Investment Grade and What It will really bring

March 28,3013 by Randell Tiongson

There is every reason why we should be celebrating Fitch’s recent credit upgrade of the Philippines. With the upgrade, we are now officially “investment-grade” which really means many things. An investment-grade status is a confirmation that the Philippines is a sound nation financially and that it has the capacity to pay off its debts.

President Aquino is obviously ecstatic with the upgrade; he said “this is an institutional affirmation of our sound good governance agenda” in a statement.

In a nutshell, the new status will effectively reduce the cost of our borrowings which when managed properly, can be used for key investments and infrastructure that will further spur economic growth. The upgrade will also usher the inflow of more institutional investments such as investment funds of other countries that usually require investment destinations to be ‘investment grade’. This move will even grow the local investment market which has been bullish in the last 3 years. The Philippine Stock Market already reflected a positive sentiment upon the news of the upgrade. It is more likely that the stock market will continue to ride on this upgrade, as well as other investment instruments like bonds.

It is important to note that while Fitch is a very reputable rating organization, the other two rating organizations namely Standard & Poor’s and Moody’s must also upgrade the status of Philippines to confirm our being truly ‘investment-grade’.

I believe that the upgrades merely affirmed what the market has already known as showed by how the Philippine investments have been faring, particularly our sovereign debt. For some time now, the Philippine sovereign issues (ROPs) have been trading with yields much lower than other nations with the same credit rating; in fact, the Yield-to-Maturity (YTM) of our ROPs are even lower than the debts of other nations who are rated as ‘investment-grade.’ Returns are always an indication of the risks involved so when the market makes our debts trade with lower yields, it also means that the market views us as low risk as well.

I asked some of my friends about what the benefits of the upgrade means to them and to the nation as a whole. I’m also proud to say that these friends of mine are experts in their own fields as well – I am blessed with awesome friends right? This is what they say:

“We deserve the upgrade, but remember that a credit rating is just a confirmation ofwhat is already present in a debt issue, the debt security issuer and the economy as a whole. In other words, we and not the rating agency made ourselves investment grade. So upgrade or not, the country is indeed on its way to becoming an economic force in the world arena. We just need to learn how to spread wealth better.”

– Efren Ll. Cruz, RFP- President of Personal Finance Advisers Corp., best-selling finance author, columnist, investments expert

“This is definitely the seal and proof that Philippines is a good country to invest in and supports my bullishness in the Philippines. This will open up our markets to more investors who were not allowed to participate before. Increased Investments will surely open up better opportunities for the ordinary Filipino. I definitely recommend that Filipinos participate in this growth opportunity by investing as well.”

– Marvin Fausto – Chief Investment Officer of Banco de Oro Universal Bank

“The investment upgrade will propel our stock market even further as it will allow moreforeign funds to invest in the Philippines. It will also help our economy as it will allow our government to borrow cheap, build more infrastructures, and allow businessmen to expand their businesses further. To the common Filipino, it would give them an opportunity to take housing and car loans cheaper. This upgrade has triggered a signal to the world that – ‘Hey! The Philippines exists and is now a safe haven for your money!’ This is such a great time to be a Filipino.

– Marvin Germo, RFP – Stock Market expert and investments speaker

“Investment Grade is not an end objective. It is a recognition that a country has graduated from a condition of doubt to a reasonable level of investment risk. The Philippines graduating to that is an expectation this year – the only thing uncertain was when. Fitch’s ratings upgrade to the Philippines is a validation of the core improvement in the country’s international credit and investment status. This upgrade means that the Philippines has to do its homework. It has leveled up in the eyes of the investment community globally. The upgrade actually does not necessarily translate to immediate economic betterment as being investment grade simply means that one can borrow at cheaper rates in the international market. Borrowing is something we do not need to do now as the country is very liquid – both the government and the private sector. Local interest rates are in their historic lows already. What the investment grade is telling us is that ‘we believe in your country to be able to institute the needed structural reforms to translate our trust into productive pursuits.’ Finally, it is important that the two other larger ratings agencies – S&P and Moody’s should affirm the same soon to consolidate and cement this trust.”

– Dr. Alvin P. Ang – Economist and President of the Philippine Economic Society

“Companies that would not otherwise invest in the Philippines as they require investmentgrade status would now do so. Our borrowing costs would also go down. This means more jobs and a stronger economy as money goes towards industries, infrastructure, etc. In the near term the peso is likely to appreciate though, which could pose problems for OFW families.”

