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Philippine Stock Market Investing Basics

Last month, I had the priviledge of being invited as one of the resource speakers in the University of the Philippines Diliman College of Business Administration’s (UP CBA) Alternative Class Learning Experience (ACLE).  The event titled “Stockticks: Learning the basics” was organized by Adelfe Enu Crea Sorority, UP CBA’s only business sorority, helping promote Philippine Stock Market Investing to students of UP Diliman.

The experience was a blast!  More than 60+ students were able to attend the event and learned the basics of investing in the Philippine Stock Market.  I was also fortunate to share the stage with one of the more experienced stock market investors in the Philippines, Mr Aaron Say of Rhyme and Reason Investing.

Good news for you, my wife (a.k.a my number one fan), was able to take a video of my talk.   In the video, I discussed the basics of stock market investing, what a stock is, how do you make money from stocks, its advantages/disadvantages over other investment vehicles and more.  The video is around 30 minutes long so I had to split it into two so it can be uploaded to You Tube.

CLICK HERE to watch part 1 of 2 of the video.

CLICK HERE to watch part 2 of 2 of the video.

Watch and enjoy!

P.S.  I understand that the information contained in the video is basic for some who are already investing in the stock market…but for those of you who are still clueless how to invest in the philippine stock market, I hope this will be a welcome mini-tutorial for you.  I am like you and I know how it feels to want to learn but don’t know where to start.  This video is a good starting point, if you’re really interested to pursue stock market investing in the Philippines. 🙂

DISCLAIMER:  I am NOT a licensed stock market analyst or stock broker, nor am I a seasoned investor.  I am just like you, an ordinary person wanting to learn how to grow the money I have.  Please note that everything I say in this blog and in the video are purely my own personal opinion and nothing else.  Take them at your own risk. 🙂 If you seek professional advice, please consult licensed professionals engaged in that line of business.

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5 Questions You Need To Ask Before Joining a Network Marketing Company

Recently, one avid reader of this blog emailed me to ask my thoughts regarding highly controversial topics such as Network Marketing or Multi-Level Marketing.

I have often hesitated sharing my thoughts on topics such as network marketing, because for one, I don’t have much to share to begin with.  I was not confident enough to share what limited knowledge I had about the industry.  I didn’t want to share with you mere hearsay or what someone else has experienced good or bad.

Now, I know a little bit more and have gained first-hand experience to at least share with you simple tips to help you avoid falling into scams that has given this industry a lot of bad reputation.

First of all, let’s define what network marketing is so we all start off from the same page.

“Network Marketing is a system of moving products from the factory to the consumer, through an organization of users, retailers and network builders.” 

Secondly, I highly encourage you to CLICK HERE to watch a video explaining how network marketing model really works and how is it different from other distribution models.  The video features an interview with a university professor who holds a PhD in Business Administration from Harvard University who is involved on researching, teaching and consulting about network marketing.

Lastly, I want to help you avoid falling into ponzi schemes or pyramid scams.  After learning more about the industry, it has become one of my advocacies to help educate people on legitimate and professional ways to build a network marketing business…and more importantly, if you decide to become part of this industry, to help you build your business with the right foundation of integrity, honesty and sincere desire to help other people get what they want in life.

Here are 5 questions you need to ask before joining a network marketing company.

1) Who are the owners of the company? 

What are their backgrounds in terms of starting and running a business, especially a network marketing business?  Every industry is different.  Some people may be good with traditional businesses, or have succeeded in franchising, but it doesn’t necessarily mean they will succeed using a network marketing business model.  How many years have they been in business? What is their mission and vision?  What are their core values? Is it aligned with what you believe in?

You need to understand that a huge part of business success is about the people who own or are running the company.  The owners, as well as the CEO, and the other employees who will be there face to face with your customers will make or break your business.  You need to think like an investor who is looking for a CEO to run your own company.  If you have doubts about their background, or worse, you don’t even know who the owners of your company are, better STOP and do more due diligence than regret losing your hard earned money in the end.

2) What is the track record of the company?

How stable is the company?  A lot of the bad reputation the industry has been getting is based on some companies’ poor track record.  Not a few companies have started so fast but folded up in a few years. As a consequence, many distributors were left hanging in the end.

The thing to understand about a network marketing business, is that IT IS still a business. The success ratio still applies: 9 out of 10 businesses fail in the first 5 years; and for those who survive, 1 out of 10 of them will fail in the next 5 years.  The simple reason? Any start up business will go through growing pains.   The systems are still being built and not yet in place.  If the systems break down, the business collapses. That’s why, you need a great visionary team running the company, who will make good decisions and never compromise money over the long term health of the business.  You need people who are going to be there for the long term.

How long is considered stable?  A good benchmark is at least 10 years.  By then, the systems are already in place and has proven to work through business cycles like economic recessions and depressions.

3) How is the product different from those in the market?

After watching the video earlier, I hope you at least have an idea how different the distribution model of network marketing companies are compared to traditional ones.  Different they may be, both, however, have the same goal in mind — move the product from the factory to the consumer.

There are three things to consider when looking at the companies’ products: 1) it must have unique selling proposition, it must be of high quality and 3) it must be consumable.

First, the product should have a unique selling proposition.  You cannot sell a product, distribute it via network marketing and have that same product also distributed in traditional retail stores.  Just think, if the same product is available in your neighborhood grocery store, why go through all the trouble and buy it from somewhere else?

Second, the product must be of high quality. The good thing about network marketing is that because it minimizes the distribution cost, the products tend to be of higher quality.  This ensures that it gets the better end of the network being a two-edged sword.  People talk about great products.  But they talk MORE about bad products.  So if you are in a network marketing business, your products must be top-notch, otherwise, your network’s multiplying advantage may even be your worst enemy.

Third, you want your products to be consumable.  You want your customers to keep coming back to use your products.  That’s the only way to build loyal customers.  That applies to a traditional business, but even more so for a network marketing business.  And you can only do that if your product is of high quality.

4) Where are the sales coming from?

There are two-sides to a legitimate network marketing business.  One, is direct sales, where you buy a product at a lower price and sell it higher for a profit.  The other side is in sponsoring other people to help you sell more products to more users, retailers and network builders.  Normally, the company will give you a start up kit or enrollment pack which contains your initial inventory of products.

To know if the company is legitimate or not, you need to watch out whether the direct-sale activities balance with the sponsoring side of the business.  If the sales are coming mainly from direct sales with minimal sponsoring activities, then it is operating mostly as a direct sales business.  On the other hand, if the sales of the company are coming mostly from selling of start-up kits or enrollment packs, and not much is coming from direct sales, then the company is bordering on becoming a pyramid scam or ponzi scheme.  The company may be legitimate, but if the only thing they are selling is the startup kit, and there are no repeat purchases from satisfied customers, then sooner than later, the company will also fold up.

