February 2008 Archives
Your investment strategy will be driven by how much resources you can invest (i.e., what you have), how much you want to attain (i,e., what you need) and how much time you are willing to allot (i.e., your investment horizon). No matter how the investment gurus package their own secret method, all that has been said of investing invariably goes back to these three items. Think of going on a trip: you want to go somewhere from where you are right now and you ask yourself what travel arrangements can be made.Aww… Noet took away what most of us media persons love to write about. “HOT” investment tips, the darlings of the market, the favorites of the season. You all know how much those headlines lure in readers! (laughing at myself) It’s so much easier to write about hot investment tips than go into the details of why it is important to have an investment objective, and figuring out different investor types and risk profiles. Most people find the first sexy and the latter just plain boring! But we gotta do what we gotta do, right? We gotta go into the boring and bland stuff if we really are to help in bridging people to their financial dreams, and thus help them enjoy life with less worries. Noet wrote about four investment types. In this article, he discusses why it is important to know in which group you belong. Haves: high net worth individuals who are typically clients of banks’ private banking unit.
HNIs already have lots of savings and have a high income to go with that. This gives them the twin luxury of having a significant stock of investable funds and a strong recurring flow of new saving to either add on to wealth or replace any depletion of it. Without a doubt, they belong to the group I call the “Haves”. For this group of investors, returns at par with Treasury Bill rates will be too low. They would be interested in more “sophisticated” instruments, derivatives, FXTNs, structured products among others. The complexities of these instruments coupled with the ability to invest long-term makes it worthwhile for HNIs to delegate the task of monitoring and managing investment information to a preferred financial specialist. For HNIs, the opportunity to garner better returns must come at the price of more risk and a larger minimum investment.Getting There: Has enough income to live comfortably but has not accumulated wealth at the level of the “haves.”
Having more income than they can spend and consciously looking out for their future, the investments profile of this group tends to cover a wide range of instruments. This does not mean that they will splurge on every new offering in the market. The tendency is to get a feel of the instruments available with a little-of-everything approach. Access to information separates the “haves” from the “getting there group”. Those in the latter will have some access to investment information but they often have to gather these on their own. Without a Relationship Manager to help them, this may involve a lot of self-study or finding things out within their network of peers, both professionally and socially. This makes them vulnerable to investing with the herd. When things turn badly in the market, those who have better or advance information can shield themselves; those who have delayed information are the ones who bear the largest burden of a loss.Liquidity Savers: Most Filipinos are still in this category. Deposit in the bank ranges from a few thousand pesos to more or less P250,000 and most of the salary is used for regular expenses.
For “liquidity savers”, income tends to be modest and therefore cash flow and preserving capital is the dominant concern. With a lot of perseverance, good health and kind luck, savings can quietly accumulate over time specially once the children take on regular employment. Investments – if any – will be limited or conservative.Currency Converters: overseas Filipino workers who have to contend with exchange rate risks.
With “currency converters”, the issue remains unchanged: they earn in one currency and remit part of these earnings to dependents in the Philippines. Their concern, therefore, is not just about financial instruments but also the choice of currency if they invest and/or the timing of the currency conversion if they want to remit into the Philippines. Distance is obviously an issue and so access to reliable information and monitoring are huge constraints.So…where does that leave us? When faced with the “It depends” answer:
“It depends” isn’t the cop out that it looks like but a healthy reminder that you would have to respect details before making any investment. Once you have done this honest assessment, you could now consider fine-tuning the investment options out there to the resources that you possess and the considerations that matter to you.Here are some questions you might like to ask yourself if you want to know which group you belong to:
- are you generating regular saving from your work income or some other source?
- how much will you be investing?
- do you foresee a regular or periodic amount of saving that you can invest?
- what factors do you consider yourself sensitive to?
- how big a loss you can afford to accept just in case things do not work out?
- do you wish to generate periodic returns?
- for how long do you want to keep your investments?
- how do you react to uncertainties?
- how much access do you have to information?
- do you expect to actively participate in monitoring and managing your investments?
