Financial IQ: Mutual Fund Picks for 2012

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Sharing an article I wrote that was published in Business Mirror on December 20, 2011.

To see the newsprint of the publication, you can launch this link -> http://www.facebook.com/media/set/?set=a.10150533688390673.414127.541370672&type=1&l=57a651fc10.




IN the recently concluded third fight between Manny Pacquiao and Juan Marquez, Manny Pacquiao was heavily favored to win over Marquez (although the fight turned out to be much closer than most sports experts and casual fans expected). 


During the 2011 NBA Finals, Miami Heat was favored over Dallas Mavericks.  Likewise, in the 2011 NCAA Final Four, Kentucky was favored to win it all over the three other collegiate teams.  Even though Floyd “Money” Mayweather was out for more than a year, he was still heavily favored to win over Victor Ortiz. 


Just as sports experts have their favorite individuals or teams, the financial market also has “flavor of the month” stocks and the likes.


As 2011 is coming to an end, have you invested your excess funds on various types of financial instruments?  Did you invest in a certain stock because your friendly broker or relatives gave you some hot tips?  Or are you among those that prefer to keep their excess money on guaranteed financial instruments such as savings, checking, or time deposits because they feel safer?  What was the return of your “safe” investments compared to our inflation rate, which is at around four percent?


Let me focus on the local mutual funds to consider investing for 2012.  If you are among those already familiar on how mutual funds work, congratulations!  If not, it is not yet too late to understand this financial jargon. 


A mutual fund is a type of financial instrument that pools the money of various investors to purchase equities, bonds, and other financial instruments.  A mutual fund is professionally managed by a fund manager.  Most of the time, mutual funds are categorized as equity fund, bond fund, and balanced fund.


Why are mutual funds categorized?  Each classification serves different purpose.  As an example, equity funds cater to aggressive risk-tolerant investors.


·         An equity fund is composed mostly of stocks.
·         A bond fund is composed mostly of government and corporate bonds.
·         As for a balanced fund, as the term implies, it is composed of a combination of stocks and bonds instruments.  To be precise, approximately about 50- percent stocks and 50-percent bonds.

http://businessmirror.com.ph/home/banking-a-finance/20909-mutual-fund-picks-for-2012

Financial IQ: Is it tougher to plan for retirement?

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Whether we recognize it or not, we have to admit times are changing!!!  Retirement planning needs to be more polished than what our elders did during their time.  Building the right financial foundation will help address the retirement concerns.  Is your financial foundation properly set-up?  If you are not sure, please consult a Certified Financial Advisor or Planner.


Planning for retirement is tough enough these days; living in retirement can be even tougher. That's why it's important to avoid being misled by the growing number of myths surrounding the difficult job of preparing for and living in a financially comfortable retirement.


Bankrate spoke to several financial professionals to get their perspective on those old chestnuts about retirement.

1. $1 million will be enough
2. You'll spend less money after you retire
3. Social Security will take care of you
4. Put all your money in bonds and CDs
5. College education should be top savings priority
6. Medicare is all you need in retirement
7. 4 percent is a safe withdrawal rate

http://finance.yahoo.com/retirement/article/113776/retirement-planning-myths-bankrate?mod=retire-planning

Related articles

• You Will Not Spend Less Money When You Retire (businessinsider.com)
• Retirement reasons to be thankful: lifetime retirement income (cbsnews.com)
• Retirement planning: who will succeed? (cbsnews.com)
• The Benefits of Working Longer (online.wsj.com)
• More Americans expecting to retire in their 80s (today.msnbc.msn.com)

Financial IQ: Money and Marriage

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Studies have shown that money issues is one of the leading causes of failed marriages.  If you are among those that have problems managing money, recognize and start taking actions to address it.  Good luck!


When I was a child, my father used to joke with me saying, "Nancy, remember, it is just as easy to fall in love with a rich guy as a poor one." There is always some truth in a joke and looking back on this saying as an adult, it is obvious that he was steering me toward what he hoped was a happy life rather than a life of what he perceived would be a struggle. He is old fashioned and didn't think that a girl could create her own financial security (that is fodder for another blog) but his intentions were good. In my career as a financial adviser turned financial educator, I have worked with hundreds of couples and have seen firsthand how money problems, worries and other financial issues can lead to unhappy marriages. If left unchecked, financial problems can ultimately destroy a marriage.


Money and marriage is an age old problem. I've seen many societal and economic changes over my 25 year career: incredibly high interest rates in the 80's, a raging bull market in the 90's, the stock bubble bursting in 2000, the rise of 401(k) plans replacing defined benefit pension plans, as well as the most recent financial crisis. However, during good or bad economic times some things never change — couples are still fighting about money. In many cases, they are the very same things couples were fighting about 25 years ago. According to research as well as my own experience working with couples and money, here are the top five money conflicts that lead to marital strife and ultimately divorce.


