Category: Business

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Business Investing Personal Finance Stocks

How to Invest in the Stock Market in the Philippines in 3 Easy Steps

Investing in the stock market is scary for a lot of people.  Others like Warren Buffet love it and end up making a lot of money in the process.  But everyone who wants to be rich through the stock market needs to know some basic things.

Here are the 3 easy steps I followed in getting started on how to invest in the Philippine Stock Market.

Step 1:  Open a stock brokerage account.

To begin investing in the stock market, you have to have a broker.   As for my case, I used an online stock brokerage firm in the Philippines, mainly because of the convenience of doing it all online, at the same time, taking advantage of the relatively lower fees.

A few months ago, my wife and I opened an online stock brokerage account with CitisecOnline.com.  It was after many many months of thinking about it.  I already wanted to open an account even when I was still in Malaysia but I always found an excuse not to do it.  I’d say, it’s hard to open an account since I’m out of the country-Philippines. But the reality is, I can actually fax or mail the application forms to Citiseconline if I really wanted to and they’d be able to open the account for me. 

I came across CitisecOnline.com again when I attended Bo Sanchez’s Truly Rich Financial Coaching Program after coming home to the Philippines last year. I got to know more about the company and the stock market in the Philippines.  I was pretty convinced this was something I wanted to get involved into so I picked-up the application forms and brought it home with me.  However, taking action on the investment opportunity is a totally different story.  The only thing I had to show for it after a few weeks is the unfilled and un-submitted application forms on my hands.

Getting frustrated with myself for taking a long long time to decide, I finally filled-up the forms and decided to mail it to CitisecOnline.com the next day.  My wife, being the thoughtful person that she is, tried to call up CitisecOnline.com to inquire how we can submit our application forms.  She was pleasantly surprised because CitisecOnline.com offered to pick up the forms for us.  It meant we didn’t have to pay for mailing the forms ourselves after all! So far, so good. 🙂

Step 2: Activate and fund your brokerage account

The CitisecOnline.com agent came to our office that same afternoon to pick up the forms.  He took a quick look at the forms to make sure everything was filled out properly.  After confirming that everything is in order, he smiled and thanked us as he went on his way to file our application forms. 

The application process went on smoothly and after a day we got an email and a call from the COL agent that our application has already been approved and ready for funding. 

Normally, COL requires a minimum amount of P25,000 to fund an account.  For CitisecOnline Easy Investment Program (COL EIP), however, you can open an account for as little as P5,000 minimum. 

We decided to fund our account with P5,000 first.  We went through the nearby BPI branch and deposited the amount to CitisecOnline account number provided to us by the COL agent.  Afterwards, we then faxed the receipt to the agent and waited for our account to be activated. 

After a few days, COL advised us through phone that our account has been activated and our the login name and password have been sent to our registered email address.

Here’s where I encountered a few problems.  The email containing the password was tagged as a spam.  Since the email client I was using then was very old, I went through a lot of trouble trying to un-tag it so I can read the password. With no luck, I requested COL to re-generate the password again. Unfortunately, the new email containing the re-generated password got tagged as a spam too.  Back to square one. 

Starting to get frustrated, I then requested to have my email address changed.  The COL agent sent the application form for changing my email address.  I quickly filled up the form and faxed it to COL. 

Eager to check my account, I waited for their reply everyday, expecting that they generate the new password to my new email address.  But after a week, there was still no response.  This time, I sent an email to follow-up and shared my frustration. 

That same day, I received my login and password via email and was able to view my COL account online. 

Now, we’re getting somewhere! 🙂

 

Step 3: Buy stocks using your brokerage account

After reading the book Rule #1 Investing by Phil Town, I learned that the basic idea of investing is buying a $1 worth of stock for half the price-$0.50.  But calculating the value of a stock is not a very straight forward process, and to some degree, it is more of a guess than anything else.    

I tried to calculate the value but it took a lot of effort digging up historical data.  Fortunately, CitisecOnline provides about 3 years worth of a company’s financial performance but it’s just not enough.  Looking at the negative growth rates in 2008, when stocks and businesses were hit by recession, it is even harder to make a reasonably accurate guess of the company’s future. 

At this point, I had a dilemma. I realized I needed to learn more. However, until I have some money actually invested in stocks, I would not be able to learn through experience.  This meant I had to invest another way, for now.

Enter COL Easy Investment Program (EIP).  The program takes advantage of the Cost Averaging method of investment.   The idea is to invest a fixed amount of money on a regular basis (weekly, monthly or quarterly) on premium growth stocks and take advantage of the power of compounding to grow your money in the long term. 

Since your investing the same amount every week/month/quarter, your money will buy more shares when the market is down.  If the market is up, the value of your shares will also go up.  So in essence, you’re making money both ways.  The only disadvantage is that you have to have the discipline to invest the same amount on a regular basis and leave your money for the long term (COL suggests at least 5 years) and not get carried away by your emotions.

For those investing through COL EIP, you can even choose to invest on the recommended companies/stocks listed on the COL site.

Here are the 3 main advantages of using the COL EIP method of investment. 

  • You don’t have to worry about constantly watching the stock market. 
  • For as low as P5,000, you can invest on solid growth companies.
  • Simple to use, regardless of age, income, or investing experience.

To gain valuable learning experience, I figured this is a great way for me to start investing in the stock market.  Without the necessary experience, I won’t have the knowledge to properly analyze a company and I won’t be able to make an educated assessment of the value of the stocks I want to invest in.

