What newbie investors need to know

    




Newbie? Here's what you need to know. 





Investing Early is key. I have been emphasizing this over and over again in my blog.

With this post, I will teach readers the 2 types of investments:

1) lending investment
2) ownership investment.

What is lending investment?
It is actually “lending your money to institutions in exchange for a profit. Putting money in the bank is lending investment. Money in a savings account or in a time deposit is actually a loan to the bank.

What is ownership investment? 
It is the acquisition  of OR OWNING assets (shares of stock, property, etc.) with intention of periodically earning income from these assets. In ownership investment gains or losses are actualized only when the asset is sold. This type of investments are generally  more suitable for long term goals.

Now the more important stuff. Guides in Investing:

Know that:
a) the higher the return, the higher the risk;
b) the longer the time, (investment period), the lower the risk; and
c) the longer the time, the higher the return

Investing is a choice. Retiring rich is a choice. If you know what you're doing early on, nothing will stop you from retiring rich. Doing something NOW rather than later (or none at all) IS A FAR BETTER CHOICE to make.

Again, it’s developing the habit that’s more important. When you muster the discipline, you will retire rich.

Good luck and happy investing!

The best mutual fund products in the Philippines

I am sharing this so people will know options.This is a series of posts. I intend to feature the best mutual fund products in the Philippines. For today, it is going to be Sunlife of Canada's Money Market Fund.

I love this product of Sunlife of Canada. Click here

Sunlife of Canada's Money Market Fund - One of the most conservative mutual funds
you can buy.

As per Sunlife:

Money market funds are designed to provide current income at competitive yields with minimal risk to your principal investment. Compared to other existing mutual funds, money market funds are at the top of the heap when it comes to low risk.

Money market funds are comparatively low risk mainly because of the securities in their portfolio. These types of funds only invest in securities that are “short-term,” meaning those with a term of one year or less. As a general rule, short-term securities are less riskier than longer-tenor securities.




Compared to other mutual funds at this time therefore, it is one of the most conservative mutual funds in the country, perfect for somebody who wants to “try out” investing in mutual funds.

There are no fees to pay upon investing. This means that your Php 10,000 initial placement is invested wholly into the fund, thereby maximizing its earning potential. Subsequent investments can also be made for as low as Php 5,000.

It is also tax-free. Unlike bank products that provide tax breaks on your interest earnings only when you stay with them until your money “matures”, your mutual fund proceeds are not subject to the usual 20% withholding tax.

So if you're in your early stages of investing. I recommend this.

In my next posts, I will feature the other products available in the market for Filipinos to try out.

See this yahoo featured article about how to retire a millionaire

Yahoo featured this today. Click the link.

start-with-10k-retire-millionaire-marketwatch: Personal Finance News from Yahoo! Finance

For most of us Pinoys, around P10M (instead of $1M) is enough retirement fund. So do the math. $:P exchange rate is around P42. This should give us an idea of how much to target monthly and how long.

Good luck, people. Information is key!

Why get serious about financial planning?

Today, i'm featuring an article written by one of my favorite financial writers, Rokai Kolam.

Q1 2011 has just passed, and I thought it would be nice to remind readers once again of the importance of planning out one's finances. So here goes:

Financial Planning Crucial During Hard Times 
By : Rokai Kolam     

 " It’s essential for people to plan their finances well especially during these difficult times. Even though you are employed or you run your own business, it’s not ideal to be complacent. What matters most is being able to manage your finances and not go overbudget so as to avoid going into debt. 


Living within your means is the way to go today. There are temptations around from clothes, cars and jewelry to the latest electronic gadgets. For this reason, practicing self-discipline is the most important step to take to avoid falling into these temptations. This is where financial planning proves highly valuable. 


Financial planning refers to meeting one’s financial goals by balancing income and expenditure to gain sufficient savings for future use and for security against potential risks. The most common objectives are for building wealth, children’s education and retirement purposes. With the right attitude and determination, financial planning can be easily achieved by following some important steps. 


A financial planner will initially recommend assessing one’s situation and setting goals. During this stage, one has to start considering getting a life insurance coverage for himself and his family. For those employed, they can enjoy a group insurance through the company they’re working for. However, for independent contractors working at home or those who operate their own business, buying an insurance coverage is the right thing to do. 


Setting aside a certain amount each payday is an ideal attitude. For the newly hired professionals, starting this endeavor as early as possible or as soon as you get your first paycheck is vital. But it’s never too late to do this. 


Expenditure-wise, people whether singles or married couples should make a list of their monthly expenses if possible to determine the average budget they need and the extra amount they can still save for themselves and their families. 


Credit card use should also be assessed as this is sometimes the root cause of a person’s debt. Most often, when an individual possesses a number of credit cards, he or she feels confident of spending more because there’s no cash involved. In the long run, when this attitude continues and the monthly balances are not paid off on time, the credit card owner falls into debt. 


People finding it hard to cope with their financial problems should not hesitate to consult a financial planner if they feel hopeless. A financial advisor or financial consultant can provide the proper advice to people facing financial difficulties. With their vast knowledge and experience, they are adept in teaching people the ways to free themselves from debt and other financial burdens. What they stress at most times is to always stick with your plan to be successful in your financial planning endeavor."

There you go, people. What he's saying is actually what i've been trying to say out loud to you. It doesn't matter if you're in the US or in the Philippines. The trap is universal. (You might want to read my article about the trap here) Avoid it while you can.

While at it, look at ways and means to earn extra (Read about it here). Then save what you'll earn, then invest. (Read articles about saving and investing here)


Make that choice now, readers. The rest of your lives are in your hands.