Materialism — valuing "things" or money over the relationship. Research on marriage has shown that couples who are materialistic rate at the bottom of the happiness scale. A recent study by BYU and William Jefferson University found that spouses who were BOTH materialistic were worse off on nearly every relationship measure they looked at. It wasn't the lack of money that was the culprit; the authors found that it was materialism itself that created much of the difficulty even when couples had plenty of money.


Having conflicting money values. Now I don't know about you but if I was married to someone who gambled away money I'd have a really hard time with that. I see gambling as foolish (unless you are good enough to get into the World Series of Poker.) Foolishly spending money is the number one financial cause for divorce. According to Jeffrey Dew's paper titled Bank on it: Thrifty Couples are the Happiest, when a spouse feels the other spends their money foolishly, it increases the likelihood of divorce by 45%. What caught my attention in the report was the word "feeling." The researchers tell us that perceptions of how well one's spouse handles money play a role in shaping the quality and stability of family life in the U.S.


Adopting traditional roles when they don't fit. The commonly held belief that men should handle the financial planning and investments in the family and the women should take care of the day-to-day finances may not fit every couple. In fact, in my household, my husband manages the cash flow — he can be very detail oriented, which is painfully obvious when he is talking baseball with his buddies. It is amazing to me that he knows the batting average of players who retired 5 years ago! He is much better with our cash flow and I am more suited for our strategic financial planning. This is not simply because I have a financial background, but studies on the human brain have shown women to be hard wired to multi-task and those skills cross over to strategic planning. In our case, we switched roles and it works beautifully.


Having opposing money styles. It is not uncommon to see financial opposites attract one another. Couples often have mismatched money styles — one is a spender while the other is a saver. Instead of having them work against each other, causing fights and tension, successful couples don't try to change each other. They adapt their money styles to work for both of them. In a previous blog, I mentioned how a newlywed couple set up a plan that made the most of their opposite tendencies. Paula loves her husband's sense of adventure and fun but on the flip-side he spends every dime he has doing it. He loves her stability and discipline since it balances his free and relaxed nature but he is always asking her for money and wanting to tap into her savings. There is tension and resentment on each side.


Magical thinking — getting results without a plan. One of the most undervalued yet important reasons to work with a financial planner is to force couples to develop a plan together and, at minimum, review it annually. Some people have some of the individual pieces of their finances in order but having a plan puts the pieces together. Couples who don't have a plan don't have a chance of meeting their goals.


Couples who improve their attitudes about money and their communication can truly have it all. Since finances are the biggest cause of stress (a 2010 APA study found that 76% of Americans see money as a source of stress in their lives) and stress is a major cause of disease, improving financial literacy also has the added benefit of improving your health. Keeping your values in the right place and improving finances can actually bring health, wealth and happiness. What more can we ask for?

http://finance.yahoo.com/banking-budgeting/article/113770/financial-mistakes-ruin-marriage

Related articles

• Materialistic couples have more problems (today.msnbc.msn.com)

Financial IQ: Philippines Wealthiest Women

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Interesting list, majority of the top wealthy women are Tycoon's life partner.


An informal survey of several tycoons and a dozen topnotch bankers to come up with this list:


1. Imelda Romualdez Marcos — The indefatigable, controversial and also charismatic “Iron Butterfly” and now congresswoman claims her husband was already rich from trading gold before rising to power, while her critics accuse her of ill-gotten wealth. Cosmopolitan magazine in December 1975 ranked her as one of the world’s top 10 richest women and speculated that Imelda might be the richest in the world and wealthier than even Queen Elizabeth II of Great Britain.


2. Cynthia Aguilar Villar — A business alumna of the University of the Philippines and an MBA graduate of New York University, she is the business partner of self-made realty tycoon Senator Manny Villar. The hardworking and humble Cynthia is scion of the Aguilar political clan of Las Piñas.


3. Imelda O. Cojuangco — The philanthropist widow of the late Ramon Cojuangco increased her cash hoard from the sale of PLDT stocks to First Pacific in the Erap Estrada administration; Imelda Marcos claims the PLDT stocks were actually theirs.


4. Katherine Tan — The wife and top business confidant of the Philippines’ third richest billionaire Andrew Tan, who founded Alliance Global, Megaworld and Emperador Brandy.


5. Bea Zobel — Wife of Ayala conglomerate patriarch Jaime Zobel de Ayala, she is a philanthropist who has helped tribal minority people in Mindoro and other civic and culture causes.


6. Gretchen O. Cojuangco — Wife of San Miguel boss Eduardo “Danding” Cojuangco Jr., an art lover and a philanthropist, she told me her family has donated to restore or rebuild various Catholic churches in the provinces from Tarlac to Negros.


7. Fredesvinda Almeda-Consunji — Wife of construction, realty and mining tycoon David Consunji. Her sister Angelita is also the wife of top contractor Felipe F. Cruz.


