April 2008 Archives

Investing lesson for the day from Noet Ravalo:

Before you invest, find out whether selling eventually will be a problem.

The possible earnings may be high based on the best guess-timates, but how do you cash in if no one is buying? Classic examples: time-share, real estate, jewelry, paintings, even certain bonds and stocks can be difficult to sell. Check out his column today here. Here’s an excerpt:

When an investment opportunity comes our way, the main pitch is its rate of return. Those in the know often speak of “risk-adjusted” rates of returns to get a better reading of the “real” attractiveness of different instruments. A whole array of measures has been devised just for this purpose. For retail investors like you and I, however, this language is too foreign and largely inaccessible. Even if we wanted to speak the language of risk adjustments, many of the required parameters are not publicly available. The best that we can get from our financial agents are terms like “indicative returns”, “estimated IRR” and perhaps “historical return” for instruments that are already selling in the market. For stocks, price-earnings ratios are often used as a guide for the future. A great deal of caution about these terms is helpful. The term “indicative” translates to “best guess” and I have no clue how the financial agent got to his conclusion. IRR assumes an unchanging market condition so I really am not a believer of this parameter. History is good ... except of course that it has this nasty habit of changing when you least expect it. As for P/E ratios, they would be helpful only if we had a good benchmark. For these reasons, I personally place a very high premium on asset liquidity. I need the peace of mind that I have the option to sell my investment any time I need to do so. In addition to being “tradable”, I need to have a reasonable sense that I can liquidate my investment without having to take a huge loss by selling it at a firesale price. These two conditions are the hallmarks of a liquid instrument. This is just being practical. What comfort can we take from an instrument that promised a high rate of return if we do not have the option to get back our funds when we may need them?

State-owned Landbank of the Philippines’s sweet deal for OFWs launched yesterday is described in this article. An annual interest of 7.0% and a maturity of 5.5 years is not bad for anyone’s portfolio. Experts always tout diversification and to do that properly, the risky part should not overshadow the secure and boring part. How to cut the cake exactly depends on personal risk appetites, of course. It is a fact of life that stocks are sexy and deposits and bonds are boring. ☺ Most of the times, boring is good. I have an OFW’s sister. You think I qualify? Numbers to remember: P2 billion – volume of securities being offered, technically called long-term negotiable certificates of deposit (LTNCDs). (there’s your tongue-twister for the day) 5.5 years – maturity of the securities. No pre-termination is allowed, but the securities can be used as collateral for loans or sold to another investor May 16 – end of the offering period. 7.0% - annual yield of Landbank’s LTNCDs (practice rolling your tongue!) 5.5% - current annual yield of traditional time deposits of the same maturity P13,699 – what an OFW needs to get P20,000 in 5.5 years P250,000 – maximum investment per OFW 20% tax – will not be imposed on the offering Read the article here.

(Camilla, the Duchess of Cornwall leaves a blessing at St Georges Chapel in Windsor Castle after her civil wedding Prince Charles 09 April 2005. It's easy to overspend on weddings, especially on rings when couples don't know what to buy. Photo from AFP.) Raising your eyebrows? You’re saying there are only four Cs? Cut, color, clarity, carat. Let me add one more. Credit card. Ooops. Those are six Cs. It’s a slippery slope from diamond rings to expensive dinners to entourage costumes (yes, that’s exactly what I wanted to say) to a million-peso-wedding. If you ask me, Filipinos overspend too much on tying the knot, then wonder too long why the knot doesn’t stay tied for long. So if you don’t want to overspend, check out this article from MoneySense. Here are Lynda Corpuz’ top tips: 1. Set a budget. Your soon-to-be bride may not be too keen about wearing an expensive ring but as Robin said, from centuries back, a ring (usually a diamond ring) traditionally serves as a betrothal gift to the bride and that traditionally, the price tag is equated to the kind of love he has for his bride. I ended turning down most prospective rings because they were too pricey even if discounted. There is a rule of thumb that says an ideal budget for a ring is worth two months’ salary. Eventually, though, the guy will eventually determine how much he is willing to shell out. 2. Know the 4 C’s. Know the basics if you’re planning to get a diamond ring: cut, color, clarity and carat. According to Tiffany and Co., the diamond’s cut will determine its defining characteristic – so check for angle and size and the shape; round remains classy, but for variety, you may opt for emerald, heart, oval, marquise, pear, or princess cut). The most valuable color is white or colorless, and graded “D” by jewelers. To check the clarity, examine the ring through a jeweler’s loupe or magnifying glass, and when the stone is graded SI1 [Slightly Included 1] or better (best and most expensive is IF, or Internally Flawless; worst is I3 or Imperfect 3], then your pick is fine. Finding the right carat for your budget is important so ask for stones than the next carat [example: 0.9 instead of 1], since this almost indiscernible difference can lead to significant savings. In our case, Robin was on the lookout for a simple yet classy ring. He was first considering a round cut diamond. When I later became pro-active in our search, I leaned more toward a princess cut. 3. Pick the band. According to Suarez Wedding Rings Web site (www.suarezweddingrings.com), white gold is trendier than the traditional yellow gold and not as rare looking as rose gold. It is more affordable than platinum, an extremely white metal that is harder and more expensive than gold or any other metal at that. White gold is recommended for stone settings other than yellow. You may opt for 24-karat gold, but you can save more by opting for gold of lesser karat. Since gold by nature is soft and malleable, generally losing its shape over time, cleaning and maintaining your engagement and wedding ring might eventually become a real expense. While we had different ideas regarding the stone, Robin and I settled for an 18K white gold band. 4.Shop around. Don’t settle for just the popular jewelry stores. You have to search both mom-and-pop jewelry stores and jewelry chains. The latter, of course, command higher prices because of their name and years in the industry. We found our ring at a less popular store, which has the accreditations required and follows global guidelines (the Philippines follows the International Gemological Institute guide on diamond clarity). Most stores we checked also offered discounts, but the smaller—and more eager—stores will give in to the customer’s (reasonable) demands. When we got the discounted amount, I asked if they could just waive the excess P2,500 since it’s the only ring of its kind left and we truly came back for it after checking out all the other stores. So they waived it and my fiancé gave me an approving smile for sealing the sale at a more reasonable amount. 5. Don’t buy alone. For men, bring a companion when buying jewelry – someone who knows your ladylove’s preferences. If you decide to go with your fiancée, you may lose the surprise element and the romanticism, but it can be worth it. Looking for a ring together is an exercise in mutual decision-making, involving money at that. Buying the engagement ring gave us an idea how we are going to work together as a couple in the near future. Enjoy shopping.