Besides, the Philippine stock market only has a limited number of companies at the moment, so I might as well invest in the most stable of companies for now, those that I think will still be in business for the next 10 years.

I know that P5,000 is a very small amount for some people.  However, it is an amount I’m comfortable
investing in into the stock market.  I may decide to invest more in the future as I gain experience in learning the world of stock market investing, but for now, I’ll stick to investing at least this amount on a regular basis.

How about you?  Have you started investing in the Philippine stock market?  How’s your investing experience been so far? 

Categories
Business Credit Card Investing Life Updates Money Mindset

Rich Money Habits Carnival: First Edition-Best Money Stories To Jumpstart Your Year!

Welcome to the first edition of Rich Money Habits Carnival-Best Money Stories To Jumpstart Your Year!

Every month we will be featuring the best articles in the world of personal finance through the Rich Money Habits Carnival. In this first ever edition, we’ve reviewed a total of 27 articles submitted by personal finance bloggers and picked 5 of the best money habits stories to jumpstart your year on the right note and inspire you in your journey to financial freedom.

Rich Money Habits’ Top 5 Picks

  • PT presents How to Negotiate Price posted at Prime Time Money. [RMH] Great tips and examples on how to negotiate to save on haircut, shipping, and freebies.  The advice, “don’t be afraid to  ask for a little something extra or a discount for being a good customer” is spot on.

  • Lovelymary presents 100 Extreme Ways to Save Serious Money posted at Accounting Degree.com.  [RMH] A very long list of unusual money saving tips bordering on being too cheap but funny nonetheless.  Some of my favorites are: on personal care-“No more toilet paper”, and on Food-“Ignore expiration dates.”  Hilarious! 🙂
  • Roshawn Watson presents Thoughts on Escaping The Rat Race posted at Watson Inc, saying, “Do you yearn to be free…really free? What would you do if money was not a limitation? Perhaps the primary reason for increasing your financial literacy is so you may indeed escape the rat race.” [RMH] Great solid tips and advice on achieving financial freedom.  More importantly, the article recognizes the fact that the battle is not in  learning the “how” but discovering your “why” in your journey to financial freedom.

Other interesting articles in this edition

Business

  • Frank Goley presents Strategic Planning for Business Success posted at Business Success Strategies, saying, “The business success strategies blog is written by small business success expert, Frank Goley, the chief business consultant for ABC Business Consulting. Frank has more than twenty years experience helping companies start, grow, turn around and succeed.”

Investing

Personal finance

  • nissim ziv presents Career Goals: Examples of Career Goals and Objectives posted at Job Interview Guide, saying, “It is only when a person has a clear thought about his/her career goals and objectives that he or she gets ultimate satisfaction from his/her job and therefore progress faster.  This article covers many examples for your career goals & objectives.”

  • Darryl Holland presents Why You Should Care About Your Credit Scores posted at Credit Secrets Revealed By Darryl, saying, “Learn to improve your credit score by up to 247 points in the next 90 days.Soon you will be able to proudly run a credit check with no shame.Stop paying more interest for your loans and credit cards.Start getting those low interest rate loans that you deserve.The Credit Secrets Revealed ebook will help you solve your credit problems.”

Real Estate

That concludes this edition of Rich Money Habits Blog Carnival.
Submit your blog article to the next edition of rich money habits carnival using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

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Business Life Lessons Money Mindset Passive Income Personal Finance

Passive Income Opportunity Myths & Realities: How to Spot a Scam

The idea of a passive income attracts a lot of people mainly because it promises to earn you money while doing little or no work at all.  Some even think of having a passive income stream as an opportunity of a lifetime.  Who wouldn’t want to earn money while you sleep?  Who wouldn’t want to make money the easy way?  Who wouldn’t want to sit comfortably on the beach, drinking a glass of your favorite drink while your “passive stream of income” works hard to make money for you.

That is the dream, right?

 

What is passive income?

Passive income is the residual income you receive from rental properties, royalties from your books, licensing income from your businesses, etc.  This income is passive because it supposed to be earned with little or no work required from you at all.

While passive income promises a lot of things, it is NOT without a price.  Identifying the myths & realities of a passive income opportunity allows you to spot if it’s an opportunity of a lifetime or a total scam.

 

Myth: Little or no work at all

Reality: A lot of upfront work

 

The most common myth about a passive income opportunity is the allure of not having to work at all while money keeps coming to you.  While this may be true at some point, it is NOT the complete picture.  In most cases, the reality is that setting up these passive streams of income requires a LOT of hard work especially in the beginning.

Real Estate

One of the most common examples of a passive income is rental income from tenants through real-estate properties.  To some degree, it is a passive income. But still not purely 100%. If you are the one managing the property, you have to worry about maintaining the property and possibly fixing toilets in the middle of the night. 🙂  If you do hire a real-estate managing company, then you would need to make sure they do  their job and worth more than you’re paying them.  Otherwise, you stand to lose more compared to running the business on your own.

Business

Ask any employee what they plan to do after retirement.  Most of them will answer that they want to go into business because “finally” they have enough capital to do so.  Unfortunately, it could be the riskiest move they will ever make.  The odds are against them.  Statistics say that 9 out of 10 businesses fail in the first 5 years.  Few do make it.  Others are forced to go back into employment.  The rest are content to live a “cheaper” lifestyle and forego their dreams.