From other bloggers:Joelle of Mommy Banker suggests ordering water when eating out. For those who own restaurants, you know this is sage advice ☺ That fun-looking concoction with sliced fruit on top is grossly overpriced most of the time! Ria suggests bringing only the exact amount when shopping or doing the grocery. I had to laugh at myself, Ria, when I read your tip because simple as it may sound, it’s really tough to do! But oh so good for the wallet. Cezar suggests using Quicken to make sure you keep track of your spending. Sigh. I’m baaaad at keeping track of spending, but I promised to do this last year. Let’s try again. Paetechie's post on a deceptive sales presentation from a Fern-C agent says we can be frugal by not being easily taken in by sales persons. Save me from TV shopping networks!
Nine weeks. That may not be enough to get back on one’s feet. Thus, there is a need for an emergency fund that should cover anywhere from three months’ to six months’ worth of expenses. This will help you tide over the tough times until you get back on track. Besides, borrowing money to cover emergencies will cost you more. Should you save for three months’ or six months’ worth of expenses? Some financial experts advise only three months’ worth of expenses in the emergency fund if you are employed. If you are self-employed, they say you’ll need six months’ worth of expenses. But of course, the more you save, the better. You do not know when bad things may happen and for how long they will last. Save at least six months’ worth of your expenses — living expenses, bills, saving for a child’s education, and the like. As to your big challenge: How to save for an emergency fund when there doesn’t seem to be enough funds in the first place. Here are some tips: 1. Stick to your goal. If you say to yourself that you will start an emergency fund, be committed to do all it takes to fulfill that goal. 2. Review your obligations. You mentioned that you have “so many other obligations.” Study your list and find an expense you can cut down. For example, if you haven’t been going to the gym at least three times a week, then you may be better off canceling your gym membership. The savings you will get from canceling the monthly dues can be channeled to your emergency fund. You can find another exercise alternative that won’t cost you money, such as walking in the park. 3. Before spending anything for the month, save first. Once you get your paycheck, set aside some money for your emergency fund. Start with at least 10 percent, and increase it as you free up more obligations. Making saving a priority will be beneficial for your financial future. 4. Open a separate account for your emergency fund. This will help you to avoid dipping into your emergency fund for living expenses. 5. If you have a sideline income or receive a windfall (example: bonus or prize money from a contest), use this to pay off your debts, then put the rest in your emergency fund. 6. Cut down on expenses that you can do without. These may include weekly trips to an expensive coffee shop, or going for designer clothes. Just think: if your family is in need or has an emergency, you wouldn’t even think of these things. But you will rack your brains thinking of how to meet the family emergency with your meager funds. Thus, prioritize the emergency fund.If you or anyone you know is struggling to set up an emergency fund, how’s this for motivation. Forget the three to six months rule of thumb for the moment. Just start saving any amount upwards of P1,000 this payday and move on from there. Start with small steps and give yourself a pat in the back afterwards. Consistency is what matters most. You’ll find it easier as you go along. Good luck!
***Every fourth week of the month, I will share tips on being frugal and give you all a chance to share yours. If you are a blogger, simply write your tip in your blog on the same week, and send me a link by emailing lightdream (at) gmail (dot) com. For blogs on personal finance that I constantly read, no need to send me the links. As our personal finance article from MoneySense today says:
Money is a struggle many people face, and the struggle becomes more difficult when you don’t really have any idea where your paycheck goes. But saving is not only good for your wallet – it’s also good for your mind.More frugal living tips from the article here. The best frugal tips from MoneySmart readers shared at the end of my previous post on Misers and Money: Edzmaya: Commute, use common plastic bags instead of buying garbage bags, recycle post-its, recycle gift-wrappers, ribbons and gift embellishments. Nina: Don’t withdraw from other banks’ ATM. Omski: Turn off lights and electric fans after using, fix leaking faucets, use fluorescent lights, walk more, do garage sales every two years and don’t spend the earnings, bring a list to the grocery and stick to it. Eicon Aviva: recycle Christmas gifts. AJ: Put water on ketchup bottle to empty it, make fried rice from leftovers and recycle plastic and glass bottles, styro, trays, old school bilaos and other stuff from take-out food. You know those termites that eat perfectly good looking blocks of wood? Sometimes, our personal finances can be like that. We don’t realize that we are losing money from little stuff that we have overlooked. So share your tip so we can all keep the financial termites away!
