March 2007 Archives

Let's take a break from our weekly news roundup and try testing our knowledge of common stock market terms. This test was a hit some time ago in our website. Thought it might be interesting to see how many can ace it :-). Besides, it's fun to know that a word you can pick out from the dictionary has a totally different meaning in the world of brokers, bulls and bears. 1.) When someone asks you to "hit" shares do you: A) throw your stock certificate? B) cancel an order to buy or sell? or C) buy or sell a stock at a particular price posted on the trading board? 2.) Under your "street name" is A) your complete address for your brokers' record? B) the shares you own registered in the name of your broker or C) the code name of one broker trading through another broker 3.) When a broker offers you a "warrant" it is equivalent to: A) handing in your account number B) a long-term form of investment product usually attached to a bond or preferred stock C) it gives the holder the right to buy a fixed number of a company's common shares at a price that is set higher than the stock's current price at the time of its offering, D) I'm sure it's B and C, E) Can it be A and C? 4.) EBITDA is earnings before interest, tax, depreciation and amortization. It is useful to know because: A) it is a measure of a company's profitability, B) it tells the investor how much cash a business raises before interest is paid, C) it is hard to manipulate, D) definitely it's A and C, E) of course it's B and C, F) absolutely it's A and B 5.) Some articles say one of the concerns of foreign investors in investing in the local stock market because it is an "illiquid market". This market is also called a thin market compared with more advanced ones and is characterized by: A) the lack of buyers and sellers B) the lack of alternative investment avenues C) the lack of stocks traded 6.) Did you see the ticker tape? A trader says it's like stocks on roller blades. Why? A) it shows the latest information on stocks income and news developments B) it is a moving electronic display that shows the stocks symbols and prices at which each buying or selling order is executed C) it's called the consolidated tape D) both A and B E) both B and C 7.) the breadth of the market shows A) the volume of trades B) the difference between buying and selling, C) the number of stocks traded out of the ones listed 8.) An "ask and bid" is A) the buying and selling price B) the lowest price to sell and the highest price to buy, C) the offer price and the matching price 9.) Investors sometimes use "arbitrage" in stocks like PLDT. What do they do exactly? A) Buy and sell a combination of these shares from different markets to take advantage of bargains B) buying and selling of shares simultaneously from different markets to try to make a profit from short-term price differences depending on the foreign exchange C) buying and selling of shares through foreign markets to take advantage of tax rules 10.) Book value refers to A) the value of the company excluding its tangible assets B) the theoretical value of the company if all assets were liquidated or sold at the prices carried on the balance sheet and all liabilities are paid off, C) the value of the company as done by an external appraiser 11.) San Miguel offers a 10% stock dividend. The assembly hall rang with applause. San Miguel offered to: A) buy each stockholder's 10% ownership in SMC B) sell its 10% stock to be equally divided to shareholders C) to pay each common shareholder a portion of the company's after tax earnings in the form of stock 12.) An investment is well hedged if: A) it is protected against losses B) it has limited losses C) an investor limits losses on a certain stock by establishing an opposite position in the same stock D) yeah it's both A and B, E) yup, it's both A and C 13.) A broker is flipping if: A) he's losing his mind B) he's changing his mind C) he's asking his customers to buy a stock while another broker is simultaneously saying that their customers sell that stock, D) he's manipulating the stock 14.) Short selling is: A) a quick sale B) a strategy used to profit from a price decline C) selling securities that the investor has borrowed with the intention of buying them later at a lower price D) You'd better believe it's A and C E) I have no doubt it's B and C 15.) Someone handed you a "red herring". Could it be: A) a bloody fish B) a slip of paper indicating your losses in your investment C) an abbreviated version of a company's prospectus or detailed information submitted before an initial public offering 16.) The poison pill is: A) a false tip B) a nasty rumor C) a stock or security designed to defend against a hostile takeover 17.) This market is overbought. It may go down soon, says an analyst. What the analyst meant was this market is: A) technical description for a market or stock whose value has risen quickly and sharply far beyond its actual worth B) seen to be bearing the symptoms of a future decline C) filled with too many buyers D) I think it's A and C E) I would bet it's A and B 18.) The Phisix's support is at 3,150 and its resistance level 3,300. Now it's current level is 3,203.55. These levels refer to: A) the market's floor and ceiling levels B) where a price falls to and rise repeatedly C) where buying and selling respectively are triggered D) A and B looks the best choices E) B and C are my choices F) I think all of the above 19.) The net asset value is: A) In mutual funds, the total value of the fund's portfolio less liabilities B) In terms of corporate valuations, the book value of assets less liabilities, C) A and B, D) None of the above 20.) A company asks its shareholders to waive their pre-emptive rights. This is equivalent to: A) deferring their right to buy new common shares before they are offered to other investors B) deferring the right to vote on the stockholder's meeting C) deferring their right to speak at the stockholder's meeting Whew. Good Luck! Source: Philippine Stock Exchange and some brokers analysis Answers : 1.C 2.B 3.D 4.A 5.A 6.E 7.C 8.B 9.B 10.B 11.C 12.E 13. C or D 14.E 15.C 16.C 17.E 18.F 19.C 20.A Score Card: 1-4 points = Look out....a bear hug! 5-9 points= Not too late. 10-14 points = You didn't sleep through Stocks 101 that's for sure! 15-19 points=Right On! No need for a refresher course! 20 points= Outstanding! You can't be manipulated!

