Financial IQ: A doctor's wisdom

Donald Campbell, Physician, Butte, MT (Photo credit: Butte-Silver Bow Public Library)
Financial IQ Philippines Quick Hit(s):

A nice article from Francis Kwong.  Sometimes even though it is more logical to follow one path... it is worth trusting your gut and instinct.


A worried woman went to her gynecologist and said, “Doctor, I have a serious problem and desperately need your help! My baby is not even one year old, and I’m pregnant again. I don’t want kids so close together.”


“Ok, what do you want me to do?” the doctor asked.


“I want you to end my pregnancy,” she answered.


The doctor thought for a while. And after some silence, he said to the woman, “I think I have a better solution for your problem. It’s less dangerous for you too.” The woman smiled, thinking that the doctor was going to yield to her request.


The doctor told her, “You see, in order for you not to have to take care of two babies at the same time, we’ll kill the one in your arms. This way, you could rest some before the other one is born. If we’re going to kill one of them, it doesn’t matter which one it is. There would be no risk for your body if you chose the one in your arms.”


The lady was horrified. “No, doctor!” she exclaimed, “How terrible! It’s a crime to kill a child!”


“I agree,” the doctor replied. “’But you seemed to be ok with it, so I thought maybe that was the best solution.”


Human rights have become a favorite topic in the world today. Yet while they can go and talk about human rights, intelligent societies don’t really know what it takes to be human. “It’s just a fetus,” they say of the unborn. Amazing isn’t it? And that the proponents of abortion always come from people who are already born. So what about the rights of the unborn child?


This is what happens when you take God and The Word out of society. You hear such battle cry as: “Protect the forests! Take care of animals! But kill the babies!”


God knew you even before you were formed in your mother’s womb. He created you – wonderful and beautiful. That’s what my Bible says. That truth is where you find your humanity, your dignity in life.


But man’s selfishness has twisted how society defines humanity and life. But I pray to God that will not be the prevailing attitude here in our country.


Let’s talk about situational ethics.


Situational ethics is now being taught in many schools, especially in the West. But one teacher wanted to illustrate the faultiness of this human reasoning, so the teacher presented the following situation to a class of students:


“How would you advise a mother who was pregnant with her fifth child, based on the following facts: her husband has syphilis; she has tuberculosis; their first child was born blind; their second child died; their third child was born deaf; their fourth child has tuberculosis. The mother is considering an abortion. Would you advise her to have one?”


In view of these facts, most of the students agreed that she should have an abortion. The teacher then declared, “If you said ‘Yes’, you would have just killed the great composer Ludwig von Beethoven!”

http://www.philstar.com/Article.aspx?articleId=801334&publicationSubCategoryId=66

Financial IQ: Pinoys, mostly women, remain lowly paid

Employment Exhibition (Photo credit: Modern_Language_Center)
Financial IQ Philippines Quick Hit(s):

This is one of the challenges of being employed.  Even though some jobs are high paying... there are a lot more that receiving low wages.

It would be a good idea to start building your passive income while you are still receiving wages from your active income.


The number of lowly-paid Filipino workers, mostly women, continues to rise despite economic improvements, the International Labor Organization (ILO) reported yesterday.


According to the ILO, lowly-paid workers increased by 14.5 percent as more women took on low-paying jobs.


“Women have not seen comparable improvements, with the proportion of female employees in low earnings going up by around 1.5 percentage points since 2001 in both Indonesia and the Philippines,” the ILO noted.


ILO said wage-setting mechanisms, such as collective bargaining and minimum wages, could help achieve a more balanced and inclusive development, by ensuring equitable sharing of economic growth benefits.


“Sound wage policies (based on social dialogue in particular) can help reduce vulnerabilities and the risk of low-paid workers falling into poverty,” the ILO explained.


ILO director general Juan Somavia said tens of thousands of people around the world are expected to join street protests on Labor Day to press for decent work.


Somavia said the continuing global economic crisis has hit workers the hardest.