At the heart of the issue is financial literacy and what drives that is information. The great majority of our investors --- existing and would-be ones like Erick --- do not have access to information on all the options available. Since money is comparatively tight and the complexities of the financial market can be intimidating, liquidity will be a primary concern. But in this situation, keeping tabs on market changes is important. Unfortunately, access to these information remain very uneven.I would like to think forums and blogs on personal finance, wealth management, investing, help in making information more accessible to the public. There are new ones coming up everyday. They should not be the only source, of course. But there’s nothing wrong with grabbing every opportunity to inspire someone to be more responsible with his finances. Just recently, Income-Tacts made its debut. I also recently discovered Absolute Traders, which aims to help people on personal finance and investing. Those who have websites and would like to be reviewed, drop me a line at lightdream (at) gmail (dot) com. I like the way Noet ended his column.
The fact that you are asking is a very good sign. But for the question to have any real value, you will have to act on it. Let me end by tempting your imagination. Can you imagine what the cumulative value would be if you invest P10,000 a month regularly for 1-month placements and continuously rolling over at a modest 3.0 percent per year for 30 years? It is P5,841,937.27. Not bad, don't you think?Some of the steps we may be able to make at certain points in our lives may seem small and insignificant. But every little achievement can go a long way!
Question: I have been working for the past five years and have been saving money in the bank. I now want to move some of my savings to other investments. They say investing in the stock market is good, and that this is a good time to buy. But I don’t know how this works. However, the thought of owning company stocks excites me. Please explain how the stock market works and how one should invest in it.—BernadetteAnswer: Many people find it exciting to invest in the stock market. Think about it — the concept of owning a portion of the fast-food outlet you go to, the airline you patronize, and the bank you have an account with and so forth makes you feel that you’re on the right track when it comes to finances. You “own” something big and that feels good. And that’s exactly what owning shares of stock is — owning a portion of a company. You can be a stockholder by joining a corporation that’s being put up, in that case, you will also be an incorporator, or by buying shares of stock of existing corporations either privately, through a pooled fund, or via the stock market. A stockholder is also called a shareholder. If you buy shares of stock yourself (via the stock market or by directly buying from other shareholders or by being one of the incorporators), you will be given a stock certificate saying how many shares of stock you hold in your name. Depending on the kind of stock you hold, you may be given voting rights whereby you may vote for the company officers during stockholders’ meetings, or preferred rights, where you will be given preference in decisions affecting stockholders’ holdings. The nature of stocks Because stocks are traded every day, their prices change a lot. The price of one share of stock at 9 a.m. when the trading day opens at the stock market may be different from its price at 12 noon. Think of the stock market as a bazaar where sellers offer goods at a certain price and buyers offer to buy them at a different price. The stock market is very volatile. It reacts to market forces and to the political and economic climate. Thus when there is perceived political instability, the prices of stock more often than not goes down. This is because nervous stockholders dump or sell their stocks in the market so they can take their money somewhere they perceive to be safer. In the same vein, when investors get wind of bad news about a certain corporation whose shares of stock are traded in the stock market, some of them may sell off their holdings driving the price of stock down. On the other hand, when investors hear of something good happening in the economy or the government or in the company itself, they will buy more stocks, driving the price of stocks up. This is the law of demand and supply at work. Since the stock prices fluctuate widely, stock market investing is recommended only for: 1. Brave hearts who are aggressive and won’t mind taking high risks for the chance to earn high returns 2. People who would like to invest in the long term, as doing so would let them ride out the market fluctuations and realize a gain in the long run Getting into stock market investing If you decide to invest in the stock market, there are two ways to do it: 1. Choose a licensed stockbroker. This broker will handle your “orders” and buy and sell stocks for you. You may also ask your broker for advice as brokerages employ stock market analysts who study the markets. You may choose to deal with a licensed broker who does the transactions by phone with you, or with an online broker you contact. 