Running a business needs your time and attention.  It demands your focus.  For that reason, it is not a passive income until you’re able to setup your business systems.  Setting up these systems will demand your hard work, your patience, not to mention your time and money.

If you’re able to set these systems up properly and hire a great CEO to run your business, only then can you let the system work for you and allow it to give you a steady stream of passive stream income.

However, if you setup the wrong system, especially if the system requires you to be the one managing the property, you will end up having a job instead of a sustainable business system.

 

Myth: You need a lot of money

Reality: Having money is not a guarantee

 

Some people think that building systems to create passive income requires a lot of money.  The reality is that successful entrepreneurs are not hindered by the lack of money in setting up their business systems.  They even use it as an inspiration to be more creative in selling their ideas to potential investors and partners.

While having money is an asset to a savvy entrepreneur, it is actually a liability for someone who doesn’t know what he is doing.  A lot of money in the beginning for an inexperienced businessman can be a hindrance to his success.  With money readily available, a frustrated and inexperienced entrepreneur can just throw away money at any problem that comes his way.

This is hardly the way to set up a business system.  It will only make the problem worse because the real problem is not identified and fixed, hence, the system does not improve.  All it does is throwing money down the drain.

In the end, money is an asset or a liability depending on how a person makes use of it.

 

Myth: Setting up a passive income stream is very hard

Reality: Setting up a passive income stream can be learned

 

While setting up a passive income requires a lot of work especially in the beginning, it certainly is not limited only to hardworking individuals.  Sometimes, not wanting to work hard can also be your asset as it forces you to think of ways to setup the business without you having to work for it.

You can choose to hire hardworking employees to do the work for you.  You can spend your time learning and figuring out how to set up efficient systems.  You can concentrate on the 20% of things you do that brings in 80% of your output and delegate all the rest.

Doing any of these things allows you to leverage your business system to complement your employees’ strengths and provide more high-value offerings without necessarily doing the work yourself.

Internet

In this day and age of living in the information superhighway, it is now easier for someone to be in business. With access to the internet, someone working at home can setup a blog or sell stuffs through ebay, amazon, or other online stores.  While this requires you to learn how internet businesses and marketing works, you can certainly hire someone to do it for you if you really don’t want to be involved in the technical details.

Making money online is such a popular dream for many of us.  The reality is, it is also NOT for everyone. It requires a lot of learning, patience and self-discipline to make the system work.  As with any brick-and-mortar business, it also needs your skills, time and attention.  It demands your focus and unrelenting desire to give more.  And with more and more clutter competing for your customers’ attention, there’s no other way to serve but to stand out and give your customer ALL you’ve got.

 

Demystifying the myths of building a passive income stream is only the first step of a lifelong journey.  The only way for you to learn how to build these systems, is to do it yourself, always remembering that something worth doing, is worth doing well.

In the same way that an overnight success is actually a culmination of a decade long history of working hard, building passive income streams is a journey laden with challenges and opportunities.

In the end even though creating passive income may be an opportunity of a lifetime, it is still up to YOU to make it happen.

 

P.S. CLICK HERE to email me if you would like to learn a legitimate, legal, low-capital investment with huge passive income potential.

Categories
Business Life Lessons Money Mindset Personal Finance

7 Ways to Celebrate Christmas Without Breaking Your Piggy Bank

Christmas is just around the corner.  Many of us are already planning how to spend our vacation.  Some are even singing a tune or two of their favorite Christmas carols.  Christmas in the Philippines is really special.  In fact, the season spans at least 3 months, starting in the early “ber” months of September until the misty dawns of December and even extends until the first few days of January.  What’s with the three kings and all?  🙂

With all the 13th and 14th month pays being given just before the month of December, everyone enjoys his own “extra” jolt of cash.  Suddenly, people have money to spend.  So they spend their money left and right, partying, buying gifts, busily getting into debt through the “easy monthly payments” for the brand new “ultra cool” mobile phone or flat screen TV. These expenses, if not controlled, can cause a strain on your budget even with the sudden influx of cash. Worse, after spending more money than you have, you end up needing to break your piggy bank.

 

Here are 7 ways to Celebrate Christmas Without Breaking Your Piggy Bank

1) Give your time.

Time is indeed gold.  In the world of business, it is an undeniable fact that your time is worth money.  As a contractor or employee, you get paid per hour of you time.  Your business generally earns money as long as it is open, which is also restricted by the time of your employees.  As the world becomes busier by the minute, your ability to give time is becoming more valuable more than ever.  In my opinion, your time is even more valuable than money.

So give your time.  Spend it with your family.  Take a walk.  Play outside the house.  Enjoy some time gardening.  Smell the fresh air.  Your precious time is more valuable than any gift you can ever give them this Christmas season.

2) Decorate your Christmas Tree Together

When I was growing up, we’d always decorate our Christmas tree together.  Most of the time, we’d use indigenous materials as decoration.  We would use white soap for a snow.  We would pick up stones and wrap them up as candies and hung them under the Christmas tree.  One time, we even made a “parol” (star) out of banana stalks.  It was a lot of fun and we didn’t even have to pay a dime. 🙂

3) Sing Christmas carols with your friends

There was a time when me and my friends would go out at night, knock from door to door to sing a Christmas carol or two.  Our neighbors being so kind and gentle would give us coins and gifts.  We enjoyed it so much we even brought our musical instruments along. We had a lyre, a trumpet, drums, and my favorite – a home-made tambourine made out of flattened aluminum caps.  And at the end of it all, we even earned some money from the whole thing.