Very early this morning, I was sitting across an Aklan-born, but Californian ex- accountant retiree who spends two hours everyday trading stocks online as his personal hobby. It was so refreshing to hear him speak with a faint lilting Visayan accent that is so adorable, an accent countless of corporate meetings working in the US thankfully failed to erase. As he was trying to combat his jet lag, he turned to me and asked, “What about you? Don’t you want to work in the States?” I had been asked this question too many times. “No, I like it here.” (…and my blog, and the company I work for, and going to the market every week, and being with my kids, and having time to play Monopoly with the kids etc. etc.) We talked about the “OFW phenomenon” and how the government is benefiting from the collective sweat of more or less eight million Filipinos toiling abroad. I used to be depressed whenever I think about the social costs of parents leaving their children to earn dollars but there is some good news you all should know about. Our top business story today quotes no less than the International Monetary Fund, who has noticed that more Filipinos working abroad are now more savings and investment-savvy. Read the story here: “Given that some 80 percent of families that receive income from abroad as their main source are now middle- and high-income families, it is much more likely now than in 1991 that the uses for this income go beyond consumption and subsistence, and are put toward saving and investment,” the report said, quoting the IMF. Simply put, more and more remittances are no longer being used to buy the latest unit of mobile phones and home appliances, but into savings and investment vehicles – hopefully some are even placed into businesses that are profitable. You won’t see this in investment figures just yet, but the IMF believes the economic indicators will prove this soon. Hey, I say this is reason to celebrate! Let’s all do a virtual happy dance. Of course, there’s still a lot of things to be done for this to be established as a trend but hey, small triumphs like these need to be acknowledged. This is a long way from the sad stories I heard all the time from bankers working with overseas workers who find that when they came home, they not only realized they didn't have savings but also that they didn’t even have a spouse. We are sending more highly skilled workers abroad now who are naturally more interested in long-term saving and who are more prone to love fiddling with sophisticated investment instruments. That's another reason for this trend. So here’s a toast to you, to the work that you do, to your search for financial independence, to your dedication to your family, and to your willingness to learn and take risks. Here’s to more sharing -- of your struggles and hopes, of your dreams and challenges. Feel free to share that defining moment when you knew you would let nothing stand between you and a retirement spent sipping pinacolada on whatever beach in the world that catches your fancy. Personal finance may be full of talks about banking, insurance, mutual funds, stocks, taxes, cold money and credit. But the truth is, what we have begins with what we think, and how we stamp out the fears that keep us from reaching for financial freedom. If it’s possible to spark this defining moment in others, then perhaps it’s time to share your story :-).

This photo is hot off the lens of an AFP photographer. Shown here are residents cleaning up rubble from a badly damaged house in Wajima, Ishikawa prefecture after a recent earthquake. Couldn't resist sharing it with you. Everybody has got to ask themselves: how prepared am I for an emergency? Are you protected from death, fire, illness? Here is another kind of disaster waiting to happen: Teresita Galanto, 71, smokes a one-meter-long rolled tobacco cigar during a tobacco rolling contest in Candon, Ilocos Sur. Photo again courtesy of AFP. Might look like fun, but I bet the lady's lungs are not jumping with joy. Do I hear somebody asking if this woman is insured?

It was swimming around my head like a mantra last week: follow your budget, follow your budget! As I tested this very common financial tip for Money Myth Busters, I came too close to becoming unglued. I couldn’t make it work. It felt like my gym membership. I bought gym shoes, gym clothes, an MP3 player so I could focus on something else aside from my complaining muscles while on the treadmill. I will lose 10 pounds before you know it, I chortled to my husband. Before I knew it, my excitement lost steam. I already tried this last year. Somewhere in the maze of zeroes and ones in my computer is an excel file that recorded my budget and actual spending for February, March, then half of April. Started again in August, halfheartedly did it in September and threw up my hands in despair in October. I told myself that just because it’s hard to do doesn’t mean I shouldn’t do it. Every expert says budgeting is the most important part of personal finance. It is the foundation. It is the mother lode of all personal finance gold mines. Has anybody ever been financially successful even if they didn’t use a budget? I wonder if Bill Gates and Warren Buffet use a budget? Henry Sy and the Ayala brothers? For me, this tip is so busted. Just the word “budgeting” sounds so painful. Plus, even if you make a foolproof budget, what use will it be if you don’t track your spending? I can just imagine myself after I check out of the grocery. “Did I pay P35 for that loaf of bread or P35.50? Or was it P35.75?” Gives me an ache at the back of my neck. And some people even use sophisticated software for budgeting! Would it really matter where I put every centavo if I make sure that for every P100 peso I earn, I give P10 for tithing, then save and invest P25? As long as I pay all my bills and househelp’s salaries, settle all credit cards in full every month and have a little bit of fun money set aside for the kids, maybe I can give that excel file some rest? Then if I have extra, I may add that to my mutual fund. That has got to save me the aggravation of tracking every peso and centavo that I spend, which really sucks out the joy in doing things. “Hey everyone, let’s watch a movie this weekend! Ooops that will cost P1,000.” Having said that let me stress that this tip is not totally busted. If you keep wondering at the end of the month where your money went but have a hazy recollection that you went to the spa, bought an expensive gift for a friend who’s migrating and that’s all, you seriously need to keep track of your spending pattern. If you are trying to trim some fat in your finances so that you can save more, or you honestly have no idea where you are financially and want to start being responsible for your financial future – taking a look at your expenses is crucial. However, I still believe that you don’t really have to track down every peso. Round it up if it makes it easier to stick to your routine. That way, you’ll even get a nice surprise at the end of the month finding more money than you thought you had. Keep it simple and more importantly -- fast! If things don't add up or go as you planned, don't feel guilty! It's your money. You decide what to do with it. If you want, call it a spending plan rather than a budget. Yeah, its the same but its sounds better, doesn't it? Ok, I’m expecting some virtual crucifixion from the personal finance experts now. Let the comments begin (dodging). ;-)