Obviously, the commissions should be based on how many products were sold and how many repeat purchases there are, and NOT based on the number of people who signed-up.  In the end, the heart of a business is still and will always be satisified customers.

5) How fair is the compensation plan?

Is the compensation plan built upon rewarding only those people at the top? Is it possible for someone new to surpass the earnings of those who have joined the company earlier?  How will you be rewarded?

How healthy is the financial condition of the company? Has the company put in place control mechanisms to ensure the long term health of the company?  Obviously, the company has to make profits as well as give a fair share to the distributors.  If all profits are given to distributors, it is just a matter of time before the company folds up and the owner runs away with your money in his pocket.

You also need to ask yourself how many people have already succeeded in the company, and what are your chances as a new distributor to succeed as well?  What available training and support will you get in order to achieve the same or greater level of success in the business?  What challenges will you expect if you decided to pursue this business to get the results you want? These are simple questions you need to ask to really understand what you are getting into.  Network marketing business can give you potential residual or even passive income, but it doesn’t happen overnight.  It is certainly not easy, but it can be done.

The above 5 tips is just a simple list you can refer to before joining a network marketing company.  My hope is that you keep this handy list with you when you start exploring getting into a network marketing business.   The world has changed…and one of those changes is the coming of age of the network marketing industry.  It has even been tagged as the “business of the 21st century” by Robert Kiyosaki, the famous author of Rich Dad, Poor Dad.  The only question is whether you will become part of it or not.

Starting a network marketing business can be your gateway to success if you do it right.  It will most likely change your life for the better if you work on it and do your own due diligence.  In the end, it is all up to you.  Be driven.  Be careful.  Be wise.

Cheers to your success!

 

P.S.  CLICK HERE to mail me  if you are considering building a network marketing business and would like to be part of my team XTRM 1-11 Inc, one of the most professional and highly successful team in the network marketing industry. If you become part of the team, you will also get a chance to receive personal mentoring from me.
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How Can A Janitor Be Better Off Financially Than A Doctor?

A humble low-income earning janitor became better off financially than a highly successful doctor. It happened…only in the Cashflow 101 game.

Last weekend, I had the great fortune to host another round of Rich Money Habits Cashflow Workshop.  And I couldn’t have prepared myself for the suprise that I was about to witness — a janitor beating a doctor in the cashflow game.  It happened.  It really happened.

How did it happen?  Simple.  The janitor took advantage of the opportunities that came his way, even though he had little money to begin with.  In the end, he got out of the rat race and achieved his dream.  The doctor, on the other hand, was a little bit more careful and took his time investing in opportunities.  While he was able to generate a lot of passive income, in the end, he wasn’t able to get out of the rat race.

Of course, it helped that the janitor only had minimal expenses, so he only needed a few extra passive income to get out of the rat race.  But then again, he also did not let his meager paycheck affect his willingness to invest in income-producing assets.  Even when the deal was “too big” for a janitor’s income, he still managed to face his fears and take advantage of the opportunity.  In short, he invested in income-producing assets and when the market turned up, he sold those assets and got a hefty sum that allowed him to invest some more.

The doctor, on the other hand, wasn’t doing bad financially at all.  In fact, he actually acquired more properties, earning him more passive income than the janitor.  How many? A lot more, I would say.

Why then was he not able to get out of the rat race?  Reason? He had a high expense.  That high expense spelled the difference.  Because of the high expense, he needed to do a lot more than the janitor.  Whereas the janitor needed only 2 properties to get out of the rat race, the doctor was only half way to getting out after acquiring about 10 properties.

It appears a story like this happens only on fairy tales.  A happy ending.  A triumph of David vs Goliath.  But the message is clear.  It isn’t so much about how much money you make.  It is also about how much you spend, and how you invest the difference so you can get out of the rat race faster.

Taking this important lesson to real-life, here are things you can do to help you get out of the rat race.

1) Take charge of your cashflow

As my good friend Jay Castillo mentioned in one of his popular articles, you should become the CFO (Chief Financial Officer) of your own financial life.  You have to treat yourself as a business enterprise.  You have to look at your finances from an eye of a business tycoon.  How much money is coming in (salary, side businesses, investment income, etc), how much money is going out (rent, food, car, starbucks, etc), and how you are going to invest the difference.

2) Take the right mindset

Having the right mindset will help you build the right money habits which will lay out a good foundation to your financial journey.  It is not about getting rich quick by taking advantage of other people.  Nor is it getting rich winning the lottery. It is not about getting rich being a crook, or a dishonest politician, or an evil-villain in movies or soap operas.  It is about being rich with integrity and honesty by providing value to a lot of people.  It is about being rich so you can bless more people.

3) Take baby steps

One of the most dangerous things you want to get your mind off is the idea of winning a one-time BIG-time fortune.  It just doesn’t happen that way.  Take baby steps.  You start small.  You learn.  You grow.  Once you learn the lesson, you’ll be able to handle the responsibility when the BIG fortunes come your way.  Having the BIG fortune when your not ready can even be detrimental to your growth.  Ask any of those who won the lottery and ended up poorer a few years after winning.

4) Take your time

Be patient.  It will not happen overnight.  It takes time to learn the right mindset, to develop yourself to be able to do the things that you need to do to provide value to other people.  You will go through a lot of discouragements.  But all people who have accomplished great things have gone through trials.  It just makes the victory even sweeter.  Just like wine, the longer the wait, the tastier it becomes.

5) Take responsibility

One thing all great people have in common is that they take responsibility of their results.  If you fail, it’s your fault.  If you succeed, it’s also your fault.  There are no excuses.  We are dealt with the same lemons every now and then.  It is up to you to take those lemons and turn them into a lemonade.  It’s never a question of being lucky or being dealt with a fair amount of challenges.  Time and time again, the thing that makes people great is never in the amount of challenges they have to face.  It is in the realization that they have a tremendous power to take on those challenges, if only they believe in themselves enough and the God who made them.

Go out there and be rich with honesty, integrity and humility.

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Tales of the Cashflow 101 Games Part 2 – Lessons Learned

Last April 3, I had the priviledge of hosting our second session of Rich Money Habits’ Cashflow 101 games.  This time, at The Old Spaghetti House (TOSH) Restaurant at Robinsons Forum, EDSA Pioneer, Mandaluyong City.

