Category: Personal Finance

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Bonds Business How To Tutorials Investing Money Mindset Personal Finance Stocks

Reader Question: What to do with an extra PhP 50,000?

I recently received an email from an avid reader of this blog.  He asked me one simple question.  He said,

“I have an extra PhP50,000.  I don’t know if I should invest it all in RTBs?  What do you think?  What is the best thing I can do with my money?”

I remember sending a quick note asking him more about his financial situation whether he has any existing debts he can pay off with the PhP50,000 or if he has saved up for an emergency fund.  If he’s financially OK with both, I then asked him if he’s willing to leave his money in RTBs for the long term (at least 5 years)? If not, perhaps he can consider using the extra money to start a small business. 

Upon reflecting on the question, I realized this is a question most of us will face at least once in our lifetime. 

The key to taking control of your own money

If you really want to be rich, one question you’ll have to ask yourself more often than anything else is —

“What is the best thing I can do with my money?”

Do you remember the time you received your last 13th or 14th month bonus?  Maybe, about 2 months ago? 🙂 Suddenly you had extra cash to do whatever you want. Or perhaps when one of your grandmother was so pleased with you receiving honors on your graduation, she gave you a $100 gift?  Or when you recently got your first promotion as a Team Lead and got a whopping PhP 3,000 as bonus? 

All of these brought you the same thing – the sudden problem of having “too much money”.

Now, don’t get me wrong.  I’d rather have the problem of having “too much money” than the problem of “not enough money.”  

Why having too much money is a problem

As some of you may realize, having too much money is indeed a problem.  Granted, not many people are currently facing this problem, especially in this time of recession.  These days, people are more familiar with the problem of “not enough money”.

If you have this problem of having too much money, congratulations!  You have the opportunity to face a different kind of challenge in your journey to financial freedom.  The challenge is to fully utilize your extra money and ask yourself what is the best thing you can do with it.

 

How people try to solve having too much money

1) Spend it

For some, the answer is simple.  Spend it.  Spend it on something you want.  You want that cool gadget they call the “iPad" or the earlier generation and wildly successful “iPhone 3Gs”?  Now, you have the money to pay for it – in CASH! 

Or how about the smooth talking salesman offering you a limited-time-only-special-edition watch for ONLY PhP50,000?  He lets you hold the watch on your hand and shows you how it would perfectly fit into your tiny wrist. After a while, you start to convince yourself. You say “I deserve to have this gorgeous watch”.  After all, you do deserve the reward after so many hours of working hard at the office.

This is the most common way people use their extra money.  Unfortunately, the ultimate question still remains – “is that the best thing you can do with your money?”

 

2) Invest it

For others, it is more complicated than that.  Their solution?  Invest it!  But how?

There are people who define their investments with what they can put under their name.  Invest it in a car or a house, they say!  It is an asset, right?  Of course, it is an asset says your banker.  Unfortunately, he doesn’t say whose asset it is.  The truth is, it is the bank’s asset.  When you pay your mortgage every month, or your car loan, the reality sinks in and you realize that the bank is making money from you.

Other people likes risky & highly leveraged investments. The truth-they are just plain gamblers and not investors.  You will hear them say

“Never mind, give it to me.  I’ll make your PhP50,000 into a hundred million in 3 days. I’ll buy a lotto ticket and when I win, I’ll split the money with you.”

The successful investors like Warren Buffet, on the other hand, live with a different mindset from the rest.  They made their money through sheer hard work, a lot of financial intelligence, and allowing the system to work for them.  Yes, they also lose money.  But they have gained more – knowledge and experience.  After many many years of ups and downs of the market, they still ended up making a lot of money in the process. 

So, which investor are you?

 

3) Donate it

The 2 richest people in the world both donate to charities.  Bill Gates donates some of his money through the Bill and Mellissa Gates Foundation.  Warren Buffet is a big fan of tithing and in fact planning to donate most of his money as part of his last will. 

When you donate, you are allowing yourself to believe that you CAN give.  You allow yourself to believe that life’s blessing is so abundant that sharing it will make it even more meaningful. When you GIVE, you gain so much more. 

Unfortunately, while we busily try to earn a living and make money, we tend to forget that money is a gift to bless yourself and others.  A gift that reflects what is important to you and defines who you really are – God’s blessing to others.

 

In the end, deciding how to spend your extra money is all up to you.  Anyone can advice paying off your debt, save for emergency, buy insurance, or any other advice that seem wise.

The reality is, I do not know your situation.  We are all facing different circumstances.  The advise to start a business may work wonders for some, while it may lead to bankruptcy for others. 