– Rizalina Mantaring – President & CEO, Sun Life Philippines

The above views are from the experts; I will post another blog about the views of ordinary Filipinos (who are experts in their own rights) which I solicited through social media.

We are very excited with the nation as a whole and while there is much work to be done, I believe we are in the right path. We must also never forget where all these blessings are coming from and knowing our responsibilities for such blessings, lest all these gains will be for nothing.

Blessed is the nation whose God is the LORD, the people he chose for his inheritance. – Psalm 33:12, NIV

Q & A on Fitch Ratings’ announcement declaring the Philippines Investment Grade, March 27, 2013

From Official Gazette:

http://www.gov.ph/2013/03/27/q-a-on-fitch-ratings-announcement-declaring-the-philippines-investment-grade-march-27-2013/

Q & A on Fitch Ratings’ announcement declaring the Philippines Investment Grade, March 27, 2013

Q: What does an investment-grade rating mean for the Philippines?

A: This investment-grade rating is a seal of good housekeeping and a resounding vote of confidence in the Philippine economy. It is strong affirmation that the Philippines is on the right path toward sustainable and inclusive growth. It also closes the gap between our market rating and our credit rating. This upgrade was achieved due to sound macroeconomic fundamentals, underpinned by good governance reforms as well as the Philippines’ good economic prospects moving forward.

Q: How will this impact the Philippine economy?

A:  We expect to see an increase in investment inflows, as many institutional investors allow the investment of funds in investment-grade countries only.

The upgrade also means lower costs for government debt, thereby freeing more funds for social services, infrastructure and other long-term investments for economic development. It means cheaper and broader sources of funds for both government and corporate borrowers. Domestic and foreign businesses would be more encouraged to increase investments in the country’s productive capacity such as in the manufacturing industry and in agri-business, thus generating more employment.

Q: What was the basis of Fitch Ratings’ decision? What were the main drivers?

A: According to the press release of Fitch Ratings, the following are the key rating drivers for the upgrade of the Philippines’ sovereign ratings:

- The Philippines’ sovereign external balance sheet is considered strong relative to ‘A’ range peers, let alone ‘BB’ and ‘BBB’ category medians. A persistent current account surplus (CAS), underpinned by remittance inflows, has led to the emergence of a net external creditor position worth 12% of GDP by end-2012, up from 6% at end-2010. Remittance inflows were worth 8% of GDP in 2012 and proved resilient even through the shock of the global financial crisis. Fitch expects a rising import bill stemming from strong domestic demand to lead to a narrower CAS and to stabilise the net external creditor position at a strong level through to 2014.

- The Philippine economy has been resilient, expanding 6.6% in 2012 amid a weak global economic backdrop. Strong domestic demand drove this outturn. Fitch expects GDP growth of 5.5% in 2013. The Philippines has experienced stronger and less volatile growth than its ‘BBB’ peers over the past five years.

- Improvements in fiscal management begun under President Arroyo have made general government debt dynamics more resilient to shocks. Strong economic growth and moderate budget deficits have brought the general government (GG) debt/GDP ratio in line with the ‘BBB’ median. The sovereign has taken advantage of generally favourable funding conditions to lengthen the average maturity of GG debt to 10.7 years by end-2012 from 6.6 years at end-2008. The foreign currency share of GG debt has fallen to 47% from 53% over the same period.

- Favourable macroeconomic outturns have been supported in Fitch’s view by a strong policy-making framework. Bangko Sentral ng Pilipinas’ (BSP) inflation management track record and proactive use of macro-prudential measures to limit the potential emergence of macroeconomic and financial imbalances is supportive of the credit profile. Inflation has been in line with ‘BBB’ peers on average over the past five years.

- Governance standards, as measured in international indices such as the World Bank’s framework, remain weaker than ‘BBB’ range norms but are not inconsistent with a ‘BBB-’ rating as a number of sovereigns in this rating category fare worse than the Philippines. Governance reform has been a centrepiece of the Aquino administration’s policy efforts. Entrenching these reforms by 2016 is a policy priority of the government.

