentral ng Pilipinas and the PDS Group. Over the past 12 years, he has been asked to provide technical inputs to both the Senate and the House of Representatives on various economic and financial legislation, some of which will have big impact on Filipinos’ personal finances.)
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