I’M a media person. I’m in the business of selling words. Anybody who writes for a living will tell you that it is always useful to read newspapers. Yes it is… (I do have to toe the line right? :) ), but be smart when reading the papers. Read it to enhance your wealth. For example, this week there has been a flurry of articles on the findings of a controversial SWS survey that one out of five Filipino families had to bear hunger at least once in the last three months. Our own Nonoy Espina wrote a great article about that here. Do you know what it feels like to be desperate for food? I have. I come from a poor family. This is an emotional issue, and a very political one for Malacanang. The President responded by telling Filipinos to stop texting, smoking, resist the urge to buy luxury items, "curb spending patterns." Hmmm. That’s a basic personal finance principle but it certainly cannot apply for all. We don’t have to go far to see that people are hungry, but talking about it to death doesn’t really create wealth, doesn’t it? Let’s see what does. Manufacturing production in January rose 2.0 percent from a year earlier, the first annual growth in 14 months. The central bank believes that the country’s balance of payments surplus with other countries will exceed expectations. Registered investments recorded by the Board of Investments and the Philippine Economic Zone Authority jump 125%, and overseas workers' remittances in January hit $1.1B, up 20%. All economic indicators paint a rather cheerful picture -- the manufacturing industry, which employs a lot of people, is buzzing with activity, a better-than-expected BOP surplus points to a possible strengthening of the peso, among other things, and more investments means money is coming in. The Reuters story that the Arroyo administration is giving an across-the-board 10% salary hike is of course a reason to celebrate (although the sudden announcement is suspiciously close to the elections) but can you imagine how much money that will release into the financial system? It’s good that inflation is low at this point and I’m crossing my fingers some of that money will be saved and not used to buy more stuff that are not needed. The 91-day T-bill rate inched up to 2.998%. This rate is the benchmark that banks use to price their loans, as well as interest on deposits. Also, National Treasurer Omar Cruz is planning to drop T-bills in 2008 and issue just bonds. Don’t you think that’s better, so that people will shift to longer-term savings? In the private sector: Megaworld is getting ready to plunk in as much as P60 billion into one of its projects, SM Investments is on track with its P6-billion coastal resort project. A well-planned strategy in real estate investment cannot be too bad at this time, after all interest rates are low. Stress on "well-planned." People who usually go looking for a tryst with "hot" investments get burned, but doing it because it fits in with your overall plan can be a powerful way of growing money. I saw, however, a very distressing news item that has a direct impact on personal finance, especially those who are nearing retirement. In Virac, Catanduanes, retirees were fuming over delayed GSIS pensions (read the story here). Read about a beneficiary’s experience with getting her father’s pension from GSIS in her letter to the editor. It’s such a pity the GSIS and SSS cannot properly take care of its pensioners and that we have to worry very much about whether we are going to outlive our money, saving more, working hard -- the whole shebang. Lastly, I noticed several articles this week on my soapbox issue -- education. Veronica Uy wrote about UP Engineering’s decision to offer 200 graduate scholarships, Alex Villafania said in his article here  that poor students rated highly in career assessment examinations and that high school seniors show aptitude for technical and vocational courses. Filipinos are such gifted people. Harvard chose a Pinoy as Scientist of the Year. I told you that I was born poor in the hinterlands of Bicol. But my mother worked day and night to send her children to school. A scholarship in UP changed my life. So it was with my sisters. It’s a documented phenomenon: better education raises income levels and quality of life. I really hope we, as a people, get our education act together.