- The Philippines’ average income is low (USD2,600 versus ‘BBB’ range median of USD10,300 in 2012), although this measure does not account directly for the significant support to living standards from remittance inflows. The country’s level of human development (as measured in the United Nations Development Programme’s index) is less of an outlier against ‘BBB’ range peers.

- The Philippines had a low fiscal revenue take of 18.3% of GDP in 2012, compared with a ‘BBB’ range median of 32.3%. This limits the fiscal scope to achieve the government’s ambition of raising public investment. The recent introduction of a “sin tax”, against stiff political opposition, will likely lead to some increment in revenues and underlines the administration’s commitment to strengthening the revenue base.

Q: Moving forward, how do we expect government policy and government action to change in response to the credit rating upgrade?

A:  While we expect an investment grade rating to open new opportunities for the Philippines, it also poses a challenge to all of us to maintain it. Hence, the Philippine government will continue to focus on sustaining the progress that we have achieved both in terms of economic growth and institutionalizing good-governance reforms. We will preserve all the factors that made this investment-grade rating possible—low and stable inflation, favorable interest rates and a sound banking system, a sustainable fiscal position, and a strong external position. Most of all, the platform of good governance which has made such progress possible, will continue and are irreversible. Foreign and local businesses can rely on a government that will continue to be transparent, effective, and responsive.

Philippines Now Investment Grade

From Phil.Star March 28 by Prinz magtulis

Noy on first-ever rating: Asia’s laggard taking off

MANILA, Philippines - What it means for Phl: An investment grade rating means the Philippines has a strong ability to meet its financial commitments fully and on time.

While credit ratings do not indicate investment merit, credit risk is one of the factors taken into consideration by businessmen. An investment grade sends a message that the Philippines is a safe place for investments, including big-ticket ones that generate much-needed employment.

Borrowing costs will also go down for debtor nations seen as unlikely to default. The Philippines, whose debt payments eat up the largest chunk of the annual national budget, can then channel savings to development efforts and improvement of basic services.

More investments, more jobs, and more funds for social services are expected after the country bagged yesterday its first-ever investment grade rating.

Debt watcher Fitch Ratings lifted the country’s credit rating to BBB- from BB+, with a stable outlook, less than a month after its team visited the Philippines for a diligence review of the country’s macro fundamentals.

New York-based Fitch made the move ahead of its rivals Moody’s Investors Service and Standard & Poor’s Ratings Service.

Both agencies put the Philippines one notch below the coveted status, with S&P having a “positive” outlook.

President Aquino welcomed the credit upgrade yesterday, saying it represented the “reclamation of our national pride” and showed that “the perennial laggard of Asia is taking off.”

“This means much more than lower interest rates on our debt and more investors buying our securities,” Aquino said in a statement. “Greater access to low-cost funds gives us more fiscal space to sustain and further improve on social protection, defense, and economic stimulus, among others.”

He said more investments and jobs would foster “a virtuous cycle of growth, empowerment, and inclusiveness that will redound to the benefit of Filipinos across all sectors of society.”

MAY PERA KA BA? by Jason Lo

(jaysonlo.tumblr.com))

I am a businessman and I made my first million at the age of 22. Akala ko noon, ang pinaka-importante sa buhay ay ang maging successful sa career o sa negosyo kaya naman ginawa ko ang lahat upang umangat ako. Marami na akong nasubukang iba’t ibang negosyo, mula sa trading, manufacturing, kiosks, at direct selling. Hanggang sa pinasok ko ang restaurant business at doon nga nawala ang lahat… Sa edad na 30, naubos lahat ang ipon naming mag-asawa at nagka utang-utang pa nga. Kasama ang ilang business partners, nawalan kami ng ten million pesos at nagkaroon pa ng utang na 2.5 million pesos. Ngunit noong December 2010, through God’s grace, nabayaran namin ang aming pagkakautang.

 Ang nangyari sa amin ay nakatulong upang maging mas mapagkumbaba ako at mapagtantong mayroon akong mga limitasyon; at ngayon ngang alam ko na ang aking mga limitasyon, nakabuo ako ng mas makatotohanang strategy para sa aking personal at financial growth. Tandaan na ang personal finance ay 80% Behavior at 20% Knowledge.