8. Beatrice Dee Campos — Widow of the late immigrant self-made “Pharmaceuticals King” and Unilab founder Jose Yao Campos. She is also a daughter of the late lumber tycoon and Chinese community leader Dee Hong Lue.


9. Gloria Macapagal Arroyo — Former president of the Philippines, economics professor and wife of controversial lawyer Mike Tuazon Arroyo. Many people claim she should be in the top five wealthiest, but I want to err on the side of caution due to raging controversies and unsettled questions regarding her fortune.


10. Felicidad Tan Sy — She is the humble and deeply religious wife of SM Group founder Henry Sy Sr. Her younger brother Dr. Paulino Y. Tan used to be a top official of De La Salle University, and helps the Sy family run Asia Pacific College as its president. Felicidad is said to be the reason SM malls hold Catholic Masses every Sunday.


11. Helen Yuchengco Dee — One of the most talented businesswomen in the Philippines, she is the eldest child of RCBC and Malayan Insurance boss Alfonso Yuchengco and the late Paz SyCip. Her husband is respected banker Peter S. Dee of Chinabank.


12. Mercedes Tan Gotianun — Wife and business partner of Filinvest Group founder Andrew Gotianun, her maternal grandfather Vicente Gotamco was a pre-war lumber tycoon and Chinese community leader. She is a UP summa cum laude graduate.


13. Mercedes Zobel — Daughter of the late Ayala conglomerate boss Enrique Zobel.


14. Susana “Chuchu” Abad Santos Madrigal-Eduque — heiress of the late Consuelo “Chito” Madrigal-Collantes, her family supports the NGO Habitat for Humanity.


15. Ana Maria Gizela “Ging” Madrigal Gonzalez-Montinola — heiress of the late Consuelo “Chito” Madrigal-Collantes, a lawyer and wife of BPI President Aurelio “Gigi” Montinola III.


16. Socorro Cancio Ramos — Legendary entrepreneur behind the leading National Book Store and Powerbooks chains, as well as matriarch of the Ramos clan in the mining and realty businesses. Her father was a Chinese immigrant who died young.


17. Vicki Belo — A successful doctor, a marketing entrepreneurial whiz who has built up the Belo and Flawless beauty chains, she told me her ancestor was the famous Spanish colonial era Chinese immigrant tycoon Nicasio Chiong Veloso of Cebu.


18. Jinkee Pacquiao — The wife of the world’s top boxing champion and rags-to-riches billionaire Rep. Manny Pacquiao.


19. Vilma Santos Recto — Multi-awarded actress, governor of Batangas province and wife of Senator Ralph Recto. She told me her brush with bankruptcy during her youth had taught her the importance of saving her showbiz earnings and investing wisely.


20. Susan Roces — Movie queen of the past, still active in showbiz and widow of the late “King of Philippine Movies” Fernando Poe, Jr.


21. Sharon Cuneta Pangilinan — The well-read Megastar and wife of Senator Kiko Pangilinan has been one of the top savers and an astute realty investor throughout her over three decades’ success with singing, movie acting and TV hosting.


22. Kris Aquino — One of the biggest earners and possibly the No. 1 most popular celebrity endorser in the Philippines, Kris reportedly could easily earn way beyond P100 million every year with her commercial endorsements alone.


23. Lani Mercado Revilla — Herself a top actress before, Rep. Lani Mercado Revilla is said to be a good money saver and is wife of Senator Bong Revilla.


24. Mother Lily Yu Monteverde — Founder of Regal Films, owner of Imperial Palace Suites and daughter of the late 1950s copra tycoon Domingo Yu Chu, she built her fortune all by herself.


25. Amalia Fuentes — This former movie queen has for decades wisely invested her earnings in prime real estate properties from New Manila in Quezon City, to Makati and all the way to Ayala Alabang in Munitinlupa. This Chinese/German-Spanish Bicolana mestiza told me that during her heyday, the income from each of her movie contracts she would use to buy a house in Dasmariñas Village, Makati.

http://www.philstar.com/Article.aspx?articleId=745058&publicationSubCategoryId=86

Financial IQ: Riches to Rags

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Once wealth has been built, we need to have the discipline in order to keep it as well.


One of the big lessons is not to binge on debt. Frank says that, in percentage terms, the very wealthy have taken a larger hit to income in recent years than the poor and the middle class. ("Hold the violins," he notes.) And while that may make sense — wealthy people tend to have more money in the stock market -- it marks a departure from history. "Prior to 1982, the top one percent were a stable line on the income charts," says Frank. "When things were great, they did OK. When things were bad, they didn't do as bad as the rest."


But things have changed. And It has a lot do with debt. The very rich can easily inflate their net worth by borrowing tens and hundreds of millions of dollars to buy assets, only to see it all disappear in a poof of smoke. High-Beta Rich is full of such tales: the former millionaire who now does odd jobs and lives out of a truck, the guy had to stop building a 75,000-square-foot home near Orlando after his time-share business collapsed under a mountain of debt.


