(Can you handle the wild ride in equities? Photo from AFP)

Good investment advisors will never forget to tell you that potential gains in the stock market are interminably intertwined with potential losses. That is what TraderPinoy was saying in his comment here. Before considering the stock market, ask your delicate stomach if it can handle the wild ride so common in equities. You will notice this warning is NOT in fine print, so don’t allow your eyes to zoom out.

Take your time… there’s no hurry.

If it can stomach the risks, here’s an excerpt from an article from INQUIRER.net that seeks to help beginners get their feet wet in the market. You can read the entire article here.
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(Even ants have a method to their madness.)

Just the thought will make you think: snotty, snobbish, arrogant. Financial planning only for the rich?? Get outta here. After all, you are reading MoneySmarts, where people from all walks of life – with or without cash – converge to help each other reach financial independence.

Truth be told, however, a lot of people still think financial planning as it should be practiced is only for the rich. Really.

First of all, don’t forget that 50 percent of Filipinos live below the poverty line. That is quite a reality bite that chumps tremendously on the influence of financial planning on the lives of Filipinos.

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It’s not easy to buy insurance. In fact, it can be so confusing that people tend to just go with the flow and trust everything to their agent.

That would be okay if your agent is always on the lookout for your interests. But sad to say not all agents were created equal. Some just want to meet their quota. Even those who are in the insurance business will not deny that.

Having said that, I have met many insurance agents who are truly concerned with their clients and sell them what they need, not the products that they need to sell. Most of them have training in overall financial planning.
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(My dream house has this morning view. Can you guess where it is?)

I thought I would blog about this separately as I’ve been getting a lot of emails asking for tips on buying real estate.

I found these list of questions very helpful for those who are house or condo hunting. I’m sharing this from Noet Ravalo’s column “Alternatives to low interest-bearing deposits”.

1. Is your expected income sufficient to cover the amortization?
2. How much of an increase in the amortization can your income tolerate?
3. At what loan rate can your income stream handle at the maximum?
4. If rates do go down, can you advance payments?
5. Will there be a penalty?
6. How about pre-termination of the outstanding loan amount?
7. If currency conversions are involved, by how much will the cost-benefit analysis be sensitive to exchange rate movements?
8. What does this mean for the timing of the conversion of the funding as against the timing of the revenue stream?

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(JAPAN, Tokyo : Japanese women buy boxes of chocolates as gifts a day before St. Valentine’s Day in Tokyo on February 13, 2008. Women in Japan feel the need to give chocolate to their boyfriends, work colleagues and teachers on February 14 as a social obligation more than a sign of love. AFP PHOTO / Yoshikazu TSUNO)

I would be the first to say that an expensive dinner and something wrapped in a small package speaks and drips of love (pronounced luuuv). Sure, it does!

But since we are trying to be money-smart, how about exchanging ideas on how to strive for the same effect at less cost?

**after two hours**

Whew. Seems there are no ideas in this unromantic body. Went around the blogosphere and here are some thoughtful ideas I handpicked:

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Yesterday, Warren Buffett found his name again in almost every publication across the globe.

In a stunning move, Buffett on Tuesday offered to take over the liabilities of troubled bond insurers, saying it would eliminate one major cloud from the troubled global market and at the same time, he would stand to collect a steep 150 percent of unearned premium reserves of these companies.

This article from Fortune says:
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(Sleeping lizards don’t go anywhere, but they don’t grow too. So like putting all of one’s savings in low interest-bearing savings deposits. File photo from Agence France Presse)

I picked up several things from Noet Ravalo’s column today:

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.

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(Photo credit: Agence France Presse)

Bear markets set off the most interesting behavior in many investors.

Some get infected with the snakebite effect, a term I got from Chartered Financial Analyst Society president Mark Yu. He explained that some people who are bit by the snake (in the world of investing) decide never to invest again.

Then you have those that follow the herd. When foreigners are spooked and they start dumping stocks, they sell their shares too and stay on the sidelines waiting for better times.

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The INQUIRER.net special feature today for personal finance is How to buy jewelry. It has the usual tips on karat for gold, the three Cs for diamond – color, clarity, cut and carat — and what makes good silver and pearl jewelry.

Whether or not jewelry is a good investment, however, is still a debatable point. For Efren Cruz, author of Pwede Na: The Pinoy Guide to Personal Finance (full public disclosure: I co-edited this book), buying jewelry for “showing off” should not be confused with investing in jewelry for future profit. Consumption and investments are not peas in a pod.

“The moment you part with money or time in the hope of enjoying more of it in the future, then you are investing. Investments will differ in potential returns, amount required and time to harvest. With jewelry, it takes longer. It is still, nonetheless, investing, unless you buy jewelry just to show off,” he said.
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The Bangko Sentral ng Pilipinas, the Philippine central bank, has padlocked a Makati-based bank named Bankwise Inc. and put it under receivership of the Philippine Deposit Insurance Corp.

This article from the Philippine Daily Inquirer explains why.

Many times, I have received emails from people who read INQUIRER.net, who say that it is all right to put money in a high-earning savings instrument from a small bank because deposits are insured up to P250,000. That’s foolish reasoning.
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