Archive for the ‘finance’ Category

courtesy: google images

courtesy: google images

 

While curling up with a good book in this wet afternoon, I was jolted by the words of the author as it spoke to me. I realize that sometimes my “overthinking” and “overanalyzing” of things get in the way towards the fulfillment of my plans.

 

The words goes like, “Here’s the bottom line: You already know all that you need to
succeed. You don’t need to learn anything more. If all we needed
was more information, everyone with an Internet connection would
live in a mansion, have abs of steel, and be blissfully happy. New
or more information is not what you need—a new plan of action is.
It’s time to create new behaviors and habits that are oriented away
from sabotage and toward success. It’s that simple.”

 

As human beings, we are exposed to the herd mentality. Wherever the majority goes, we flock to follow. We do not lack information. Though we reason that we have limited and timely access to it but I am much convinced it is available at our own exploration. It is our procrastination and lack of action that hampers our development and sabotages our growth.

 

We always get busy, juggling one chore to the next but accomplish nothing. We consciously delay what we can do today. We slacken after winning small victory. And we easily get distracted by short term comfort of slumber rather than focusing our energy to what matters most. Nobody gets out of the rat race by doing nothing. A plan and your decision to execute your plan is what will help pay your bills, give you good grades, bring you promotion and build your dreams. As for me, I’d quit the overthinking and over analyzing and summon my creative juices to act in my favor.

 

We already learned much my friends, now let’s put that learning to action.

courtesy: google images

courtesy: google images

Investment is generally purchased goods or items that will generate another product; or an asset (paper or physical) that can be sold at higher value in the future. This way your initial investment has grown by the time you need it.

The word investment sounds very appealing to almost everybody. In fact, a lot of people are lured by fly-by-night operators to avail of their investment schemes that happen to end up to be a pyramid or Ponzi scheme which will eventually eat investor’s money away. While many choose to have fund managers or get a mutual fund account in order to have someone manage their portfolio for them, there are also those who choose to do it on their own like trading and investing in stocks. However you plan to do it, it is imperative to know why you decide to invest.

So why invest?

Become Financially Independent

Becoming financially independent is everyone’s dream. This means to be self-reliant in your expenditures and financial decision. If you are a student, you are likely to depend from your parents in almost all of your expenses. Even working professionals do not necessarily have financial independence. Lack of financial planning leads them to depend on salary loans or petty debts whenever emergency comes. Building a passive income through investing is one way to become financially independent.

Achieve your dreams

Whether your dream is to own a car or to travel to Bangkok this summer you need money to make it happen. It is a big mistake to borrow money just to take a vacation. Knowing what you really really want will keep your enthusiasm to invest. Investing prepares you to finance your dreams in the future.

Make your money work for you

Basically your invested funds will grow in proportion depending on two variables: 1. Length of time you held your money in a particular investment instrument, 2. Interest rate by which your money grow. Choosing for an investment instrument has to conform to your investment profile. If you do not know your investment profile, talk to financial planner today.

Build wealth

As you put your money into an investment instrument and continue to put it there, the power of compounding interest kicks in. Compound interest is interest added to the principal of a deposit or loan so that the added interest also earns interest from then on. As your investment reaps the benefit of compounding interest, your wealth grows.

Prepare for retirement

There is nothing more important than preparing for your future. Many working parents today think of their children as their retirement plans. They are not. Your retirement in the future is your sole responsibility. Failing to prepare today while you still can will derail your planned grand retirement vacation. Investing early will help make your money grow, will keep your money work for you and will allow you to enjoy your later years without having to worry about your expenses.

Investing is a great way towards a better financial future. The sooner you begin, the better it can work for you. If you want to learn how to invest the right way, talk to your trusted financial planner today.

P.S.  If you need a financial plan for your investment and/ or coaching, please send me an email at fjaymoli@gmail.com. I will be more than willing to be your mentor and partner in your journey towards financial freedom.

P.S. 2.  Please join our facebook group Pagadian City Stocks Network

Photo Courtesy: Google Images

Photo Courtesy: Google Images

Before you continue reading the whole post, I have a confession to make. I have become a victim of an investment scam (Aman Futures, 2012). It was year 2012 when a big fraction of my savings bid farewell in my pocket and down the drain to perish forever. Like most of the so called “investing people” that time, we all felt depressed and confused. But that nasty scar brought a gargantuan learning experience. I vowed to myself to not let it happen again. I subjected myself to self-imposed research, sought attendance in financial seminars and read and read to learn stuffs I never thought existed. I realized if people only knew what I know today, we all could have made wise investment decision. I hope this post will help provide guidance to you and the people you love.

Many people confuse investment with business or deliberately use them interchangeably. The truth is they are alike but are not the same. In Robert Kiyosaki’s Rich Dad, Poor Dad book series, it is a continuous theme and pronouncement that an investment is money you put into something that has the potential of getting a return. If you purchased something but has no potential gain/profit then it is not an investment. For example, you buy a new house and call it an investment. If you do not plan to have it rented or sell it in the future for a higher value; it must not be defined an investment.