“Workers are (now) seen as being consumers of all sorts of loans rather than having a legitimate share through wages in the wealth that they contributed to create,” Somavia pointed out.

http://www.philstar.com/Article.aspx?publicationSubCategoryId=63&articleId=800831

Related articles

• The world is entering the third phase of the crisis, warns ILO (liberalconspiracy.org)

Financial IQ: Secrets to Being a Millionaire and Enjoying It

Cover of The Millionaire Mind
Financial IQ Philippines Quick Hit(s):

Great article.  Everything starts within us and the actions we take.


Yes, opportunity is knocking for American investors. Less than two weeks ago Spectrem Group of Chicago released its latest annual report of American millionaires. About 200,000 new millionaires were added last year, for a new total of 8.6 million.


True, that’s less than the 9.5 million at the 2006 peak, but it’s still great news along with the Dow industrial’s 994 point first-quarter rally of 8.1% first quarter ending last Friday, two clearly positive signs of a recovery.


In short, you can still become a millionaire. Here’s the secret: It’s all in your head, your attitude, your state of mind. If you want to retire a millionaire, you can. Here’s how: You control your mind.


A few decades in business, and years writing about behavioral economics and psychology have convinced me of this one simple truth: Becoming a millionaire really is all in your head. It has little to do with wealth-building techniques, tools and rules.


In fact, you could forget all the usual stuff: asset allocation, stock picking, savings plans, budgeting and so on. I know, that’s what the experts tell you to focus on. But if you’re not in the right state of mind, none of that matters.


Seriously, I’ve read the books: “The Millionaire Mind,” “Instant Millionaire,” “Automatic Millionaire,” “Millionaire Next Door,” “One-Minute Millionaire” and many more. Even wrote a couple, “The Millionaire Code” and “The Millionaire Meditation” and worked on Wall Street as an investment banker with Morgan Stanley.


But I keep coming back to this one simple fact: Becoming a millionaire really is all in your head. Period. No excuses. You decide to become a millionaire and it will happen — in a bear market, a bad economy or riding a bull.


So here are the 10 best tips I picked up over the decades, tips that’ll help you become one of America’s next millionaires:

• Getting rich isn’t about money
• Think different
• Accentuate the positive
• Quit doing what you hate
• Do what you love
• Find ‘the real you’
• Invest in ‘You Inc.’
• Live with passion
• Live in the moment
• Make a difference

Remember, being a millionaire is all in your head. If you have the right attitude, if you feel it, if you believe you’re a millionaire, you’re already there, already rich. You have the mind of the millionaire. Money will follow. It really does work.

http://finance.yahoo.com/news/10-secrets-being-millionaire-enjoying-040103343.html

Related articles

• Surprising Job That Gets Many Americans Into the Millionaire Club (dailyfinance.com)
• How many millionaires pay a lower tax rate than you? (dailykos.com)
• Here's What Really Keeps The Rich Up At Night (businessinsider.com)
• A Management in a Minute Book Overview of The Millionaire Next Door by Thomas J. Stanley and William D. Danko (gomestic.com)

Financial IQ: Are you banking on Social Security during your retirement years?

Seal of the United States Social Security Administration. It appears on Social Security cards. (Photo credit: Wikipedia)
Financial IQ Philippines Quick Hit(s):

It is no surprise to hear about the potential U.S. Social Security issues in the future.  This situation is something that may also happen in Philippines' Social Security.

This is the reason that we need to look for investment opportunities ourselves and not have to rely on the government for our retirement needs.


High energy prices and an economy that has been slow to rebound are worsening Social Security's finances, shortening the life of the trust funds that support program by three years, the government said Monday.


Those trust funds will now run dry in 2033, according to a report issued by the trustees that oversee the massive retirement and disability program.


Medicare's hospital insurance fund is projected to run out of money in 2024, which is unchanged from last year. The trustees, however, said Medicare spending continues to rise.


Congress enacted a 2 percent cut in Medicare last year, which is the main reason the trust fund exhaustion date did not advance.


If the Social Security and Medicare funds ever become exhausted, the nation's two biggest benefit programs would collect only enough money in payroll taxes to pay partial benefits.


The trustees said in their annual report that Congress should address the programs as soon as possible, but no action is likely before the November election.


"Lawmakers should not delay addressing the long-run financial challenges facing Social Security and Medicare," the trustees wrote. "If they take action sooner rather than later, more options and more time will be available to phase in changes so that the public has adequate time to prepare."