a. SM/Hypermarket b. Landmark c. Rustan’s d. Puregold e. Shopwise f. Ever Gotesco g. Cherry Foodarama h. Metro Gaisano i. Robinson’s j. Metro Stop k. Santis l. Waltermart m. Makro n. PriceSmart

(Photo courtesy of Michelle Morelos) With a global food crisis hanging over our heads, should we say goodbye to ‘good eats’? Here are some tips from MoneySmart friends for enjoying good food even with low budgets: 1. Skip the fruit shakes, juices and signature concoctions! Super mom Kitts Luna-Vibar points out that these drinks cost as much as one dish. And don’t go bottomless if you don’t drink that much! 2. Andrea Echaves of Eon even goes as far as ordering house water only. “It is healthier and more cost-efficient. Drinks cost around P50 each which means additional P250 for a family of five!” 3. Efren Cruz, author of two books on personal finance (Pwede Na: The Pinoy Guide to Personal Finance and Pwede Na: The Pinoy Guide to Estate Planning. Disclosure: I co-edited both books) advised spacing out trips to restaurants. “It’s hard to resist temptation when they are right smack in front of you. Go for budget meals. Forget eating foreign foods…Instead of fine dining, find daing!” 4. Chel Jacob of BPI Foundation never fails to make me laugh. “Befriend a foodie who knows the best value for money restos in the Metro. Be OUR friend!” Her recommendations are: Kikufuji on Pasong Tamo, Som’s on Alger St. in Bgy. Poblacion in Makati, Flavors of China, and Mey Lin on Jupiter. Lunchtimes are the best times for good deals. 5. Alex Salvador, a businessman who has a passion for food, passed along some recommendations. Barrio Fiesta’s merienda value-for-money offers cost P79. Kamayan’s eat-all-you-can at dinnertime now costs P89 (omygosh). Eat porterhouse or T-bone steak for P99 at Slice ‘n Dice. Tramways Restaurant on Timog Ave. has a combination of Japanese and Chinese food in its buffet for P168. I haven’t tried them yet, but the prices are as low as fast-food chains and very intriguing. 6. If you’re a fan of hole-in-the-wall outfits, try Mang Jimmy’s behind MWSS in Quezon City. First serving of rice is free, extra rice costs almost nothing, a sizzling plate costs P100 -- buy 10 take two. “Medyo pang jologs yung lugar, pero libre ka tumawa kahit gaano kalakas,” says super mom Analy Pinaroc, a regular reader of MoneySmarts. She adds that some ubiquitous Andok’s outlets have dine-in areas where you can have a whole chicken for P198 and softdrinks at tindahan prices. 7. Noemi Dado says she limits going out to eat and does so only on special occasions like a wedding anniversary. She and her husband have mastered the art of cooking at home. Quote of The Day:

“When I am dining with my children or with my good friend, it makes the scenario great! It has something to do with the company I am with to enjoy the meal wherever places I dined, it maybe in my home or a fast-food chain.”

-- Melanie Marquez-Lawyer Hey, she has a point. It doesn’t matter WHERE you eat. It’s the company that matters. Enjoy eating!

1. Too busy to check the lowest or highest shelves. Heinz Bulos, editor-in-chief of MoneySense magazine, says the most expensive items in the grocery are mostly at eye level. If you want to find bargains, you have to stoop down or look up. “This may not be true all the time, but I did find that it was true in some of the grocery stores I went to,” Heinz says. We had a good laugh at the fact that I’m only all of 4 feet and 9 inches. 2. Moving from aisle to aisle in an “organized manner”. Heinz also says there’s a science to designing how products are situated in grocery stores. The most expensive food items are placed in the middle while those that are less expensive are in the periphery. So that’s why processed food items are always in the center! If you move from the periphery to the center (as opposed to from aisle to aisle in a zigzag manner), you are more likely to pick up value-for-money items first and save the frivolous stuff for last, just in case you have some fun money left. 3. Assuming tag prices are accurate all the time. They aren’t. In the photo above, the actual price is lower, so it was good for me. But what if the actual price is higher? Who has the time and patience to check actual prices at the counter? 4. Grocery shopping before lunchtime on a Saturday or going to the wet market before breakfast. Never shop on an empty stomach! 5. Leaving the calculator at home. How about you? How do you keep yourself from buying more than you need?

I love my adobo with rice, but a friend once showed me how to eat it with bread. Hmmm. Ok, maybe I will if there’s no alternative. But I still would rather have hot, steaming rice. The Philippines has been eating rice for centuries. Changing an entire nation’s eating habits won’t be easy. But as former socioeconomic planning secretary and UP professor Felipe Medalla pointed out to me a few weeks ago half-jokingly, if Filipinos won’t eat too much rice, there will be no shortage! So experts are now pushing for rice alternatives and extenders, namely sweet potato and corn, which actually have more fiber content and thus more nutritional value. Here are some recipe/blog entries on kamote and other alternatives from my favorite food blogger Market Manila. I hope you don’t mind if many of them are snacks or desserts! The last recipe is my favorite breakfast alternative to sinangag. Enjoy! Minatamis na kamote Deep friend bananas with caramelized sugar Roast duck with sweet potatoes Battered and friend bananas French Toast / Eggy Bread / Pain Perdu a la Marketman

(File photo from AFP)

a) Who has the big muscles? Of course, it should be the husband. The wife should stay home with the kids. b) Do you live in the middle ages? Women can and should have equal rights to work outside the home. Brawn is no longer the world’s currency. Brain is. c) Husband: There are no opportunities for me out there. Wifey has the upper hand in the labor market. I can stay home and take care of the kids. d) Wife: I want to work but I am kept home against my will. e) We are having the time of our lives. We are in business together. f) Should this be an issue at all?

