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Know yourself: the first baby step to financial security

Publicado por sam - 30/04/08 a las 04:04:35 pm

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You’ve all heard of the expression “know yourself.” Experts believe this should be the first baby step of people who want to successfully get off their little gerbil wheel of consumerism, where it is custumary to work like horses the whole week and spend everything on weekends. No matter what investing prowess we have achieved, or what superior knowledge about wealth accumulation we have attained, if we skip this process, there’s a likelihood we may crash and burn and perhaps question whether financial independence is really an achievable goal.

Thing is, facing reality is tough. Nevertheless, knowing our inner financial blueprint could bring us closer to financial happiness or hinder us from getting there.

From the perspective of the financial planning professional, taking this route requires more work and dedication. Cookie-cutter financial plans will not work. A financial plan that folds in clients’ money personalities addresses their inner money demons and strengths, and hopefully builds on those strengths to create a more financially responsible and happy person. Continue reading …

Finding your financial personality

Publicado por sam - 30/04/08 a las 04:04:55 pm

A very wise man wrote that money is more about the mind, more than the math. I tend to agree, considering the results of recent Money Makeover sessions with volunteers Diego and Bianca, and Sheldon.

As I recounted in this post, financial planner Augustus J.V. Ferreria began his Money Makeover sessions by asking our three volunteers about their childhood, parents, siblings and major milestones in their lives. During that meeting, several initial analyses came out.

Diego and BiancaDiego was deprived as a child, having grown up in poverty as the eldest among his siblings. His father’s sudden business success during his teen years flipped the situation over and allowed him to enjoy the comforts of financial security – a generous allowance, a good car, and an expensive course (Fine Arts in UP Diliman). Continue reading …

Financial planning pioneer ‘pays it forward’

Publicado por sam - 30/04/08 a las 04:04:11 pm

Augustus “Joe” Ferreria (Joe F. in this article) has all the trappings of a high-profile job. A big corner office in the Makati financial district, a nationwide sales team, and the solid name of the SM Group of Companies and Generali Pilipinas behind him.As senior executive vice-president of Generali Pilipinas, Joe F. is the revenue guy. In the first five months of 2007 alone, sales clocked in a 75% growth compared with the same period a year ago to P974 million.

That amount may seem tiny compared with Philamlife’s P14.5 billion in 2006, but not if you realize that Generali began operations in the Philippines only in 2000. Joe grew the company from a P400 million company to P2 billion in one year after he joined the firm in 2004. As an upstart in the insurance industry, Generali is playing a quick catch-up game. Continue reading …

Trusting kids with cash

Publicado por sam - 30/04/08 a las 04:04:58 pm

I don’t know if keeping money matters among adults is unique to Filipinos, or even Asians. Time and again, I have seen parents send children away when talking about financial matters. It’s not just that we don’t want our children to worry. It’s just that not many Filipino parents are comfortable telling their children how much they really earn.

However, trusting children with cash is at the heart of teaching financial literacy in the home. If we want them to understand money, we have to let them handle money. More importantly, we have to truly empower them to decide, after we have taught them the right principles behind money management.

I know of a mother who was widowed and had to feed and clothe four children alone. Gainful employment was hard to find because she was a homemaker before her husband died. It was very tough for the whole family. Continue reading …

How currency hedging works

Publicado por sam - 30/04/08 a las 04:04:25 pm

I read in the internet that the Philippine Peso will appreciate against the US dollar to P39 at the end of the first quarter this year and will appreciate further to P35 by end of 2008. Is this a possible scenario? I’m currently in a dilemma whether to convert into pesos my USD time deposit. — Vic

The hedging facility launched by the government financial institutions is not good enough if the OFW is earning only a meager amount of $500 per month. If an OFW is earning $1,000,000 or more then he stands to benefit from the program. But how many OFW’s earn more than $10,000.00/ month? — Romeo

An estimated 8.2 million Filipinos are based abroad, many of whom regularly remit part of their earnings to the Philippines. For this reason alone, the rate of exchange between the peso and various foreign currencies will be a major socio-economic policy concern for a very long time. Continue reading …

What kind of investor are you?