Social Security's finances worsened in part because high energy prices suppressed wages, a trend the trustees see as continuing. The trustees said they expect workers to work fewer hours than previously projected, even after the economy recovers.


This year's cost-of-living-adjustment, or COLA, was also higher than expected. That was good news for seniors, who saw their benefits increase by 3.6 percent, but it drained more resources from Social Security.


The trustees project a 1.8 percent COLA for next year, though the actual amount won't be set until October.


Social Security is split into two funds — one for retirement and survivor benefits and one for disability. The retirement fund is projected to run out of money in 2035 while the disability fund is projected to run dry in 2016.


The trustees who oversee Social Security are urging Congress to shore up the disability system by reallocating money from the retirement program, just as lawmakers did in 1994.


Combined, the two funds will last until 2033. If they run dry, payroll taxes would cover about 75 percent of benefits.


"This year's trustees report contains troubling but not unexpected projections about Social Security's finances," said Social Security Commissioner Michael J. Astrue. "It once again emphasizes that Congress needs to act to ensure the long-term solvency of this important program, and needs to act within four years to avoid automatic cuts to people receiving disability benefits."


The trustees also warned that their own Medicare projections could be too rosy. Based on current law, they assume cuts in payments to doctors that Congress routinely waives will actually take place. They also assume President Barack Obama's health care law will squeeze the full amount of its $500 billion cuts from the program.


"Medicare's actual future costs are highly uncertain and are likely to exceed those shown ...in this report," the trustees said.


The trustees who oversee the programs are Astrue, Treasury Secretary Timothy Geithner, Labor Secretary Hilda Solis, Health and Human Services Secretary Kathleen Sebelius. There are also two public trustees, Charles Blahous and Robert Reischauer.


More than 56 million retirees, disabled workers, spouses and children receive Social Security. The average retirement benefit is $1,232 a month; the average monthly benefit for disabled workers is $1,111.


About 50 million people are covered by Medicare, the medical insurance program for older Americans.


Calling Social Security and Medicare the "twin pillars of retirement security in this country," Geithner said "it is critical that reforms are slowly phased-in over time so current beneficiaries are not affected and future beneficiaries do not experience precipitous changes."


Obama's health care law is supposed to trim Medicare expenses by $500 billion, extending the life of the program. But many Republicans doubt the savings will materialize.


On Social Security, Obama has not proposed any comprehensive plan to address the system.


Social Security is financed by a 6.2 percent tax on the first $110,100 in wages. It is paid by both employers and workers. Congress temporarily reduced the tax on workers to 4.2 percent for 2011 and 2012, though the program's finances are being made whole through increased government borrowing.

http://finance.yahoo.com/news/poor-economy-worsens-social-securitys-175251926.html

Related articles

• THE GOVERNMENT CONFESSES: Social Security To Run Out Of Funding BY 2033, Earlier Than Expected (businessinsider.com)
• Social Security heading for insolvency even faster (fox6now.com)
• Social Security will run out by 2033, government says (wjla.com)

Financial IQ: What are your income sources?

Aviva Group Ireland (Photo credit: Wikipedia)
Financial IQ Philippines Quick Hit(s):

Though it turns out as a mistake... this is one thing employees need to start thinking about.  "What if" he is no longer with the company he or she is working with?  Does he or she have other sources of income?

Building your passive income while being employed (which is where you are receiving your active income) is a necessity these days because there are too many unknowns in the corporate world.


One of the biggest insurance firms in the world sent shockwaves to 1,300 of its worldwide staff who received a curt email telling them they have been fired – with instructions to return all company property upon leaving the premises and to refrain from divulging confidential information. Apparently, Aviva, the world’s sixth biggest insurance company, dismissed its entire global investment arm by mistake when a human resources employee hit the group button instead of sending it to just one unidentified employee who was the unfortunate recipient of the dismissal message.


It took a full 25 minutes before the error was noted – prompting the HR department to again issue another mass email apologizing for the mistake and the confusion. But by then, panic had already set in for all the 1,299 unintended recipients, since the company had announced in January that it would cut down its global workforce by about 12 percent. (Aviva says it has 36,600 employees with 43 million customers worldwide and manages assets of around $420 billion.) The insurance firm is also facing major challenges with its annual net profits dipping by 85 percent primarily driven by the economic crisis in Europe.