It is only YOU who knows what’s the best thing you can with your money.  Because it’s only YOU who knows what’s important to YOU.  

 

So, what would you do with an extra P50,000?

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Investing Life Updates Personal Finance

MoneySense Live’s Where To Invest In 2010

I recently received an invitation to attend MoneySense Live’s Where To Invest In 2010 Seminar at AIM Conference Center, Makati City.  As a first time investor I thought this is a good opportunity to learn more about investing, particularly the available investment options in the Philippines. 

I am planning to attend the event this Saturday and share whatever I learn from the seminar to readers of Rich Money Habits.  Watch out for that in the next few weeks.

Since this event will happen this Saturday, I thought it’s a good idea to extend the same invitation to you so you too can have the same opportunity to learn first-hand from the seminar.  Here’s an excerpt from the invitation.

Learn where to put your hard-earned money to work harder for you. Attend MONEYSENSE LIVE’S WHERE TO INVEST IN 2010, the third interactive seminar of MoneySense Magazine, which will be held on February 20, 2010, 1:30-5:30pm at the AIM Conference Center, Makati City.

WHAT YOU WILL LEARN

The seminar features 4 relevant topics:

  • Where to Invest in 2010: Get an overview of and forecasts for various investment options, such as stocks, bonds, gold, real estate, and government securities
  • Life Cycle Investing: Understand how investing figures in important stages in your life and what appropriate strategy to take
  • Picking Stocks Like a Pro: Learn the various investing strategies of successful professional investors and fund managers
  • Where to Put Your PERA, How to Invest REIT: Know what these new financial products and reforms are and how to put them to your advantage

You can learn more about the seminar @ MONEYSENSE LIVE’S WHERE TO INVEST IN 2010.

DISCLOSURE:

In an attempt of full-disclosure to readers of Rich Money Habits, please note that I don’t earn anything from promoting this event other than a free-ticket to the seminar, which is nice.  :) 

Also, kindly bear in mind that I have NOT personally attended any seminar organized by MoneySense and Learning Curve prior to this event.  If you plan to attend the event, it will both be our first time. 

See you there!

Categories
Life Updates Money Mindset Passive Income Personal Finance

Rich Money Habits Gets Featured!

I’m very excited today.  Rich Money Habits just got featured at MoneyHackers.net!  Here’s an excerpt of the interview.

  • What encouraged you to start Rich Money habits?

It has been said that we are creatures of habit. Some money habits make us poor, while others make us rich. The key to being rich is knowing which is which.

My money habits growing up can be described as “working hard for money”. The only way I knew how to make money then was to work hard and and get paid at the end of each month.

Being young and foolish about money, I made sure that my “hard work” was compensated by having lots of fun. I have earned and spent my money as if there’s no tomorrow, dining out with friends, buying the latest gadget, or buying home appliances all at once, EVEN if I didn’t have the money to pay for it. I only had to use my new credit card.

When my debts piled up, I realized that my money habits are eating me alive. I even had to do cash advance on my credit card just to pay for rent. That was a wake up call for me. I realized I had better take care of my own money by controlling my own money habits or I’d end up begging for money to pay for what I eat.

That proved to be a turning point in my financial life. My journey of trying to learn how the world of money works started by discovering my own “poor” money habits and forming new “rich” money habits to help me get started in taking control of my own finances.

Rich Money Habits was born out of my desire to help people take control of their own money habits. It starts with recognizing that years and years of “poor” money habits programming cannot be undone overnight. It takes constant exposure to the financial habits of the rich, making your own financial mistakes, and having the courage to take action in spite of financial failures. More importantly, Rich Money Habits was built in the hope of cultivating a community where people can learn and encourage each other to discover and strengthen the “rich man” within each one of us.

  • How does Rich Money habits differ from other financial sites?

The main focus of Rich Money Habits is in helping you develop the mindset of the rich in the hope of drawing out the “rich man” in you to help solve your own financial problems.

Some financial sites focus on being frugal. Others focus on ways of saving. While a few concentrate on the different investment vehicles, whether it be online savings accounts, mutual funds, real-estate or stocks.

Even though Rich Money Habits will occasionally feature these topics, it is mainly to highlight the money mindset behind the financial decision and examine how and why people take advantage of these financial vehicles in the first place.

  • Does personal experiences play a key part in the content of your blogs?

My personal experiences (both successes and failures) are occasionally included in some of the articles in Rich Money Habits in the hope that it might help encourage other people to explore and discover their money habits on their own.

  • Where do you get the ideas for your blogs?