Globally, the definition and boundaries of the traditional family are in flux. There was a time when there were only two choices: for the wife to work or not. But the changes have opened many options to couples. Which is the ideal? Which is the reality? Which is true in your family? I’m a traditional gal. I still think a mother should stay home with the children. Quantity time and not just quality time, matters. When the husband comes home from a stressful day at the office, her mind is more capable of understanding his need for comfort and quiet strength. Being stressed out from the demands of a career makes it tough to provide that kind of refuge for a spouse. On the flipside, when the wife is stressed due to motherhood, he has the objectivity to help deal with the issues. But reality bites hard. Many families cannot make do with a single income these days. Many seek careers to prove their worth. A career that takes someone to other countries brings special challenges, too. Many wives decide to take up jobs for many other reasons. I don’t stand in judgment for those who do. I assume that all couples are doing all they can to provide well for their families and give them both quantity and quality time the best way they know how. We don't live in a box. Technology makes sure our boxes can give a hug. (huggie emoticon here) It will be a mistake for would-be couples not to have a serious talk about this before saying “I do.” The financial issues in tying the knot can and do ruin many couple’s “happily ever afters.” Hats off to the lucky few who are able to work it out. So before you walk down the isle and look into her or his eyes, look inside yourself for answers to your financial readiness questions. Our personal finance article today “Before you say goodbye to bachelorhood” answers a reader’s question:

Question: My girlfriend and I have been together for the past four years. We’d like to get married, of course, but when I think about the financial responsibility looming before me (e.g., have a big wedding, book a nice honeymoon spot, build a house, raise kids, etc.), I get overwhelmed. I only make enough for my lifestyle now. How can I support a family? What do you think should a bachelor prepare for financially before thinking of marriage? - Dan

Read the article for more tips on how to know if you’re financially ready for marriage and why debt and budgeting are big issues for those who will soon say “I do.” Cheers!

(Photo from Agence France-Presse) We hardly think about the few mouthfuls of rice left on our plate. Taken together, this daily rice wastage average 15 grams per head, or 1,280 tons per day and cost Filipinos P23 million. Did I say “daily”?! Mind-boggling. These are official figures from the Food and Nutrition Research Institute (FNRI), the principal research arm of the government on food and nutrition, that I caught this morning from the television show “Mornings on ANC”. I tested this at home last week, in fact, and found that after every meal, scraping rice from every dish can collect a small pile of rice big enough to feed one or two more persons. The lesson on frugality is obvious. Find a way to minimize, if not zero out, rice wastage. The small morsels literally means millions in the trash, especially with rising rice prices. Just this weekend, I discovered that one serving of rice at Leslie’s (the famous Bulalo place going on the road to Batangas and Tagaytay) already costs P40. Expect rice prices in general to continue going north in the coming months. Children are best taught by imagery and less by Sermons on the Mount. I was taught while young never to leave a single “mumu” on my plate because each one represented one sweat from my mother’s hard work. You can bet until now, I still clean my plate even if that’s not considered “fashionable” by some. Makes you think about all those rice wasted at eat-all-you-can places, huh? It’s high time we should get only the amount of rice we can consume. Frugality Tip for Tuesday: Rice alternatives and extenders. Blog about it and email me at lightdream (at) gmail (dot) com, or if you aren’t a blogger, just fire away and send me an email! *** Our personal finance feature today talks about ordinary things that may bring in extraordinary cash. Coins, trading cards, comic books and toys –- at just the right age -- may bring in moolah if you stored them well enough. Just look at this Amazing Spiderman (1963) first edition which initially cost 12 cents but now costs $32,500. (Photo courtesy of MoneySense) *** So What Chocnut Snippets HSBC’s Fred Neumann got it right. At a press conference a few months ago, he predicted that the Bangko Sentral ng Pilipinas would be shifting monetary policy and this shift would result in some changes on Special Deposit Account rates. He was right on the money. If you weren’t able to cash in on the high rates enjoyed by SDAs earlier this year, now it’s too late. From P610 billion as of end-February, SDA funds have now gone down to P245.7 billion, mostly going to traditional time deposit, bonds and other debt instruments, and foreign exchange instruments. Standard Chartered Bank has sounded the alarm on big wage increases, saying they will be more harmful than the rice problem. Too much money released into the system will cause prices of basic commodities to rise, it says. Here’s a non-economist’s explanation for that: Imagine that there used to be two persons buying mangoes from this store. All of a sudden, there are ten persons who want the mangoes because their paychecks are higher. If you were the storeowner, you would be more confident about raising your prices because you know that there are more buyers and they will be elbowing each other out for your ripe mangoes. And that is how inflation is supposed to be born. Standard Chartered, however, forgot one thing peculiar in the Philippine’s situation. Wage increases are not set across the board in the Philippines. Each regional wage board studies how much wage increase can be absorbed by the economy. So if the wage boards do their job, our much-stressed workers who have been suffering for quite some time may have their cake and eat it too. Perhaps, Standard Chartered just doesn't want to pay its employees more. Boohoo. Big local businesses are already willing to pay, why not a foreign firm that pays its expat personnel dizzying rates?

