Financial IQ Philippines

Why is Financial IQ important in Philippines? Financial IQ is extremely important not only in the Philippines, but in the entire world. With solid Financial IQ, better financial choices are made. With good Financial IQ, money works for us. With excellent Financial IQ, we can easily find business opportunities in Philippines. With excellent Financial IQ, we can ride the growth of Philippines stock market. With great Financial IQ, we can gain Financial Independence.

Sunday, June 23, 2013

Financial IQ: Mutual Funds Primer - part 2

Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor (Photo credit: Wikipedia)

Financial IQ Philippines Quick Hit(s):

Introduction to Mutual Funds. The concluding part... :)

Last of two parts

BEFORE we continue, let us recap the important points covered last week.

So how do mutual funds differ from other financial instruments like government treasuries, bonds and stocks?

For mutual funds, investors will only need to provide the investment money and indicate their choice of mutual fund to the company, and the fund manager will be the one to select and manage the investment. For the rest (i.e., government treasures, bonds and stocks), investors would have to personally identify, buy and sell these as applicable.

This is the reason mutual funds perfectly fit busy professionals or individuals specializing in other fields, as everyone can enjoy the benefit of the growth in the financial market, even if they do not have the time or knowledge.

Below are the recommended mutual funds according to type of investor. Please note that the returns mentioned are as of May 17:

Conservative investor. Investment horizon is less than three years; best suited to invest in bond fund

First Metro Save and Learn Fixed Income Fund Inc.—five years average return of 12.27 percent
Phil Equity Peso Bond Fund Inc.—five years average return of 11.22 percent
Philam Bond Fund Inc.—five years average return of 10.49 percent

Moderate investor. Investment horizon is three to seven years; best suited to invest in balanced fund

First Metro Save and Learn Balanced Fund Inc.—five years average return of 27.94 percent
Philam Fund Inc.—five years average return of 20.22 percent
Pami Horizon Fund Inc.—five years average return of 19.57 percent

Aggressive investor. Investment horizon is more than seven years; best suited to invest in stock/equity fund

First Metro Save and Learn Equity Fund Inc.—five years average return of 26.58 percent
Phil Equity Fund Inc.—five years average return of 26.21 percent
Philam Strategic Growth Fund Inc.—five years average return of 22.76 percent
Phil Equity PSE Index Fund Inc.—five years average return of 21.79 percent

So how do you get started on mutual funds?

http://pinoyfiq.com/pinoyfiq/financial-education/introduction-to-mutual-funds-part-ii-of-ii

Friday, June 21, 2013

Financial IQ: Mutual Funds Primer - part 1

Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor (Photo credit: Wikipedia)

Financial IQ Philippines Quick Hit(s):

Introduction to Mutual Funds. Read on... :)

On May 15 the Philippine Stock Exchange index (PSEi) reached a new all-time high, ending that day with 7,397.34 points, representing a year-to-date investment return of more than 25 percent. This is the 31st record high the Philippine stock market has reached this year.

During this and past year’s bull run, were you invested?

Investing in the stock market requires some specialized knowledge. As such, some people avoid the stock market entirely. For other people, they try to get in to enjoy the profit, but at the expense of speculating how the stock market will move.

Good news to everyone who wants to participate and enjoy the gains of the stock market without having the time to study all its intricacies. There is an investment option called mutual fund(s) that can help you get good returns without having to learn everything and continually monitor the stock market. Essentially, the investor will just select the preferred mutual fund(s), hand the money to the mutual-fund company to subscribe shares and immediately get to enjoy the ups and downs of the fund.

So what is a mutual fund? It is an investment vehicle that pools the money of various individual investors to buy corporate bonds, government treasuries, stocks and other financial instruments. It is important to note that investment returns are not guaranteed and are subject to market volatility, unlike savings or time deposits where interest rates are fixed but investment returns are significantly lesser (and mostly, cannot even outperform inflation rates).

There are four types of mutual funds:

money market fund
bond fund
stock/equity fund
balanced fund

The return of investment of the money market fund is aligned with the returns of the money market, which is at 2 percent per annum. Whether you are a conservative or aggressive investor, it is best to avoid the money market fund as you can get a comparable rate of return with other financial instruments such as a special deposit account.

Now let us go to the bond fund. This type of mutual fund has majority of its investment in fixed-income instruments, such as corporate bonds and government treasures such as Treasury bills, notes and bonds. These instruments are called fixed income because they generate regular and predictable interest rates per annum. This fund is best suited for conservative investors who have a shorter investment time frame (typically three years or less) and returns are conservatively on an average of 6 percent to 8 percent annually.

Stock fund, commonly called equity fund, is mostly invested in stocks. The holdings of the various Philippine stock/equity mutual funds are mostly publicly listed companies on the PSE and could range from big, well-known companies to smaller ones. This type of fund is best suited for aggressive investors who have an investment time frame of seven or more years, as there is more volatility but returns are higher, conservatively on an average of 10 percent to 12 percent annually.

There is a special stock fund called an index fund. This is composed of stocks and weighted according to the composition of the country’s stock index. For the Philippine index fund, the composition is identical to the PSEi. Compared to typical stock funds, the index fund is passively managed, as the fund manager will only transact if there are changes in the index’s composition.

http://pinoyfiq.com/pinoyfiq/financial-education/introduction-to-mutual-funds-part-i-of-ii

Sunday, June 2, 2013

Financial IQ: Suze Orman's tips to Filipinos

Cover of "The 9 Steps to Financial Freedo...

Cover via Amazon

Financial IQ Philippines Quick Hit(s):

Read on for Suze Orman's tips to Filipinos.

Susan Lynn “Suze” Orman is a financial advisor, speaker, and television host. She has also published a number of books such as The 9 Steps to Financial Freedom, The Courage to be Rich, and The Road to Wealth.

She is well-known for her television show, “The Suze Orman Show”.

Suze Orman has visited Philippines on 2012 and 2013. Could you guess what are her typical financial messages to Filipinos?

“It is okay to take care of others, but you also have to take care of yourself too.”
“Do the right things, not what the culture says.”
“The greatest thing you can do for yourself is to pay your debts.”

http://pinoyfiq.com/pinoyfiq/financial-education/suze-ormans-advises-to-filipinos