2. Join a mutual fund or unit investment trust fund (UITF) investing in stocks or equities. These pooled funds gather the small investments of several people then invest the money in a mix of stocks that fund managers think will do well. Take note that investing in the stock market comes with additional fees: broker’s commission, fund fee, and documentary stamps tax. As to how much money to put in, you may want to start with the minimum investment required first since you are still a beginning investor. Some mutual funds and UITFs accept investments for as low as P5,000 or P10,000. If you will directly invest with a broker, you may be able to put in an amount as low as P3,000 depending on the minimum board lot or the minimum number of stocks one can hold. Although you may realize high gains by investing in a specific stock, your investment may be safer if you invest in a pooled fund. This is because your holdings will be diversified—the fund will invest in a number of stocks, not just that of one company. By doing so, investors may be better shielded from greater loss should one company stock go down; the other stocks may compensate with gains. About IPOs When companies want to offer their stocks in the stock market for the first time, they do an “initial public offering” (IPO). The public is given the chance to buy shares of stock at a predetermined price before the stocks are put on the stock market. A lot of investors look out for IPOs expecting to make a quick profit. In the past, prices of IPOs go up on the day the stocks were listed in the stock market. Read the business page to see what companies will be having IPOs soon. Other tips You may potentially gain a lot in the stock market, but you may also lose a lot. Go into it only after determining if you are comfortable with taking high risks in your investment. Hold your investment in the long term to maximize the possibility of having gains. If you trade often to go after short-term gains, there’s a risk you may lose out on bigger gains offered later, such as when the company gives out high dividends or stock options, or its stock price rockets up. Returns from short-term gains should be enough to compensate for the higher fees associated with such trading. Don’t put all your savings in stocks. Diversify and have a good mix of safe and risky investments to have an overall better yield.
The first step is to know what you want. A philosopher once said, “Take care to get what you like or you will be forced to like what you get.” Your goals have to be laid out and specified. Maintaining your current lifestyle, your children’s education, a comfortable retirement, a completely furnished house, a wonderful vacation, involvement in charitable causes, and a second honeymoon can all be important to you. But how do you rank these? What are your priorities? Setting your objectives right is the most crucial first step in creating your plan. Second, you have to study your financial position. How much income do you receive and what proportion of this do you spend? How much have you saved? In what instruments are these invested? Do you have loans? It will be worthwhile to know how your current situation is and check if it matches the prioritized goals you have established. The answer to this question is critical: Are you on track with what you want to achieve? If your answer is yes, or if you are quite close, then you will not require any radical changes. But if the answer is no, or if you are “way off,” then you will have to either change your lifestyle, reposition your investments, check on your inflows and outflows, thereby effecting a change in your financial position to direct your track towards your goals. Another alternative is to alter your objectives altogether because they may be too unrealistic. When you have completely analyzed “where you are” and “where you want to go,” you can now evaluate your investment options. This particular step will define the vehicles that you will choose to reach your desired investment targets. In more technical terms, this is commonly referred to as the creation of a “portfolio.” At this stage, you have to differentiate instruments as to their capability to earn (yield), the probability of losses (risk), the time horizon that you will be committed (liquidity), and the taxes that you may be exposed to. These factors are very important in the selection process because there has to be a match between specific goals and the choice of vehicle. There is no such thing as an ideal investment for everyone at all times. Much depends on your financial situation, risk appetite, investment acumen, and the time frame you have in mind. Another reason why this evaluation is important is the fact that these factors are manifested in varying degrees within a given instrument. For example, a high yield may naturally mean that you will be taking greater risks. It may also mean that you are committing yourself to a longer time horizon. It is ironic that many people focus on earnings alone without thinking of what they are sacrificing in return for that higher yield. On the other hand, too much focus on safety and liquidity may limit what you will earn. This can result to the under performance of your “portfolio” thereby making it difficult for you to meet your targets at your desired timeline. You also have to keep in mind that you have many choices. Savings and time deposits, life insurance, real estate, mutual funds and unit investment trusts, money market placements, and many other instruments are there to build up any investment basket. In the end, matching and balance is the key to portfolio creation.
