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
Life Updates

Be featured in the 1st ever edition of Rich Money Habits Blog Carnival

Today, we are launching the first ever edition of Rich Money Habits Blog Carnival.

This edition is now accepting submission of the best money stories and articles showcasing money habits that make people rich through personal finance, business, investing, stocks, mutual funds, bonds, real-estate, internet marketing, and more.

Submission of entries is until January 26, 2010, at 12 midnight Pacific Time.

So hurry, submit your stories and articles now and be one of the chosen few to be featured to the first ever edition of Rich Money Habits Blog Carnival.

Let your story be heard.  Be featured.  Be Inspired.

What is a Blog Carnival?

“A Blog Carnival is like a magazine. It has a title, a topic, editors, contributors, and an audience. Editions of the carnival typically come out on a regular basis (e.g. every monday, or on the first of the month). Each edition is a special blog article that consists of links to all the contributions that have been submitted, often with the editors opinions or remarks.” – blogcarnival.com

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?

Categories
Life Updates Personal Finance

A Look Back on my Financial Journey in 2009

I have been reflecting the past couple of days on the many blessings I’ve received in 2009 and realized that no matter where you are, no matter what you do, there’s only one person responsible about your finances – YOU.

Living in Malaysia

My financial journey over the past year started by working as an IT professional in Malaysia.  My 2-year contract with my foreign employer just got extended for another year.  To top it off, my wife also got absorbed by our client company and got a new contract.  We both got a raise, though it was only minimal due to the ongoing recession.  We were both safe & fortunate to say the least.

Some of our friends were not as fortunate.  Their employer had to terminate their contract to cope up with the recession.  Some even have their families with them, which makes it more challenging.  Panic was everywhere. It was disheartening to see everyone trying to stay focused while their eyes reveal their fear, wondering whether it was their turn to be let go.  The recession made everything “temporary”.  Nothing was permanent.  Not your job.  Not your house.  And certainly not your visa. 

Thankfully, my wife and I was not hardly hit by the ongoing recession. 

Financially, we were doing OK.  We still had jobs.  We still had each other.  We have earned enough to put up an emergency fund.  We have stayed debt free. And more importantly, we were able to set aside some of our money, which we could use to support us if our employer decided to shorten our stay in Malaysia. 

If we learned one thing in our stay in Malaysia, it is to be prepared, always.

On the bright side, we were also able to enjoy some of the money we earned. We splurged on a lot of “doodads” as Robert Kiyosaki puts it.  We bought a 32’’ Sony LCD TV (which is now broken and could not have it fixed because it costs more to repair than the original price I bought it for – duh??), a Nikon D60 DSLR (which I love to this day), and a Macbook which my wife loves very much because she can do her video editing projects and post her Facebook pictures very easily with it.

We could have stayed in Malaysia if we wanted.  However, something was just not right.  We knew something was missing and we had to change.  And after much discussions over dinner and sleepless nights, we decided to take the chance of finding what we were missing in our home country – the Philippines.

Going Back Home to the Philippines

By middle of 2009, I got a call from my previous employer from the Philippines.  They have a big project going on and wanted to check if we’re interested in going back to the Philippines.  At the time, my wife and I have been contemplating whether to finally go back home or not.  To cut the story short, we left a life full of promise in Malaysia to a seemingly challenging life back home with family and friends in the Philippines.

To be honest, the next two months were REALLY challenging.  We had to immediately report to work as soon as we arrive in the Philippines.  We didn’t have any vacation at all.  We had to squeeze everything including preparations for our working papers, fit to work health clearance, and unpacking the 5 “balikbayan” boxes in a span of two weeks.  To make it worse, a 10-day self-quarantine was required after arriving at the airport because of the ongoing AH1N1 virus scare.

It’s been 5 months now since we arrived and I like to think that we have already adjusted living in the Philippines again.  Yes, work is stressful and challenging.  Yes, because of stress we got sick a lot of times during the past few months.  Yes, the traffic is bad and watching bad news on TV is sickening. But on the bright side, there were also lot of things I’ve been very thankful for for the past few months. 

First, my wife and I were able to attend Bo Sanchez’s Truly Rich Financial Seminar and Truly Rich Financial Coaching Program since we’re now in the Philippines.  We learned a lot, not only about the many ways you can make & invest your money but also about how my wife and I view money as a tool to help ourselves and other people. 

Second, I get to eat my favorite Filipino food like “longganisa” (locally made sausage), “inihaw na isda” (grilled fish), “chicken and pork adobo”, and many many more. 

Lastly, I am also thankful I was able to spend some time with my mom and dad, as well as my in-laws.  I get to know more about them, their concerns, their plans, their dreams.  The time I’ve spent with them is priceless and I won’t trade it for anything else in this world.  