4) Share stories with old friends

The yuletide season is one of those days where everyone is going to their home town.  It is a great blessing to be able to catch up with your old friends and enjoy the season together.  Long lost high school friends ask who is  already married and who is next in line.  They might even ask you to be the godfather of their own kids. There is something refreshing in meeting up old friends.  With all the stress we endure at work throughout the year, it is a very welcome opportunity to spend some time with those you’ve spent most of your childhood with.

5) Sing and dance to your heart’s content

We Filipinos are a happy people.  We love to sing! We are all singers, even if we cannot carry a single decent tune!  Everyone knows the hottest song on the radio is the Korean hit sensation “Nobody, nobody but you?!” 

We also love to dance.  Why do you think noon time shows are full of dancing from hip-hop, to modern to ethnic dance?…They even have dance contests all year round!

During Christmas, you have an excuse to celebrate.  So sing your favorite song on your videoke!  Dance like crazy! Live life and have fun!

6) Watch the stars

During the whole month of December, the cool winds clear out the clouds so the stars can come out at night!  Watching the glittering stars on a clear night sky is both relaxing and peaceful.  The stars are saying…”settle down…be calm…rest for a while”.

It is one of those rare opportunities to really reflect and reconnect with nature and the universe.  So grab the chance to watch the stars and marvel at the wonders of the world!

7) Give love!

Just like what the popular Christmas carol says…

Give love on Christmas day (Christmas day!)

No greater gift…is there than love.

What the world needs is love!

Yes the world needs your love…

Why don’t you…give love (Repeat Chorus)

Love is priceless. Love is “cheesy”. 

Love other people.  Love your neighbor.  Love your dog.  Love your son.  Love your daughter.  Love your parents.  Love yourself. 

Love is the only thing that grows and comes back to you a million fold when you give it away. 

 

Christmas is a season of celebrating joy and happiness.  Be happy! Smile!  There’s nothing that can take that away from you.  Not working on a night shift on the eve of Christmas day.  Not enduring the very long ride home just to catch your family’s Noche Buena.  Not even your problems on work, money or family. 

You dictate how to celebrate Christmas.  You alone can make it the best day of the year!  You have the power to give, to sing, to dance, to share, to love, to be happy and smile!  You can do all these things…even without breaking your piggy bank.

Categories
Business Credit Card Money Mindset Online banking Personal Finance

8 Best Home Budgeting Software Features I’d Really Love To Have

I’ve been looking for a home budgeting software for quite some time but I haven’t really found anything that has all the features I’d really love to have. You see, my wife and I have been relying on the good old excel spreadsheet to track our income and expenses.  Sometimes it works.  Sometimes it doesn’t.  There are days (usually at the start of the year) where we would be very excited (and committed) to enter our daily transactions into the spreadsheet.  But after a couple of months, the excitement dies down along with our budget.  As a result, unexpected expenses happen.  And we wonder where our money went. 🙂

Here are the 8 Powerful Home Budgeting Software Features I’d Really Love to Have

1. Secure

I may not have billions of dollars in my bank, investment and credit card accounts, but even then I still want my privacy when it comes to my own money.  In this day and age when information can be easily sold to unscrupulous individuals with not so good intentions, and with the many scams we hear every now and then, I think it is but prudent to take some extra precautions regarding your own personal financial information.  Security is the first feature I’d really love to have in a good home budgeting software.  Without it, all other features really don’t matter.

2. Easy To Use

One of the main reasons I hesitate to use most of the available home budgeting software out there is because they all require me to “manually” download the transactions from my bank or credit card account and then “manually” upload the same information into the budgeting software.  This is a complete waste of time, not to mention a complete bore.  When I heard about Mint.com and its ability to automatically download/upload the transactions from your accounts, I thought finally someone had found a neat way to solve this problem.  The bad news is – it is only available in the US at the moment.  Not to mention the privacy concerns raised by other people since the data is being kept by Mint.com on its own servers.

3.  Visually Appealing Charts and Graphs

The human mind understands pictures better than words.  One look at a picture and you know whether you are spending more than you are earning.  One look at the chart and you know your income or expenses are going up month after month.  Looking at rows and rows of transaction details is NOT a great way to organize the financial information available from your bank statements.  It will only add to the clutter that you don’t need and don’t really like to have.  As they say, “a picture is worth a thousand words”.

4.  Voice, SMS and Email Alerts

More and more people are attached to their mobile phones today than ever.  Aside from keys to your car, you cannot leave the house unless you have your mobile phone with you.  I bet you’ll even go back to your house in case you forget it.  Sometimes, you even feel incomplete without it.  For people on the go, it is very important to stay informed especially about anything related to your own money.  You can receive alerts if there’s any suspicious activities involving your finances.  You will be notified if someone just withdrawn half of your money from the bank.  Good banks would do just that.  But sometimes it is not always the case.  That added security of receiving alerts wherever you are is a welcome convenience to give you peace of mind.

5.  I-Phone/Mobile Phone App

The financial services industry is being revolutionized by the Apple I-Phone.  There are hundreds of cool apps you can install on your I-Phone or mobile phone free of charge or for a small fee.  A lot of these applications help manage your money and budget. Today, everything can be literally controlled from your fingertips wherever you are and whenever you want.  You can view your account balance.  You can receive reminders to pay for your bills that are due.  You can be notified if you’re going over budget after paying for that coffee using your credit card.  A cool app extends your home budgeting software beyond your home PC or laptop.  It is the only way to go for mobile people that are always on the go.