1. Identify your needs If you are single and earning but have no financial dependents, then you may not really need life insurance because nobody will be “financially hurt” when you are gone. If you are married and family members are dependent on you, and if you also happen to be the sole earning member in the family, then you need life insurance. Your entire family is dependent on you for financial support and, in your absence, their lifestyle would be severely impaired. 2. Determine how much insurance you need The next step is to ascertain the amount of coverage. The concept of human life value (HLV) can help in deciding how much coverage you should opt for. The HLV takes factors like your annual income and expenses along with the inflation rate into consideration while calculating the value. 3. Identify which product to buy After having quantified the need for insurance, the next step is to finalize a plan that will accomplish your need. There are two kinds of insurance plans – term plans and savings-based plans. A term plan insures a high sum at a low cost. A term plan makes for a good fit in all individuals' portfolios, irrespective of their profile. Some people also look at life insurance as a savings instrument. Here, apart from insuring a person’s life for a certain amount, savings-based life insurance plans also give returns on maturity. This is unlike term plans, which act as a pure risk cover and do not give any returns on maturity. 4. Compare policies across companies Before zeroing in on an insurance plan from any company, you should compare policies across insurance companies. This will help you in evaluating which insurance plan is best suited to your needs. One way of doing this is by contacting the insurance agent and asking him for a comparative analysis of insurance plans. Another way is by visiting the websites of different companies and scouting for relevant information. 5. Select an insurance provider Having understood how much insurance you need, you then need to approach a life insurance provider. Individuals wanting to buy insurance should preferably opt for full-time life insurance agents. The agent should have a good track record in offering objective advice in the client's favor and not his own. This will stand you in good stead over the long run since life insurance needs call for evaluation every few years and the insurance agent will help you with the same over a period of time.
- Is your expected income sufficient to cover the amortization?
- How much of an increase in the amortization can your income tolerate?
- At what loan rate can your income stream handle at the maximum?
- If rates do go down, can you advance payments?
- Will there be a penalty?
- How about pre-termination of the outstanding loan amount?
- If currency conversions are involved, by how much will the cost-benefit analysis be sensitive to exchange rate movements?
- What does this mean for the timing of the conversion of the funding as against the timing of the revenue stream?
Love coupons Use a word processor and clip art to create 8-12 “coupons” the size of a business card. Each coupon can be redeemed for something the recipient will appreciate. You might create love coupons that your partner can use for a night on the town, a candle-light dinner, a movie of their choice, a weekend getaway, guilt-free time with friends, or — if you’re feeling particularly romantic — fantasy fulfillment. A second “first date” The easy familiarity of a long-term relationship is a wonderful thing. But that familiarity can easily become a “rut”. Shake things up by pretending you’re going on your first date again. Give yourself a college student’s budget, and do the sorts of things you might have done when you were younger. Eat at the local burger joint or pizza parlor. Go bowling or roller-skating. Attend a free concert. Make out in the back row of the movie theater.
Every couple has a collection of private rituals and symbols. These silly phrases and routines are like glue for a relationship. When Kris and I were first dating in college, for example, I picked up a horse-chestnut from the quad. It was smooth and strong and beautiful. I liked it. On a whim, I gave it to Kris. “This is a love nugget,” I told her. “It’s a reminder of how much you mean to me.” For almost twenty years now, horse-chestnuts have been a sort of secret code between us. I know it’s silly, but I’d rather have Kris give me a “love nugget” than have her buy me something new.From Rather Be Shopping:
Music mix of songs that remind me of him. (From Salve, knowing me, I would rather give him a music mix that would remind him of me! Heh) Flirt all day long. Re-enact your first date together. (From Salve, that would be a night at the UP Oval, under a full moon.) Wash his car. (From Salve, naaah. Hehe)From FrugalPinoy:
Watch DVDs. (From Salve, malls will be packed anyway. Why not watch all-time favorite movies in your room, with no hassle at the parking lot and lining up for tickets?)Whatever you do, make sure you spend time together. Really spending time talking long into the night. With yummy dessert maybe. And lots of laughter. Love does not have to be expensive. But if you want to add a diamond ring, that’s fine by me too. Just don’t get it from the retirement fund. :-)
NEW YORK (FORTUNE) -- Billionaire investor Warren Buffett said Tuesday he is offering to take over the liabilities of the troubled bond insurers, whose shaky finances have regulators and Wall Street greatly alarmed. The billionaire's Berkshire Hathaway (BRKA, Fortune 500) approached the three largest bond insurers last week - Ambac (ABK), MBIA (MBI) and FGIC Corp. - offering to reinsure about $800 billion in tax-exempt or municipal bonds in order to maintain their 'AAA' rating, Buffett told CNBC in a televised interview. "This would just eliminate one major cloud from the market," said Buffett. Under the deal, Berkshire Hathaway would add $5 billion in capital to his recently formed bond insurance company - Berkshire Hathaway Assurance Corp. - that would strengthen the new company's ability to take on the liabilities of the other bond insurers. Buffett, however, admitted that the offer was not solely a gesture of goodwill to help rescue the struggling industry. Berkshire would stand to collect a steep 150% of the companies unearned premium reserves. Ambac and MBIA's combined reserves stand at $6 billion, so in their cases Berkshire would receive $9 billion for taking over their liabilities.Yesterday morning, markets immediately reacted including the Philippine market. And you might want to read about market reactions here. Nothing like having loads of cash and a shrewd business sense to turn difficulties into opportunities.