Due to popular demand, here it is – a posting dedicated to mutual fund investing for dummies. Thanks to Alfa and Hachiko for this idea. We will definitely wait for the glorious, painful detail of your mutual fund experience! :-) There are a lot of definitions of mutual funds out there, but I am most fond of using the analogy of a car pool. Car pools help you get to your destination without having to worry about taking the best route – you let someone you trust take the wheel so you can focus on other things like..uhh..fighting stress! :-) Mutual funds can help you reach your financial goals without having to worry about the everyday ups and downs of the stock or bond markets. It is also a way of giving newbie investors a taste of what it is like to own stocks and bonds – at a much lower entry level. Imagine, for a P5,000 investment for example, you instantly have a diversified portfolio! Compared with the mutual fund industry in other markets, though, ours is still very young and certainly a lot of things still need to happen for it to grow. I began writing about mutual funds when, under the direction of my then-editor Sheila Samonte-Pesayco, our team published the country’s first section in a national newspaper dedicated solely to Personal Finance. That was around 1998 or 1999. A lot has changed since then, and certainly mutual funds are more popular now. In fact, judging from the discussions in this blog, it is fast becoming a hot investment instrument that offers superior earnings compared with the more traditional time deposits. However, the industry still has a long way to go. Definitely, it is still light years away from successfully drawing the more than P1-trillion deposits of Filipinos languishing away in banks’ time deposits. Here are some useful links that I’ve collected through the years: The website of the Investment Company Association of the Philippines has a “Mutual Funds 101” website that you should check out. How to choose a mutual fund Discover mutual funds as savings tool Investing your hard-earned money (Look beyond regular savings accounts) Retirement plans vs mutual funds Can I lose everything I’ve invested in mutual funds? Useful tips:

1. Every human being learns how to chew with small bites. In investing, start with the simplest concepts: read the fine print.
2. Don’t depend on the agent to explain everything. Ask for the prospectus and take out a magnifying glass if you need to.
3. Things to watch out for are sales loads, management fees and charges. These can have different forms and can attack a fund from many angles.
4. Fees and charges depress your returns. While your mutual fund investment is not taxed as opposed to the 20 percent withholding tax on time deposits, you pay commission or sales loads sometimes in the form of entry and exit fees anywhere from 0.25 percent to three percent.
5. The trick is to spot the high commissions and sales loads on those prospectuses and scrap these funds from your list. Stick with funds that offer the lowest operating expenses and commissions.

Happy investing, everyone!

Someone who looked like a messenger was standing at the door, shifting his weight from one foot to the other. I glanced irritably at my watch. I was planning to be early for my meeting.. “Ano po yun manong?” “Nandito po ba si Salve Duplito? Meron padala sa inyo. Pwede pumasok?” The word “padala” of course got my attention. I couldn’t turn him away, but I couldn’t let him in either. “Sorry, manong di pwede eh. Mag-isa lang ako dito. Di po ako nagpapapasok ng ibang tao. Kunin ko na lang po sa inyo dyan sa labas.” No, I wasn’t being unkind. We almost got victimized by a gang several years ago. After which the discussion turned very, very interesting. Mr. Manong turns to me irritably and says, “Eh, pano to, magbibilang ako ng pera dito sa labas? Baka naman kung anong mangyari pag may nakakita sa akin?” His voice was already starting to creep towards the F note. Apparently, my senior citizen mom again did not heed my advice to go to the bank to send money for my brother in high school. She used a door-to-door service, which apparently rated poor on that word: service. In my mind, I tell him, “I could feel for you man, I really do, but no dice. Can’t compromise my family’s security.” I ended up saying, “Sorry po.” His face was turning as red as his very dusty shirt. In the end, he counted the wad of bills in a little corner all the while glancing at me with irritation. I was going to offer him some water, but my patience was running thin. Instead I offered him a freezing litany on poor service and a threat to contact his manager. Whew. Too bad it had to turn ugly. Believe me. I knew he was just doing his job. But somewhere, somehow there was a disconnect. We got $14.7 billion remittances as of last count and I’m sure it can still go higher, but in my book, banks are not nearly doing enough to serve OFWs. Photo: AFP PNB has been number one in this business for many, many years, but since the other year, BPI knocked it off its perch. Other banks are raring to get a slice of the pie, indicating that this is good business for our financial system. I think that if they improve their services – and really think out of the box – more Filipinos will trust banks to bring their money home. It would, of course, be nice if they lower their fees some more. BPI is the most transparent bank when it comes to fees. Their website shows a table of the fees and charges for remittances. I imagine that this would be very useful to OFWs trying to shop around for the best rates. (That got me thinking, though. Do OFWs look for the best rates or is banking still a “relationship” thing? How do you decide which bank to use for your remittances?) So far, Citibank’s Money Card is the one that appears to be very convenient and inexpensive, but its $8-per-$1,000-remittance does turn off those who send less than that amount on a regular basis. I haven’t received PNB’s official reply yet on their rates, so maybe there are better options out there. Do let us know. Why opt for banks? Banks have an image of being unfriendly and unapproachable. Many people believe banks will lend you an umbrella but will take it away when you really need it. So, why give your money to them? If I still remember my Economics 101, banks make money for the economy by using the country’s collective savings to lend to worthwhile businesses that produce goods and employ people...who save and the cycle begins again. That’s a worthwhile reason, isn’t it? Banks are also well supervised and regulated, and that at least can give our OFWs some reassurance that their remittance would not used to buy someone else’s brand new cellphone, which is often the case when our beloved overseas workers ask “a good friend” to bring his money home. (padala system). My thoughts turn back to Mr. Manong as I remember the irritating exchange. I hope next time, my mom will go to the bank instead of the door-to-door delivery.