Naranasan ko na ang mga ups and downs sa buhay. Ang isang sign ng taong marunong sa pera ay iyon ngang taong marunong mag-adjust sa sitwasyon; iyong marunong magtipid sa oras na nag-uumpaw ang biyaya at marunong magsikip ng sinturon kapag oras ng kagipitan. Hayaan mong bigyan ko kayo ng tips kung ano ang maaari ninyong gawin para matuto at unti-unti kayong makapag-adjust at nang ang inyong pera ay hindi lang maging sakto o sapat – hayaan itong maging siksik, liglig at umaapaw!

1) Gumawa ng Budget

Magplano at isulat mo ito. Kapag hindi mo ‘yan isinulat, para ka lamang nagsulat sa tubig. Kung ang mga kumpanya nga ay mayroong financial statement, maaari tayong matuto sa kanilang gawi.

Gumawa ka ng budget at mas maigi kung kasama si mister. Sa totoo lang, kailangan ninyong pag-awayan ang budget niyo. Alamin kung ano ba talaga ang inyong needs and wants; baka kay mister, ang pakikipag-inuman sa barkada is a need and kay misis, ang shopping naman ay need. Pag-awayan niyo na ang budget niyo dahil mas maganda na mag-away ng isang beses imbes na mag-away kayo araw-araw kapag kinapos na sa pera.

Ang paggawa ng budget ay hindi natatapos sa isang upuan. Maaaring abutin nga ng ilang buwan bago niyo talagang magawa o mabuo ang tamang budget para sa inyong pamilya; kaya naman maiging pag-usapan ninyo itong mag-asawa at least once a week sa loob ng dalawang buwan at matapos nito, maaaring pag-usapan niyo ito kada buwan kung magkakaroon ba ng adjustments o kung ano pa man.

Ang budget nga ay maituturing natin bilang isang mapa at kailangan ngang isulat mo muna kung saan ba dapat mapunta ang iyong pera bago mo pa ito makuha. Isama mo ang perang itatabi mo at ang perang ilalabas kahit na ba ang mga binabayaran mo kada taon tulad na lamang ng insurance kung mayroon ka man. Tandaan, isulat mo iyan!

2) Maghanap ng Extrang Pagkakakitaan

Maghanap ng maaaring maging sideline na business. Magsimula lamang sa maliit para hindi ka mabigla. Pwedeng magtinda ka ng mga pagkain o di kaya mag-buy and sell. Lalo na nga kung Pasko, maaari kang magbenta ng mga gift items, imitation perfume, slippers at iba pang bagay na in ngayon.

 O di kaya, tumungo ka sa iyong silid at tingnan mo ano nga ba ang mga bagay na hindi mo na ginagamit baka naman maaari mo pa itong ibenta! Ang tawag nga diyan sa corporate world ayliquidation. Magbenta kayo ng magbenta ng mga gamit na hindi niyo kailangan hanggang matakot na ang mga anak niyo na sila na ang susunod.

3) Bawasan ang Gastos

 Ito nga ang sinasabing formula kung nais mong maging financially free: “Spend less than you earn, and do it for a long time, then you can be financially free.” (Gumastos ng mababa pa sa iyong kinikita at gawin ito ng matagal at ikaw nga ay magiging financially free)

Ang mga tunay na milyonaryo na walang utang ay hindi magarbo kagaya ng ating iniisip.

Bihira nga silang bumili ng bagong sasakyan at mas gugustuhin pa ang mga second hand na sasakyan. Bakit ‘ka mo? Dahil ang bagong sasakyan, sa oras na ilabas mo ito sa casa, babagsak na agad ang halaga nito ng halos 20% dahil nagamit mo na. Ang tawag diyan ay depreciation.

Kagaya ng magagarang sasakyan ay huwag ka ring magpadala sa mga latest gadgets na inilalabas. Lahat nga ng mga bagong gadgets na iyan ay bababa ang value sa loob lamang ng ilang buwan. Naalala ko nga nang unang lumabas ang iPad ay nagkakahalaga ito ng P45,000; pero makalipas lamang ang ilang buwan ay bumaba na ang presyo nito sa P26,000. Kung ilalagay mo sa banko ang P26,000 mo ng 10 taon ng may 1% rate per annum, hindi ito aabot ng P45,000. Be patient! Huwag magpadalos-dalos sa mga desisyon!

4) Ipunin ang Pera

Sabi nga sa Bibliya, “He who gathers little by little makes it grow.” Kaya naman mabuting ipunin mo ang, at least, 10% ng iyong kinikita.