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.I would tell the bank to shove the French fries up his nose (no funny words here please), but that’s just me. The owners of more than P3 trillion of deposits out there are still parking all of their money in bank deposits. Don’t get me wrong. Bank deposits do have their places in our financial lives – for emergency funds and other savings that need to be kept in an easily accessible but secure place. But there’s something wrong when almost all our money – even those for long-term saving – are parked in an account that earns no more than the cost of French fries monthly. This low level of return is causing people to think of other ways to grow their savings. Noet reports that people are beginning to consider jewelry, timepieces, and real estate. They come with their own quirks. Some characteristics of these alternative investments that investors should think about are: 1. They are not that easy to sell or to liquidate (see my previous post: How to sell jewelry) 2. Valuation is subjective 3. Get ready to do a lot of studying and comparing, and don’t just browse through contracts. You really have to read the fine print and then afterwards, read some more. So you have plain vanilla deposit products on one end, and alternative investments on the other hand that have the potential to grow AND shrink your money. Rushing from one end of the spectrum to the other can be disastrous, as many of you who have been “forced” into aggressiveness by friends, family or (I hope not) financial planners have discovered. Loss of sleep and nervousness or worrying no end about money are just some signs you have not transitioned properly. A friend was complaining to me one day how her son seemed to grow into a man overnight. His voice changed perceptibly and he acts differently now, she says. Those of you with teenagers probably recognize that instant when almost like magic, boys morph into these beings with deep voices and forays into coolness and hip-ness. What’s the connection? That moment when an investor begins opening his mind to risk is a milestone. It happens to many and I hope it happens to more risk-averse Filipinos or else a lot of us will retire poor. Of course, I am not saying you go and get yourself in an investment plan that will pay 4.5% per day! But you can say when “protecting the principal at all costs” turn into “let’s see what this can do”, that’s a magical moment -- a rite of passage if you must into a more mature investment attitude. What can facilitate a smooth rite of passage? More information? Deeper understanding of finances? Role models? Encouragement? Simply getting your feet wet? What has it been like for you or someone you know?
It all depends on your needs and goals. If your needs are for the long term, you may want to consider holding on to your investments in mutual funds and UITFs which may both invest in bonds alone, stocks alone, or a combination of both. This is because equities have been identified as the best performing asset for the long term. The market will improve in the future—we just don’t know when. Now if you have needs such as your child’s college tuition and if you put your fund for this in the pooled funds, you may or may not move your investments to a safer alternative. It depends on how much time you have left until you need the cash. If your child is going to college in a year or two, then it may be best to go for the safer investments, after taking into account if you’ll have enough by then given the lower interest rate given by time deposits.Diversification is also a much-touted strategy that never loses luster. Putting your money in different baskets will protect the overall amount if one or two baskets get steamrollered by whatever hiccups are shaking markets up. Marvin Fausto, BDO treasurer and senior vice-president, in an earlier interview recommended buying when there’s uncertainty, while at the same time continuously rebalancing one’s portfolio. “Blue chips are cheap now. When the market is down, you buy blue chips. Buy second and third liners when the market turns bullish. The first thing foreigners will buy are blue chips,” he said. Newbie Trader thinks bargain hunting is a good idea when you are well informed and ready to wait.