There were two great news in this session of Cashflow 101 game compared to last time —

First and foremost, all participants got out of the rat race.  Congratulations to the participants!  Yehey!  Granted, it took some time for some of the participants to get out.  In the end, however, when one of them finally got out, like magic, everyone followed suit and got out in no time at all.  It could be because they saw that getting out of the rat race is indeed possible.  Everyone focused on making more passive income from then on so they too can also get out of the rat race.  In hindsight, I realized that this is also true in real life.  The more like-minded people you surround yourself with, the more people will support you and cheer you on as you go for your dream of financial freedom.

Second, we had the luxury of time and we were able to enjoy the game without getting kicked out of the restaurant.  The first time I hosted a Cashflow 101 game in Tapa King Edsa Central, we were kicked out because apparently playing cashflow boardgame is prohibited inside the restaurant.  We were lucky the caretaker still allowed us to play the game if only for a couple of hours.  But when the guard saw us, the caretaker didn’t have any other choice than to request us to stop playing, even though we weren’t done yet…just when the participants were now beginning to see how the cashflow 101 game works.  I felt really bad for the participants and promised myself never to allow a similar experience to happen again.

Hosting the second cashflow 101 session had its own challenges but the fact that everyone got out of the rat race was a reward in itself.  It was a gratifying experience witnessing the participants get out of the rat race and cross over to the fast track.  Seeing their spirits come alive and become animated as they celebrate their personal victory is truly an amazing experience.

After the game, I asked the participants what realizations they’ve had while playing the game.  Here are 5 lessons they’ve willingly shared that I am now passing on to you so you too can learn from them as well.

1) It’s OK to start all over again. 

One of the players over leveraged and got into debt so much so that he was already paying more money than what he was able to earn.  In short, his expenses was greater than his income.  Whenever he passes by the “Paycheck” cell, instead of receiving income, he now shells out extra cash to pay out his debts.

Needless to say, this led to his downfall as he eventually filed for BANKRUPTCY.  After declaring bankruptcy, he had to sell off all his assets for half the price.  After selling his “assets” off and paying his debts, he finally got into a positive cashflow situation.

That means, he had extra money at the end of the month again.  The surprising thing was, after getting rid of his “asset” he was actually better off.  He had lots of cash and he didn’t have to pay every month for his “asset”.  What he considered to be an asset was actually eating him alive because of the HUGE loans, causing him to file for bankruptcy.

Does this sound familiar?  I think this is very similar to the housing crisis a couple of years back, and still being felt up to this day.

2) It’s OK to borrow money as long as your asset is paying for it.

One of the most popular advise you will get is to NEVER borrow money.  And it certainly is a wise advise, especially if you are still learning your way to financial literacy and you don’t have the discipline to pay off what you owe.

The surprising thing was, because of the law of leverage, those who bought assets turned out to be in better position to take advantage of opportunities when the market changed.  For example, in the game when someone draws out a market card, it could turn out positive changes to the players.  Someone may be looking to buy for a new house.  And because you have the property, you get to sell it to him.

Of course, it is not always as rosy as it sounds.  One time during the game, someone drew a catastrophic market card — a financial crisis, if you may.  Tenants could no longer pay rent.  Everyone who had 3 bedroom/ 2 bath houses was affected and the owner had to let go of their properties.  Ouch.

3) It’s OK if you want to play it safe, you can still get out of the rat race

One of the players was very conscious about getting into debt, even though it was only a game.  At first, she was focusing on the paycheck and wanted to earn more, feeling safe with the money that she had.  She avoided debts as much as possible and ensured she always had extra cash at hand.  She occassionally invested in mutual funds and stocks throughout the game.

In the end, even she was able to get out of the rat race.  She didn’t have to quit her job.  In fact, after getting out of the rat race, she now has the option to still do what she’s always done.  But the good thing is, she’s no longer tied to her job anymore.  She can quit anytime she wants, and the passive income will still be able to cover her monthly expenses.  Isn’t that great?

The lesson? You can still get out of the rat race even if you’re afraid of debts.  You don’t have to despair if you find out you’re afraid of risks.  You can still get out of the rat race.

Of course, while the game went on, she had to shift her focus from paycheck to opportunities.  One time, she was even complaining why she landed on paycheck instead of opportunity.  At the time, she was almost out of the rat race.  One small deal was enough for her to become financially free.  In that context, it’s understandable why she wanted to land on another opportunity instead of a paycheck.

4) It’s OK to give away what you seek the most

It is sometimes counterintuitive to give away what you seek most.  Your tendency is to keep what you have for as long as you can.  In reality, however, keeping it to yourself does more damage to you because of the feeling of scarcity that you’re telling your mind.  Instead, do what one of the players did.  Here’s how.

The same player who went into bankruptcy had the habit of donating to charities, even when he was financially struggling. The surprising thing was, he eventually managed to get up and get out of the rat race even with the bankruptcy.  The fact is, he even surpassed and got out ahead of some of the other players. 🙂

He mastered the flow of money by starting to be generous with what he had. It is truly mind boggling how things fall into place when you set your priorities straight.

5) It’s OK to be the last one to get out of the rat race

It doesn’t matter whether all other players are already out of the rat race, although I might say, it can be demoralizing sometimes.  When that happens, know that we all start out somewhere.  Perhaps, one was able to get out of the rat race faster because she had only minimal expenses.  Or perhaps, she took advantage an opportunity and the market rewarded her investments.  The important thing is YOU are able to get out of the rat race.  It is your personal victory.

It’s inevitable to compare your results with other people.  It’s just what we normal humans do.  But instead of living your life in despair, use that motivation to be inspired instead.  You can say, “if they can get out the rat race, it only means, I too can get out as well!”.  Keep the positive attitude up, and sooner than later, you too will celebrate your day of financial freedom. Cheers!

Readers, have you played Cashflow 101 game board?  What other lessons can you add into the above list?

P.S.  Ready to play cashflow 101 in real-life?  CLICK HERE to email me.

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10 Real-Life Money Tips From Playing Cashflow 101 Gameboard

A couple of weeks ago, my wife and I played Cashflow 101 game board as a special bonus to the first 10 who bought my ebook guide Rich Money Habits – 8 Ways To Shift Your Money Habits and Be Rich. I was excited because I haven’t done anything like this before in my life.  I first learned about the Cashflow 101 boardgame around 2005 when I read Rich Dad Poor Dad book of Robert Kiyosaki.  Ever since reading the book and finding out about the boardgame, I had a yearning to play Casflow 101.  The only problem — the boardgame costs quite a bit, around PhP 10,000.  And being a struggling employee facing credit card debts, I didn’t have that amount of money then.