Mahalagang magkaroon ka ng emergency fund. Ang emergency fund ay dapat katumbas ng 6-8 buwan ng iyong living expenses at nakatabi lamang ito sa bangko. Kapag ang living expenses mo ay P25, 000 a month, sa loob nga ng 6 na buwan ay kakailanganin mo ng P150,000  na emergency fund.

Bakit nga ba natin kailangan ng emergency fund? Hango nga sa salitang emergency, ito ay makatutulong upang hindi kayo mabigla sa mga gastusin, halimbawa na lamang na magkasakit at ma-ospital ang inyong anak. Hindi ba’t medyo malaki ang gastos? Ano ang gagawin natin? Ang madalas na ginagawa natin ay mangungutang tayo sa kaibigan o kamag-anak pero kung may emergency fund ka, doon mo na kukunin ang gagastusin sa ospital.

O di kaya kapag nawalan ng trabaho si mister ng ilang buwan, saan kayo kukuha ng pera? Tama, sa emergency fund. May 6 months ka pa bago maubusan ng pondo at sapat na itong panahon upang makapaghanap muli ng trabaho si mister. Buuin muna ang inyong emergency fund bago niyo bilhin ang anumang luho niyo para sa oras ng kagipitan, mayroong maayos na makakapitan.

5) Kumawala sa Utang

Sinasabi ngang getting out of debt is a test of character. At kung mapapasa mo nga ang test na ito, mas mapagkakatiwalaan mo ang iyong sarili at gayun din naman, mas madali mong makukuha ang tiwala ng iba; at syempre, kapag pinagkakatiwalaan ka na ng tao, madali nang mag-negosyo. 

Nagawa nga namin ng asawa ko na bayaran ang aming P2.5 million na utang sa loob ng dalawang taon. Sa totoo lang, hindi ko alam kung paano namin ito nagawa. Tuwing magkakaroon kami ng additional income, nagbabayad kami para sa aming utang maging malaki o maliit man ang aming hulog. Mayroon nga kaming walong credit cards noon at lahat nga iyon ay may utang. Nang nagbigay nga ako ng speech sa harap ng 300 katao noong December 2010, itinaas ko ang huli kong unpaid credit card at sinabi ko ngang, “this is plastic surgery.” Ginupit ko ito sa harapan at sumigaw ako ng FREEDOM. Ang makawala sa pagkakautang ang isa sa pinakamasarap na maaari mong maramdaman.

Hindi ko na sinama ang tungkol sa investing dahil iba na ang paksang ito. Pero sa oras na matapos o masunod mo na ang mga nasasaad dito, ay maaaring mag-simula ka na sa pag-iinvest.

Ang huling maipapayo ko sa inyo ay maiging ibahagi ninyo ang inyong pera. Itabi na ang 10% ng inyong income para sa tithes. Magbigay sa simbahan o di kaya sa isang organisasyon na maaaring nangangailangan nito. Tandaan mo na “It is more blessed to give than to receive”)

What is Mutual Fund?

What is a Mutual Fund?Posted on November 14, 2012  MF Phils.net

Have you ever thought of investing in the stock market? Perhaps investing in currency and real estate? How about gold and precious metals? But like most of us, employees, we do not have the time, resources and knowledge on how to invest in these things.. This is where mutual funds come in…

A mutual fund is a pool of money, from small investors such as yourself and I. Hence called a fund. This fund, will be managed by able financial managers and invests it in whatever instrument they see fit, to make you profit. You do not have to worry whether you made the right or wrong investment decision. Let the manager do and worry about all those things for you. All you have to do is let them handle your money.

Benefits of Mutual Funds

Mutual funds have many benefits.

#1 – Tax

Profits from mutual funds are tax exempt. Mainly because the managers are already taxed when they invest your money. So as to prevent double tax, the mutual fund profits that you receive are “net” which means, you get all the profit. Tax free!

#2 – Saves Time

If you have tried to manage a rental property, you will have a lot of headaches managing the tenants. On a stock market recession, you might lose sleep. In investing in mutual funds, all the stress are passed on to the managers. Since they are good at what they do, you can rest assured that they will do anything to make a profit for you. And I’m sure they have a good night sleep even on bear markets.

#3 – Saves Energy

If you invest in mutual funds today, you’ll realize that transactions are very easy. You can deposit or withdraw more money into your portfolio by a click of a button. Most mutual funds now are done online.