All in all, year 2009 was great for us financially.  We were able to transition from being an IT professional in a foreign country to a similar work in the Philippines.  We’ve started investing in Retail Treasury Bonds.  We’ve also opened an account in one of the leading online stock brokerage firms in the country (I’ll tell you more about this in one of my upcoming articles).  And we’re also starting to learn to give back to other people.

How about you?  How was your financial life the past year? 

Categories
Life Updates Personal Finance

Happy New Year!

First of all, I’d like to greet you and your family a very Happy New Year! May God’s blessings continue to pour through your life and bring you happiness, love and hope that a more prosperous 2010 awaits ahead!

Second, I’d like to THANK our dear readers and subsribers of Rich Money Habits articles. About 3 months ago, the site akosiallan.com was re-launched as Rich Money Habits – a personal finance website helping people build long term money habits so they can achieve financial freedom with peace of mind. The response has been simply amazing, as the visitors of the site grew to a whopping 300%! Thank you very much for continually inspiring me to bring more helpful, practical and useful money & personal finance articles. Watch out for more interesting articles to help you with your finances this coming year!

Third, I’d also like to thank our friends who are continually inspiring people to learn to make, save, grow and invest their money wisely.  May the coming year bless you more so you can continue to inspire and encourage people to be wiser with their own money.
> Fitz @ Ready To Be Rich
> Jay @ Foreclosure Philippines
> Tyrone @ Millionaire Acts
> Celine @ Frugal Pinoy
> James @ Pinoy Money Talk

Lastly, watch out for more exciting things happening @ Rich Money Habits in 2010 as we create more new ways to help you build rich money habits and live the abundant life.

Again, Happy New Year to you!

God bless,
Allan

Rich Money Habits
https://akosiallan.com

Categories
Life Updates Personal Finance

Merry Christmas!

Merry Christmas everyone!

May you and your family be blessed with the goodness and financial abundance as you celebrate the Holiday season together!

Cheers!
Allan

Categories
Personal Finance Truly Rich Club

Bo Sanchez’s How To Conquer Your Goliaths Book Review

This December, we are going to feature Bo Sanchez’s newest book, How to Conquer Your Goliaths.  Bo Sanchez is a very popular and much sought-after preacher in the Philippines.

 

His new book “How To Conquer Goliaths” contains two parts.  The first part is a creative rendition of the famous story in the bible – the battle between David and Goliath.  The second part contains 7 tips to conquer your own Goliath.

Part 1: A Pebble That Crushed a Mountain (David vs Goliath)

The story is re-told with a little twist similar to a “Lola Basyang” setting where several excited children repeatedly request their “Uncle Kenjo” to tell them the story about the olden days of the battle between David and Goliath.

Reading the story feels like reading a children’s story book.  Bo’s humor is on the spot.  He not only makes reading worthwhile, but for some people (like me) to dream again.  What was it like to be a child?  To be always in wonder?  To surge with excitement over a new story of a very courageous young man named David against a humongous giant named Goliath?  It’s always exciting to be a child.

Part 2: 7 Keys of a Champion’s Life

In the second part of the book, Bo Sanchez outlines the following 7 keys to overcoming your problem that’s preventing you from achieving your dreams.

  1. Follow Your Dream With Passion
    • Find something you’re willing to die for
    • Focus on the dream, NOT the problem
    • Repeat your dreams to yourself over and over again
  2. Focus on Your Core Gift
    • Find out your core gifts & passion
    • Follow your passion and match it with the needs of the market
    • Use your strengths, delegate the rest
  3. Believe in Yourself When Others Don’t
    • Build your confidence by starting small
    • Don’t listen to negative people or those that are not in your target market
    • Seek advise and listen to people who are already living your dream
  4. Build Your Dream Team
    • The #1 desired quality is the ability to work with a wide range of people
    • Recruit people who are better than you
    • Build relationship with your team
  5. Take Action
    • Take the first step in faith. You don’t have the whole staircase. – Martin Luther King Jr.
    • Take bold, massive action
    • See everything as preparation
  6. Fail Forward
    • Learn to fail
    • Be prepared to fail
    • Feel the fear, and fail anyway
  7. Shine Your Light
    • Heal your fear of success
    • Real humility is selfless servanthood
    • Be confident when you shine your light

The book is full of graphic stories to illustrate the key points mentioned above.  These ideas are nothing new.  But I like what Bo Sanchez said that the reason he wants to learn and re-learn the same things over and over again is because he wants to be “reminded” of these ideas once again.

Who should buy this book?  I did! 🙂 It costs PhP 295 (around US $6) at National Bookstore.  I think it is a good read.  And it never fails to inspire.  More than anything, I believe you can get most out of the book if you can pick 1 to 3 gems of ideas that you can readily apply into your life at the moment. 

So, I’ll start with mine.