You’ve all heard of this tip. Experts say the surefire way to get rich is to pay yourself first. Normally, people save money after budgeting for the usual monthly expenses. Paying yourself first means you sock away a certain amount before you pay your bills, your groceries, your haircut and manicure. I can tick off a lot of big names in personal finance – David Bach, Robert Kiyosaki, Suzie Orman. They all say paying yourself first will get you out of the rat race. More than all the scurrying for higher interest earnings and hot stock picking, this one “secret” tip makes a millionaire. Well, not quite. When MoneySmarts put that tip to the test, the figures showed that behind the simplicity of the plan are several conditions that need to be followed to make this work. First, pay yourself and forget about that money or else you’re going to dip into it like a jar full of … ok krispy crèmes. MoneySmarts discovered that some people who tried to follow this tip ended up tipping the jar by the end of the month. It’s important to understand that this money should be untouchable. It’s a good idea to make “the payment” part as painless as possible by automating your savings (talk to your banker) so that you never see a single peso. Try to set up two bank accounts – one for your expenses and one for long-term savings. And make sure you don’t stick your hand into the wrong account. :-) Second, the tip is not going to work without the discipline to mentally give yourself a slap on the wrist whenever you think of getting “a lil bit” of that money for an extra night out, a pair of shoes “that you deserve naman”. Resist that urge and be ready to make the sacrifice if the budget is getting thin before the next payday arrives. You might feel a little bit deprived, though (and that always makes all of us vulnerable to some impulsive shopping when the money does come in) so keep in mind that you HAVE spent for yourself and wisely at that because what you “bought” for yourself is going to grow even bigger rather than depreciate. Do it, even if it means taking a jeepney ride or foregoing a movie date and buying toys for the kids during the usual weekend mall stroll. (Better yet, forego malling and go to a park.) Third is the choice of your savings vehicle. Merely squirreling away 10% (or whatever amount you have decided on) will not really cut it. Your savings vehicle should maximize the power of compounding or else you’ll lose money to inflation. Puhleese, don’t put this money in time deposit or savings deposit. That’s a losing proposition. Angie Llanes-Vilvar, RFP, was kind enough to do our computation for us. A 30-something professional who started working in 1995 might have began with a humble P5,000 per month salary and lets say gets P50,000 now. Along the way, she regularly paid herself first. Actual amount saved as of 2007: P463,200 in a span of 12 years. However, if she merely deposited this in a savings account that paid 1% interest, she will have only P485,182.92. Placed in a time deposit with let’s say 3% interest, her little kitty will give her P533,813.33. Now, imagine if she was a little bit more open to the idea of entrusting her money to a fund manager of a mutual bond fund, her money will grow to P689,259.01 at 8% yield per annum. After all, this is long-term savings, right? What if she was a bit adventurous and placed this money in a variable equity fund that fortunately earned 15%, she will have P1,027,882.86 by this year. “Hmm.. good figure,” Angie says. Yup, good figure. Well, its definitely not guaranteed returns and we don’t know if this is going to be replicated in the following years, but our friend here says after all, her money is in it for the long-term. I can hear her saying, "Let’s just see what happens." Now, one last note. Regularly saving money and paying interest on credit at the same time is like trying to transfer water to a bucket using a container with a big hole. Credit card balances should be paid first because that’s already saving money from interest. There are too many things that we buy and don’t really need after all. Check out this new washing machine. Mitsubishi Electric says this is the world’s first moving washing-drum washer-dryer. Its a drum that can slant angle between 0 and 20-degrees for washing, spin drying and hot air drying. Mitsubishi claims the new washing machine can save washing and drying times, electric expenses. Total price: $2,100. Source: AFP Disgusting. These guys will try to sell you anything!