#4 – Vast Array of Products to Choose From

Mutual funds are like glorified candy shop. They have different flavors for different walks of life. Equity funds for the risk takers and bond funds for the secure elder. There are different kinds of mutual funds that you can pick and choose to your preference.

#5 – Affordable Investment

You can get started in investing in mutual funds for as low as P5,000. The good thing about affordable investment is that, ordinary people can start investing early and continuously because of low investment required.

How do you profit from Mutual Funds?

When you invest in mutual fund, you’ll be given a particular amount of sharescorresponding to the amount of money you invested. These shares have prices. You earn money if your share increase in value. And you lock in your profits if you sell your shares.

What’s the use of life insurance?

Excerpt from an article-MF Phils.net

Ask yourself this, what’s the use of life insurance? How much do you need? How does one grows out of needing a life insurance?

A Family Of  Five

To clearly explain how I think about life insurance and the type of insurance, consider a scenario of a family of 5.

1.      The Father – The breadwinner. Takes home P25,000 per month of income.

2.      The Mother – A housewife. Does a little part time here and there but mostly focuses on the hose. Earns around P5,000 a month of extra side job.

3.      The College First Son – A son in college taking up engineering.

4.      The Highschool Daughter – A daughter graduating in highschool.

5.      The Baby – a year old baby.

The household has a combined income of P30,000. And let’s say that the family has a monthly expense of P25,000. They have a savings of P5,000. (Everything is for illustration purposes.)

Now to clearly illustrate my point. Which of them needs an insurance? Do all of them needs an insurance?

Not all people has the money to buy an insurance. Like our example family. They only have P5,000 of savings every month that they could put in to insurance (or investments).

They still need to allot money to invest in mutual funds if they want to retire happily. Investing lesser amount would only mean they will need to work far more years before they can retire.

The Father Died

Now let’s say the Father died. The income of P25,000 per month GONE! The family is in trouble. The kids will need to get out of school to work. Mother would need to work. Baby would be neglected for the lack of time. Everything would be a lot harder for the family. The mother can’t pay the estate tax. Funeral service costs, they need to borrow, digging the family in more debt.

Life insurance protect us from this situation. If you are the father, you protect your loved ones from this kind of situation, shall come the time for you to part from this world. This is the best example of life insurance at work for the right person.

Consider that the father used the remaining P5,000 savings to his life insurance. Neglecting to buy all other family member their own life insurance. When its time for the father to die, they’ll be well taken care of financially. There would probably more money left for a few years of college for the kids before they can get a job and help their mother. Life is easier.

How Much Insurance Should I Get?

Let’s go back the the family example. If we are asked how much The Father should get as an insurance, how much would you suggest? You can go crazy and say P10M and the family would live happily ever after. But the cost of that would be insane for a household income like that. Remember that you, have a finite resource (money). Get only the least amount, cheapest amount that you could get that will still get the job done.

So how much is it? The 2 kids one in college and 2nd going into college. If you’re the father you want to provide the schooling for them. And probably for the baby too. You want to insure yourself that the money they would get, would be enough for their expenses and will get them to graduate. So you would have to compute how much money they would spend in expenses plus the money they would spend for school up to the point they graduate plus estate tax plus the funeral cost for yourself. That is how much you should cover.

How much insurance to cover:

expenses of the family + expenses of the kids up to graduation + funeral expenses + estate tax

But you could go cheaper than that. Keep in mind that the son is already in college. Maybe you want to make him graduate and give him a year or two to find a job. After that, they’ll be well off and you have done your job. In this case, your insurance cost is much lesser. And the first born son would provide for the family, keep his sister in college until the sister is able to help too.

Stock Market Correction

Stock Market Correction

Posted: 20 Mar 2013 07:18 PM PDT

From our last post, we anticipated a correction. And it is now happening. The correction is here. Up to when it will last, we don’t know. Instead of worrying about that, lets look at this in another perspective. The price of investment is a lot less cheaper now than before. In other words, you’ll get more shares for the money you’ll invest.

This is a great opportunity to accumulate your investment. As we don’t really have any bad news about the Philippine economy, as a matter of fact, we are still a strong force, why its falling is just based on emotional sentiments and short term investors cashing in. This is a temporary correction and will continue to go strong once the investors have finished cashing in their profits.