The creation of bargains: As long as you're sure about the stock's value, then I think its a good time to buy when foreign buying is low. Foreign buying adds to the competition among buyers and pushes prices up.So, can you play bull in a bear market?
My friend said he knew that it is not good to put all your eggs in different baskets, so he deposited his money in different banks -- the BPI branch in Binondo, the branch in Makati, and another branch in Quezon City.Seriously... :-) Accounts under one name, even in different branches and different kinds of deposit accounts will be treated as one account and insured only up to P250,000. The PDIC website gives illustrative cases for joint accounts, in trust for accounts, and/or accounts. Very easy to understand and very clearly illustrated. Click here. Remember, banking is all about trust, more than convenience. Stay away from all those red flags and don’t diversify across branches! :-D
"It is important to note that from a high of 28 percent seven years ago, the share of US demand to total export income of the Philippines has shrunk to less than 20 percent as our exporters have diversified their markets," Bunye said in a statement.Who can argue with figures? But he unfortunately ignored the need to discuss how many overseas Filipino workers in the US and North America would be affected by a recession and what that figure means for the local economy. Finance Secretary Margarito Teves, I hate to say it, almost sings the same tune.
While a possible slowdown or recession in the US economy could dampen the growth of emerging markets, the Philippines will likely withstand the adverse effects of such a development largely because of its improving economic fundamentals,” Teves said.On the opposite end of the spectrum is real estate consultant CB Richard Ellis with its aggressive and bullish statements. This story also came out in CNN.com.
A looming recession in the United States is expected to boost the Philippines' booming property market and its outsourcing industries, real estate consultants CB Richard Ellis (NYSE:CBG) said Thursday. 'We see no end for the demand for commercial real estate,' CB Richard Ellis Philippines chairman Rick Santos told a news conference. 'We haven't seen this much interest since pre-1997 (before the Asian crisis),' he said.The statement made for catchy news, but if you look closer it sounded self-serving for a company that has purchased quite a lot of properties in the Philippines, especially commercial real estate. IBON research also came out with a bold statement that call centers will suffer most from a recession in the US. But even economists, with all their analyses and numbers, don’t agree with each other. The Philippine Daily Inquirer the other day quoted Citibank’s Philippine-based economist Jun Trinidad saying the Philippines will in fact grow 6.5 percent in 2008, not bad even after a 7.4 percent gross domestic product expansion last year. HSBC’s Fred Neumann also believed the Philippines is not in any danger of being dragged under by a slowdown in the US economy. The last time he spoke with members of the media a few weeks ago, he was not even using the “R” word. Yet the Asian Development Bank said just now that Asia is not immune from the crisis.
"A significant slowdown in the US economy will most certainly affect the region's growth performance through trade, investment and financial linkages," said ADB chief Haruhiko Kuroda.In the blogosphere, some interesting thoughts came from David Llorito, who wrote in A World Without Borders that globalization and continued growth in the Asia Pacific region will insulate the Philippines from the effects of a US recession Tony Lopez of Business News Asia however agrees with experts who say the US will go into a deep and long recession, and the whole world, not just the Philippines, will get hurt.
The United States accounts for a fifth of global production. It is the world’s single largest consumer market which spends more than what the consumers of China and India combined spend. Morgan Stanley Asia Chairman Stephen Roach estimates US yearly consumer spending at $9.5 trillion, China $1 trillion, and India $650 million.
The US also buys 30 percent of total world exports. Since China is now one of the world’s biggest exporters, then it will certainly be hurt by a US slowdown. Since much on Asia now depends on China, then the rest of Asia, including the Philippines, will certainly suffer. How bad we will suffer is not clear. Should the US stumble, Roach warns, the world would face “the mother of all recessions”.