6.  Update Feature

Today, most home budgeting software can only read/browse through your transactions.  They can only make sense of the information that you give it.  It is passive.  It can only give you information.  You cannot tell it to do something other than spit out a report or chart.  The one feature that would really make a home budgeting software powerful is the ability to process “push” services like updating your account information, transfer funds through your mobile phone, or do everything you can do on your bank account and more.  Wouldn’t it be great if you can do everything without going to your bank and wait for hours just so you can have a customer service representative update your account for you?

7.  Track Cash

In Asia where most transactions are still made in cash, using a home budgeting software is not effective.  To be able to make use of the software, you have to manually key in the transaction details by yourself.  It is a complete waste of time and counter productive.  Besides, who would want to carry a notebook everywhere and jot down the transaction details when paying for his lunch at the cafe?  Certainly not me.  The really cool home budgeting software must be able to record cash transactions easily and track it effectively. Most important of all, it must be able to treat cash just like any other transaction.

8. One Account

Most people maintain a lot of accounts.  They may have multiple accounts in several banks.  They receive many credit card offers on the mail each month.  Not to mention their retirement and investment accounts in different brokerage firms.  Organizing your finances under one roof is getting harder and harder every day.  If you cannot link all your accounts together, the information you have of your finances is incomplete.  The home budgeting software of choice is able to integrate everything together under one roof so you don’t have to do it yourself.

These are the 8 powerful features I’d really love to have in a home budgeting software.

In the end, these features will only take you so far.  You still have to take control of your own money.  You still have to challenge yourself to make more money and keep it.  You still need the discipline to know when your expenses are helping you achieve your goals or not.  In the end it is still up to YOU to become rich or poor.

How about you?  What features would you like to have if you were to build the most amazing home budgeting software in the world?

R98Z5TYP2TTG

Categories
Bonds Books Business Investing Money Mindset Stocks

Increase Your Financial IQ Book Review – Part 5: Improving Your Financial Information

Today, you will learn Financial IQ #5 – Improving Your Financial Information.  This article is the last part of Rich Money Habits’ review on Robert Kiyosaki’s book Increase Your Financial IQ: Get Smarter With Your Money.

To read parts 1 to 4 of the book review, you can checkout the following links.

Increase Your Financial IQ Book Review – Part 5: Improving Your Financial Information

Information is the most important asset you can have.  For soldiers in the midst of war, using the information they have against their enemies determines whether they will live or die. 

Information is the key to Manny Pacquiao’s victory against the likes of Oscar De La Hoya, Ricky Hatton and Miguel Cotto.  Freddie Roach, his coach, is without a doubt a master strategist.  He is great at identifying the smallest weaknesses of Pacquaio’s opponents and skillfully using those to draw up a game plan for Pacquaio to win each of his fights. 

Today, leveraging the power of information can make you very rich.  Young twenty-year olds have proven that.  Armed with only their dreams and technology, they have built up Facebook, You Tube and My Space and became billionaires. 

The Four Ages of Humanity

  1. Hunter-Gatherer Age
    • Nature provided the wealth. 
    • There’s only one group – everyone is poor.
  2. Agrarian Age
    • Land became wealth. 
    • There are now 2 groups of people:
      • The rich kings and queens who own the lands, and
      • The poor peasants.
  3. Industrial Age
    • People who own the biggest factories, skyscrapers and industries are the new rich. 
    • There are now 3 groups of people:
      • The rich owners of industrial companies
      • The middle class who work for those companies
      • The poor who are still caught up in the Agrarian & Hunter Gatherer age.
  4. Information Age
    • The new super rich are 20 something kids who leverage information to become billionaires
    • There are now 4 groups of people:
      • The super rich – young billionaires leveraging information.
      • The rich who are still struggling to bring their industrial companies to the new information age.
      • The middle class who are now working as employees to more and more companies of the rich and the super rich.
      • The poor who are clueless how they can use technology to become rich.

According to Robert Kiyosaki, a lot of people are struggling today because they are clinging to the Hunter-Gatherer, Agrarian and Industrial Age ideas.  They are “perishing because of obsolete or inadequate information.” They still think having a safe secure job with great benefits is a good idea.  The good news for you is that you don’t have to be like them. You can become rich just by having the “right information.”

Tips on Classifying Information to Become Richer

  1. Facts vs Opinions
    • Know the difference between facts and opinions. 
    • Many people think investing is risky because they don’t know if they are basing their investment decisions on opinions or facts
  2. Insane Solutions
    • Acting on insane solutions is risky.
    • If your investment decision is based on an opinion, it can lead to your financial ruin.
  3. Risky Actions
    • A person who invests for capital gains is investing on an opinion.
    • A person who invests for cash flow is investing on a fact.
    • A smart investor uses both opinions and facts to invest for both capital gains and cash flow.
  4. Control Over the Asset
    • Most people investing in paper assets have very little control over their investments.
    • These investors are hoping their opinions turn into facts – which is very risky.
  5. What are the Rules?
    • Know the rules of money.  Knowing the rules gives you valuable information on how to play the money game.
    • Without rules, there is chaos, and your assets would decline in value.
  6. Trends
    • A small investor with superior information and intelligence about local and global markets can beat the giants who rely only on international information
    • Know and invest with the trend.  The trend is your friend.
    • Robert Kiyosaki says “Financial intelligence is the ability to take information and make it meaningful.”