One of the best stories revolves around Tim and Edra Blixseth. After making a fortune in the timber industry, the Blixseths decided to go big by building the Yellowstone Club, an ultra-exclusive ski and golf resort where plots went for $3 million an acre. (Members included Bill Gates, and the trails had names like EBIDTA and Lear Jet.) Demand was so strong for debt backing the project that the Blixseths borrowed several hundred million — more than was needed to build the resort. The cash went to support an insanely lavish lifestyle: seven homes, two private jets, and his and hers Rolls-Royces. During the boom, Frank went to visit one of the couple's homes, which was nestled in a private golf course and full of waiters and other staff. When he returned after the Yellowstone Club went bust and the couple got divorced, Frank rang the bell at the front gates. "I got a Verizon message saying it had been disconnected because they hadn't paid their phone bill." After 25 years in a gilded paradise, Edra Blixseth had to learn how to fill her own gas tank.


Of course, the story of these rags-to-riches-to-rages tales are cautionary ones. Most readers will find it difficult to relate to many of the characters in the book. You won't be able to get through this entertaining, well-reported book without shaking your head in disbelief at the arrogance and stupidity of people who had it all -- and then lost most of it because they wanted even more. But Frank warns that we should try to understand them at a human level. Why? The manic behavior of get-richer-quick types has a larger impact — people using leverage to make big statements and take big risks influence the markets in which we all invest, and the economy in which we work.

http://finance.yahoo.com/blogs/daniel-gross/rags-riches-back-rags-meet-high-beta-rich-164920730.html

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Financial IQ: Presentations with Humor

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In case your schedule permits, the topic "HOW TO MAKE GREAT PRESENTATIONS WITH HUMOR" sounds interesting.


FREE TRAINING! You are cordially invited to the Grand Assembly of the Genius Creation Mastermind Assembly (Mon, Nov 7 at Roofdeck, Prestige Tower, Emerald Ave, Ortigas) featuring world-class speaker Mr. Raju Mandyan, who will be sharing about HOW TO MAKE GREAT PRESENTATIONS WITH HUMOR. Training is FREE. Pay only a minimal fee of P200 to cover venue and your dinner. To register, call 7487646 or text 09178790543.

Financial IQ: How safe is wireless technology?

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Health is wealth.  Medical bills easily pile up as we get up in age.  I'm not sure if there are health risks... and it does not cost a penny to take precautionary steps.


We are constantly wired to something – cell phones, internet, cordless phones, etc. We come to the office and we have wireless internet and these days most of us have 2 or 3 cell phones – we use cordless phones, wireless speakers, Bluetooth and what have you. At the end of the day, we go home and most of us have wireless internet at home, cordless phones and several cell phones for each member of the family.


Although the issue on the safety of the use of cell phones had died down since the US National Cancer Institute declared them safe and since the stringent requirements of the US Federal Commission (FCC) that manufacturers should not exceed the maximum 1.6 watts per kilogram specific absorption rate (SAR) before these phones can be sold to the public were implemented, still there were experts who warn on the safety concerns of cell phones.


They were asserting that the FCC safety declaration was generally based on specific absorption rate (SAR) level, or the rate at which our bodies absorb radiation. In the website of FCC it defines SAR “as a measure of the rate of RF (radio frequency) energy absorption by the body from the source being measured – in this case, a cell phone”. These independent researchers were saying that SAR only monitors thermal effects – meaning, if it’s not emitting harmful energy on your brain, it passes as safe.


It’s not as important as the research that shows that it’s the non-thermal radiation from a cell phone (the energy waves that made it possible for cell phones to connect to the cell towers) that “can damage our immune system and alter cellular functioning.” This has nothing to do with how high or low the SAR level of your phone is. All cell phones emit a hazardous amount of non-thermal radiation.


The sad thing is that most of us are still ignorant about this fact on non-thermal radiation. All we are concerned are the SAR which is the one much publicized.


Moreover, these safety studies on cell phones involved adults aged 18 or older. Working parents especially gave their children cell phones to closely monitor their activities in school and whereabouts. Other countries discourages children from using cell phones such as the British government when in December 2000 recommended reducing the length of time children spend on a cell phone.


If we cannot do anything much with RFs in offices, we can do something in minimizing our exposure at home not only with regards to cell phones but to anything wireless such as the internet. At our home, we have this router in the master’s bedroom right beside our bed – now we plan to place it in our office room. Where before, the router is turned on the whole night until morning, now we make sure it is turned off at night and when not online.


With cell phones, let’s try to use speakerphones when at home or in the car or use corded headphones and shy away from wireless headset. Let’s also make sure to turn off to wireless mode our cell phones and IPADs when not going online. Cordless phones should also be avoided if possible, since it can prove more harmful than a cell phone. The phone base is like a mini cell tower radiating 24/7 at a range of up to 300 feet.