One day, while reading through the Entreprenuer’s forum, I learned that someone is holding cashflow 101 games at AIM Makati City.  Even though the price is quite expensive (at that time) at PhP 800 for a 4-hr workshop, I grabbed the opportunity right away.  I enjoyed the game so much I played again (and paid another PhP 800).  It was a real learning experience, realizing that there’s a different world of money out there I’ve never recognized before.

When I went to the US a year after, buying a Cashflow 101 board game for myself was one of my main goals.  So when I got back from my 6-month stint in the US, I didn’t hesitate to buy the game and bring it home with me to the Philippines.  I immediately played the game with my family and friends.  Everytime I play, I learn something new —  how to analyze a deal, how the cash flows for every event that happens in your life, etc.  The most important realization I got was recognizing my own attitude about money.  Am I generally conservative?  Or agressive? Am I the type who goes into debt and takes advantage of the power of leverage? Or am I contented just watching other players enjoying making deals left and right while I am still afraid to take advantage of the small deals even though it is only play money.

It’s been months since the last time I played Cashflow 101 game. While playing the game this time around, there were many real-life lessons that came flashing through my mind that I wanted to share with you.

Here are the top 10 real-life tips I’ve re-learned while playing Cashflow 101 again.

1) Having a High Income Does Not Mean You Are Wealthy

One of the players had a profession of a doctor.  He had a hard time getting out of the rat race because of the high expense.  He had to be really be creative and financially savvy to generate a lot of cashflow to cover the high expense.  Contrary to popular belief, high income doesn’t necessarily mean you are wealthy.  Even with your high income, a high expense will leave you little cashflow (aka Paycheck) at the end of the month. Unless you turn that casfhlow into income producing assets, you will have a hard time getting out of the rat race.   What does it mean?  You need to manage your expenses and be creative if you want to achieve financial freedom.  You cannot rely only with your high income.

2) Being Creative Is More Important Than Being Knowledgable

In real-life, what you know is only potential asset unless you apply it.  And the only way to apply what you know is by being creative in using the knowledge that you have to find solutions to other people’s problems.  Getting into good debts to buy a real-estate property can be a good strategy, provided you know how to manage that property so it gives you extra cash at the end of the month.  For that to work, you need to understand your market, your cash flow and equip yourself with the necessary financial intelligence to make the deal work.  Good deals are everywhere.  However, those with creative minds have an easier time recognizing those deals because they invested the time to learn to spot those deals.  To be creative, you need time and effort.  Time to feed your mind data to recognize good deals from bad, and effort to battle through the emotional learning to make it work.

3)  You Can Be An Ordinary Teacher and Beat A Doctor From Getting Out of the Rat Race.

Sometimes, having a lower income can be an advantage, provided you also have lower expenses.  And because you have lower expenses, the less passive income you need to generate to get out of the rat race.  In real life, this is easier said than done.  One because, sometimes, even with the low income, the expenses are even higher.  You end up borrowing money from other people just to pay for the food you eat.  Other times, you are discouraged with living each day from paycheck to paycheck.  If you play the cashflow 101 boardgame, realizing this important lesson will give you hope.  If only you know how to manage what you have, you have the power to get out the rat race sooner than you think.

4) Be Careful What You Focus On

What you focus on expands.  If you focus on problems, you will see problems.  If you focus on opportunities, you will see opportunitites.  In playing Cashflow 101 board game, there’s a trap that a lot of beginners frequently fall into — i.e. focusing on your paycheck.   When you receive your paycheck, you glee in delight as you bring your token over the yellow cell.  As you accumulate more and more money, however, you begin to hunger for more opportunities instead, to the point where you no longer want to fall into a yellow cell (paycheck)…You now want to land on an opportunity everytime! When this happens, celebrate because you have just started to shift one of your core money habits. You are now focusing on opportunities and going beyong just receiving a monthly paycheck.  You are no longer a slave of the 15th or 30th days of the month.  Now, you are looking for small deals and big deals so you can build those assets that produces income.  Keep it up and soon financial freedom will be yours.

5) Every Event In Your Life Impacts Your Cash Flow

Lose your job.  Have a baby.  Go on a shopping spree.  Buy an opportunity.  Donate to charities.  They all impact your cash flow.  They either add in to your expenses, or to your income.   However, they don’t have to stop you from building your asset and minimizing your liabilities.  You still have the power to determine how it impacts you.  At the start, I pulled up a doodad card where I had to pay more than what I have in savings.  I had to borrow money from the bank just to pay for the “vacation”.  When you get in this situation during a game, it’s a bit discouraging because you don’t have any money left and you don’t have anything to invest.  You have to wait for your next paycheck to get back into the game.  The reality is that a lot of people live this kind of lifestyle in real-life but they don’t have a clue that one false move (a.k.a. losing your job) can lead them into financial disaster.

6) The More You Play The Game of Money, The More You Recognize Opportunities Around You

I’ve played the game many times, and because I’ve read and re-read the cards on deck, I know what small deals and big deal opportunity cards are out there.  I know what’s possible in terms of market going frenzy over houses, stocks or businesses.  I do believe the same applies to real-life.  The more you learn about what’s possible, the more you are able to expand your consciousness and focus on those opportunities.  By taking advantage of those opportunities, you give your self a chance to gain your own financial freedom.

7) Take Action and Take Advantage of Opportunities 

Watching others make a move doesn’t do you any good.  Take action.  No matter how small.  Each baby step is a giant leap to your dreams.  You never know when the next wave is going to hit and carry you to your goals.  I’ve played the game since 2005, and yet I am still learning.  The only reason I learned what I know is by taking advantage of the opportunities that life gives me.  I don’t always make money, sometimes I even lose some.  But the more I go through all those experience, the more I gain the confidence to move forward.

8) Luck Favors the Prepared Mind 

Opportunities are flashing before your eyes every second of every day.  You only need to train your mind to see those opportunites.  The reality is that it takes time to build your mindset to see those opportunities.  It took me years to finally see that earning money aside from your job is indeed possible.  But without the constant exposure to financial lessons, I doubt if I even had the courage to start the Rich Money Habits blog.

9)  Money Attracts Its Own Kind

Even the smallest passive income can turn into big amount if you put your heart and soul into it.  In reality, there’s only one asset you actually have – YOU.  You are the asset.  You determine whether something becomes an asset or a liability.  A perfectly viable business like Mang Inasal can be profitable if the owner knows how to turn it into an asset.  If the same asset is transferred to someone who doesn’t know how to manage a food business, and doesn’t have an inkling of an experience running a business even as small as a food cart, the same asset can turn into a liability.