(Photo credit: AFP) I missed seeing this article in the Philippine Daily Inquirer when it came out in end-March, but I think it’s worthy enough to be shared again in MoneySmarts, just in case you guys missed reading it too. Say it with me. “If it’s too good to be true…” Enjoy reading! (For those who want to blog about this or forward to friends, please link back to MoneySmarts or the page where the article was published. Stealing content is a crime against your own personal integrity. It's not worth it ☺) ~~~~~~~****~~~~~~~ The scam that rattled high society By Marge C. Enriquez Philippine Daily Inquirer First Posted 02:08:00 03/30/2008 MANILA, Philippines - If it’s too good to be true, then it’s not true,” Carrie (not her real name), a businesswoman, says, breaking into nervous laughter. She is referring to the illusion of easy returns from risky speculative investments. In July 2007, news broke of a scandal involving the Singaporean boss of a foreign exchange trading firm who was suspected of running away with some US$250 million of investors’ funds. The people who invested were the powerful, the rich and the beautiful. Every time the Performance Investment Products Corporation (PIPC) scam is brought up, Samantha (not her real name), also a businesswoman, prefers to wax philosophical: “I made so much money. I was devastated but it took some time to heal. We have to go on with our lives.” In 1998, Michael “Mike” Liew, the Singaporean owner, established PIPC as an online foreign exchange trading firm in the Philippines. Carrie was invited by a friend to an introductory lecture of the PIPC by Liew at Hotel Intercontinental. People were asked to put in a minimum of US$40,000 in a trading scheme staking on gains or losses in pairs of currencies. The PIPC traders did business on these monies. Carrie was attracted by the guaranteed return of 10-15 percent every maturity period of eight weeks, or an average annual return of 12 percent a year. “With $40,000 and a 12-percent return after eight weeks, you could earn $5,000,” says Carrie. Warning Before Carrie could invest, a banker-friend warned her it could be a scam. The banker found it anomalous that an investor would dispatch the money to Hong Kong and would not get a deposit slip in the investor’s name. “Let’s say you remitted through Citibank which, in turn, remitted to ABN-Amro in Hong Kong,” Carrie says. “You get a confirmation from PIPC, not from ABN-Amro. It’s a laminated plastic receipt stating you are an investor of PIPC of $40,000, plus your remittance and the account number.” After the Intercon presentation, the banker, now convinced of the scheme, suggested they try a joint account, starting with $20,000 each. “We began making good money and would share it,” Carrie says. “She said, ‘Let’s go on separate ways because our dividend is nice. We don’t lose anything because every eight weeks, we get back our money.’ PIPC sends a notice saying that your deposit is maturing on this day. If you don’t want to roll it, just advise the office and you will get your money in your bank account. We tried it. Sure enough, we recovered our money. As the years went buy, she put more and more.” Somebody went to Singapore to scrutinize PIPC’s operations. He reported that it was listed in the stock exchange and gave his nod to invest. The circle of investors felt more secure about his endorsement so that they increased their deposits. When Carrie went to Shanghai, she checked out PIPC’s office and was also impressed that it was in a swank building that had Louis Vuitton and Gucci as tenants. Word got around in high society. In the late ’90s, Samantha approached a PIPC trader and expressed her interest in the scheme. Carrie and Samantha felt they were in good hands since they had known most of the PIPC employees for a long time, and many of them came from respectable families. Dividends Carrie also saw Liew, who was always conservatively dressed in a suit and wearing a Rolex or a Patek Philippe. He motivated his employees to work hard so that PIPC would be another Merrill Lynch. The firm’s transactions were very organized. “Let’s say PIPC traded on March 1 and made $400 for you, minus the commission and management fees, your net was $260,” Carrie says. “They gave each investor one trading sheet per week. It would be summarized every two weeks so that you could see the progress of the trade. PIPC deposits your interest to your bank account. You don’t touch the money. The bank will tell you there’s a deposit of $800 or $1,000 in your dollar account. The sheet informs you of the next maturity date. “Every eight weeks PIPC sends the trading sheet. They e-mail or mail a sheet, how much you’ve made during the eight-week period. It states your next maturity date. If you don’t want to roll it over, advise the office two weeks before. If you want your capital of $40,000 back, tell the office. They will remit it to your bank account. Even if you don’t roll it, you will get your interest,” says Carrie. “I never saw the dividends dwindling. They were just inconsistent. PIPC made us believe that our shares depended on the trade. I even got a zero in an eight-week period in October 2006. Before that I got a $2,200 dividend. At the end of 12 months, I still got 12.5 percent annual return.” Perks PIPC knew how to win its investors. On the first year, they were given a $50 bonus, and were gifted with luxury items such as Hermés scarves and free foreign magazine subscriptions. The first Christmas party was at the Peninsula Hotel ballroom, attended by the high and the mighty. “We were in good company,” exclaims Samantha. In the next three years, the Christmas parties were held in five-star ballrooms. When the big parties stopped, PIPC sent cards to the investors saying that in lieu of a party, the money would be given to charity. The recipient even sent thank-you cards to the investors, making them feel that part of their money was used for noble causes. In another year, the Philippine General Hospital gave Liew a plaque for his generosity in the renovation of its obstetrics and gynecology wing. He dedicated the project to family members who had died in the tsunami in Thailand. Carrie was impressed with the firm’s growth. PIPC started with a simple office at the Antel building until operations expanded to two floors. Then it moved to the Citibank Tower, where it even had a plush lounge. Investors could enjoy free coffee, pastries, wines and canapés. It had offices in Singapore, Japan, India and China and, eventually, Cebu. “You felt safe because our capital was guaranteed,” says Carrie. They were made to believe that an investor not earning anything was the worst-case scenario. When the business evolved with a second money scheme, the money game became precarious. “In Plan A, you got 60 percent while the company got 40 percent. If a trader made $1,000 for you in the eight-week period, your net interest would be $600, while $400 went to the office. Your $40,000 was still intact. “With Plan B, you got 80 percent while the organization got 20 percent. But the risk was that the capital was no longer guaranteed. If the trader lost, you shared in his losses. At the end of an eight-week period, you could have $39,000 instead of your $40,000 because your trader lost $1,000. But you could still recover in the next period. Many took Plan B,” says Carrie. Addicting Many investors opened several accounts so that they would get more dividends in shorter intervals. There was talk that one of the biggest investors was a low-key Chinese businessman who put in $5 million. While well-meaning friends, financial experts and businessmen cautioned Samantha of fraudulent money schemes, the immediate gratification was addicting. Lured by temptation, she kept holding off the withdrawal of her accounts. The friendly service of PIPC and Liew’s charisma won people over. “The relationship was based on trust. For nine years, the company showed good performance with the interests that it was giving you. You would not have one iota of doubt about the company,” says Carrie. Massage parlor On July 17, 2007, Carrie’s account executive informed her that Liew was missing. At first, she thought it was irrelevant. The AE explained that money was not coming in for the company to distribute among the investors and to pay the salaries of its employees. Liew’s mother supposedly put him on a missing persons’ list. Finally, Liew reportedly called his mother after two weeks and said she should go to the United States. Newspaper reports would eventually state that Liew had fled with the money. The bank accounts that held the investments of Carrie, Samantha and thousands of others had been cleared out. PIPC’s Singapore office pointed out that the missing funds had been kept in three banks and that Liew had closed an account in Hong Kong. Publications quoted the Philippine Securities and Exchange Commission as saying that PIPC was registered with controllers, but it was not a legitimate foreign exchange trading firm. The High Court of Hong Kong hired Ferrier Hodgson, a company specializing in financial investigations and frauds, forensic accounting and IT and business assessment, as provisional liquidator of PIPC. Initial findings revealed that PIPC lacked accounting books and records. Control was in the hands of a few and that only Liew knew how the funds flowed. He also manipulated the bank accounts of the investors’ funds. More shocking was that trading had stopped in 2004, yet new investors were still coming in. Ferrier Hodgson investigated the three banks in Hong Kong where deposits had been made. The report also revealed that the PIPC office in Singapore Land Tower had not been used for a month, yet there were arrangements for calls and mails. However, calls were forwarded to a discontinued number and the mail address was a massage parlor. Devastated and outraged, the Philippine investors held meetings. Samantha had already pulled out some of her money before Liew’s escape. She was about to deposit again, but could not contact her AE. Although she was grateful that she had been spared huge losses, she was still confounded. The meetings merely distressed her more. Many investors wanted to get even. “They had their own way of dealing with the scandal. I just forgot about it. That’s money gone forever,” sighs Samantha. Broken lives “The real character of people came out,” says Carrie. “Some sued the account executives and officers even if they were good friends or relatives. But they had signed a contract stating that the AE was not culpable. We invested on our own volition. How could I blame Mike [Liew] or the AE?” Couples split, blaming each other for their financial mess. A mother had a son who was an AE. After putting in money and gaining from it, she placed more. Then she died. During the meeting for the inheritance, the children were left with very little assets. She had put all her money in PIPC. A friend consolidated her stocks, sold them and put the money in PIPC a month before it fell. She did not even get a single interest. That money was meant to be a down payment for her son’s apartment in New York to start him off after graduation. Many lost face (aside from their jobs or retirement money) for referring friends to or brokering an account with PIPC; their friends never forgave them. On the other hand, there were those who took the fiasco positively. Carrie says: “It was a wake-up call for many. Maybe God was telling us to stop being materialistic and to look into our real values. If you have so much, greed comes in... The moment I let go, I became peaceful.”