Technology is progressing day by day so we should make the most of technology to our advantage rather than be slave to it to the point of sacrificing our health.

http://mb.com.ph/articles/333335/how-safe-wireless-technology

Financial IQ: Wealth Creation

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Nice read on wealth creation for every Juan :)


“Savings and investments are independent of each other,” says registered financial planner Rowena Cuyco-Suarez. “These two create wealth that covers the things that you will need. From the day you were born to the time after you join your creator, you will need money. It’s not being morbid nor materialism, you’re just being practical.”


She elaborates, “You either live too long or die too young. If you die too young, you need income replacement for your family. If you live too long, you need money to take care of yourself—and we are talking of past retirement. We are talking about the time when you’re 70 or 80 years old, and probably need a wheelchair or a caregiver.”


Saving for the far-off future is probably a stretch for many Filipinos, and Suarez argues for a change in mindset. “Only five percent of Filipinos have planned for retirement,” she claims, citing a study made within her industry. “That’s because many of them believe that their kids will take care of them when they grow old.


But this is a cycle we have to break. Because by the time you do retire, your kids will have their expenses to think of.”


Like death and taxes, day-to-day expenses are inarguable. Suarez classifies them into six major categories, and advises planning ahead to respond to them in the form of investments. These categories then become the basis for one’s creation of wealth.


The first pillar, which is the foundation that precedes other, is income replacement. This is the insurance to cover the family’s welfare should the main breadwinner pass away. Suarez gives an example of one form of financial planning: “If the family spends P500,000 a year, to survive the loss of their breadwinner, they’d have to multiply this annual income by, say, 10 years. Their protection amount”— or the monies that would serve them in good stead at the death of a parent—“would be P5 million.”


Health protection or available income for the inevitable sickness or hospitalization is the next in line. Suarez says that current research shows 48 percent of Filipino families contending with the illness of a loved one will take the out-of-pocket expenses from their daily budget. Neither do they have a substitute for the lost (or temporarily disabled) generator of revenue. She advises,


“If you have protection for health, you will get the money you need for hospitalization and medical expenses from a fund that you have set aside for that. The money for your monthly expenses will not get touched at all.”


The third category for wealth creation would be setting aside funds for the kind of education that will help children develop a bright future. The fourth is retirement, which marks its time after the last child has graduated from college. The fifth is the aforementioned post-retirement life of the senior citizen. Small beginnings


Financial planners like Suarez recommend investments that take factors like inflation into account. She points out, “Given the present inflation rate, your monthly expenses of P40,000 in 20 years time can grow to P100,000. You have to plan for it.”


Some of the tools that are available in her arsenal and which can give an interest rate higher than the usual bank deposit are investments in stocks and bonds, pension plans, and mutual funds. Financial planners act like “financial doctors” who analyze the would-be investor’s sources of income, level of capability to save, and financial objectives, and then make the necessary recommendations.


Some investments can last for decades, while others, like an educational plan, will require the investor to pay a certain amount for only a few years. Each plan is customized according to the investor’s needs and plans.


“In every investment, you have to have a goal,” Suarez says. “We ask about goals, dreams, and aspirations. We also update ourselves in what’s happening to our client’s life. Like if he’s sending a new kid to college or got a new job, how will that development affect his finances?”


She also debunks the myth that only millionaires can invest. It all starts by setting aside 20 percent of one’s income, which could mean a modest amount like the abovementioned P4,000 monthly seed money that blossomed into a P5,000,000 retirement fund.


The rewards can come much sooner. In one case, one middle-class professional who only set aside P56,000 for the past two-anda-half years was able to collect more than half a million pesos as her health insurance when she was diagnosed with cancer. Another lady in her 60s used merely the interest in her savings to shop along with her grandchildren in the U.S., leaving her savings principal still intact.


Start with a small amount, but make the effort to start at all, Suarez urges. The key to cultivating the pillars of life are “discipline and commitment. Forget the jackpot mentality of enjoying all the money you have right now. What happens when all of it is gone?”

http://mb.com.ph/node/339564/building-pillar

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• Yours, Mine, and Ours: A Couple's Guide to Retirement Planning (money.usnews.com)
• How Much Money Should You Be Saving? (businessinsider.com)

Financial IQ: Imelda Cojuangco, MVP, Pacquiao, Ramon Ang, Lhuilliers Also Missed in Forbes

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Oh, there are more tycoons among the country's most affluent that need to be added to Forbes list.


Thanks to Entrepreneur magazine’s managing editor Eileen Ang, features editor Rocel Ann G. Junio, staff writers Peter Imbong and Carlo Mallo for inviting this writer to be a resource speaker on Aug. 18 at their roundtable discussion about the Philippines’ 40 wealthiest based on the latest Forbes magazine list. Two experts who joined me were Enderun Colleges Dean of Business & Entrepreneurship Edgardo Rodriguez and Ateneo Graduate School Prof. Danilo A. Antonio.