10) YOU are the asset

Even the smallest passive income can turn into big amount if you put your heart and soul into it.  In reality, there’s only one asset you actuall have – YOU.  You are the asset.  You determine whether something becomes an asset or a liability.  A liability can turn into an asset, and vice-versa.  A perfectly viable business like Mang Inasal can be profitable if the owner like Edgar Siap knows how to turn it into an asset.  If the same asset is transferred to someone else who doesn’t know how to manage a food business, and doesn’t have an inkling of an experience running a business even as small as a food cart, the same asset can turn into a liability.

Keep on dreaming. Keep on learning. Keep on Believing.

Cheers!

Allan

P.S. If you’re searching for ways to practice what you learned in Cashflow 101 in real-life, CLICK HERE to email me.

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Investing Make Money Online Passive Income Personal Finance real-estate Story

Interview with Foreclosure Investing Expert — Jay Castillo

In my continuing effort to address your overwhelming request to feature true-to-life success stories to help inspire you in your journey to financial freedom, I am very honored to share with you my interview with one of the most influential foreclosure investing experts in the Philippines, my good friend Jay Castillo.

Jay Castillo, made his dreams happen – to become financially free. A few years ago, he was a busy IT manager working his way up to the corporate ladder. At one point in his life, he was really frustrated spending hours and hours working at the office and going through the frustrations faced by employees. He realized that the stress from his job was literally killing him.  That’s when he decided to do something about it for the sake of his loved ones. After reading Rich Dad, Poor Dad by Robert Kiyosaki, he was inspired to learn how to do real-estate investing.

He attended seminars, seek out mentors and built his now very popular blog Foreclosure Investing Philippines at foreclosurephilippines.com. After only a few years, he is already financially free. He was able to quit his job and work full-time on his real-estate business, that is investing in foreclosed properties. Without further ado, here’s my interview with Foreclosure Investing Expert — Jay Castillo.

1) Can you give us some background on what you did for a living before you got involved with real-estate?

I was the MIS department head for a multinational company. I have been in the IT field for more than 13 years and I worked my way up the corporate ladder from being an IT staff, to DBA, to Network specialist, supervisor, and to Manager.

2) What made you decide to pursue financial freedom by investing in foreclosed properties?

It just made perfect sense to invest in real estate and foreclosed properties appeared to be the niche with the most number of properties available out there. As to why I decided to pursue financial freedom, this article pretty much covers everything: http://www.foreclosurephilippines.com/2009/04/foreclosure-investing-is-not-really.html

3) What were the 3 biggest obstacles you had to overcome when you decided to pursue real-estate investing?

1. Lack of financial literacy – Some would say it would be lack of money but I would say it really is just lack of financial literacy. After I started to manage my finances, I started to have a positive cashflow, even though I only had income coming from my job. This is where I got money to invest not just in foreclosed properties, but also for my education.

2. Lack of time – It’s funny that we all have this excuse of lack of time, but when something drastic happens, like when I had to go to be rushed to the hospital, and eventually got diagnosed with hypertension at such a young age, I suddenly realized what things are more important to me, and I MADE TIME to for them. I stopped wasting time on unimportant things like TV, unproductive use of the computer for gaming, I no longer did overtime at the office where I focused instead on getting things done through automation, delegation, etc. I was able to set aside time to learn and do real estate investing.

3. Distractions – There were so many distractions like negativity, doubts, and fears, not just from the people around me, but also from myself. It really helps to have people who have the same goals in life to be around you as they help cancel out the negativity form “well meaning” people who really don’t have a clue what you are doing, and why you do it. Another form of distraction are those unproductive things like watching TV, reading too much newspapers, and a lot of those things that can be delegated or outsourced. For example, we hired a maid to take care of household chores, this alone freed up so much of my time and helped me focus on things that are more important.

4) Can share with us the story on how you finally achieved financial independence?

It was really just a combination of getting other income streams from real estate investing and internet marketing, learning how to manage my finances and stop spending on liabilities, and also practicing “delayed gratification”. It is also very important to “simplify” and lower one’s expenses. It just came to a point where I realized that my expenses can already be covered by income other than that from my job, and that gave me the means to quit my job, and go full time with real estate investing, and internet marketing.

5) How did you get started with internet marketing?

I started to take internet marketing seriously with my blog http://www.foreclosurephilippines.com . Initially, it was just an experiment, as I was looking for a way to have all my foreclosed property listings accessible from anywhere, through the internet, from my PDA, eliminating the need to bring the actual classified ads with me. I remember that during that time, I have just finished helping facilitate an internet marketing workshop of Jomar Hilario in Cubao, courtesy of an invitation from Thea Santos (Thea was the one in charge of Think Rich Pinoy Club Marikina, where I was a member back then), and I said to myself I might as well create a blog for this purpose. Aside from listings, my wife and I started to document lessons learned (our very first was about the auction of tax delinquent properties in Marikina), and people started to follow the blog and I guess the rest is history.

6) Which is better, real-estate investing or internet marketing? And why?

Personally, I am becoming more biased towards internet marketing because the passive income potential is so much more because of the global reach, physical boundaries are virtually non-existent. In contrast, with real estate investing, I prefer to invest in properties that are nearby, and that somewhat puts a limit on where I can invest. Of course there are ways for me to expand my real estate investing like partnering with other real estate investors, but this is turning out to be more complicated as compared to internet marketing. Furthermore, even if one invests in rental properties, I believe hiring a property manager at a certain point is needed for it to remain as truly passive income, I guess I’ll cross the bridge when I get there, so to speak. Nevertheless, I truly believe that internet marketing and real estate investing can have synergy. In fact that’s exactly what I am doing right now.

7) What is the most important habit you’ve learned that has really helped you in your journey to financial freedom?

One needs to have a big enough why that would help sustain one’s drive to be financially free, and I suppose one of my habits in relation to this is I ensure that I always remember why and for who I am actually doing all of this. I try my best to make all my decisions with this in mind. This habit also helps me become very disciplined in just about everything that I do, and this has made a world of a difference.

8) What 3 tips can you give to our readers who are also dreaming of someday being able to leave the rat race and achieve financial freedom just like you?

1. Start with a plan. In it you write your objectives(your vision), your purpose(or mission), your roles and goals, your principles (the non-negotiable’s), and your values. You also need to include the actions you need to do in order to accomplish your goals, make sure these are broken down into “S.M.A.R.T.” tasks (Specific Measurable Achievable Realistic Timebound). This may sound daunting at first. Looking back, I am very thankful that I did make a plan like this using an excel sheet and it was specific enough that it was like a checklist where each task accomplished will lead me closer and closer to my goals. This is very much like creating a business plan and I created mine early 2007!