Investment could mean a lot in many people. Some attach emotions to it which will make it wide of the mark. I know someone who buys a new car and say that it is an investment for himself. This isn’t an investment! You call it an ego bolster instead.

  1. Recruiters are in Haste – Scammers know that they do not offer you anything with value. And because you do not know it or doubt about it, they do not want to give you time to think about it. So to avoid that you’ll do in-depth research, they will be pushy. And to rid-off annoyance, you will sign up only to regret it in the end.
  1. Buy More to Earn More – This usually happen in “networking company” scams. They will sell you products that are hard to sell. When you realize that it is difficult to dispose your inventory, you have no resort but to recruit people to earn from their recruitment commissions. The problem with this thing is that, essentially no company will survive without a product being sold and bought. Earning money due to recruitment is a tell-tale sign of a company waiting to collapse. Here’s more, according to RA 5601 or otherwise known as Anti-Pyramiding Law, the SEC requires all MLM (Multi-Level Marketing Company) to not engage in Pyramiding Scheme. This means that total worth of products given back to members of the MLM must not go lower than 73% of the total capital shelled out by the member. Example, if your registration for a food supplement MLM company is P 10,000 the stocks you must receive should be worth not under P 7,300.00
  1. Recruiting Members to Earn – Now I really, really want you to get this so please read very carefully. If you were asked to recruit so you will be compensated, then you have all the right to doubt. Here’s why. According to the Securities and Exchange Commission (SEC) when a company registered to them as a corporation collects “membership fee” to compensate uplines and representatives and relies on the circulating membership (not on products sold), in effect that company are collecting securities or investment amount. Any company in the Philippines that sells securities or collects investment is defined as an “Investment Company” and because they will fall within that category, they are bound by law to secure a Secondary License (as per SRC RULE 68, AS AMENDED) from the SEC (Securities and Exchange Commission). If they fail to do so, then you are dealing with an unregistered company thereby making their offer null and illegal.
  1. Use the Rule of 72 – According to investopedia, “It is a rule stating that in order for you to find the number of years required to double your money at a given interest rate, you divide the compound return into 72. The result is the approximate number of years that it will take for your investment to grow”. How do you use this rule in your investment? If someone approaches you and says “ I will double your money in two years….” That simply means 72/2=36. Hence, using this formula, you know that your money will grow 36% per year. Although this is possible, this is also very ambitious. Remember risk-reward trade off, the higher the return the higher the risk. So if your heart is not prepared to take on high risk investments, this is not for you. The problem happens when representatives in these so called companies promised you that guaranteed return with NO RISK AT ALL. Quite frankly, a company without proven track record to provide that high return is a scam. Too good to be true as they say.
  1. Do your Homework and Research – We are in the information age so looking for information is easy. If you have any doubts about an investment opportunity or any networking company, you may check Securities and Exchanges Commission’s advisories. In their website you may be surprised to know that it houses a long list of companies who may have engaged into unfair investment practices. Always exercise due diligence so as not to be duped by shark-like scammers hungry to get hold of your hard-earned money.

P.S. I hope you learn something new. If you think this is helpful, please share.

P.S. 2. Please join our group in Facebook called Pagadian City Stocks Network

Cost-vs-Value

I got a query on facebook recently from someone who is interested to learn about stock market investment but somehow apprehensive about it due to the cost of investment.

First I would like to apologize to most of my facebook friends. I have been advocating that you invest in the Philippine stock market and yet I failed to consider individual financial capabilities. It is a fact that for the many and uninformed, the word stock market is quite intimidating. People believe that you need to have millions and millions of pesos to invest, giving an erroneous idea that the stock market are only for the rich. In this post, I will clarify some of these myths and I will try my very best to make this as simple as possible.

I personally believe that the stock market in a great equalizer. This means that both the rich and the average income earners can do it. You can buy shares of companies and become partners of growth in big corporations in the Philippines. These include the likes of Jollibee, Ayala Land, BPI, BDO, SM, GMA or ABS-CBN. How awesome is that!

So how much does it really cost to invest in the stock market? My answer is it depends primarily in two things: a. company price per share and b. number of shares you are willing to buy. To avoid confusions, please remember that  by definition a “stock” is equivalent to “shares”. So If I mention about stock I also mean shares. For example, in the case of Jollibee Foods Corporation, their price per share is P201.00 (as of may 29, 2015). Is this something you can afford? It’s funny sometimes because every time I talk about this example, people will assume I meant 201,000. Just imagine, when JFC opens its door in your next visits you can say to yourself that you are part owner of it.

However, our stock market will not allow you to buy just 1 share. Every company sells their share at multiple called board lot. Investopedia defines board lot as a “standardized number of shares defined by a stock exchange as a trading unit. In most cases, this means 100 shares. The purpose of a board lot is to avoid “odd lots” and to facilitate easier trading.” In the case of Jollibee (JFC), the minimum share you can buy is 10. Hence, 201 x 10 = 2,100 as the amount of money you need in order to start investing in JFC. Now tell me, can you really not afford it?