Rich Money Habits Review Notes:

Today, more than ever, you need the right information.  Information can make you rich or poor.  With the right information, anyone can become rich. The only problem is that in a rapidly changing world, the old ideas of yesterday may no longer work today.  That’s why it is very important to continue to learn and be discerning of the information you receive, always making sure if your decision is based on facts or opinions.

Categories
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Increase Your Financial IQ Book Review – Part 4: Leveraging Your Money

Today, you will learn Financial IQ #4 – Leveraging Your Money.  This article is part 4 of Rich Money Habits’ review on Robert Kiyosaki’s book Increase Your Financial IQ: Get Smarter with Your Money.

To read parts 1 to 3 of the book review, you can checkout the following links.

Increase Your Financial IQ Book Review – Part 4: Leveraging Your Money

According to Robert Kiyosaki, leverage, in its simplest terms, is basically “doing more with less”.  It could be in the form of leveraging other people’s money like acquiring a loan for your house. It could be leveraging other people’s time by hiring employees for your business.  Or it could be leveraging technology like putting up an online store to reach out to more people, 24 hours a day, 7 days a week.

Things to note when applying leverage:

  1. There are many types of leverage: leverage of debt, leverage of financial intelligence, leverage of technology and more
  2. Most investors have little control over their investments such as savings, stocks, bonds, mutual funds, index funds.  Without control, the investment becomes risky.
  3. Higher returns does not mean higher risk.  The key to minimizing risk is applying financial intelligence.
  4. Most financial advisors are sales people – NOT investors.
  5. To gain control of your investments, you need to take control of your own financial education.
  6. Leverage can work in two ways – it can work for you, or work against you
  7. Warren Buffet, the second richest man in the world, says “diversification is a protection against ignorance.”

Investing for capital gains vs investing for cashflow

Some people invest only for capital gains.  Their motto is “buy low, sell high”.  When you purchase a house for PHP 1 Million in the hope that you can sell it for PHP 5 Million after a few years, you are investing for capital gains.

Others invest only for cash flow.  They want to receive a steady fixed amount of income every month.  When you invest in Retail Treasury Bonds and receive a regular interest earnings, or invest in stocks that give dividends, you are investing for cashflow.

To invest for both capital gains and cashflow, you need to increase your financial intelligence so you can control the investment and increase its value at the same time provide a steady stream of income for you.

More tips on taking the first step to apply leverage

  1. Don’t let your problem of not having enough money stop you from becoming rich.  Take that first step, make mistakes.  Continue learning even if you fail. The experience will increase your financial intelligence.
  2. Start small and take baby steps.  Take the time to read books, attend seminars and learn from great financial mentors before you invest.
  3. Dream BIG.  Instead of living below your means, let your BIG dreams inspire you to learn and invest carefully to allow you to magnify your income and go beyond your means.

Rich Money Habits Review Notes:

Leverage is a very powerful tool.  But it can work both ways.  It can make you money or it can work against you. Be careful. I experienced the other side of leverage when I got into credit card debt.  To know how I managed to pay for it, you can read my personal finance story.


Categories
Books Business Investing Money Mindset Personal Finance

Increase Your Financial IQ Book Review – Part 3: Budgeting Your Money

Today, you will learn Financial IQ #3 – Budgeting Your Money.  This article is part 3 of Rich Money Habits’ review on Robert Kiyosaki’s book Increase Your Financial IQ: Get Smarter with Your Money.

To read part 1 and part 2 of the book review, you can checkout the following links.

Increase Your Financial IQ Book Review – Part 3: Budgeting Your Money

After learning to make more money and finding out ways to protect your money, you next need to learn how to budget your money for maximum utilization.

According to the book, a budget is a plan to coordinate your most important resources (such as money and time) and expenditures.  There are 2 kinds of budgets:

  • Budget deficit
    • excess of spending over income
    • you spend more than you earn
  • Budget surplus
    • excess of income over spending
    • you earn more than you spend

The reason most people are poor is because all their lives, all they’ve known is not having enough money, hence, they only have a plan for “budget deficit”.   They have never experienced having more money than they could ever expect to spend.  They think only lottery winners, corrupt politicians, or greedy businessmen can have a “budget surplus”.   The key to having a budget surplus is realizing that it is possible for you to have it.

There are 2 ways to generate a budget surplus:

  1. You can apply Financial IQ # 1 to make more money, thereby increasing your income, or
  2. You can cut expenses, and reduce your spending.

Both strategies will tip the equation to your favor such that your income will be greater than your expenses and you create that extra cash a.k.a. “budget surplus”.

Most people and businesses only know how to cut expenses, especially in these times of financial uncertainty.  But you can only do so much in terms of cutting expenses without sacrificing your mental, emotional and physical health.  You don’t need to starve yourself to create a budget surplus. If you apply Financial IQ # 1 – make more money, you can stretch the other side of the equation and achieve the same thing.  The same applies to business. A business without sales is NOT a business. So aside from minimizing the costs of your business, you also need to learn to sell more and boost your income!