The Western Union branch on West Avenue in Quezon City is nearest to my place, so one morning a few weeks ago, I went there to get a remittance from a friend in the US who asked me to buy Swarovski stuff for her hobby. I was in a hurry, so I asked Western Union to give me the remittance in pesos. The girl at the counter said their exchange rate was P39.30 to a dollar! I was outraged. I said, “That’s too much!” I just came back from Bank of the Philippine Islands and Banco De Oro and they were converting at P40.40 to P40.30. That’s an almost one-peso difference. Aren't they satisfied with the huge remittance fees they charge?As with most Western Union outlets, this one was shoulder-to-shoulder with a moneychanger booth. The moneychanger was offering a P40.20 exchange rate. “Ok, just give me the remittance in dollars please,” I said, wondering about the intelligence of the owner. “Sorry ma’am, but we don’t have dollar bills available,” the girl said. I guess I judged too soon. The owner was indeed intelligent -– and greedy, preying on Filipinos’ vulnerabilities. There are many choices out there, don’t be a victim to opportunists out there. I claimed my remittance in another outlet, where the moneychanger affiliate gave me an exchange rate that was even better than BDO’s. (Readers across the globe shared their experiences with cutting the cost of remittances in this blog post. Check it out.)

Johnny Noe Ravalo explains this in figures, already doing the math for us. hoping nobody gets him wrong. To some extent, we can still play a catch-up game in planning for retirement, he says. But there’s a point where it becomes too late. Read his article here. Below is an excerpt and the graphs he prepared. Click on them for a bigger, clearer version. Enjoy reading!

We all get pre-occupied by the rat race. Surely taking a few years off wouldn't hurt my retirement plan. Or would it? Anyone who wants to retire well needs to ask himself (1) how long do I expect to live and (2) how much time do I have before I retire? The last thing we want is to run out of resources after we retire. We would rather bequeath what we have left rather than ask our children to feed us. That’s why the planning horizon is important. We need time to prepare. Figure 1 in the gallery shows what happens when we have set aside P100,000 (for the lump-sum, just-in-case expenses) and then we add P50,000 each year to our retirement fund. Let’s assume that it generates a return of 5.0 percent per year.

Getting one's first full-time job at 21 to 22 years old, a young worker usually needs a few years to get “settled” (complete change of wardrobe, treating the immediate family, spending on “tools” that make us look more professional). This transition is normally done by 25 years old, which leaves 30 years before retirement. Using the assumed parameters, the potential retirement kitty will come out to P3.92 million. This figure is not etched in stone as many things can and do change. Rather than get caught up in the accuracy of an absolute number, I find it more useful to think in “relative terms”. Now, what happens if we take a few years off from the 30-year plan? After all, 30 years is a very long period and surely some time off wouldn't hurt. Or would it? Five years off from the 30-year planning horizon ─ that's 16 percent if you're counting ─ makes us lose more than 25 percent of the full potential value of our retirement kitty. And if we take a third off the planning timeline, we lose almost half of the potential value! (See Figure 1 in the gallery). There is a world of difference between starting to plan for retirement at 25 years old versus starting at 40. Roughly two out of every three pesos that could have been generated is lost just because we start later than sooner. Is the gap permanent? Absolutely not. Can we retire then in five or 10 years if we only start to prepare our retirement kitty now? Not exactly. The same graph shows that catching up is increasingly difficult the more we delay. If we only allow five years of pension contribution, we would have lost 89 percent of what the fund could have been. For a vesting period that short, the problem becomes more absolute than relative: five years is too short to have enough in a retirement fund irrespective of any consideration of foregone opportunities.

Read the rest of the article here. Below are the other graphs he used for the article.

(Photo courtesy of Joe Goodz, Flickr) Getting ready for enrollment should have been done at least six months ago. Not today, not in May, and certainly not a week before school starts. A couple I interviewed once said enrollment time is their most stressful season of the year. Christmas spending may put them in debt, but the warm, fuzzy feelings ease the pain. What the heck, it’s Christmas! they say. No such thing for enrollment days. It’s just pure financial pain. Alex C. wrote:

It’s enrollment time again for my three children in grade school. Every year, I get so depressed during this season. Everything I save whole year round disappears at this time. Then I start at zero again, saving for next year’s round of tuition fees. Can you give me advice on how I can manage this time better? How can I prepare the needed funds adequately in time for next year? — Alex C.

There’s a trick called “sinking fund” that I learned when I was a beat reporter many years ago. You may tell the kids it’s a wormhole that will bring them to a great place across the galaxy. We drop an amount monthly into the wormhole to let it grow big enough to pay all our tuition for the year. How much to feed the wormhole exactly? Divide all tuition expenses by how many months you want to save up for it. So, when the kids are hankering for their third serving of Dairy Queen Blizzard, suggest feeding the Blizzard instead to the wormhole -- the wormhole that can send them to college and a good education. Let them decide. You’re giving them a stake in their own education and an unforgettable lesson delivered without words. Great for teenagers and children. Enrollment blues, our personal finance article, talks about this tip and many others. Check out the entire article here. Make a date to start your wormhole. Don’t just file this tip away for future use. For those whose wormholes have already started growing, don’t stop at next year’s tuition. Go for high school. Go for college. Go for your own post-graduate degrees in Oxford. Sky’s the limit.