I’m back! Sorry for being absent for the last couple of days. My PC almost died and went to computer heaven. Can you imagine losing 10 years’ worth of data? I once thought that ol’ box was immortal, now I’m treating it like a vulnerable crystal vase. Back to business. A couple of business articles stood out this week, particularly one that has made several rounds around business and personal finance discussion groups on Yahoo. A survey by Hong Kong-based Political and Economic Risk Consultancy (PERC) showed in a summary made available to AFP that the Philippines was considered the most corrupt country in Asia by almost 1,500 expatriates in 13 countries in January to February. Within 24 hours, President Gloria Macapagal-Arroyo, Socioeconomic Planning Secretary Romulo Neri and even the Makati Business Club were huffing and puffing with their own statements refuting the survey. Come on, guys, tell me something we don’t already know. We see corruption everyday. Would it really matter if we are the most corrupt, second most corrupt, or third in the ranking? I say, ignore these kinds of stories. We have gone past the need to accept that reality. Let’s get moving to news that will actually make a difference between limping and zooming to a better world for our children. If you have not been able to follow business news last week, at the least you should know about the following developments: New, swanky projects in real estate were king of business news last week. Daxim Lucas started the week with “SM unveils mammoth tourism project”, then followed it up the next day with “Ayala unveils plan for Bonifacio Global City”. The real estate industry has been swinging up from a cyclical downturn, infused with funds from investors and overseas workers. Yep, Filipinos have always been very particular with houses and furnishings, even if it meant buying one window, one door, one wall at a time. More real estate and constructions projects are good. At least, for me, money that goes into building homes and roads and fences are plowed back into the economy, not into some Chinese or American or European company’s pocket. That happens so quickly when we buy every new gadget that hits the stores. The financial sector reacts quickly to real estate developments. Doris Dumlao wrote about Pag-IBIG’s new bond offer worth P700M, which would be used to acquire 50,000 housing units. Overseas workers and other investors, with as little as 10,000, can invest in these bonds, so that’s interesting for personal finance. Oh, and rates on 10-year bonds rose from last week’s all time low. It’s at 6.942%, just a bit shy of 7%. I don’t know about you, but for a 10-year instrument, that’s still a bit low for me. Banks are also expecting to get a windfall from the home mortgage market’s upswing, so if you own bank stocks, that should be interesting. Last Friday, newspapers said more Filipinos landed jobs last January compared with a year ago. Read the story more carefully. The figures also showed that compared with the previous survey, which came out in October, the numbers weren’t so hot. Filipinos need to earn and earn well, so they can save for a better future for them and for their children. Employment or business opportunities are an important part of personal finance. Another article (not in the Inquirer) showed that salaries are rising fast in Manila, next only to India, when Asian countries were ranked. Time to do some soul searching if your own salary is not growing. Some other news that personal finance enthusiasts shouldn’t miss: Sun Life says that its mutual fund sales hit P2.6B in end-Feb. Online stock trading firm offers starter account to students. Somebody’s been doing some pretty good analysis of what this country needs! Thank you. At least, our students can start getting their feet wet in the market and learn that there’s more to life than old stuffy theoretical books and getting through another exam week. I find it amusing that there were no takers for 50,000 flight seats in Cebu Pacific promo, because I had been trying to get some! Arggh. Read the story here. Cebu Pacific should start thinking about where its business model failed. And if you are like me, always looking for ways to save, especially on expensive travel expenses, start finding ways to get to those P1-per-ticket seats. Check out Citibank’s answer to a reader’s question on how to provide for your children’s future. RFP Speaks' Joseph James Lago also tackled a reader's question on finding a stockbroker that does not have conflict of interest. I was in a fast food place last week and saw this guy trying to read the business pages. After a few minutes, he gave up and did this. Sigh.

Guys, check out INQUIRER.net's latest column. Johnny Noe Ravalo will be sharing his expertise with readers through 'Ask Dr. Noet', where he will answer questions on the economy, trends, and -- our favorite topic -- personal finance, through the eyes of a macro-financial economist. I met Noet when I was a newbie reporter covering banking and finance for BusinessWorld. In fact, he was the first economist I called up when I wrote my first story on gross domestic product. Oh the alphabet soup of economics and how they looked to a rookie reporter! I still smile when I remember that afternoon, hands all sweaty as I nervously punched the telephone buttons. You can immediately sense how much a person knows when he can explain to a greenie and make everything sound sensible and understandable. That was my first brush with one of the best macro-financial economists in the country. Just to sum up who he is: Noet was chief economist at the Bankers Association of the Philippines until 2002 and has since been doing consulting work for multilateral and foreign agencies like the Asian Development Bank, the World Bank and the USAID. Over the past 12 years, he has been asked to provide technical inputs to both the Senate and the House of Representatives on various economic and financial legislation, some of which will have big impact on Filipinos’ personal finances. He is also a devoted daddy to his twins, who merely think that he is nice to cuddle with at night because he is like a squeezable pillow. :-) Read his first piece : 'Can I lose everything I've invested in mutual funds?' Read our news article on his column: INQUIRER.net launches ‘Ask Dr. Noet’ column Congrats Noet, and thank you so much for sharing your knowledge with INQUIRER.net's readers.

Talked to my good friend Rodney last weekend and asked him for tips on choosing a stockbroker. Since the bulls went wild last year, more people are thinking of putting in some dough in the stock market. The oldest piece of advice and still the most important one is: don’t play to make a quick buck. If you want to invest, do it for the long term. Pay close attention because this is an insider’s tip. Our conversation went like this: Rod: Choosing a broker is like looking for a boyfriend or a husband. Salve: Hmm.. I look for someone who will spoil me and buy me stuff? Rod: That’s the grateful partner who is thankful you love him and trust him, so he will watch out for your investments. Be careful of the charismatic or the bolero type. The one who will promise you the moon and the stars, but will leave you brokenhearted when he gets what he wants. He is the broker who will boast of his right calls and his earnings, yet hide his losses. Meron din Mr. Torpe. He is the type who will only take your orders without giving advice. But every girl likes the "bad boy." This one likes to ride the volatility of the market. There is no such thing as "insurance selling" or "topslicing" for this kind of stockbroker. He plays the speculative stocks and bets everything on them. Some bad boys make a lot of money because of this philosophy, but when they get burned, they can get hurt really bad. To distinguish a "bad boy" investor, watch out when he plays speculative and fast-rising stocks like the BWs, the Philwebs, and of course the current flavor of the market, GEO. For him, its better to crash and burn than fade away.” I’m crossing my fingers you’re not “with” anyone like these right now. Break-ups can be hard, but some things just need to be done. :-( For those who have found THE right one, keep the investing love alive. :-) By the way, Ron Nathan had a really great column today and Citibank came up with another article for parents who want to understand investment instruments that could be used to provide for their children’s future. For newbies who want to get their feet wet in the stock market, the Philippine Stock Exchange’s website has very good material. Exploit it, its equivalent to a free seminar and you don’t even have to get dressed and drive. Happy reading.