Ideas are a dime a dozen. I’ve read hundreds of personal finance books, magazines, blogs, attended financial seminars and coaching, designed software solutions to major financial services companies but nothing beats jumping in and experiencing how to solve your own money problems. Listening to other people’s money problems also allows me to tune in and understand why people do what they do with their own money. My goal is to extract the valuable financial lessons from all these sources and effectively communicate those gem of money ideas to readers of Rich Money Habits.

  • What are some key concepts to keep in mind when creating a budget?

One thing I learned about a traditional budget is that it doesn’t work – at least for me anyway. I don’t keep a detailed list of all transactions that I make. What works for me is keeping an overall picture of where my money is coming from, where is it going out, and more importantly, if I’m keeping any of it at the end of each month. If I need to know where my financial life is, I can check my accounts and instantly get an idea if my money is growing or not. I’ve learned to stay flexible and treat a budget like a plan that has to be continually refined as I go.

  • What is some financial advice you could give our readers?

Keep learning. Keep dreaming. Keep building your own rich money habits.

Thanks to Lydia @ MoneyHackers.net for the interview.  The original article got published @ http://www.moneyhackers.net/465/interview-with-allan-from-rich-money-habits/.

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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
Life Lessons Personal Finance

Funny math video-are you cheating yourself?

Here’s a funny video I came across about the tricky world of Mathematics. 

So, who do you think is the better Mathematician? 🙂

While watching the video, I learned that anyone can easily manipulate numbers to prove what he or she believes in, even in the seemingly accurate & precise world of Mathematics. 

The danger happens when we use the same tactics to deceive ourselves and make excuses instead of facing our money problems with honesty. 

You might say “I’m not interested in money”.  But the reality is, you’re willing to do anything to get a job and earn some money. 

Or you can say “I saved 50% off when I bought this new pair of shoes on sale!” The reality is, if you didn’t buy anything, you would have saved 100% of your own money!  🙂

How about you?  What “excuses” have you been telling yourself lately?

Categories
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
Life Updates Personal Finance

RMH Reader’s Survey-It’s time YOU get heard and get a chance to win Robert Kiyosaki’s bestselling book, Rich Dad Poor Dad

Over the past weeks, I’ve been writing mostly about myself.  I wrote about my financial situation the past year, my goals for this year, as well as my health & investments.  Enough of my stories.

This time I want to hear from YOU.

Let me know your thoughts, your dreams, and your ideas on how this site can help you achieve your financial dreams.

Participate in the first ever Rich Money Habits Reader’s Survey .

Click here to take the survey

Take the survey and get a chance to win Robert Kiyosaki’s all-time bestselling book Rich Dad Poor Dad-What the Rich Teach Their Kids About Money That the Poor and the Middle Class Do Not! for FREE!

This survey will officially close on February 21, 2010.   After the survey is closed, I will choose among those who participated in the survey who will receive the FREE book give-away.

Hurry! Take the survey NOW!  Answer the 7 questions in the survey and get a chance to win our FREE giveaway – Robert Kiyosaki’s bestselling book Rich Dad Poor Dad!

IMPORTANT NOTE: The FREE book is a paperback edition.  Only one copy of the book will be given away.  FREE shipping is available to Philippine and US residents only.  If you’re based on another country, you’ll have to shoulder the shipping for the book.

Categories
Bonds Investing Personal Finance

How to Invest in Retail Treasury Bonds in the Philippines – Interests and Fees

Last October, I wrote a story on how my wife and I were able to invest in Retail Treasury Bonds (RTBs) in the Philippines.  We’ve practically forgotten about it until we received a letter from the bank informing us that they have already credited our settlement account with Bank of the Philippine Islands (BPI) Capital Corporation.  We just received our first quarterly interest!  🙂

Here’s a picture of the interest payment we received.

image

The net amount is just as we expected.  Our total investment amounted to PhP 200K with a tenor of 7 years at 7% annual interest. This would translate to an annual interest amount of PhP 14K per year or PhP 3,500 per quarter before-tax.  Note that the Gross Amount indicated in the above picture is the same as our computed quarterly interest of PhP 3,500.  This amount is taxed at 20% (or PhP 700) which further reduces it down to PhP 2,800.  This is the net amount after taxes.  This is the amount we expected to receive every quarter for 7 years.  Not very exciting but certainly beats the interest on savings accounts. 🙂

There’s one thing I didn’t expect though — fees.  Included in the letter are 2 debit transactions which I missed in the fine-print.  One is a PhP 7.25 Custody Fee and the other one a PhP 25 Transactional Fee-Security Deposit.

image

I’m guessing we were assessed with these 2 fees because we purchased the RTBs from a bank, which is basically, a secondary-market.  Unfortunately, it looks like these two fees will also be deducted every quarter.