Last week, Aviva also announced that three of its most senior directors for the European, North American and asset management units were leaving. Add to that the disclosure that the UK firm is pulling out its operations in the United States as part of its strategy – a move that would mean over £1 billion in losses for the insurance company. No doubt the incoming new president will have his hands full trying to overturn a global entity whose shares have been described as “underperforming” by about 25 percent over the past year. 


In any case, the accidental email blast left the UK-based insurance firm wide open for criticism for doing the sacking – even though it was only one poor employee – in a coldly impersonal manner. The company’s “easy to contact us online, by phone or by post” line on its website has also been the subject of sarcasm and ridicule, with people saying Aviva also finds it easy to fire people online, by phone or by post. A company spokesperson described the email blast as a “clerical error” – prompting calls for the sacking of the HR employee who pressed the wrong send button. 

http://www.philstar.com/Article.aspx?publicationSubCategoryId=66&articleId=800010

Related articles

• U.K. insurer mistakenly fires 1,300 employees with mass email (business.financialpost.com)
• Firm's 1,300 staff accidentally given marching orders (news.yahoo.com)

Financial IQ: Always exercise good judgement

McDonalds (Photo credit: Sean MacEntee)
Financial IQ Philippines Quick Hit(s):

This is not financial related, but worth mentioning.

Please be reminded to always exercise good judgement.  Let's be courteous to restaurant staffs.


Police in South Carolina say that a McDonald's worker spit in two customers' cups of iced tea after they returned them because they weren't sweet enough. A video shows the employee,19-year-old Marvin Washington Jr., leaning over the open cups before giving them back. The fast food chain patrons claim they discovered phlegm in the drinks when they removed their tops. He was arrested Wednesday and charged with malicious tampering with food.


Eating out can be an exercise in suspended disbelief. Wide eyed, we assume the food is fresh and wholesome and that workers have followed the "employees must wash hands" decree posted in the bathroom. Nevertheless, the McDonald's incident is so sickening because it actually bears out the urban legend that a disdainful waiter can and will contaminate your food if you tick him off.

http://shine.yahoo.com/healthy-living/mcdonald-8217-worker-spits-tea-gross-fast-food-185600556.html

Financial IQ: BSP warns investors vs seeking high yields

Philippine 100 peso bill (Photo credit: Wikipedia)
Financial IQ Philippines Quick Hit(s):

If an investment return is too good to be true, it most likely is.  It is better to avoid getting into such investment instrument.


The Bangko Sentral ng Pilipinas (BSP) cautioned investors seeking higher returns amid the low interest rate regime in the country.


BSP Central Supervisory Support Sub-sector managing director Johnny Noe Ravalo said in an interview that investors should know what they are getting into before investing their hard earned savings.


“In a low interest rate environment, our reminder is that investment is a process,” Ravalo stressed.


The BSP has so far slashed interest rates by 50 basis points due to the benign inflation outlook as well as the fragile global economic growth. This brought the overnight borrowing rate back to a record low of four percent and the overnight lending rate to six percent.


Likewise, the yield on government securities including retail treasury bonds, Treasury bills (T-bills) and Treasury bonds (T-bonds) continued to remain low on the back of the country’s sound macroeconomic fundamentals and improving fiscal position.


Ravalo said investments in the Philippines particularly contracts governing the sale of securities are covered by the Securities Regulation Code but offshore investments are not covered by law as these involve jurisdiction issues.


“Don’t just invest abroad, know the details of the contracts you are entering into,” he reminded investors.


He explained that the BSP is now drafting a bill that would be submitted to the Committee on Banks and Financial Intermediaries of the House of Representatives.


According to him, the proposed bill would involve a resolution mechanism by determining the market and credit risks as well as operational risks.


Likewise, the BSP lauded the efforts of the Trust Organization Association of the Philippines (TOAP), and the Fund Managers Association of the Philippines (FMAP) to come up with a code of conduct that would govern all their members.


Latest data from the BSP showed that the central bank’s Financial and Consumer Affairs Group (FCAG) has resolved 99.5 percent or 11,611 of the total 11,664 complaints filed by financial consumers against banks and other institutions since 2006.