By the way, I said the Forbes list is good, but I believe it is incomplete for missing such tycoons, who could definitely qualify for its top 40 list with the lowest net worth being US$85 million. Here are some more missing from the list: Imelda Cojuangco, Manny Pacquiao, Manny Pangilinan, Ramon Ang, Mike Velarde (religious leader but also a realty businessman), the three inheritors of the Chito Madrigal Collantes estate, the Floirendo family, the Araneta family of Cubao, the Lorenzo family of Lapanday, the Ortigas family of Greenhills, Carlos Chan of Oishi, Alfredo Yao of Zest-O/Zest Air, “Radio King” Fred Elizalde, flour/sugar mill tycoon Alfonso Uy, “Tuna King” Ricardo Po Sr., Angelo King, the Lhuillier brothers with reputedly the world’s largest pawnshop chain in number of outlets, Ambassador Jesus Tambunting of Planters Bank, Wilson Lim of Abenson/Waltermart, Lucio Co of Puregold,  the Roxas family of sugar milling, etc.

http://www.philstar.com/Article.aspx?articleId=721429&publicationSubCategoryId=82

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Financial IQ: Remembering Steve Jobs

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Remembering Steve Jobs, who was very instrumental in the revival of Apple.  Great inspirational speech.

Financial IQ: Are you a Saver or Spender?

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In order to properly secure our future, we need to have a "Saver" and "Investor" mindset.  The earlier we can break away from the "Spender" mindset, the better it would be for ourselves and our family.


With this latest recession, I was caught off guard. I'd been living in Florida, where unemployment rates were low and the housing market was off the charts. My job was stable and most people I knew had no financial worries. But then the housing market crashed and the layoffs started. I gained an entirely new perspective having lived through the most recent recession.


I view my house as a liability


While a home that you own and can rent out is an asset, most houses are liabilities. I never realized how much of a financial burden a house could be until my friends started losing their homes. Because of the recession, I've picked up the pace in terms of paying off our mortgage. According to USA Today, a lot of people are crunching numbers to figure out how they can pay off their loan in 8 years, using a Quicken Loans product called Yourgage.


I don't decline extra work


When I was living in Indiana during a local economic depression, I was always motivated to work. I could not pass up an opportunity to earn income doing what I love when so many people couldn't find a job. Seeing people living in humble circumstances then and now keeps me focused on productivity. In contrast, during the economic boom I just went to my 40-hour job and took it easy the rest of the time.


I question my own purchases


When the economy was booming in Florida 9 or 10 years ago, I never thought twice about buying things I wanted. I may have questioned my sons' purchases, but rarely my own. Now I think before purchasing a new outfit or even buying treats at the grocery store. I track my spending and consult my budget.


I don't count on a job


It's not wise to put all your money into one investment vehicle or to depend on one source of income. Because of the recession, I've thought about diversifying my streams of income. I find creative ways to make money such as being a secret shopper and participating in focus groups through marketing firms.


I'm not embarrassed to scrimp or forage


Before the recession, I felt as though people gave me a strange look if I pulled out my coupon organizer. Now they expect people to use coupons. I also forage for elderberries to use for pies and jellies. I'd never go so far as to be a "freegan" who salvages discarded food in dumpsters, but I don't look down on those who do. I never would have had the guts to collect berries before the recession, but now I look forward to elderberry-picking season.


The recession has not made me bitter or cynical, but it has made me appreciate and respect money. I'm more thankful for my family and the work that I'm given. I take better care of my things so they last longer.


In the end, the recession has made me a better, more thrifty person.

http://finance.yahoo.com/news/First-Person-How-Recession-ac-4133652592.html?x=0

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Financial IQ: How to become a Millionaire?

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Great article.  This is exactly what Financial Advisors are saying... invest regularly regardless of the financial market cycle and you will achieve financial independence in due time because money together with time will work in our favor.


The idea of becoming a millionaire may seem like a pipe dream.


When it comes to retirement, most Americans doubt they've saved or invested enough to retire comfortably, let alone reach that million-dollar milestone. A new AP-CNBC poll finds nearly one-third (31 percent) of U.S. residents believe they would need a minimum savings of $100,000 to $500,000 if retiring this year in order to be confident of living comfortably in retirement, and 22 percent believe the minimum is $1 million or more to retire comfortably.


Only one-fifth of U.S. respondents think it's likely that their net worth will total at least one million dollars in the next 10 years, while 62 percent said that is "very unlikely." The consensus from the majority of respondents (61 percent): It is "extremely" or "very difficult" to become a millionaire in the United States today.


But many are still trying to hit that million-dollar mark — and millions of Americans have already attained that goal.


The number of millionaires in the country is growing. The U.S. has more than 10 million. Despite the European debt crisis and worries about the U.S. economy, a May 2011 report from the Deloitte Center for Financial Services projects that the number of millionaire households in the U.S. will more than double to 20.5 million in 2020, with combined wealth of $87 trillion, up from $39 trillion in 2011.