In effect, the PhP 2,800 interest is (again) deducted a total of PhP 32.25 fee which brings down the amount we will receive every quarter to PhP 2,767.75.  🙁

Anyone experienced the same thing or know how these two fees are computed?

Things I learned while investing in RTBs:

1) Invest now.

If we waited until we had ALL the answers, we would still be wondering today how to invest in RTBs.  Yes, we were assessed a PhP 32.25 fee that we didn’t expect but the net amount is still better than interest from a savings account or even time deposits. 🙂

2) Read the fine print.

If we’ve read the fine print, we would not have been surprised by these fees.  Yes, it may be tedious to go through every form and double check all information indicated in each form, but a 5-minute checking on the fine-prints can save you time (and money) in the future.

3) Don’t be afraid to fail.

We’ve known RTBs for quite some time, but only decided to invest a few months back.  We were afraid to fail and lose money.  We were content to leave our money sitting idly in the bank via savings or time deposit accounts.  Now, our money is working for us, and making us money – even for only a little amount.  This money is passive income.

I know that the interest amount is small, but imagine if you’ve invested 10x the amount we invested…it would give you a quarterly “passive” income of PhP 28,000 before tax.  That’s around PhP 9,000 every month.  If you can live on that income for a month, then you’re practically free!  (at least for the tenor of the investment:))  That’s money you did not have to work hard for.  That’s money given to you whether you worked at your job or not.  That’s money working for you and setting you free.

Categories
Investing Life Updates Money Mindset Mutual Fund Personal Finance Stocks

My Financial Goals for 2010: Get Into the Money Game

As I’ve mentioned in one of my recent articles describing my financial journey last year, my wife and I were pretty lucky in 2009, being able to transition back to working as an IT professional in the Philippines even in the midst of the worst recession since the Great Depression.

As a consequence, our financial situation at the start of 2010 is relatively OK as summarized below:

  • We don’t have any debts.
  • We have an emergency fund.
  • We have a little bit of savings on top of the emergency fund.
  • We both have Life Insurance.
  • We have started investing in RTBs.

As you can see, our financial situation is relatively safe. However, we are still slaving ourselves into the 9-5 job.  We still need to wake up early in the morning, go to the office, sit in front of a computer, think & type on the keyboard the whole day and then go home to take a rest.

We have cash, but we don’t have TIME.  I want to have both cash AND time.  And I won’t get that if my cash is sitting idly doing nothing while I am working hard the whole day.  I want my cash to work hard too, so that someday I don’t have to work as hard anymore.  That’s why I want to learn to invest my money.  That’s why I want to get into the money game.

I understand that aiming for financial freedom will take some time.  And I’m ok with it.  It will require that I learn more and more each day how the money game works.  And I’m up to the challenge.  I will probably lose some money along the way.  And although I think it will be painful actually losing money, I’m looking forward to the lessons it will teach me.

Here are my 3 financial goals for 2010:

I originally planned to list 10 goals, but I realized it’s too much.  I’m really not a big fan of remembering things so I’ll just keep it short this time.

1) Buy a House

Ever since I got married, my wife and I have been planning to buy a house.  We worked in Malaysia for two and a half years and we were able to set aside at least a down payment for a decent house.  The only problem is, we have NOT found our dream house yet.  Worse, we don’t even know where we want to live.

Our work and my in-laws are both located in Mandaluyong.  Naturally, we would want to live somewhere near to save on cost and for convenience.  Unfortunately, Mandaluyong is not the most tranquil and home-friendly-neighborhood place often portrayed in movies.  It is a busy commercial area and business district.  So all you see are tall buildings, noisy buses plying the busiest highway in the Metro they call EDSA, and lots and lots of busy people going to their work everyday.

We want a nice single-detached home with enough backyard to have a little garden where our kids could play.  We want a house where the air is fresh and we could walk along the neighborhood while watching the sunrise.  We want a safe community for our kids, where they can play around with other kids, much like what we both used to do when we grew up.

The two pictures are contrasting to say the least.  But there’s no other way to be closer in making our dream house a reality than to actively checkout the houses for sale now.

2) Invest 20% of My Money

As I’ve said earlier, our money is hardly working for us.  Last Monday, my wife was shocked when she heard that the 180-day time deposit interest rate is currently at 0.25%!  What??! Only 1/4 of 1%!??  I think I’d rather keep my money with me, thank you.

Yes, we’ve started investing in RTBs. We got 7% interest on a 7-year tenor bonds.  But it’s hardly enough when you take into account the 20% tax on the interest as well as the rising inflation.  I’d say it’s just a little bit over breaking even.