The number of complaints filed before FCAG posted a 20-fold increase to 11,664 as of 2011 from only 158 in 2006.


About 30 percent or 3,487 of the total complaints filed since 2006 involved credit cards such as unfair collection practices, excessive charges, and requests for debt restructuring.


On the other hand, about 28 percent or 3,300 of the total complaints filed since 2006 involved bank deposits such as concerns on withdrawals, tracing as well as verification of deposits while four percent or 1,552 involved lending transactions such as interest charges and collection practices.

http://www.philstar.com/Article.aspx?articleId=797345&publicationSubCategoryId=66

Related articles

• BSP keeps policy rates steady (business.inquirer.net)
• Peso goes up as BSP moves to keep same policy rates (business.inquirer.net)
• Relief for credit card debts eyed (business.inquirer.net)

Financial IQ: Kaizen Philosophy seminar

Kaizen Gamorra by John Tighe (Photo credit: Wikipedia)Financial IQ Philippines Quick Hit(s):

DTI is sponsoring a low registration fee KAIZEN seminar.  Something you may want to consider if you are looking to enhance your skills.


Course Name
The KAIZEN Philosophy


Course Description
KAIZEN is a term the Japanese use to mean improvement. It is a Philosophy that is focused on small and gradual improvements over a long period of time. By encouraging the company's workforce to apply kaizen and use even the most basic quality enhancement tools, employees are encouraged to seek continual improvement in their jobs. More than quality assurance, the kaizen philosophy is also concerned with matters such as waste elimination, just in time delivery, and standardized work.


Time
1:00PM - 5:00PM


Start Date
May 08, 2012


End Date
May 08, 2012


Duration
half-day


Registration Fee
100.00

http://www.pttc.gov.ph/component/fabrik/details/24/642.html

Financial IQ: Revised SSS home loan rates

TED Spread Chart - Data 2008 zh-hant (Photo credit: Wikipedia)Financial IQ Philippines Quick Hit(s):

In case you are looking at getting home loan that are less than 1 million pesos, it may be worthwhile to check out SSS.  Though I have not personally tried it yet, seems like interest rates were reduced.


State-run Social Security System (SSS) has cut down its interest rates and raised the maximum amount of its housing loans to help members gain wider access to decent shelter at affordable terms.


In a statement, Emilio de Quiros Jr., SSS president and chief executive said members can now borrow up to P2 million, which is double the amount offered in the past, while annual interest rates were reduced by as much as five percent.


“The revised guidelines aim to align SSS housing loan programs to current industry practices. Our longer payment terms and fixed interest rates also make SSS loans competitive to lending facilities offered by other institutions such as banks,” De Quiros said.


The new interest rates for individual members are pegged at eight percent per annum for loan grants of up to P400,000; 9 percent for up to P1 million; 10 percent for up to P1.5 million; and 11 percent for up to P2 million. Interest rates are fixed for a period of 15 years.


Employees, self-employed individuals and overseas Filipino workers with at least 36 contributions, including 24 months of continuous payment of premiums, and have no retirement or total disability claims can borrow. They and their spouse must have no delinquent SSS loans.


"We also increased the P300,000 limit on House Repair and Improvement loans to P1 million. Among those who will benefit are members whose homes were damaged by natural calamities and families who want to expand or renovate their house," De Quiros said.


SSS lowered its 14 percent interest rate to 11 percent for entrepreneurs and developers of subdivisions, condominiums and other residential properties.

http://mb.com.ph/articles/357508/sss-lowers-housing-interest-rates

Financial IQ: Saving on automobile insurance

Red Lamborghini Gallardo, to be used as an icon. (Photo credit: Wikipedia)Financial IQ Philippines Quick Hit(s):

Another way to save on your automobile insurance, is to acquire the automobile insurance through yourself and earn the commission personally.

Aside from the cost, remember to include "Acts of God" to your automobile insurance.


Do you think you're spending too much money on auto insurance?


First things first: Take stock of your current policy.


Susan Voss, president of the National Association of Insurance Commissioners (NAIC), says the best thing you can do for your wallet is to re-examine the details of your auto coverage once every few years.


"Because factors like the age and condition of your car, as well as your driving record, can change, you may find that you're overpaying now for a policy that was reasonable two years ago," says Voss.