Robert Kiyosaki offers 4 tips to plan for a budget surplus:

  • Budget tip #1 – A budget surplus is an expense
    • Make spending for budget surplus a priority
    • Pay yourself first, even when income is less than your expenses
    • Use the pressure of not having enough money to think of ways on how to generate that extra cash
  • Budget tip #2 – The expense column is the crystal ball
    • Discover what you’re spending on, and you will know if your plan is working to give you a budget surplus or a budget deficit
    • Robert Kiyosaki’s Rich Dad says, “you can tell a person’s future by looking at what they spend their time and money on.”
  • Budget tip #3 – My assets pay for my liabilities
    • Instead of using your hard-earned money to pay for your liabilities like a car or a flat screen TV, make that money work for you by using it to build assets and use the income from those assets to pay for your car or your flat screen TV.
  • Budget tip #4 – Spend to get rich
    • Know when to spend and when to cut back.  Most people only know how to cut back.  Spending wisely to grow your money is a harder skill to master.
    • Learn to do more with less and use the pressure to become smarter in making more money

Rich Money Habits Review Notes:

  • Budgeting is boring.  That’s what most people say.  However, it is one the most important rich money habits that you will have to learn.  A budget is like a map.  The only way to get to your destination is to know where you are right now, and use your plan to discover how to get to where you want to be.
  • Consciously working on your money habits is a life-long process, and it starts with taking care of the resources that you have – that is budgeting your money and time.  What others don’t realize is that we all have 24 hours in a day.  Some people multiply their impact by providing livelihood to thousands of people and generating more money not only for themselves but for the whole community.  Others just sit around all day never doing anything to make their lives easier.  To me, it is not a question of do we need to budget or not.  It is a matter of realizing that to live your life to the fullest, you need to make the most of what you have.
  • Be patient.  The problem of TV shows is that everything is fast.  Yesterday a child was born. The next day he’s already a teenager.  The next week he himself is already having his own kid.  Life is not a TV show.  It is a series of small steps earned each day.  So have a plan and learn to adjust that plan along the way.  As Robert Kiyosaki says “take it one day at a time.”

P.S. You’ve just read part 3 (Financial IQ #3: Budgeting Your Money) of Rich Money Habits’ review on Robert Kiyosaki’s book Increase Your Financial IQ: Get Smarter with Your Money.  How about you? How are you budgeting your time and money today?

Categories
Books Business Credit Card Money Mindset Personal Finance

Increase Your Financial IQ Book Review – Part 2: Protecting Your Money

Today, you will learn Financial IQ #2 – Protecting Your Money.  This article is part 2 of Rich Money Habits’ review on Robert Kiyosaki’s book Increase Your Financial IQ: Get Smarter with Your Money.  To read part 1 of the book review, you can checkout Increase Your Financial IQ Book Review – Part 1: Making More Money.

Increase Your Financial IQ Book Review – Part 2: Protecting Your Money

In the first part of the book review you’ve learned that to earn more money, you must learn to solve money problems.  Once you have learned to solve problems and earn some money, the next thing you need to do is to protect that money from what Robert Kiyosaki calls “financial predators”.  Real world predators do not always look the part. Sometimes, they are ordinary people with well-meaning intentions.  Their job is to “legally” take money from your pocket…and your job is to “legally” have them take as little as possible.

According to the book, there are 7 financial predators you need to protect your money from.  They are:

  1. Bureaucrats who legally take money from you through “taxes”
    • Taxes are your single largest expense
    • Know which type of income you’re earning money from and paying in taxes
      • Earned Income – salary, commission, etc
      • Portfolio Income – income from paper assets such as interests, dividends, etc
      • Passive Income – royalties, rental income from real-estate, licensing, etc
  2. Bankers who legally take money from you through “fees”
    • Banks and credit card companies charge you with all kinds of fees, some of them you or your company might not even be aware of
    • For every dollar you have in the bank, the bank can lend out twenty dollars to your credit card.  The bank pays you 5 percent for one dollar and makes 20 percent on twenty dollars.  That is how banks make money.
  3. Brokers who legally take money from you through “commissions”
    • Look for brokers who are students of their profession and invest in what they sell
      • For real-estate brokers, ask them how many properties they are invested in.
      • For stock brokers, ask them which stocks they personally invest in.
    • “Good” brokers make you rich, “bad” brokers make you poor.  Build a relationship with “good” brokers.
  4. Businesses who legally take money from you through “profits”
    • Buy products that make you rich
    • Poor people buy products that make them poor, paying them for years with a very high interest rate
  5. Brides and Beaus who legally take money from you through “alimony/marital asset split”
    • Get a prenuptial agreement before you marry
    • Think of your exit plan before you enter into the agreement
  6. Brothers-in-law who legally take money from you through “inheritance or financial wishes”
    • Consult an estate planning specialist to plan your exit
    • Use legal vehicles such as wills & trusts to protect your wealth from death predators
  7. Barristers who legally take money from you through “court & legal fees”
    • Hold assets of value in legal entities instead of your own name
    • You must buy insurance before you need it…not the moment you need it.

Rich Money Habits Review Notes:

  • Protecting your money is like plugging holes.  You first need to be aware what the holes are before you can actually plan on fixing them to stop the cash from flowing out.
  • Learning to protect your money is a never ending process as the rules regularly change.  The ways to protect your money yesterday may no longer be able to protect your money today or tomorrow.
  • Protecting your money reduces your expenses. The more money you keep, the more money you can utilize for productive endeavors.

You’ve just read part 2 (Financial IQ #2: Protecting Your Money) of Rich Money Habits’ review on Robert Kiyosaki’s book Increase Your Financial IQ: Get Smarter with Your Money.  How about you? How are you protecting your money today?