2.  It’s all in the mind. You need to believe that it is possible. Think of it this way, what if your life or the lives of those you love depended on it, don’t you think you can actually do it?! It was like this for me, I strengthened my belief that it really is possible and there is a better way, especially after realizing my work(too much stress doing the work of 3 people) was killing me and I always had a choice what to do. I also believe in the following: “Whether you think you can or you can’t, either way, you are right” – Henry Ford

3.  Just do it. No one learns how to swim just by reading about it, etc, you really need to get into the water and start swimming. Sure you may swallow some water along the way, but that’s part of learning, just make sure you don’t drown. No one learns how to ride a bicycle by reading about it, etc, you really need to get on that bicycle and get your feet on the pedals and start riding. Sure you may fall many times, but that’s part of learning. Just make sure you don’t get hit by a car. No one learns how to drive by reading about it, etc,you really need to get behind the steering wheel and start driving. Sure your engine may stall at times and die, but that’s part of learning, just make sure you don’t crash and get killed. The same goes for striving to be financially free, you can’t just read about it, you really need to do it! Sure there will be problems along the way, but that’s part of the journey. Just make sure you apply what you have learned from others, fo llow your principles, values, and have good old common sense!

 

Cheers!

Allan

P.S.   Dear Readers, I hope you learned something new today and realized that financial freedom is indeed possible.  My hope is that you get closer and closer to it every day.

P.P.S.   Quick update on the launching of my Rich Money Habits guide ebook — I have both good news and bad news for you.  Bad news — all 10 slots for my special bonus to get a chance to play Cashflow 101 board game with me and my wife live have already been taken.  If you’re one of the lucky 10, you will receive an email invitation from me in the next few days with the event details.  The good news — I’m extending the 50% special introductory price discount to those of you who haven’t claimed your discounts yet.  This extension is available until end of this week only.  After this week, the price will now go up.  Hurry, get your copy of my guide now!

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Investing Personal Finance real-estate Story

Interview With Millionaire Real-Estate Investor Eden April Alemania-Dayrit

Hey guys! First off, I’d like say THANK YOU SO MUCH for the overwhelming response to the recent Rich Money Habits survey.  I am learning a lot from your feedbacks. Rest assured, I am going through each and every one of your responses.  This way, I get to understand what kind of financial information you are looking for so I know how best to help you. So keep them coming! 🙂

In fact, I have already gone through some of your feedbacks and a lot of them are requests to have more features on real-life inspirational people or leaders who set good examples in building wealth. 

To give you an idea, here are some of the responses to the survey question “What improvements would you like to see in the Rich Money Habits Series?”

“I would like to read about real life experiences of those who have successfully implemented the habits to wealth”
                                              – from Rod of Gensan, Philippines

“More examples of true to life stories. Testimonies.”
                                              – from Leo of Manama, Bahrain

The really great news is we have a very timely feature for your today to address this overwhelming request from our readers.  Lucky for you, I managed to get hold of the young real-estate investor millionaire, Eden April Alemania-Dayrit for an interview here at Rich Money Habits. 

I met Eden last year when my wife and I tried to invest in a private-lending deal for a real-estate property.  We partnered with Eden on that deal.  We have since gotten back our investment with the agreed upon interest income and we are very very happy with the outcome.  Through that deal, I have known how trustworthy Eden is, and that’s why I am very happy to have Eden featured here at Rich Money Habits. 

Without further ado, here’s my interview with Eden April Alemania-Dayrit.

1)  Tell us a little bit about yourself.  What were you busy with before you discovered real-estate investing?

I am a chemical engineer by profession who worked for semiconductor companies handling sustaining operations in manufacturing lines. Thinking that I will be an employee in the long run, I took up a master’s degree in Electronics Engineering. But on the last semester of the course, I decided not to finish it because that was when I began investing in real estate.

2)  What made you decide to get into real-estate investing and how did you get started? 

I got into the stock market and got burned in the mid-2007 market crash and hadn’t recovered. My boyfriend then (now my husband) and I partnered in a dimsum food stall in the place of his employment that later on included a waffle cart. It lasted for 6 months and we realized that food business is not our forte.

While still employed, I read books like Rich Dad Poor Dad and Think Rich Pinoy. These books inspired me to look beyond employment and pursue the path of entrepreneurship. We bought our first piece of real estate — a condominium unit in Taguig where we now live in. To save on acquisition cost, I applied as an agent. Little did we know that it was our spring board in our real estate career.

If I didn’t know how to cut my losses on other businesses early on, I wouldn’t have been in real estate investing.

3)  Can you share with us the story of your first real-estate investment property?

It was a Quezon City townhouse. We bought it from a bank at 50% off market value through an auction and paid a downpayment of 20%. It was then sold at 70% market value on a flexible term scheme (rent-to-own) after 7 weeks of acquisition.

4)  Can you give us an idea about the process you go through before you decide to invest in a real-estate property?

The real estate investing process is actually very simple. Find, fund, fix, sell then profit. But the real issue that most people have a hard time on is the thought process and deciding when to actually jump. I did the unthinkable — I quit my stable job. And that made it easy for me to decide to pursue the first property because I basically put everything at stake. It was a "now or never" decision that pushed me to do well. (Though I don’t advise people to do the same because that decision also had repercussions like I couldn’t take on a loan because I didn’t have a job that the bank requires to have that forced me to take on investors at the very beginning.)

5)  What’s the most important habit you’ve learned so far that really helped you in your real-estate investing?

I learned to listen to mentors. I am a stubbornly independent person and I find it hard to do things if I don’t do them my way. But when I agreed to be under my mentors’ wing, I had no choice but to follow because I believed in what they taught me. I listened intently until I learned the ropes in real estate investing. Until I learned it well, I then improvised. I still am stubborn, but I use that trait to stubbornly pursue the deals that I am getting into.

6)  If you can start your real-estate investing all over again, how would you do it differently, and why?

I’ve made a few mistakes along the way. Sometimes I wished that I could’ve asked for a higher price for a property or wished I didn’t buy a certain property. I sometimes thought that I should’ve set my criteria higher in selecting tenants. But these things were easily remedied and didn’t hurt a lot because I’ve set contingencies too. So if I could’ve done it all over again, I will still do what I’ve done because the small mistakes made me a better real estate investor now.

7)  Why do you think you’ve succeeded in real-estate investing at such a young age while many others struggle to even get started?

I’d say that age doesn’t have to do with it. It just so happened that I started earlier.

The main factor that hinders a lot of people from succeeding is one’s mindset. I always say that every basic thing that you need to know about real estate investing are all in the books. And you will learn along the way some techniques that will be useful. But all these will go to waste if one’s mindset is not on the right track.