Money makes money, but it can be tough to make that money grow in these rocky financial markets. The AP-CNBC poll found six in 10 U.S. residents (62 percent) say their confidence in investing has been shaken by recent volatility in the stock market. That sentiment has increased over the past 12 months. Today, 65 percent of those who own stocks, bonds and mutual funds are less confident about investing, compared with 61 percent last year.


Respondents in the AP-CNBC poll say they're making saving and investing a top priority. The survey asked people what they would do with a million dollars and found, on average, that Americans would spend 31 percent on saving or investing; 17 percent on giving to family; 14 percent on spending; 13 percent on paying down debt; 12 percent on buying real estate and 11 percent on charitable donations. Unfortunately, the reality is that mounting expenses, lower wages and job losses require many Americans to dip into those savings to pay for household bills or pay down debt.


The reality is that investors who stayed the course and did not pull their money out of the market in the last few months may actually have fared pretty well. Despite an almost 8 percent decline since mid-July, the broader stock market, represented by the S&P 500 Index, is up nearly 8 percent over the past 12 months. Certainly it's been a rough few years with the S&P 500, down 8 percent in five years. But over the past decade, the broader stock market is up by more than 10 percent.


In most cases, the road to financial security in retirement comes with steady savings, strategic investing, and probably a later retirement date than you may have envisioned at the start of your career. Keep these three rules in mind: First, you need to live within your means. Next, you have to commit to saving a certain amount every month and stick to that goal. Then, you have to make sure your investments are in a diversified portfolio — a mix of stocks, bonds, and alternative investments (commodities and real estate) and rebalance that mix to attain your goals for growth.


So how long will it take until you're a millionaire?


If you start with an initial $10,000 investment and your portfolio grows by 5 percent every year, here's how much you need to save each month to reach your $1 million goal by age 70, according to Bankrate.com's calculator.


• 25-year-olds have to save $450 a month. That's just $15 a day for the rest of your working years.


• 35-year-olds have to save $850 a month.


• 45-year-olds have to save $1,700 a month.


• 55-year-olds have to save $4,000 a month. (Of course, with an average inflation rate of 3 percent, that $1,000,000 nest egg will only be worth $642,000 in today's dollars. So that means you'll likely wind up having to save even more.)


Still, for those who start early and save often, becoming a millionaire doesn't have to be a pipe dream.

http://finance.yahoo.com/retirement/article/113526/what-it-takes-become-millionaire-cnbc?mod=retire-planning

Related articles

• What it takes to become a millionaire (usatoday.com)
• Poll: Vast majority doubt they'll strike it rich (cbsnews.com)

Financial IQ: Is Personal Loan worth it?

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Financial IQ Philippines Quick Hit(s):

Most of us have been offered loans by different institutions.  Unless you can recover the interest from the loan, I suggest you think twice before taking out this type of loan.  As can be seen from the one of the leading institution's offer, the loan's annual interest rate ranges from 21% to 27%.  Yes, this is very high.

Just think about it, in savings account, you typically get 1% interest per annum (for a deficit of appoximately 20% to 26%).  For time deposits, typical range is around 4% per annum (for a deficit of approximately 17% to 22%).


One of the flyers I got from the recent Franchising Expo 2011 in SMX is a Personal Loan from one of the leading financial institution.  This type of loan is typically non-collateral and can be used for home improvements, purchase of retail items, medical expenditures, trips, etc.  Reading the front portion of the flyer, seems like the rate is around 1%.  As it turned out, the various interest rates are:

Term	Interest Rate / Month	Effective Rate / Year
6	1.30%	26.27%
12	1.25%	26.63%
18	1.25%	26.76%
24	0.99%	21.37%
36	1.25%	25.98%

Related articles

• The Pros and Cons of Personal Loans (savings.com)

Financial IQ: 9 Strategies of Billionaires

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Financial IQ Philippines Quick Hit(s):

Warren Buffet, consistently among the Top 3 billionaires, preaches buying companies when they are cheap.  Shouldn't it be one of our strategies as well?


One of my favorite business books is Martin Fridson’s How to Be a Billionaire. Although I have no plans or ambitions to be a billionaire, this book shares a lot of interesting ideas that even small and medium entrepreneurs and professionals can learn from.  Fridson studied more than a dozen self-made billionaires like Sam Walton, Bill Gates, Wayne Huizenga, and Warren Buffett, and came up with these nine strategies. I will apply these strategies to our local tycoons:


1. Take monumental risks. Lucio Tan buying almost bankrupt firms like Tanduay, Genbank (now Allied Bank), Philippine Airlines, etc. Who is gutsier than he?


2. Do business in new ways. Henry Sy pioneered malls in a big way; Tony Tan Caktiong’s Jollibee was ahead of multinational McDo; John Gokongwei Jr. turned transport upside down with budget airline Cebu Pacific and also the free texts/calls from Sun Cellular.