Categories
Books Business Investing Money Mindset Personal Finance

Increase Your Financial IQ Book Review – Part 1: Making More Money

Every month at Rich Money Habits, we will take a deeper look at some of the best business, personal finance and investing books out there.  For this month of November, we will feature Robert Kiyosaki’s book Increase Your Financial IQ: Get Smarter with Your Money.  This article is part 1 of the book review which digs deeper into Financial IQ #1 – Making more money.

Increase Your Financial IQ Book Review – Part 1: Making More Money

The book starts by asking the fundamental question:

“Does money make you rich?”

Take a moment to answer that question.

Do you think money will make you rich?  Do you think winning millions of dollars from lottery will make you rich?  How about having a high-paying job from a lucrative profession like doctors, or lawyers, or IT professionals?  Does having a lot of money make you rich?

Many people have heard stories how instant millionaires lost their millions after a few years. Or how someone who was once rich and famous had his house foreclosed.  Or how a high-paying manager begged for his job back because he can no longer afford the lifestyle that he once had.

If not money, what then makes you rich?  According to Robert Kiyosaki,

“…it is not real-estate, stocks, mutual funds, businesses, or money that make you rich.  It is information, knowledge, wisdom, and know-how, a.k.a. financial intelligence, that makes one wealthy.”

What is Financial Intelligence?

Robert Kiyosaki describes Financial intelligence as that part of our mental intelligence we use to solve our financial problems. Financial IQ, on the other hand, is the measure of that intelligence.

What money problems do you have?  Are you having the problem of “not having enough money”? Are you

  • using your credit card whenever you’re short on money?
  • constantly worrying about the rising cost of living?
  • paying more in taxes after an increase in income?
  • afraid of emergencies?
  • receiving bad financial advice?
  • waiting for the next paycheck to pay for last month’s rent?

While the rich do not have these problems, they too have their own money problems – “too much money”.  Some of these are

  • needing to keep their money safe and invested
  • not knowing whether people like them or their money
  • looking for smarter financial advisors
  • raising spoiled kids
  • worrying about estate and inheritance planning
  • looking for ways to “legally” avoid paying excessive government taxes

Which problems would you rather have?

The 5 basic Financial IQs

According to Robert Kiyosaki, you need to learn the 5 basic Financial IQs to solve your money problems.  These are:

  1. Financial IQ #1: Making more money
  2. Financial IQ #2: Protecting your money
  3. Financial IQ #3: Budgeting your money
  4. Financial IQ #4: Leveraging your money
  5. Financial IQ #5: Improving your financial information

Financial IQ #1: Making more money

How do you make more money?  The key according to Robert Kiyosaki is to “solve problems”.  People will gladly pay you money if you solve their problems.  I know I’ll be more than happy to pay you money if you can fix my broken LCD TV at a reasonable price. Would you gladly pay your doctor if they solve your ailing stomach? Would you pay your financial advisor if they can make you more money than what you pay them?  Or how about paying your “star” employees “millions” whenever they bring you “billions” in income?

Solve people’s problems and make more money.  As the famous quote from Zig Ziglar says

You can have everything in life you want, if you will just help enough other people get what they want.

Which problems do you want to solve?

Which problems do you want to solve?

Do you want to solve the problem of “hunger” by providing quality meals at an affordable price.  That’s what a lot of food businesses are doing.  Or do you want to solve the problem of “not having enough time to eat”.  That’s what the fast and “instant” food delivery businesses are trying to solve.

What are you naturally good at? Perhaps you can use any of your skills to solve other people’s problems.

Are you good in math?  Be a great financial analyst or an accountant and help people and businesses solve their financial or tax problems.

Do you like speaking to people?  Become a powerful speaker.  Share your message by leveraging your highly sought after skill of public speaking.  Inspire people to take action and solve their problem of a dull and boring life.

Do you love making great movies?  Learn to be a great director or a movie producer.  People will pay you to entertain them because you are solving their problem of “not having fun”.”

Solving problems is a process

The key according to Robert Kiyosaki is realizing the fact that problems will never go away.  After you solve a problem, another problem will come up.  Only in this process of solving problems one after the other will you gain financial intelligence.

You have to go through the process of solving whatever money problems you are facing right now.  Don’t run from it.  Face it head on.  Use your mind to think of ways on how to solve your money problem.  As Robert Kiyosaki’s Rich Dad says,

“You can quit when you win, but never quite because you’re losing.“

The reason instant millionaires end up poor after winning the lottery is because they want only the money but not the process of learning how to build their wealth.  This is the same thing as people wanting to get paid more than the value they are providing.  Their greed is making decisions for them.  Some people even claim that “greed” has caused the current financial crisis that we are in right now.

The other side of the coin is also dangerous – fear.  Don’t let fear hold you back.  Enjoy the process of learning.  Feel the fear and face it head on. This is the same reason why employees would rather gladly receive the small steady paycheck than take a chance at building their own fortune.  Take a leap.  Live out your dreams.  As Hellen Keller says,

“Life is either a daring adventure or nothing.”

Rich Money Habits Review Notes:

  • What I liked about the book is that it offers other (unconventional) ways to think about money.
  • The book is not about financial advise, so it does not discuss any “how to” details on investing in real-estate or businesses.
  • There are a lot of strong comments about the book so it is NOT for everyone.  My hope is that after reading the rest of the book review in the coming weeks, you’ll pick up a thing or two to help you with your money problems.

You’ve just read Rich Money Habits’ review of Robert Kiyosaki’s Financial IQ #1 – Making More Money.  Now, go out, solve problems and start making more money! 🙂