Its a great time to invest!

Do you think the Stock Market went too high already? 





Our prediction: This rocket ship will still fly higher because there’s still a lot of rocket fuel to burn. 

And even if it rests a bit and takes a pit stop in some refueling station in space....



(and I really want it to rest so I can invest more at cheaper prices), 
in the long term, nothing beats the Stock Market in giving you the best returns.
If you’re not yet investing in the Stock Market, you’re missing out on the great bull market of the Philippines. Amazingly, the Philippine Stock Market has been the best performing Stock Market in the world.


Come ride this rocketship.  It will continue to ride to the sky.  With or without you!

-bosanchez.ph-

What you need to know before you start Investing

What you need to know before you start Investing by Nira Arcales

Know yourself

Many people when they hear someone who made money in a particular investment, wants to invest in it too.  "oh I doubled my money in this particular stock" or "My mutual funds investment is now twice its value today." or "there's this business who promises to deliver 50% of your money after a month", these phrases attracts the investors to put their hard earned money to whichever they think gives them the highest profit without even knowing what that investment is all about. That is why a lot have been victims of investment scams.  Most of us wants to have the highest earning investment in the shortest period of time.  Who doesn't want that?  The truth is, each and every successful person didn't make it to the top using the short-cuts,  they invested in knowledge, worked hard, failed a couple of times, and learned from failures and most importantly, they took the time to know themselves.  It hadn't been easy even for Manny Pacquiao before he made it to top.  You need to take some time to know your wants and needs.

Miranda Marquit via Money Ning said that when you invest without self-knowledge, and without a plan, you’re setting yourself up for failure.

Understand Your Risk Tolerance

Another important trait to understand about yourself is your risk tolerance. Everyone has a different level of risk tolerance, and it’s important to know where you stand. There are two elements to risk tolerance:

§  Financial: This is the numbers part of the equation. Look at your finances. What can you afford to lose? How much money can you put away right now? You need to know how your finances would handle a worst-case scenario. Can you afford to put Php 5000 a month into a VUL funds, thereby tying the money up? If you pick the wrong dividend stock, and payouts are slashed and the value tanks, can you absorb the loss? You need to know this information before making your investing plan.

§  Emotional: Don’t forget your emotional risk tolerance. If you have a high emotional tolerance for risk, you might put your finances in danger by making ill-advised and risky decisions. Understanding your appetite for excitement and risk is vital, and you need to recognize this issue and rein in your exuberance. On the other hand, it can also be a problem if you are too risk-averse. A super-low emotional risk tolerance can lead you to invest only in “safe” assets, and prevent your wealth from growing. If you have this issue, you might need to consider money market or bond funds or other acceptable-risk investments.

Look at your risk tolerance, and understand what you can handle, as well as where you might need to make changes in your behavior. This can be a big help in boosting your investing success.  That's why in Sunlife, before we let the client sign the policy or give them the investment they want, we let them answer some questionnaire forms that would evaluate themselves, their risk tolerance and what type of investor they are.  This would help them choose what investment is good for them.

Make a Plan

Can you stick with a plan? Do your best to create a plan based on what you know about yourself and your tendencies. Then, stick to it. You might need to make a few tweaks now and again, or rebalance your portfolio — but in the long run, following a plan based on what you understand about yourself offers your best chance for success.

What type of Investor are you?

More Blessings!

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Creating your own Financial Plan

Creating Your own Financial Plan by Alvin Tabanag

Filipinos have a common misconception about financial planning being only for the rich.  Many also see it as boring, confusing, and tedious.  Financial planning is not just for the wealthy.  It is for every responsible Filipino who cares about the financial future and security of their family.   Creating your own financial plan can be an enjoyable and exciting endeavor if you know how to do it.  Here are the steps in creating a comprehensive and effective financial plan.

                                                                                      

1. Set smart financial goals.

You will not know what to do or where to go if you do not have goals. The first step in creating a financial plan is to set “smart” goals.   A financial goal should be specific (clear and detailed), measurable (includes an amount), achievable (doable with sufficient effort), realistic (not impossible), and time-bound (should have a deadline).  Write down your goals, prioritize, and classify into short, medium and long-term goals. Split big goals into a series of smaller sub-goals to make it easier to accomplish. Visualize your goals often to keep you inspired and improve your chances for success.