So this year, my goal is to invest the 20% of my money in something that will earn at least 10% per year.  I’ve already opened an online stock brokerage account, but I have not bought any stocks yet.  So my goal is to finally start investing.  I’ll probably start actually investing in mutual funds, businesses, and more this year as well.

This is precisely the reason why I described my goals this year as “getting into the game”.  It’s easy to read about the different vehicles on where to invest your money.  But it’s another story to actually do it.  You haven’t actually learned anything until you’re already doing it.

3) Be consciously alive

I spent my birthday last weekend having a nasty cold & cough.  Hardly a great way to celebrate a birthday.  On top of that, most of my holiday vacation was spent in my room trying to recover from another cold & cough I got a few days before.  It’s very hard to celebrate when you’re getting sick all the time.

I want to enjoy life, while I’m young and even when I’m already old.  Who’s to say that we should sacrifice now for the future, when what we have is only today.  Yesterday is gone. We don’t know what will happen tomorrow, or the next day.  Or even the next year.  What we have is NOW.

So I’ll start enjoying the present.  I realize that we can and should enjoy today and prepare for tomorrow.  My problem has been always thinking about the future that along the way I forgot to appreciate the blessings I have today.

That’s not to say I should be spending like crazy.  My goal is to start consciously living day to day with the energy of a young kid.  Be amused.  Be inspired.  Be wondering.  Be excited, once again.  Be alive.

Yes, I will still think about my future. I will still try to learn from my past experience.  But this time, I’ll try to be more conscious of the present moment.  Just like now.  I’m having a conversation with you, and having a great time.

Categories
Life Lessons Money Mindset Personal Finance

Health Is Wealth – Why Your Health Is More Important Than Your Money

Have you ever heard the saying “Health is Wealth”?  I am not sure who coined the phrase but I think there’s a degree of truth to that statement.  It may even be more important than all the money you have.

If your wealth is a number, your health would be the leading “1” on a $1,000,000,000 (one trillion dollar) jackpot.  All the other zeroes represent your material wealth – a house, a car, your investments, family, friends, etc.  As you can see, without the “1” in front, it will just be $0,000,000,000 which is basically NOTHING.  This is the same as your health.  If you’re NOT healthy, if you’re getting sick all the time, all your riches do NOT matter…

I got sick with cough and cold the past couple of days…again.  With the very hectic schedule during the Holidays, and my wife and I making ala “amazing race” from Manila to the northern part of the Philippines they call Ilocos & Cagayan, topping it off with the pressure of going back to work on a night shift immediately right after the race (ooppss..I mean vacation? :))…I was REALLY exhausted…as a result, I got sick (again).

Eating right

Sadly, I’ve not been eating right for the past couple of months…

I almost always eat out at delicious but not so healthy fast food restaurants, eating tasty fried chicken, fatty “sisig” or inihaw na “liempo” (grilled pork belly?).  I’m just too lazy to cook food when I get home after a long day at work.

Coffee is my water.  I drink coffee in the morning, in the afternoon and at night.  Sometimes I feel the strongest brewed coffee I drink can no longer keep me awake.  The good thing is…I easily ended up getting not one but TWO Starbucks planner even before the Holidays. 🙂

When I don’t drink coffee, I splurge on sodas.  There’s even a time when I drank 2 liters of “DIET” coke (a.k.a. Coke Light) each night for a couple of days…That’s when my body started to give up and I got the nasty cold & cough.

Being physically active

When I was in Malaysia, I used to play badminton or tennis twice a week.  I also have this basketball game with friends every weekend.  On top of it all, our office was a good 1 kilometer “walking” distance from our condo.  As you can imagine, I had several physical activities lined up for me to keep my body moving and healthy.

When I came back to the Philippines, it was a complete 180 degree turn for me.  The only exercise I did is to have my fingers tap at my computer’s keyboard all day and all night long.  I convinced myself that I was “too busy” tapping at the keyboard to do anything else, much less a physically challenging activity called “exercise”.  Not even once was I able to go to the gym because of laziness.  No wonder my belly seems to be getting bigger and bigger everyday. 🙂

Where do I go from here?

I really don’t believe in New Year’s resolutions…but I realize I must change or I’ll keep getting sick again and again.  So first thing I want to do is to get well from this persistent cold & cough.  Second, I’ll try to keep my self healthy for a change.  Eat healthy food.  Minimize coffee and sodas.  Drink more water instead.  Eat fruits.  And lastly, I want to go finally use the gym at the condo and get my money’s worth at the hefty association dues I pay every month.  Wish me luck!

How about you? How are you keeping yourself healthy in 2010?