Wait there’s more!

There are also good companies like SM Prime Holdings (SMPH) whose share is only P19.24 (as of May 29, 2015). This is not even close to a cellphone load you buy almost everyday. SMPH’s board lot is 100 so this means 19.24 x 100= 1,924. If you can spend 500 pesos in your facial treatment and splurge 1,000 in Mall’s midnight sales, why can’t you set aside the same amount of money for investment for you and your family’s future? If you truly believe that the company I mentioned here will still exist in the next 10 years, then they can be your best pick to start with.

Clear so far? Do you really need millions to invest? You can answer that question by now.

Now you have the money, what do you do next?

The next thing you need to do is to get a broker. A broker is a regulated professional individual, usually associated with a brokerage firm or broker-dealer, who buys and sells stocks and other securities for both retail and institutional clients, through a stock exchange or over the counter, in return for a fee or commission. In this information age, we are so lucky that we can now transact almost anything online. And with this we have online brokers. There are many brokers in the Philippine Stock Exchange that allows you to open an account with them for as low as P 5,000. You can use that amount to start your very first buying of shares in the stock market. Of course if you have much extra cash then you can buy more. But if you are just starting, then P 5,000 is already a great start for you.

Brokers charge you by commissions. By buying and selling shares you also pay taxes that help our country. These are common charges you will encounter and that is normal. It really isn’t much, the most important thing is that you will learn and build a sturdy investment for your future.

I hope this post helps you at least get a better picture of the “cost of investment” in the stock market. Please do not be intimidated about numbers and terms, the more you study this, the more empowered you become.

I will leave you with these information and hopes that you will also do your own research. In my next post, I will explain how you can earn in the Stock Market.

P.S. If you need a financial plan for your investment and/ or coaching, please send me an email at fjaymoli@gmail.com. I will be more than willing to be your mentor and partner in your journey towards financial freedom.

P.S. 2. Please join our facebook group Pagadian City Stocks Network

Photo Courtesy: Marvin Germo

Photo Courtesy: Marvin Germo

With the help of a friend, I was so blessed to get a scholarship and study Introductions and Basics of Finance in University of Michigan’s Online Course program. We are about 400K students all around the world who shares the mentorship of Gautam Kaul. It was during his classes where I understood that I made some fatal mistakes in my financial life. And because I got so much value from this experience, I want to share some financial wisdom with those in their 20’s like me. I shall dedicate a blog page soon for investing and personal finance stuff in this blog in the first quarter of 2014.

You have to realize that ignorance is expensive. I don’t care how much you are earning in your 20’s because if you have no idea how to handle it, chances are, you may not keep it to your 30’s, 40’s or 50’s.

Before going further, let me share with you my personal finance pie. This is where I allocate my income for financial prudence and financial freedom in the future. Keep in mind that income in taxation means, “anything that comes in”, so this does not refer to your salary alone. If you have some entrepreneurial ventures while earning a salary, consider it as one. You can choose to practice this or not, in any case, I am sharing it with you.

 

Tithes 10%                      

In Malachi 3:10  God said, “Bring ye all the tithes into the storehouse, that there may be meat in mine house, and prove me now herewith, saith the LORD of hosts, if I will not open you the windows of heaven, and pour you out a blessing, that [there shall] not [be room] enough [to receive it].” This means that we shall return to God 10% of our income and He even left a challenge that if we do what He asks, He will return what we have given a hundredfold. You know why? Because you can never out give the generosity of the Lord.

Savings and Investments 30%    

After knowing your income for the month, set aside the money either for savings or investments immediately. Sometimes, when we have money, our interest is easily lured into buying stuff that we don’t need. A savings fund can also be used as emergency fund or funds you can use for new capital ventures. What you can do is either you go to your bank and deposit that money or auto-debit your account to transfer funds directly to your investment portfolio. You can ask you bank more of this.

Learning Fund 10%        

Learning fund is an income you set aside to enrich your knowledge about certain areas where you feel you are weak. In my case, I sought seminars and conferences that talks about personal finance. Most of the time, these seminars are not available in my city. So preparing an amount for it is indeed essential. I also join even business networking presentation even if I don’t have any interest to seek membership. You know why? Because I always feel good to be surrounded with positive people with great hopes and financial dreams. Their energy excites me.

Splurge 50%          

I say splurge although some financial pundits may wince to this word. I make it a point to not only reward myself but also to pay myself. I don’t withhold the good stuff that I want to experience. I am working to experience the good of life and share what I could and not to horde things inexorably. Anyways, I’ve set aside savings already.

But I don’t think this income pie is for everyone. If you are married with obligations, certain types of liabilities like debts, monthly car or house and lot amortization, kids in college –  then you need to do some revisions that will make you live just within your means.

Never spend the money that you have not earned. That is like giving your wallet a cancer.

Many 20 something today earn a big amount of cash but with empty bank accounts. No savings. Continuously spending and at the time where there’s nothing left to be spent, resort to borrowing. I also did this mistake, and I am grateful to have learned early.

To be continued…