This may sound funny but believe me, work on your mindset, get educated on the business and everything will fall into place.

8)  What advice can you give to our dear readers who want to get into real-estate investing?

I get a few questions like, “We are looking at the same lists in banks and newspapers, how do you spot good deals?” I’d always say, start by familiarizing yourself with the prices of properties for sale or sold in your own area or the area you want to focus on. Walk around the neighborhood and ask around, network with brokers and look at online sites where these properties are posted. Naturally, the opportunity will present itself in the form
of undervalued properties for sale or of neighbors seeking your help in selling their property.

I describe myself as a perennial student because I continually enroll in classes for self improvement. Invest on yourself by attending courses or seminars specific or supplementary to real estate investing.

Seek mentors. Accelerate your learning curve by asking questions or partnering with someone who have done what you want to do.

Lastly, be persistent. Do not stop at the first sight of failure. At 24, I overcame barriers and accomplished a feat that I haven’t even dreamed of myself–all because of my persistence, and I’m sure you can too.

 

More about Eden: Eden specializes in real-estate investing through rent to own properties and dreams of helping create 1 million millionaires by 2020.  You can checkout her website at http://renttoownproperties.blogspot.com/ to find out her growing list investment properties.  If you’re searching for a house you want to invest in, Eden highly recommends checking out http://www.bahayatbp.com.

 

P.S.  Dear readers, I hope you enjoyed Eden’s story as much as I did and learned something that you can apply into your own situation.  Have you tried investing in real-estate?  How was it?  What other tips can you share based on your experience?

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Investing Stocks

How To Invest In Stocks In Your Sleep

What if I tell you you can invest in stocks in your sleep?  How would you react?  I realized you actually can…literally.  Read on to find out how.

Before I proceed, I would like to clarify what I mean when I say “invest in stocks in your sleep”. I don’t mean logging on to your computer like a zombie, eyes closed, still dreaming in your sleep, typing away at your keyboard in the middle of the night and placing an order to buy shares of stock.

I also don’t mean it’s easy to buy stocks.  Doing anything “in your sleep” figuratively means it’s easy. What I mean is more literal than that.

If you’re halfway around the world from the Philippines, you can put your order during your day, and while you’re asleep at night, the official trading hours of the Philippine Stock Exchange begins and your order automatically gets processed and invested in shares of stocks of your choice.

In short, while your order is being processed and buying stocks, you are practically sleeping. How about that? 🙂

Ok, I must admit, it’s more accurate to say “how to buy stocks in your sleep.”

Now, that I’ve got your attention, let me show you exactly how.

How To Buy Stocks In Your Sleep?

I’ve been asked many times before how someone can invest in the Philippine Stock Market outside the trading hours which is from 9AM to 12 noon.  Here’s one from Jezz logged under the comment section of my article Online Stock Market Investing in the Philippines.

“Mr. Allan, Am I right to assume that I can only trade from 9am to 12nn Philippine time? You see, I’m somewhere in the Middle East and 9am Philippine time is only 4am here. I find it quite difficult to trade in CitiSeconline because of this time difference.”

I’ve also had this dilemma myself so I was actually looking for some answers but with no luck.  Until now.

CitisecOnline, Inc has officially allowed placing an order to buy stocks outside the Philippine Stock Exchange trading hours (9AM to 12NN) starting September last year (apologies for sharing this to you just now).  It starts from 1PM to 8AM the next day.  Here’s a definition of Off-Hours orders from FAQs of the CitisecOnline site.

What are Off-Hours orders?

An Off-hours Order or ‘After Trade hours Order’ (ATO) – the Off-hours ATO Order is provided to allow customers to enter orders after closing in preparation for the next trading day. ATO orders are accepted after 1:00PM and before 8:55 AM weekdays and anytime on weekends. Off-hours orders will be collected on a first come first serve basis, and will be sent to the Exchange for posting on a first in first out basis during pre-open session. After posting, all Off-hours orders immediately become Limit Day Orders and cannot be cancelled/modified during (9:15AM-9:30 AM). All orders will be governed by the Exchange’s order regulations. For orders during market activity (9:00 AM to 12:10 PM), please use the regular “Enter Orders” function.

There are many reasons why someone would want to invest outside of the trading hours.  The most common is due to schedule restrictions.

For example, you may be working on a night shift and during the day, you would rather be taking your much needed sleep than go and buy stocks during the normal trading hours at 9AM to 12NN.

Or like Jezz you may be living in the Middle East or somewhere on the other side of the world.  Now, you don’t have to wake up in the middle of the night just to place an order to invest in your favorite stocks.

I was so excited about this development I decided to try it out.  Here are steps I followed to place an off-hours order.

How To Place an Off-Hours Order

1.  Log-in to your account at CitisecOnline.com

2.  Click on the ‘Trade/Portfolio’ tab

3.  Click on the ‘Off Hours Order’ section

4.  Enter your order details: Stock Code, # of shares to buy, and price, etc

5.  Click the ‘Preview Order’ button

6.  Review your off-hour order details

7.  Enter your password

8.  Click ‘Place Buy Order’ button

After following the above steps, you should receive a confirmation that your order has been placed.  Once confirmed, your order will be processed during the next day’s trading hours, regardless whether you’re in front of your computer or not at that time.

It’s a good idea to go check your order again the next day just to see if it was processed successfully.

And yes, you can be sleeping while your order is being processed.  Now, that’s investing in stocks in your sleep! 🙂

Happy investing!

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Business Credit Card Investing Life Updates Money Mindset Personal Finance Personal Growth

Looking ahead to 2011

Last week, I shared my reflections of the past year 2010.  Today, I’d like to share with you my personal financial goals for the coming year 2011.  This is actually my way of challenging myself by publicly declaring my goals for the coming year.

My 3 major financial goals this year 2011

1) Create at least 3 new streams of income earning at least $100 per month each

Right now, I am still working full time at my current job as an IT consultant for a credit card company.  While I do enjoy my job, I still want to have more options.  I want to be able to one day control my income streams.  Having a job is good.  However, it is only a temporary solution to a permanent financial problem — not having enough money.

I’ve been fortunate to earn quite enough to be able to sustain me and my family and have some extra money saved every month.  The big challenge for me this year, just like in the past year, is to learn how to invest a portion of that money for my family’s future.

I don’t exactly know what the 3 income streams will be.  One thing is for sure — for this year, I’d like to focus on investing to generate more cashflow.  Last year, most of my investments had pretty good returns.  The only problem is, they were only capital gains. There’s no monthly cash flow.  This year, my goal is to learn to invest for cash flow and capital gains.  I’m considering putting up a business.  Or perhaps finally invest in a property and rent it out.  Or may be I can explore going into franchising.  I will share more to you as I get clearer on how to achieve this goal.