Keep reading for more tips on how to stop wasting money on your auto insurance policy.


Tip #1 - Comparison Shop
Tip #2 - Consider Bundling Your Insurance Policies
Tip #3 - Increase Your Deductible
Tip #4 - Ask About Discounts
Tip #5 - Don't Over-Insure Older Cars
Tip #6 - Drive Less

http://education.yahoo.net/auto-insurance/articles/how_to_avoid_wasting_money_on_car_insurance.htm?kid=1L3VJ

Related articles

• Why Should You Get Your Vehicle Insured? (ngap.net)

Financial IQ: Savings mistakes

20090112 financial aid-01 (Photo credit: Wikipedia)Financial IQ Philippines Quick Hit(s):

I believe this boils down to one thing.  "People don't plan to fail.  They just fail to plan."


Everyone knows that it’s important to save money. Indeed, the recent recession has driven that point home for most of us. However, sometimes we fail to save money as we should. Here are the top 6 savings mistakes that can derail progress to financial freedom:

• Ignorance of your spending and saving habits
• Failure to change your spending habits
• Failure to set specific financial goal
• Buying something because it's on SALE
• Failure to take advantage of free money
• Cashing out your company retirement plan

http://couponshoebox.com/tips/top-6-savings-mistakes/

Financial IQ: Is your kid a future Entrepreneur?

Cover of Car WashFinancial IQ Philippines Quick Hit(s):

Interesting article.  I know several friends who started buying and selling various items even while they are still studying during their elementary and high school days.


Watching your child carefully will help you spot the traits that could lead them to a successful life as an entrepreneur later.


So what traits should you look for?

• They’re easily bored playing with Jimmy down the street and would rather sit with Grandpa. Do you find your son bored with playing with other kids? Watch his behavior around other children and adults. If they show more interest in what is going on in the adult’s world and tend to ask questions about their environment around them, you may have the makings of a child entrepreneur on your hands.
• They think beyond their age. For example, do they connect the dots between business and consumer relationships that kids their age don’t? Do they see past the salesman in front of you and have an idea of what he’s going to benefit from you?
• They’re constantly developing new ideas for projects. You may even find them having trouble shifting from idea to idea without completing the first. A child entrepreneur may start a baseball card business and before the idea has had enough time to fully evolve, he’ll be on his way to selling t-shirts.
• They have a better grasp of the concept of money at an earlier age. Your entreChild may understand how money works and what you do with it far beyond what Susie, Jill, Michael, and others of the same age understand. He may not have any qualms about waiting a month before he’s earned enough to get that Super Deluxe Hot Wheels Racetrack with Working Car Wash because he understands that money takes time to earn and knows that with the next paycheck, his due will come.
• They focus on money and monetary issues. Is your daughter constantly on the lookout for ways to make more? She may seek ways to earn more for her next Barbie Dream House, complete with jacuzzi and Barbie car or ways to save more for the designer dress she has her eye on.

http://moneyning.com/kids-and-money/is-your-child-a-born-entrepreneur-heres-how-to-tell/

Related articles

• The six traits of successful entrepreneurs (reportr.net)
• How to Help Your Kids Be Financially Literate (ally.com)

Financial IQ: Which is better - adjustable rate or fixed rate mortgage?

Loans (Photo credit: jferzoco)Financial IQ Philippines Quick Hit(s):

Have you tried securing mortgage?  If you have, what did you select - adjustable rate or fixed rate?  Adjustable rate typically offers smaller interest up front, hence, lower monthly amortization.  The danger is, interest rates are adjusted periodically based on the terms you selected... and it could go up or down depending on the interest rate of the market at that point in time.

Whereas fixed rate, you will typically pay a bigger monthly amortization up front.  However, you are guaranteed that the monthly amortization will remain the same for the duration of the loan.

Which do you prefer?


Purchasing a home is a demanding and overwhelming experience. Add to it the stress of vetting a mortgage broker, and the home buying process becomes even more challenging. Though most mortgage brokers genuinely aim to please, some care more about the amount of their commission than the amount of money they can save their clients.