MONEY Myth Buster of the week: Buying in bulk saves time and money.

Walter Mart, Price Smart, and the now-defunct Super Sale Club attracted a lot of buyers using this marketing strategy. I remember watching frazzled mommies cart away boxes of noodles and bags of different-flavored cereals with my own overflowing cart in tow. Time to do some Money Myth Busting to find out if this tip really holds water.

Money Smarts went shopping (how I love being a journalist! :) ) and asked a lot of mommies for this blog entry. The result of the Myth Busting session? Goods in sachets are extremely expensive, especially shampoo -- but all other sizes have almost the same prices.

In SM Hypermarket, (no plugging here, it so happens that SM is close to where I live) a sachet of Rejoice shampoo costs P21.75. That’s a 10ml pack. The next-bigger size is a 200ml upside-down tube that costs P86.75, then a 400ml tube for P155 and a 750ml bottle sold for P300.

If you buy a 200ml tube of Rejoice using sachet price, you’ll be paying around P435! That’s more than five times more expensive. But here’s the weird part, buying two 400ml tubes is cheaper than buying the bigger sizes. The same goes for Head and Shoulders shampoo.

With my newfound understanding, I march to the condiment section. I remember shopping in Price Smart where you can only buy big Silver Swan plastic bottles. A close look at prices shows that it doesn’t pay to buy in bulk at all! In fact, the medium-sized bottle (500ml) is most expensive. The refill pack and the big bottles cost P0.025 per one ml. I groan as I remember that most of my money ended up at the bottom of the bottle as a dark, grainy liquid that I couldn’t use even as a marinade. How in the world can you use up a two-liter bottle of soy sauce in a month for a family of four?

Again, the same goes for canola oil and Pride detergent. It’s different for sugar, though. I got a P1.45 discount for buying a 2.5-kilo pack of Hermano sugar as opposed to a one-kilo pack.

There’s another consideration aside from price. Goods can get spoiled and can be used irresponsibly. If you buy products good for two months to get the discount, and use them all up in a month, you have actually overspent and not realized it. Also remember that veggies can wilt and canned goods have expiration dates. That huge slab of cheese can look like a great bargain, until you start eating out because you’re tired of macaroni-and-cheese, spaghetti with a lot of cheese... you get the picture.

So there you go. Instead of mindlessly buying in bulk, buy wisely. For mommies in the grocery, let me add this: Buy what you need -- and get the hell out of there!

Till next week on Money Myth Buster.

AT INQUIRER.net, finding out just how crazy our readers are about Kris Aquino with her Paris Hilton-ic appeal to Pinoys has somewhat become a game. We have long ago realized that even if you bury stories about her in the website, Pinoys will zero in on them like a homing beacon!

Even businessmen (shh they won’t often admit it) read “less serious” pages first too, before they thumb through the business section.

I asked a lot of people why. Their answers ranged from the need to get a break from “serious” stuff, to needing a decoder to understand the business section.

That made me smile. I remember a conversation I had with a wizened, grizzled but kindly taxi driver when I was covering the econ beat for another business paper years ago. He didn’t need a decoder to understand the annual price increases, he felt the impact in the size of the galunggong he brought home for dinner -- but somehow just thumbing through the business pages seemed extremely stressful to him.

That’s what So What Chocnut? will try to do. Get you through the business pages and make sure you don’t miss out on the stories that are not just nice to know, but stories that you should understand so you could make the right decisions for your personal financial plan. Well, I hope you don’t mind if we throw in one or two business news that are just “nice to know” :).

Early this week, Doris Dumlao reported about the government’s streamlining efforts. Think of the government as the country’s biggest corporation, employing the most number of people because it has more than 80 million customers (that’s you and me and everyone else in this country). Any streamlining will have a big impact on everyone. The DBM has been sitting on its blueprint for streamlining the bureaucracy for years and not even other economic agencies could take a peek. You could say this has created some tension.

Similarly, today’s story on Ayala Land’s joint venture with Saudi Prince Alwaleed bin Talal bin Abdulaziz Alsaud (nicknamed by Time Magazine as the Arabian Warren Buffet – thanks for that info Mr. InvestingBearishMarket!) will have a big impact on employment and the economy, as well as lifestyle. That’s some kind of project (and stock) to watch out for. If you’re particularly interested in the technology arena, read the article on PLDT’s P8-B budget for the next-generation network. I’m not a fan of PLDT because of its poor service, but it’s a big player that unfortunately cannot be ignored. If it’s spending this much on new technology, it will be worth watching if that kind of money is put to good use. Two stories related to OFWs came out this week. “OFW remittances seen at $14.7B this year” and “OFWs might not take $1-B bond offer – Treasury.” I remember going to a small town that only had a dirt road but two good looking houses. Someone’s mom, aunt and daughter worked as a nurse abroad. Cash from OFWs is making the real estate industry look really hot and if you are following the economy, this is an important indicator to watch. Keep reading more of the business section, but if you have tolerance for only five articles, at least don’t miss these stories. Till next week!