1) My first Goliath is time.  I got sick the past couple of days…perhaps because of stress at work – working a lot of overtime due to the upcoming holidays….or because of lack of sleep and exercise.  I want to be able to manage my time more so that I don’t feel like I’m always in a hurry.

2) My second Goliath is physical fitness.  Isn’t it obvious I don’t want to be ever sick again?  One thing I miss doing was engaging in sports activities like badminton and basketball.  When I was in Malaysia, I’d always play badminton and basketball every week with friends.  Even though it is a challenge to play those games now, I still want to find a way to take care of my body and be physically healthy.

3) My third Goliath is freedom fund.  I want to be able to choose what I work on, with whom I work it with, and when I want to work.  I have just started learning more about the various financial vehicles that I can grow my money and earn some passive income on.  My goal is to be able to generate enough passive income to cover my monthly expenses.  This is the purpose of my freedom fund.  I am still a long, long way to go.  But there’s no other way to be alive than being inspired to achieve your dreams.

How about you?  What Goliaths are you facing right now? How are you planning to face them to achieve your dreams?

Categories
Life Lessons Personal Finance

How much is your time worth?

The other day I was reflecting on whether it is really all worth it giving up your time for a hefty paycheck.  After all, it does pay the bills…and more.  But if you don’t have time to enjoy any of it, does it really matter whether you have all the money in the world?

Should we just wait for our retirement to be able to enjoy the fruits of our labor?  But you say, “it’s why we have vacations throughout the year!”

Is that really the case?

Tell that to a father who has to give up attending his son’s birthday just to fix an “emergency” situation at the office.

Or to the proud mother who has to miss her daughter’s recital just so she can keep the business going during a “major” software upgrade.

Or to the countless call center agents who are on a “graveyard-shift” struggling to stay awake, feeling like zombies while listening to endless rants and complaints from angry customers on Christmas day!

Over the years, I’ve personally observed how our own personal time is being taken upside down.  There’s no such thing as a vacation anymore. Or even a holiday for that matter.  The dates to celebrate  holidays keep on changing.   Your boss allows you to have a vacation, only if you agree to be “on-call”…which literally means, you can’t go anywhere but within 100 meter radius from the office.  It doesn’t make sense.  It’s depressing, especially for a hardworking office worker who doesn’t have any choice other than quitting the job.

So, who makes the rules?  Who makes a 40-hour workweek, a 45-hour one, or even a 60-hour one?  Who says you can only take holidays only if the business doesn’t need you anymore?

Who decides how you spend your time?

Is it really you?…Or someone else.

Categories
Life Lessons Personal Finance

Multiple Stream of Income

Are you currently earning from multiple streams of income? How many income streams do you currently have?  How many ways does money come to you? 

Some people rely only on their job to earn money.  That’s their only stream of income.  The danger of having only one income source is that once you get fired the money stops and you are forced to find another way to earn money.  This is even more risky during a recession because it is harder to find another job.

Other people earn very high income using their specialized skills.  Doctors, lawyers, dentists, architects, consultants, small business owners earn a lot of money – which is good, but for some, it stops there. 

Most professionals have only one income stream – working using their specialized skill.  If they stop working, the money also stops.  When their skill becomes obsolete, they are forced to accept a reduction in pay to make money.  Or worse, to shift to another profession.

The few who are really rich in both money and time, have a different strategy. They build multiple streams of income.  They earn money through various ways.

For example, really big businesses like the SM malls of Henry Sy not only earn from you when you buy groceries from its SM supermarket, but it also earns income from the stores who are renting their mall space.  That’s creating multiple streams of income.

So what streams of income are available?  In what ways are other people earning residual income today?  Here’s a list of the many types of passive income streams from the book Multiple Streams of Income by Robert G. Allen.

  • Savers earn interest
  • Songwriters earn royalties on their songs
  • Authors earn royalties from their books and tapes
  • Insurance agents get residual business
  • Securities agents get residual sales
  • Network marketers get residual commissions
  • Actors get a piece of the action
  • Entrepreneurs get business profits
  • Franchisors get franchising fees
  • Investors get dividends, interest and appreciation
  • Visual artists get royalties from their creations
  • Software creators get royalties
  • Game designers get royalties
  • Inventors get royalties
  • Partners can get profits
  • Mailing-list owners get rental fees
  • Real estate owners can get cash flow profits
  • Retired persons can get pensions
  • Celebrity endorsers get a percentage of gross profits
  • Marketing consultants get a percentage of profit or gross revenue

Since the list was written about 10 years ago, it obviously doesn’t include how some people are now earning money online through the internet.  If I may add to the list,

  • Some bloggers earn money from every Google Adsense ad clicks on their sites
  • Popular bloggers earn money from paid advertisement on their sites
  • Online retailers earn money selling their stuffs online
  • Giant online retailers earn profits by selling other people’s stuffs online

How about you?  What can you add to the list? What additional income stream are you earning money from today?