As a result of the US subprime mortgage crisis, banks have become more strict with their lending, even to blue chip companies. If large corporations have difficulty borrowing money they will have difficulty expanding or even sustaining existing operations. If they cut back, there will be layoffs. If there are layoffs, consumers will spend less. If consumers spend less, industries will sell less. It’s a chain.I found Econologue’s post interesting because it quoted another interesting economist. Solita Monsod (y’all know her as Mareng Winnie) says there’s too much irrational anxiety about the “impending US recession.” I heard Winnie last Friday over the radio saying the same thing. Benson Te over at prudent investor newsletters tried to answer the question asked by an analyst on whether emerging markets and the Philippines would be the last shoe to drop? I found his analysis interesting:
Today’s turbulent markets reflect the same improving dynamics. As earlier stated, the S & P 500 has lost 15% as of Friday’s close while the Phisix is down 16% from its peak and so with emerging markets (EEM) at 19%. If the same volatility had been applied relative to its 2004 and 2006 scale, then emerging market benchmarks and the Phisix would have caved in by about 45%!The Newbie Trader also doesn't think a Philippine recession is imminent, The Geeky Guide To Everything is not impressed with stimulus packages, Richard Gordon says the Philippines has newfound strengthens that will insulate it from the recession. As you can see, this is one of those times when getting from one end of the spectrum of ideas to the other feels like walking from the west to east of SM Megamall. That's a clear indication to me that nobody knows the answer for sure. Think about it. Is it really possible to know with 100 percent certainty? That meanst the average investor will have to know better than to believe everything they read and see. Some of these arguments feed uncertainty and fear, some stoke greed – all of which are guaranteed to make an investor stumble in the markets. In the face of all the hollow arguments and alarmist statements, here are several things that investors can hold on to with certainty which market tamers have said again and again. Markets gyrate and sometimes they do it wildly. This has happened for many, many decades and will most likely happen many times in the future. Invest or make financial decisions with an acceptance of the nature of the beast (Noet’s latest article teaches how to do this.) Invest based on your risk appetite, not based on hope the market will be your friend. Whatever return you get may not be fantastically like Soros’ or Buffet’s, but if they meet your own targets, that’s already reason to eat a cone of ice cream and celebrate! ☺
Business mentor to give free advice to business startups MANILA, Philippines -- MARKETING professional Willy E. Arcilla has agreed to help eight readers of INQUIRER.net who need guidance to grow their start-up businesses in a business-mentoring activity for the publication’s entrepreneurship blog called Open For Business. Arcilla will meet with ten selected readers once a month for 12 months, and help them with their strategies in positioning and marketing their products. The progress of these businesses for the duration of the exercise will be published in Open For Business so that other entrepreneurs can benefit from them. A panel of judges that include Arcilla, INQUIRER.net editor-in-chief Javier Vicente Rufino, multimedia editor Joey Alarilla and business editor Ma. Salve Duplito will choose which readers will be introduced to Arcilla. Readers who are interested in joining the mentoring activity should have a business that is at least one year old, need help in marketing and selling strategies, and who are not in the high-technology or engineering sectors. Readers may send the following information to lightdream (at) gmail (dot) com: name, company name, location, year/s of operation, product or service description and description of business difficulties. Arcilla is the president of Business Mentors, Inc., a newly formed management consultancy firm, and concurrently regional director of ZMG Ward Howell, a provider of human capital solutions. He is also a professional lecturer in business schools. He has worked as an expatriate for 18 years across the Asia-Pacific region for leading multi-national corporations and Philippine conglomerates.
- It starts with pre-natal expenses, ultrasound and other laboratory costs and vitamins (P15,000)
- Maternal wear for a working mommy, already with Divisoria shopping (P10,000)
- Normal delivery (P70,000)
- Baby furniture - foldable playpen-crib, stroller and car seat, high chair (P20,000)
- Baby clothes, excluding gifts from titos and titas *thank you po!* (P8,000)
- Avent bottles, pacifiers, breastpump, baby bags, etc. (P25,000)
- Having someone greet you with hugs at the end of the day and treat you like a queen even if you weren’t that great on that day at the office (I think we all have days like that) -- priceless
- The sound of little feet that pitter-patter on the floor -- priceless
- The feel of little arms trustingly placed around your neck -- priceless
- Huggabug times and silly antics around the table -- priceless
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