  (Balancing coins for good luck. AFP photo.) Phone conversation with The Hubby: The Hubby: Don’t forget to set aside P15,000 this month okay? Salve: For what? The Hubby: So, I can upgrade from my PC to a MacBook Pro by December. Salve: Hmm. We are saving ***** monthly for our insurance policies, education funds and investments, and setting aside P15,000 for your MacBook. What will we live on? How will we eat? (doing my best to sound dismayed) The Hubby: That’s okay. By the end of the year, I will have a MacBook Pro AND a slimmer wife. Nyahaha! *** A few years ago, we would have bought the darned thing with our credit cards, what with the installment promos out there. But getting older and MoneySmarts blogging has tamed us. Save first, and then buy. *** I don’t know if I will ever become a billionaire, but I love reading billionaire stories. Read this account of the Philippine’s shy billionaire Andrew Tan. I particularly liked this part:

My father worked in a transistor radio factory; my mother was a plain housewife. I have one brother. One influential person in my life was my mother. As a young businessman, I would consult her before I made any important decisions. We discussed not just business matters, but also anything under the sun. She and her guidance meant a lot to me. When I married, my wife Katherine became the most influential person in my life. Today, we talk about business almost every day, especially when I have to make important decisions.

Guys, guys, listen well :-p I found this part to be very interesting and possibly controversial:

Some people may disagree, but I believe that for a person to become very wealthy, 40 percent is due to luck and 60 percent to a combination of intelligence and hard work. You just have to be at the right place at the right time. If you are lucky, timing will always be in your favor; otherwise, timing will always be off. There’s a Chinese saying that big success depends on the heavens. For me, good luck accounts for 40 percent of all my success.

All in all, an account for those I'm-so-down-I-can-hardly-keep-on-living moments. But honestly speaking, I don’t believe in luck. I believe successful people make their own luck. Hard work and faith, which will keep the way lighted even when everything seems ready to crash, are the things that I bank on to keep me going. Do you believe in luck?

Eight things you should not miss this week: 1. George Soros’ new book to be launched tomorrow on why the global economic collapse he predicted in 1998 that never came is now at our doorsteps. The New York times article here and International Herald Tribune here. You can even watch an exclusive CNBC interview with Soros himself. (I love TV on demand through the Internet) 2. Food prices continue to spiral. If you think shifting from lugaw to pandesal is a good strategy, now you’ll have to think about another one. High food inflation is here to stay. It could put 100 million at risk globally, says the World Bank. Protests have already begun. 3. Despite bears running amok in global markets, OFWs continue to send money home but are channeling funds to more productive spending like vans for business purposes and homes. 4. Why selling your car and forgetting to transfer its insurance policy to the name of the buyer can be a very costly mistake. 5. Stocks and bonds in global markets, not just the Philippines, continued to wilt. Next week is not expected to be any better. 6. US consumers lost record sums to Internet crooks. No official figures yet for the Philippines. 7. America-in-recession donates $60 million to suffering children all over the world so far, and yes, Michael Johns got none of the charity. He sang his goodbye song and Idols in the running is now down to 7. (You can tell I have a teenager living with me, can’t you?) What does this all mean? Not Michael Johns, dear. The donations, of course. I wonder if Mr. Soros has an answer? 8. If you’re looking for a really good guy to fix your car aircon, go to Mang Mario in Bago-Bantay. He will fix it well and charge next to nothing. The guy’s a miracle-worker. He works inside a really old, sprawling house in a humble neighborhood, but on any day he would have 10 expensive cars lining his street. And you can google his name for directions to his house. I know, because I was a customer. How does he get customers? Only via word-of-mouth. Again, I wonder what Mr. Soros' global economic collapse will mean to Mang Mario.

(Photo from AFP) Johnny Noe Ravalo continues his online bestseller last week on preparing for retirement in the Philippines. This made me wonder whether retirees are ready for rising medical and travel costs:

Food and utility bills will be the baseline but they will not figure prominently in the total cost scheme. What you need to be very realistic about is medical expenses. Maintenance medicine and periodic check ups are never cheap. If diabetes runs in the family, for example, you will have to dish out over P5,000 in monthly medicines plus the annual check up which can run up to P10,000 if all the laboratory tests are included. That's P70,000 per year --- minimum --- for an ailment that has no cure and has to be paid when you are no longer enjoying both a regular salary or your company's medical plan. Complications also add to the expenses. Any hospitalization will set you back in the tens of thousands for as short as a day or two of confinement. You need to estimate a portion for monthly medical maintenance plus set aside a lump sum for the “just in case” part.

Some of MoneySmart’s regular readers are in their 30s but are already planning for their retirement. A lot of you are working and living abroad and are planning to come home for your golden years. It’s relatively easy to figure out the lifestyle part for me, personally, but medical cost is very much a puzzle. How do you know what medical problems you will have to prepare for, huh? (trying out a sultry, vampy voice) Can’t I just be young forevah? Noet brings me back to earth. Okay, okay, the medical cost fund should be extra, extra fat. And since every Pinoy is a tireless “lakwatsera”, the travel fund should be, too. We're all dreaming of visiting every beach in our 7,000 plus islands so we gotta raise the travel fund too what with the rising cost of oil and all. Sigh. There goes the upgrade to Macbook Air.

(Scam artists can make frogs look like princes in 10 seconds, so just walk away. Photo from AFP) It's true. I’ve been scammed several times. Don’t laugh at me, okay? This is a public confession of my extreme stupid moments! When I was a college student, I gave the gold necklace I was wearing to an old lady I met at the Shopping Center in the University of the Philippines who said she would only “borrow” it so that she could pay someone to open her car door. For some reason, she was locked out and could not go home. Duh moment! She spoke in even tones and was very persuasive, but let me tell you it was my stupidity that got the better of me. She looked pretty decent, too. That was a pretty simple scam, but con artists can get creative in their efforts. Another fraudster was a contractor for a big telecommunications company who installed our DSL modem. He seemed like a harmless guy and I didn’t think there was anything wrong in telling him about my line of work as well as my husband’s. Besides, he was in my home on official business. Unfortunately, he was part of a gang that preys on househelp. He or a member of his group pretended to be my husband, gave a story about being in a car accident and instructed the househelp to bring cash and valuables to a shady place in Caloocan, a city just 30-minutes away from us. A few days before they made the move, I remember receiving a call from Equitable PCI bank (allegedly) asking to talk to my husband to “update their bank records.” That should have been a warning sign. Banks DO NOT call clients to update records. They just pop letters in the mail to do that. On hindsight, I realize that they were trying to figure out which one in their group could pass off as my husband on the phone. These con artists also prey on greed. Read one of the most-visited post on this blog about Francswiss and scroll down to the comments section if you want to be blown away by the greed factor. Scams are everywhere. On the Internet, they have become extremely virulent. They start with simple emails on winning a lottery, a chance to win free money from big companies (usually Microsoft or Yahoo). They make people say “What’s the harm in that?” and “What if it were true?” But these emails harvest your addresses and put you on crooks’ lists of “people to dupe.” There’s only one thing to do about these things: walk away. Forget the free money; forget the high interest. More tips on our personal finance article “How to smell a scam.” Here are some warning signs:

1. The investment plan offers or guarantees an interest rate that is much higher than prevailing market rates. In fact, these rates may be too good to be true. Beware of promises such as “50 percent return in 90 days,” or “double your money in 1 year.” These are unbelievable rates of return which the legitimate investment market will not be able to give. Before signing up for an investment plan, study the prevailing market rates. Long term time deposit rates can go up as high as 6 percent per annum. Research on the Internet and go to legitimate websites of Philippine banks and financial companies and see how their mutual funds and unit investment trust funds are performing to give you an idea of the yearly average rate of returns. These may run up to only 20 percent per annum. Clearly then, a 100 percent return on your investment is very fishy.
2. The company does not take time to explain the concept of the investment thoroughly and pressures you into making a decision. They may give you testimonials of “satisfied” investors and just make a quick run down on the kinds of investments they will handle for you. Or they present you with awesome presentations of high risk investments you are not thoroughly familiar with, such as accounts receivable factoring, dollar hedging, commodities trading, etc., capitalizing on people’s unfamiliarity with such forms of investments and promising high returns.Before you get into any investment, you should be given all the details of the offer or plan. You should also be given as much time as you need to study your options. Don’t ever be bullied into making an investment decision.
3. The company has no track record. When you get an investment proposal from a company you have never heard of, be extra cautious. Find out all that you can about the company: who started it, when was it incorporated, and what is the track record of the company so far. Some scammers may brag that they are a new offshore branch of a company based abroad that is why they have never been heard of. That’s even more reason to be cautious.You can get information from the Securities and Exchange Commission, and from knowledgeable people among your network. When in doubt, do not transact business with that company. Instead, deal only with banks and established financial investment companies.
4. The company does not have a physical office address. If the company is legitimate and will handle investments from many people, they have to have a reputable office address, one that you can go into at any time of the day, or call by phone anytime during office hours. Take note though that there have been some companies with physical addresses that still turned out to be swindlers so be careful.When you do finally invest, you have difficulty getting your money after some time. The returns may be very attractive at first, but in the long run, their checks may start bouncing, or you may be given promissory notes for the returns promised to you. Or they suddenly impose strict procedures, such as not allowing withdrawal for a very long period of time contrary to what was explained to you at first. When any of these happen, contact the Securities and Exchange Commission right away.

(Photo from Agence France-Presse) Worsening poverty plus rising food prices, and what have you got? More and more households are definitely going to the poor house if this keeps up. There are indicators everywhere that high prices aren't likely to go back down anytime in the future. I remember what Rico Hizon said during a recent interview: We are importing inflation from the US and China. Everywhere in Asia, prices are going up. Here are some tips from a MoneySense article on how to make sure you're not badly affected:

Watch out for the warning signs:

1. Uncontrolled spending and/or use of credit cards
2. Having loans you are having difficulty to pay
3. Not making and using a budget
4. Living a lifestyle you can’t afford
5. Lack of savings

To me, number five would go to number one. An inadequate buffer fund, absence of emergency stash – whatever you want to call it – should make ANYONE stop and take stock of your situation as if it’s the biggest red light on the street of personal finance. I don’t expect those who are below the poverty line – that’s around 4.7 million families as of last count – to have any savings. That’s like trying to wring water from stone. Perhaps even the next tier won’t be able to sock away money, and that’s totally understandable. But if you have a job, have money for make-up, movies, dinner in a restaurant, at least 10 pairs of shoes in the house, own an air-conditioning unit, have a closetful of nice clothes, I think you should at least have a one-month worth of savings in the bank for starters. A recent survey showed that too many Filipinos who are actually in the middle-income group rack up credit card debt for non-essentials but have no savings. As the article says, simplify, simplify, simplify! Sometimes, simplifying – birthday and graduation celebrations for example – can be more fun and heartwarming. Think about it.

No matter how abundant you think your financial life is at the moment, poverty can still creep up on you. If the warning signs are present in your life right now, it’s time to take action and make some drastic changes. Take control of your money instead of letting it control you!

Poverty CAN creep up on you. I totally agree. Denial is a powerful thing.

I thought everything was a steal. From clothes hangers to craft punchers, from plasticware to slippers. It’s too embarrassing to reveal how much I spend whenever I shop in any of its branches. :-D Then I saw the bathroom accessory I bought selling for P70-something in the grocery. Same brand, same size, same packaging. It’s a nifty marketing strategy . I would give the owner a big thumbs up if I were writing for Open For Business (smile). But for MoneySmarts readers, (voice down several notches) don’t be taken in, okay? Happy long weekend! Don’t forget to play with your kids and take your spouses out for a special date. Time and good health are our greatest assets.

Asia is getting a lot of attention these days, and for BBC World anchor Rico Hizon, it’s the best time to be covering 15 Asia-Pacific economies for a television network that is watched by the whole world. Rico came in jeans and T-shirt for the interview, not his usual get-up when he goes to the BBC studio in Singapore, but I bet most of the bloggers who were in Kape Isla that afternoon could identify the Rico smile. Besides, a number of them probably watched Rico when he was still reporting live from the stock market trading floor for GMA7 in the 1990s. We talked about investing in art, being a gatekeeper of information, the stories he wants to work on given more time, his son who played the trumpet, jumping from one topic to another. He shared why it’s exciting to be in Asia right now where the action is. “Finally, it’s about Asia. Asia is the place to be in now and it will be this way for the next two decades. After all, Southeast Asia is a $500-million strong economy,” he said. Rico can be seen daily on BBC reporting in the Asia Business Report and World Business Report. BBC has been adding more economic reports in its programming in response to changes in the global economic front and that means more air time for Rico. I used to think networks like BBC had a whole army of researchers and assistants to churn out those reports. Rico says there are only three of them in his studio and they decide which stories to report on, who to interview, and what to talk about. “I decide what goes on air. I write what I am going to discuss. For us to be in this job at this level, we have to know what we are talking about,” Rico says. To a great degree, Rico also needs to make sure that his interviewees know what they are talking about. Since his viewers are not just financial people, he needs to simplify jargon and break it up to into understandable and relevant information for the average guy. “We have to bring economics into the grassroots. Your economist or your strategist will give you motherhood statements. But we have to ask them if they know what these things really mean,” Rico says. “And do they?” I ask. “Sometimes they are at a loss. All they can rattle off are numbers,” he says. Journalists are known for being pessimists, being critical and for the half-empty versus half-full mentality, but Rico showed no such inclination. Just look at his pet project Good News Pilipinas, a website solely dedicated to publishing good news about the Philippines. Now get this. After broadcasting, he would like to be a diplomat and sell the Philippines, turning down such juicy offers as fund management and corporate communications. “Yes, your salary is doubled and tripled (when you accept those jobs) but you don’t have the same high of being a journalist. For me it’s really the passion that’s important in choosing a career,” Rico says. I can imagine how easy it would be to get eaten up by demands of being in a fast-paced, multi-cultural work environment and keep one’s sanity. Imagine having to tell a story while the whole world watches. Decide which people can tell their stories. Play economic dot-to-dot and find the connections that make the world economy tick. Keep the gate of information open and shut based on your analysis. Ask questions and get answers -- from presidents, prime ministers, CEOs, fund managers and all sorts of decision makers. Rico has proven that Filipinos are tough, excellent workers who can keep their head while everyone around them may be losing theirs. (Thanks, Desiderata ).