1. Do you have any references?


Request the names and phone numbers of at least three recent customers. Call them and ask them how they were treated. Would they take advantage of the broker’s services again? Was the broker trustworthy with fees and good faith estimates of closing costs?


2. How do you lock in interest rates?


Unscrupulous brokers may mislead you, and promise to lock in a rate on a specified date, even though they plan to wait for a rate drop first. Once the rate drops, the brokers lock in at this lower rate, charge you for the higher rate, and collect the difference. To protect yourself, request a loan commitment from the lender that details the date the broker locked in the rate and when it expires.


3. Which loan is right for me?


Ask the brokers what loan they recommend based on your credit status and financial situation. Are they working within your means, or simply offering you run-of-the-mill loans you can acquire anywhere? Beware of brokers who push loans on you without gathering any of your personal details. A good broker will obtain the necessary information to provide you with a mortgage that meets your needs.


4. What costs am I responsible for?


Ask about closing costs, points, and origination fees. Lenders may charge points -- one point equates to 1 percent of the loan amount -- to offer you a lower interest rate, but brokers may charge points as a fee for their services. Request an estimate of closing costs before you apply for a mortgage. You’re eligible to receive a Good Faith Estimate (GFE) of closing costs three days after you apply.


5. What is the actual interest rate?


Request the annual percentage rate (APR) to compare loans. The APR is higher than the quoted interest rate because it includes all the lender’s fees, such as closing costs, the margin, and points.


6. Will I be responsible for a fee if I pay off my mortgage early?


If you’re planning to sell or refinance your home in the future, ask your broker if you’ll be charged a fee. Inquire about penalty periods and how lenders assess pre-payment fees.

http://www.bankoftheinternet.com/home-mortgage/mortgage-brokers/6-questions-to-ask-a-mortgage-broker

Related articles

• When Should You Refinance? (schauerteammortgage.wordpress.com)

Financial IQ: Have you made investment mistakes?

Diagram of private equity co-investment structure for Equity co-investment (Photo credit: Wikipedia)Financial IQ Philippines Quick Hit(s):

If you have made some investments in your life, there is a pretty good chance that you have already committed one of the mistakes outlined below.

Like you, I have made my share of mistakes.  I invested on high yield investments that are questionable but due to 'greed', I still ventured.  How we react to these mistakes determine how much we are progressing and learning in life.


Almost everyone makes investment mistakes. Yet, these mistakes may benefit us in the future, as we utilize our knowledge to make better and more informed business and investing decisions even if they cost us money the first time around. Like the advices from our parents, we must often experience it ourselves before we truly learn from them. However, if we know about our tendencies before we make them, it is much easier to recognize the problem and learn from it. Here are 10 common mistakes that people make when it comes to investing.


1. Blinded by Reward
2. Impatience
3. Missed the Train
4. Bubble Bursting
5. Influence of the Masses
6. Taking Investing Personally
7. Uncomfortable Investments
8. Heightened Expectations
9. Low Capital Investments
10. Investing Before Debt is Reduced or Eliminated

http://moneyning.com/investing/10-common-mistakes-people-make-when-investing/?utm_medium=feed

Related articles

• Buy Like Buffett: How to Succeed with Investment Management (savings.com)

Financial IQ: What is your compensation during start-up phase?

Salary Proposal (Photo credit: rossbreadmore)Financial IQ Philippines Quick Hit(s):

Here is a good advice from one of the industry's well-known financial advisor.  This is something that a number of start-up companies forsake to lower expenses.


Q: How should a business owner compute the monthly compensation that he will set aside for himself from the earnings of his business, especially if the business is still in the startup phase?


A: A business is considered a separate entity from the owner. The owner should set a salary for himself for putting his time in the business even if it is still losing at the startup phase. 


The amount of his salary shall depend on the opportunity cost of the entrepreneur. If he used to work for a multinational company and earned P100,000 a month, then ideally, that's the salary he should set for himself. However, since the business is just starting, he can lower it to the level that he can afford, and consider the difference as an investment of his time in the business. 

http://www.entrepreneur.com.ph/get-started/article/how-much-to-pay-yourself

Related articles

• How to Stretch Startup Money Into Salaries for Rockstar Talent (openforum.com)

Financial IQ: Stock prices

Thomas Schelling, Managing the World's Greenhouse Problem, Sharif University of Technology (Photo credit: Wikipedia)Financial IQ Philippines Quick Hit(s):

Nice read.  Something to consider because local stock market has risen quite a bit since the start of 2012.  If you are a beginner, consider investing in mutual funds instead via cost averaging.