YOUR e-mail messages and comments totally had me floored. Thank you for your interest, thank you for welcoming me to the blogosphere, and thank you for inspiring me. What began as just another interesting project has become a worthy cause. It’s particularly cool to receive e-mail messages from the 20-something group. Y’all know what it felt like to be a college grad -- the whole world seemed to exist to amuse you. You feel like you’ll be 20-ish forever. But read this e-mail from Patrick Mineses:

I was reading your blog, Money Smarts, and became interested in discussing financial goals because I really don't have any direction on that matter. I guess you could describe me as a typical fresh graduate of the IT industry, lives with his parents, but also tries to contribute to household expenses. I have a little savings that I've built up through the years.

Patrick is lucky to have escaped that malady that infects many in this age group: an inability to think about the future. One of the most important concepts in personal finance is time value of money. Yeah, it’s a mouthful (and there are a thousand technical definitions out there) but it all boils down to the fact that those who start early have a bigger chance of retiring in style because they have more time and can consider more options to grow their money. Patrick, time (can you hear Denzel Washington humming that eerie song) is on your side! :) Now, let me transport you to Metrowalk or Eastwood on a Friday night. Chances are you’re going to be eaten by a crowd of latest-mobile-phone flipping call center agents speaking with a New York accent, nursing a Starbucks latte. Some of them would be standing near café entrances trying to finish their cigarette as if they have a deadline. Here’s a challenge and I hope you really do win. Can you find me at least five in this crowd who save as much money as they fork over at Starbucks? Skipping the daily latte means you save around P150 per day. That translates to P3,600 a month on a six-day working week or P43,200 a year. That can already buy you a decent life insurance policy. Invested over a five year period with a compounding 5% interest, your latte budget can give you a cool P55,135 smackaroos! (Before latte drinkers crucify me, this also holds true for all other things we buy that we can, in fact, live without.) Let’s look at the not-so-sexy flip side. Around 42 years ago, 1,000 shares in PLDT would have cost P46,000. I know, that must have been a big amount of money back then, but bear with me please. If you were 20-something then, and bought 1,000 PLDT shares, and held on to your shares despite the eruption of Martial Law, the EDSA revolution, the Asian financial crisis, and sold your shares today, that would mean an additional P2.36 million you can spend on all the latte that you want! Of course, the choice of stock is also crucial and no, I’m not particularly recommending PLDT. You could have invested in a company that turned out to be a dud and now your shares would be worth nothing. But this illustration shows that whatever your choice of investment and whatever the strategy you used, you would have a bigger chance of winning if time is on your side. You can even refine and redraw your plan when it’s not giving the expected results. Bottomline, it pays to start early. Kudos to you Patrick, and many of you out there who are members of the 20-somethings that are already craving for financial independence. If someone from the Department of Education or universities is reading, please include financial planning in our general education classes. Over at UP Diliman, our kids are really asking for it. Note: All photos courtesy of the Lopez Memorial Museum Collection of old newspapers.

IF all this talk about the way we are eating the dust of our more progressive Asian neighbors puts your teeth on edge, as they do mine, why don't you join me in a little exercise? Look around when you're malling or just eating out. There are millionaires around us, never doubt that. I'm talking about rich people -- none of that millionaire-at-heart blah. I'm talking about individuals who have worked hard in their professions, and made it their business to understand money. People who want to have a full life and who don't live payday to payday. OK, so the word "millionaire" might be stretching it a little bit, but just for the sake of literary appeal, let's call them your neighborhood millionaires. For sure they aren't the Henry Sy-types -- they drive modest cars, some even live in rented homes (that'll be the subject of another blog!) but their kids go to the best schools and they don't drink Starbucks coffee everyday. Point is, being well-off certainly is not just a hazy dream for average Pinoys. It's happening all around us to many people and it can happen sooner to more people if the right ingredients are allowed to brew together. Blast the GDP figures and government's number crunchers who say too many Filipinos live below the poverty level. (My fave economist Noet Ravalo will give me a lecture when he reads this). This blog is for those who want to know the ingredients, who want to be inspired by other Pinoys who give the rat race a kick on the butt, and for those who are already financially independent but want to coach some people along the way. This is a blog for Pinoys who want to be money-smart, not just rich, and for Pinoys who understand that the best way to focus on that goal is to help each other. Look out for Friday entries called So What Chocnut? where we will try to make sense of business stories that matter to us. I am also going to put so-called financial tips under the microscope and report to you if they really work in Money Myth Busters. (Do you have a tip you want me to test? E-mail me.) Lastly, I'm looking for an individual (better if a couple) who wants to discuss his financial goals with me and, reality TV-style, record in this blog his journey to that goal with the aid of financial planning experts. (If you want to be this person, e-mail me!) Almost 10 years of business reporting and writing about personal finance has blessed me with opportunities to meet a lot of people and one thing is evident: those who try to reach financial independence together have more fun. Speaking of fun, look at how these traders were having fun in the stock market. This is a picture of the Manila Stock Exchange back in 1935. I had fun digging up old issues of the Manila Chronicle and found these old photos at the Lopez Memorial Museum. They were using chalk to record trades, can you imagine that. We had the best exchange in Asia, even in those days.