Wrote an article for our personal finance section today. You might want to check it out:

Did you know that a good art collector could beat returns in the stock market in both good and bad times? Investment in well-chosen Philippine art pieces at a minimum of P100,000 to P150,000 could give a 10 percent to 30 percent in a year or two. For those who have a taste for the works of National Artists, the 1972 Bencab acrylic on paper, estimated at $19,000 to $26,000 eventually sold for $54,000, writes Giselle Kasilag in Kulay-Diwa website. With stock, currency, bonds and commodity markets all over the world always in a state of flux, investors may find it worthwhile and less stressful to buy paintings instead of financial instruments. Or at least use this alternative form of investment to diversify his portfolio and spread his risks. The real return, however, may not be in the form of cash. Despite the possibility of high earnings, art patron Rico Hizon, who is also BBC World’s lone Filipino anchor, says the enjoyment that comes from the painting itself should be the primary return every art investor should consider. “Look at it as something that will lighten up your living room, give color to your bedroom. You shouldn’t buy art because you want to make money in two or three years,” Hizon said in an interview.

Read more here.

No matter what we may all think about crazy Filipino drivers and crooked public officials, a lot of Filipinos who have lived most of their productive lives abroad still believe “there’s no place like home.” The ultimate dream still seems to be coming home to the land of smiles. But how to prepare for it? That’s a common question we receive here at INQUIRER.net. Should you invest here in the Philippines or in the country where you live? Which will give you better returns in the end? Should you convert your money into pesos now and invest here in the country or keep them in dollars/euros/yen etc. and convert when you are about to retire? In part five of his series on investments, Dr. Johnny Noe Ravalo explains the pros and cons of different options. He answered the question of reader Ann, who said:

Hi my name is Ann and I work here in the US. I am now a US citizen and I would like to know if I could invest in mutual funds in the Philippines since I am looking forward to retiring there in the future. I am only 29 years old but I have saved enough to start a small investment. I would appreciate your help. --- Ann

Read Noet’s reply here and find out how each seemingly tiny decision can make a million of a difference! Noet says this is not just an issue of where to put your money, but also an issue of monitoring and conversion.

“You can opt for US investments but forego the opportunity to take advantage of a premium that the international market exacts on countries like the Philippines. On the other hand, taking advantage of the interest differential will mean monitoring the investment remotely, either engaging the services of a registered broker or going through a collective investment scheme.”

You won’t believe the horrendous stories I hear about having to deal with local brokers. I’ve heard good stories, too, mind you. Dr. Noet also points out that even with a good broker to help you, the burden of monitoring investments still rests on you. Monitoring is a big job and requires full attention and at the end of the day, as Noet says, there are some surprises you would rather not have! And if you are already on the brink of retirement, those surprises can hurt more than you realize. The decisions on where to invest, how, and when are all part of constant finetuning of investment strategies and different approaches are not necessarily wrong ones. It is possible to invest some here and some in the US as her investable funds grow bigger, and even perhaps try out some investments in other Asian economies for diversification. Whichever route you decide, you are still going to encounter the intricacies Noet pointed out. But one thing everyone will most definitely agree to is that preparing early is definitely a good idea, to recover from mistakes that we all make from time to time. Happy investing.

This photo made me sigh. Calling Hachiko…how do those cherry blossoms look? And this made me smile. Walking barefoot on grassy fields is a favorite pastime since I was a kid in Bicol. I used to let my heavy bags slide down after a long day at school and spend the good part of an hour quietly observing birds, trees and clouds and smelling the earth. I nurtured my inner introvert that way ☺ Work and life balance is a big deal in personal finance. When it comes to a point where work sucks in all our energy, we are no good both at work, at home, at church or in the community. Imbalance kills the inner joy in us; it is an enemy of money-smart peeps like you. But since vacations are expensive especially in a country with more than 7,000 beautiful islands, it is best to plan and prepare for them carefully. Our personal finance article today on “Travel now, pay later” gives some tips:

1. Book early. It’s mid-summer, and most people would like to head out of town, if they haven’t done so already. Pick a vacation spot you and your family will enjoy then book flights and hotel rooms as soon as possible. This will make sure you’ll still have a summer getaway in comfort. Find out too, if the airline and hotel you’re looking at will give added points for your credit card company’s rewards program. Extra points will mean extra rewards later on. Plus, paying with a credit card may entitle you to free travel insurance. 2. Compare costs. Not only should you compare hotel room rates and air fares; compare costs between destinations as well. For instance, there may not be much difference between traveling to Hong Kong or Macau and traveling to Palawan and Davao. The weak US dollar has made reasonable travel packages abroad possible. 3. Budget the monthly installments. The Travel Now, Pay Later scheme is an installment plan which you should treat in the same way you would treat an appliance purchase. Find out how much the monthly installments for your vacation would be, then calendar it in your budget and planner. This scheme is easy on the pocket, enabling you to enjoy a big-ticket item (your vacation) without taxing your bank account. 4. Don’t forget transfer arrangements. Transfers between airport to hotel and vice versa may be arranged beforehand; so do city guided tours. Take advantage of these offers as these will enhance your travel experience. 5. Charge only what you can afford to pay. Just because you can use your credit card for the Travel Now, Pay Later scheme doesn’t mean you should get the most expensive travel package offered. Take only what you can afford to pay in the next three or six months (depending on the terms of the scheme). Don’t be saddled with debt with the vacation of your dreams. That will come in later in life, when you can afford to do so.

There are credit card companies who offer travel packages that will allow you to “travel now, but pay later.” Perhaps you have already availed of them or are planning to. Do you think these are good deals? Yes or No? *Photos from Agence France Presse.