Buying stocks is a more critical relationship than extending credit since it is buying into a company, so the four C’s are even more relevant. The only difference between credit and equities is that the “first way out” is easier for the latter as there is a market for selling the stock, even at a loss, if one is not happy with the company’s performance. Collecting from a credit default is definitely more challenging.


As can be gleaned from our title, we will delve only on one C, which is Character as it affects the price of a particular stock. It has already been mentioned in this corner that mergers and acquisitions drive market frenzy, translating into the rise in the PSE volume and value. There are only a few names that come up when possible acquirers and their targets are mentioned. We can also include character analysis in the issuance of newly listed shares or IPO’s.


Do stocks merit a premium or discount in connection with the characters behind them? Do analysts need to go beyond financial ratios, industry structure, market shares, and historical performance and delve into personality traits?


There is a case to be made for paying attention to the track record and reputation of the principal behind a company. With the media coverage of business players now at par with their political and entertainment counterparts, reputation has become more of a public issue. In the new discipline of behavioral economics, emotions in decision-making, as well as the value of character in a corporation, is becoming relevant in making financial decisions.


Thomas Schelling, a 2005 Nobel laureate in economics, given for his conflict-collaboration game theory, has used the term “egonomics” to refer to self-management in personal matters, weighing costs and benefits as in acquiring status symbols or being rid of addictions.


The role of character and personal feelings in determining the price of an item to purchase, including stocks, is now considered a factor affecting the value of a stock. One way to look at the effect of ego on prices is to observe an art auction. Certain players bid irrationally for an artwork because they “have to have that painting at all cost” perhaps to complete a collection. Art is a metaphor for the effect of character on purchase price which has little relation to the cost of the product (like paint, canvass, artist’s time, and frame) or even its resale value.


The character and emotion in the case of the art auction is on the demand side, as it is the buyer driving up the price or bringing it down. On the supply side, character plays a part too. Some positives drive up the premium in pricing. These include a quantifiable track record like increasing the market cap of the stock through efficiencies and a strong management line-up or an aggressive cash dividend policy. A character discount may arise from fuzzy accounting, weak second-tier management, or perhaps a luxurious personal lifestyle funded by the company.


The aggregate version of character analysis is captured in “market sentiment”, an abstract, emotional factor which cannot be ignored as it affects demand and stock prices. Market sentiment is a phrase securities analysts use to explain price fluctuations that statistics and financial ratios cannot account for. Investor mood is described as bearish, bullish, or that in-between outlook of wait-and-see (cautious optimism) and staying in the sidelines, waiting for developments.


Sometimes, characters as stock pickers (demand side) affect market sentiment. A market maker like Warren Buffet “betting all-in on the future of the American recovery” with the purchase of railroad stocks, like the Burlington Northern Santa Fe (BNSF) three years ago, can make the bears take flight and turn market sentiment around.


In our local market, characters reign. Stocks are described by their principals and lumped together as a cluster, say the “XYZ” group, if that combination of letters is a person or family. Rumors of a takeover by a particular character is enough to lift a sleepy stock into the stratosphere, then fall back in a hard landing when nothing happens — we are not even talking.


The valuation of character in the value of the stock is a tricky one. Isn’t corporate reputation now driven by word of mouth or social media? Stories of intimates or those claiming to be so, fill up a character’s reputation with tales of a lavish lifestyle with yachts and private jets, being a man of his word, charismatic with employees, fair and honest with partners, or shrewd and opportunistic and late-payers with suppliers — these are random stories told of corporate characters.


The question of character and how it affects the stock price is a matter of whether or not it increases the stock pickers’ appetite for the stock. In a small economy, change in management and ownership and who is behind it matters a lot.

http://www.philstar.com/Article.aspx?articleId=795077&publicationSubCategoryId=66

Related articles

• Is Walgreen's Stock Cheap by the Numbers? (fool.com)
• Is Lowe's Stock Reasonable by the Numbers? (fool.com)