3. Dominate your market. MVP’s PLDT is dominant in telecom and Meralco is a monopoly; Danding Cojuangco and Ramon Ang’s San Miguel is dominant in beer; David Consunji is a leader in construction; Fred Uytengsu is dominant with Alaska Milk, etc.


4. Consolidate an industry. Like the Aboitizes consolidating power firms and plants.


5. Buy low.


6. Thrive on deals. Like top dealmakers MVP, Roberto Ongpin, Ramon Ang, and Gokongwei.


7. Out-manage the competition.  Like George Ty, the Zobels, Henry Sy’s family in malls, Felipe Gozon of GMA 7, etc.


8. Invest in political influence. Not a few tycoons are like Manny Villar in politics, while Ricky Razon of ICTSI is close to all presidents of the Philippines.


9. Resist unions. The late immigrant Jose Yao Campos of Unilab was very benevolent, and I heard of no strikes or labor unions.

http://www.philstar.com/Article.aspx?articleId=721429&publicationSubCategoryId=82

Related articles

• Cebu Pacific Stays Simple and Scalable (online.wsj.com)

Financial IQ: Franchise Expo 2011

Financial IQ Philippines Quick Hit(s):

I visited the Franchising Expo and there are a couple of interesting concepts.  There is a P100.00 entrance fee and closes at 7 pm.  I will share the various franchise information I gathered in future articles.

FRANCHISE ASIA 2011 to Highlight PHL in Global Franchise Map

The Philippines will take centerstage in the global franchise community with the staging of Asia’s grandest franchise event dubbed “Franchise Asia 2011 (FA2011)” on September 19-25 at the SMX Convention Center.  This was announced by FA2011 Overall Chair Bing Sibal-Limjoco, who also sits as Vice Chairman of the Philippine Franchise Association (PFA), host and organizer of the event.

“The honor of staging this prestigious international event came after the Philippines, through PFA, won the bid to host the twin international meetings of the Asia Pacific Franchise Confederation (APFC) and the World Franchise Council (WFC).  FA2011 will gather in Manila, delegates from 43 members countries of the two world umbrella franchise organizations,” Limjoco said.

Bannered under the theme “Asia to the World ● The World to Asia,” FA2011 aims to provide the platform to showcase to the world the best Philippine franchise brands and concepts, as well as provide a gateway for international brands to enter the 650 million ASEAN market through the Philippines.

Limjoco, reiterating the importance of the biggest gathering of franchise leaders in the country, said, “Through this event, we aim to strengthen the Philippines’ position as the ‘franchise hub of Asia.’ Franchise Asia 2011 will definitely highlight – in a global scale –  the position of the Philippines as a premier trade, investment and tourism destination to further raise the country’s profile as a frontrunner in the international franchise arena and as an important investment destination in this side of the region.”

The 4-in-1 FA2011 showcase will feature: the twin meetings of APFC and the WFC (September 19-22); the International Franchise Conference with Concurrent Breakout Sessions, a high-level educational program which will provide the best opportunity to learn from world-class experts and noted franchise gurus who will share their expertise in franchising (September 22-23); the International Franchise Expo, a three-day one-stop shop for the best business opportunities ranging from established and successful brands to new and promising franchise concepts – in food, retail and service – both homegrown and international (September 23-25); and, Educational Sessions and Franchise Seminars which will provide the proper learning venue for would-be franchisors, would-be franchisees, and/or would-be international master franchisees or those on the look-out for prospective joint business ventures (September 23-25).

Highlighting the Conference are prominent names in both local and international franchising which includes Jollibee Chairman and CEO Tony Tan Caktiong as a keynote speaker.  The 2004 Earnst and Young’s “Entrepreneur of the Year” will provide the face of a Filipino brand’s success in the franchising sector both locally and internationally. In addition, Krispy Kreme Doughnut Corp. Senior Vice President & President-International Jeff Welch and 7-Eleven International Senior Vice President Chris Tanco have also confirmed their speaking engagement in the event.

Meanwhile, the Expo will continue to be the biggest showcase of unlimited opportunities as an almost 10,000 square meters of exhibit space will have added features to complement  the wide variety of investment options.  Among the exciting sections to visit are the International Franchise Brands and Concepts; the Country Pavilions (USA, Europe and Asian Countries); Emerging Concepts, Incubation and Winning Business Ideas from the Academe; and, Allied Suppliers and Business Opportunities.

Related educational activities will also highlight the Expo, such as International Franchise Seminars by international exhibitors who will present investment opportunities for prospective partners and investors; Franchise Seminars for “would-be franchisors” and “would-be franchisees”; and, Franchising 101: Benefits and Advantages of Franchising.

To know more about Franchise Asia 2011, visit www.franchiseasia2011.com.ph, or contact the PFA Secretariat at tel. nos. (02) 6870365 to 67, 09178320731, or e-mail pfa@pfa.org.ph This e-mail address is being protected from spambots. You need JavaScript enabled to view it .