Publicado por sam - 30/04/08 a las 04:04:36 pm

I am greatly interested in investing but nowadays there are so many options available that it gets confusing sometimes. Where should a young professional invest? I am 23 years old and making enough to invest in a strategic fund and get a couple of insurance policies. I recently got out of credit card debt too by refinancing it with a cheaper two-year loan. I am thinking of buying a condo unit so I can diversify my investments. Any thoughts? — Nancy (not her real name)

This question is an extension of the one asked by Erick last week . While Erick is at the earliest stage of saving awareness, Nancy has already taken concrete steps towards specific investments and managing her debt. What investment opportunities would give Nancy more returns?

We need to know as much of the full market of investment opportunities out there. Investing cannot be done in a vacuum and comparisons are inevitable. At the end of the day, though, not all instruments are for all investors all the time. We should only focus on instruments that fit both our specific investment goals and the realities of our resources.

When I am asked which instruments make good investments at this time, my reply has always been the same bland line: It depends on what you have, what you need and what investment horizon is involved, instead of playing the “favorite-for-the-season” game.
Continue reading …

What is the best way to start an investment?

Publicado por sam - 30/04/08 a las 04:04:42 pm

I am Erick, 23 years old, and work in a call center. I earn P20,000 a month and barely spend this amount since I am single and live with my parents. But my problem is that I find my wallet empty at the end of the month inspite of having more than what I need. I am just wondering what is the best way to start an investment?

In the last six paragraphs of this piece, I share with Erick some financial instruments he may want to consider. However, the context of that short version starts from another question. Continue reading …

Alternatives to low interest-bearing deposits

Publicado por sam - 30/04/08 a las 04:04:03 pm

The quiet quandary among savers lately is finding opportunities that provide good returns. Basic bank deposits — although more for parking funds than outright investing — now have near-zero returns. Some banks require a minimum outstanding balance for the depositor to even qualify for interest. For those that still offer some interest, the lowest that I have seen is a rate of about one-tenth of one percent and this is still taxable at 20 percent withholding tax.

At this rate, your monthly return for an outstanding balance of P50,000 comes out roughly to about P3.33 — an amount small enough to miss out among your transactions but big enough to be a nuisance if you try to balance your books before you get your printed statements. The other way of looking at this interest rate is that you have to set aside and keep untouched a balance of P400,000 in your account so that your net interest affords you a small-sized serving of French fries from a popular burger franchise every month. Continue reading …

How to deal with topsy-turvy markets

Publicado por sam - 30/04/08 a las 04:04:20 pm

I am an OFW from Leyte with three kids, all in college. I have a dollar savings account and it pains me everytime the peso strengthens against the dollar. Do you recommend that I should withdraw my dollars from the bank before it goes down to P35 per dollar? Is the weakening of the dollar temporary? — Mr. Jacinto

Over a period of time, I have been collecting your tips and to learn a little about investing. To take the first step forward is bit difficult though specially the timing. Kindly advise if this year 2008 will be a good time to invest in mutual funds. With the current economic situation in the Philippines being affected by the economy in the US, is it advisable to invest this year and where? — Efren

These two questions are typical of the queries that we have been getting and the concerns are perfectly understandable. Continue reading …

Are you saving or being miserly?

Publicado por sam - 30/04/08 a las 04:04:30 pm

This comes belatedly but not too late to wish everyone good tidings and great wishes for this year. It’s a good feeling (I know, everyone is talking “US recession”) and I hope it lasts. So here’s hoping that in 11 months all of us can look back to 2008 as a great year of positives.

The holidays — with our natural penchant for gift giving and food-binging — got me to thinking about saving all over again. We always stress the virtue of saving because what we save is the treasure that we bring to the future. But what we often forget is that saving, in practice, does not mean that we should stop spending.

The point of saving is not only to accumulate but also to save for something. We cannot minimize for the sake of minimizing. Ibenizer Scrooge was a miser until the three ghosts put cause-and-effect in perspective. He had that privilege; some of us may come to that conclusion too late. Continue reading …

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