2. Assess your financial condition.

Knowing your present financial condition will allow you to develop a better plan of action to hit your financial targets.   It will also help you determine if the goals you have set are achievable and realistic.  There are three things you need to determine to know where you stand financially: the things that you own which are of value (assets), the things that you owe (liabilities), and your net worth, which is the difference between your assets and liabilities and also called the true measure of wealth.  Update your list of assets, liabilities and net worth once or twice a year so you can monitor your progress.

3. Create a budget & savings plan.

A budget or spending plan will help you control and manage your expenses.  It is also a vital tool for achieving your goals.  The first item in your budget should be the amount of your monthly savings.  Ideally, this is 10-20% of your income.  If this is too much, start with a smaller amount and just increase gradually.   Your spending plan will also include a budget for debt payment, housing expenses, food & groceries, utilities, school-related expenses, transportation, clothes, vacation & recreation, and charity, among others.  Get inputs from other members of the household so you can come up with a realistic spending plan that they will follow.

4. Manage your debt.

Paying off debts should be one of your top priorities because huge amounts of debt can keep you from accomplishing your financial goals.  Make a list of all your debts, including how much you need to pay monthly and the due dates.   Prioritize paying the debt with the highest interest rate and just pay the minimum for the rest.   Debt management also includes taking steps on how to keep your debt in check. These may include changing your lifestyle, strictly following your budget and carefully evaluating any planned purchase.  You will not be able to get out of a debt hole if you continue adding to it.

5. Get ample insurance protection.

Death is a certainty in life.  A life insurance policy is absolutely necessary if people depend on you financially.  The proceeds of your life insurance will address many of your family’s needs after you go six feet under.  It will help them continue to live comfortably even when you are no longer around.  Talk to an insurance agent to know how much protection you need but buy only what you can afford for now.  You can always add to it later.  You also need to get health insurance to cover medical expenses in case you or any member of the family falls ill or injured.  If you own a home you should also have it insured.

6. Plan for your children’s education.

Every year hundreds of colleges and universities increase their tuition fees an average of 10%.  If you have children, it’s a must that you prepare for their education well in advance. You just can’t depend on your salary because there’s no guarantee that you will still be earning well when they enter college.  The earlier you start saving for your children’s education, the easier it will be on your pocket.  Consider buying an educational plan for your children from pre-need companies or life insurance firms.  You may also opt to save money specifically for their education and invest on your own.

7. Plan for your retirement.

You will likely spend a significant portion of your life in retirement.  Whether it will be a comfortable or a miserable retirement will depend heavily on how you prepare for it.  Government statistics show that 75% of senior citizens are poor and another 15% are just meeting basic needs.  Only 1 in 10 seniors is living comfortably because a vast majority failed to plan adequately.  You simply can’t rely on your government pension because it’s not enough.  It’s also unfair to obligate your children to give you old age support. Retirement planning, which should be started as early as possible, will include deciding on a retirement age, determining your future needs and saving/investing to accumulate required funds, among others.

8. Create an investment plan.

Keeping your money at home or in low-interest savings accounts will lead to a steady decrease in your purchasing power because you will not be able to keep up with the effects of inflation – a “savings killer.”  It will also take you longer to achieve your goals.  If you are saving P3,000 monthly and you put it in a savings account that only earns 1% per year, it will take you 25 years to accumulate P1 million.  Place it in an investment that earns 6% a year and it will only take you 17 years. Consider investing regularly in long-term time deposit accounts, mutual funds and unit investment trust funds (UITFs), government securities, investment-linked life insurance, stocks, real estate or in a business venture.

9. Plan for the transfer of your wealth. 

It is essential for the proper and orderly disposal of your assets.  Your children could turn against each other or turn hostile towards your spouse if you don’t have an estate plan.  In simple terms estate planning involves how you want your estate, which includes all real estate properties, cars, jewelry, cash, investments and other assets that you own, to be distributed after you die.  Basically, it identifies, through a will, who gets what.  Estate planning is a somewhat complex process and requires considerable legal documentation.  It is best that you consult with an estate lawyer.

A complete financial plan will cover all of the areas above.  However, not all areas may apply to you at the moment so work only on those that are currently relevant to you.  If all these seem too complex and daunting you can always engage the services of a financial planner.  A financial planner can help you craft a realistic financial plan that covers all important areas of your finances