2) Go somewhere I’ve never been to for a week, every quarter of the year.

This is my way of growing myself.  I feel I haven’t grown that much personally and haven’t widen my horizon for the past year.  This year, I want to go somewhere I’ve never been to. Either in the Philippines or outside.  I’d like to experience and learn new things to keep my hunger alive.  I’d like be able to share exciting stories.  I’d like to be able to know what it feels like to discover and be amazed again.

As I shared last week, I was able to travel to Bohol with my wife last December.  It realy felt good just doing nothing, hearing the soothing sound of the waves while trying to relax in a hammock by the beach.  Working in a fast-paced IT and financial services industry sometimes takes its toll on my mind and body.  I feel I need to freshen up every once in a while to stay sharp and energized.

3) Weigh no more than 85kg at any time of the year.

It’s been one of my greatest struggles every year to keep my weight down.  I am getting sick quite often the past year.  I can’t go on and blame my work or my lack of time for exercise.  I know that it’s just a matter of building new habits in terms of my overall health.  Eat right. Get some exercise.

So this year, I want to be able to maintain my weight to a more manageable level — no more than 85 kgs.  It will take some time, but I’m ready for it. Let’s bring it on! 🙂

I know goals #2 and #3 don’t look like a financial goal at all.  They seem more to do with personal development than money.  I totally agree, it looks that way.  And it’s the way I prefer it.  I personally think it is very important to take care of my mind and body in my journey to financial freedom.  As I’ve described in one of my articles, your health is more important than your money.  Without it, none of your other financial riches really matter.

2011 Goals for Rich Money Habits

My goal for Rich Money Habits is to be more consistent in posting new articles — at least one per week.  As I share my thoughts to you, I gain more clarity.  The clearer I am with the things I want, the nearer I am to my goals.

Here are some of the things I’ve been thinking as I was doing some planning for Rich Money Habits this year.

– create more useful articles
– find more ways to reach out to more people
– find more ways to help you in your financial goals
– launch a product that helps you manage your money better
– redesign blog so you can navigate it easily

As you might have probably guessed, most of my goals above are still in the works.  And quite general, if you might add.  I still don’t know what exactly I am going to do.  But I think the important thing is to use these goals to remind myself what I need to focus on — helping you.  Everything else is secondary.

Cheers to an exciting year ahead!

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Investing Stocks

Online Stock Market Investing in the Philippines

This article describes the 3 tips on how to do online stock market investing in the Philippines.  This is part 2 of a 3-part series on the lessons I’ve learned from the recent Money Summit and Wealth Expo.  If you missed the first part, you can read the real-estate investing tips in the Philippines here.

Online Stock Market Investing in the Philippines

It’s been months since I’ve started online stock market investing.  As I’ve shared in my 2010 Financial Goals Mid-Year Update, investing in stocks has been an eye opener for me.  This is the reason why I was so glad to learn more about online investing in the stock market during the Money Summit and Wealth Expo seminar.

Lesson #1 – Investing in the Stock Market Requires Discipline

According to Conrado Bate of CitisecOnline, Inc. (COL), one way to successfully invest in the Philippine Stock Market is to invest continuously and regularly on good quality companies with predictable earnings.  This investing method is known as cost-averaging. 

That means, you need to invest a fixed amount of money every month (or quarterly) regardless if the market is up or down.  If the market is down, your money buys more shares of the company.  If the market is up, your total investment would also go up in value.  So even if the market is up or down, over the long term, your investment will still yield a pretty good return.

This is a pretty simple strategy.  But it is NOT easy.  For one, you have to have the discipline to buy the stocks even if the price is too high and still buy the same stocks even if the price is too low.  Your tendency is to get greedy when the price is too high, and become afraid when the same stock is priced way too low. 

Personally, this has been my experience.  The reality is I am an emotional being and I too am driven by 2 emotions – greed and fear.  For example, initially I planned to invest monthly through EIP but my over excitement has gotten the best of me.  When I bought my first stocks, I was so excited, I bought 3 different stocks right away.  Then I learned about the Super EIP and realized some stocks are being sold 47% below their price.  So I bought some of those stocks too.  That’s greed in action. 

With so many stocks in my portfolio, I don’t have enough money to invest in each of them every month now.  In addition, the price of some of my stocks is down 5% (ouch).  Worse, I don’t know what to do (fear).  Should I buy more of this stock now that it is priced lower?  How about those stocks I own that are now 30% up?  Should I sell them now?

Sometimes, answering these questions is not always easy.  In times like these, having the discipline to stick to your plan will come in handy.

Lesson #2 – Invest Only What You Save, Not What You Need

One very useful advice from a COL agent (I can’t remember her name) during the seminar, was to invest only what you save, not what you need.  The stock market is subject to market fluctuations.  You have no control over how the price will go.  This is the reason why some investors advice on investing only what you save (or what you can lose), and not what you need.

You should NOT borrow money to invest in the stock market especially if you’re a beginning investor.  Save first.  Unless you have the discipline to save, you won’t have the discipline to invest. 

Don’t invest what you need.  Money spent for your needs should NOT be invested into the stock market.  Never use money from your emergency fund.  Never invest the money you are using to pay for your debts.  The stock market is risky precisely because you don’t have any control over the investment.

With consistent saving and investing, your small amounts can become big amounts over the long term through the power of compounding.   Your money is leveraging the consistent growth of the company and the power of compounding to give you a nice return in the future.

Lesson #3 – Don’t Watch The Market

One very good habit that I’ve realized recently, is NOT to track your investments on a daily basis.  This may sound contrarian.  Maybe it is.  Maybe for some they need to watch the market daily.  But personally, I have not found a very good reason to track my investments on a daily basis.

I do track my investments every now and then, maybe once or twice every month.  But it has never come to a point where I would have to watch over it on a daily basis.

This is both to make the most of my time as well as for my own sanity.  I cannot imagine myself being glued to the screen monitor tracking the stock price every minute and then and worrying about the problems of the world such as the European debt crisis, oil problems, election results or what not. 

I understand that my money will be able to work for me over the long term, only if I give it time and stick to my strategy.  I am not investing all of my money in the stock market.  Stocks is only a small portion of my investment portfolio at the moment.  Besides, I don’t invest what I need.  I invest only what I can lose.  That simple thought helps me sleep at night.

 

Readers, what other stock investing tips can you share?  do you think cost-averaging method actually works?