Join the RFP Financial Fitness Forum

May 4, 2013 (10:00 am – 9:00 pm) /
SM Megatrade Hall, Mandaluyong City, Philippines

Get Informed and Get in Shape

Financial Fitness Forum is a one-day personal finance event that answers everything you need to achieve your financial goals! Regardless of your situation in life, whether you are salaried employee or entrepreneur, this is your opportunity to get valuable personal finance advise you can’t afford to ignore. Get fresh ideas on investing, learn powerful insights about wealth building, apply new strategies in growing your money. Plus, interact with Registered Financial Planners (RFP®) for free counseling and advise at Financial Planning Clinic sessions.

Catch the RFP Experts! Efren Cruz, Aya Laraya, Alvin Tabanag, Noel Arandilla, Salve Duplito, Edwin Suson, Kendrick Chua, Marvin Germo, Atty. Ariel Martinez, Rienze Biolena,  Jeff Gonzales, Ricky So and Randell Tiongson in one mega event!

So honored and blessed to be featuring a guest blogger whom I respect and admire so much. Efren and I have been friends for quite some time now and he remains to be a role model to me and many ways. More than a colleague, Efren is a great mentor. More than an investment expert, Efren is a genuine advocate who practices more than what he preaches.

In this installment, Efren puts some wisdom on stock market investing. With so much attention and curiosity in stock investing, Efren’s wisdom is so timely and his balanced view is something that he is really known for — I take his insights and advise very seriously. 

Efren will be featured in iCon 2013: The No Nonsense Investments Conference this June 22, 2013 at the SMX. He will tackle the very important topic of investment planning. Check out the conference HERE

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Some Commandments in Stock Investing

by Efren Ll. Cruz, RFP

Question:Are there any rulesthat I should strictly follow in stock investing?– via email

Answer:To be sure, there are many rules to follow.  But here are some that immediately come to mind.

1) Do not make money a graven image.  Money has always been and will always be just one of the tools to achieve the more important things in life. The same goes for stock investing. Don’t get me wrong though. Money and stock investing are important tools. Just don’t let your life revolve around them as if they were the reasons for being. And when you make money, don’t forget to whom the glory belongs.

2) Forget about buying at the bottom and selling at the peak. Your chances of buying at the lowest point and selling at the highest level is as slim as winning the 6/55 lotto (about one in nearly 29 million). Why? Because you will only know that a particular price is either the lowest or the highest after the fact. Worse, you may not have even placed your order before then.

3) You beta watch out, you beta not cry. Stock prices tend to move together.  It’s just that some move faster than others.  A way to measure this relative movement is to measure a stock’s beta.  Usually, a stock’s beta is measured against a broad market indicator like the Philippine Stock Exchange Composite Index or PSEi. Operationally, if a stock’s beta is 1.5, and the PSEi made a 2% return, that stock should make a 3% (i.e. 1.5 x 2%) return.

A higher beta would mean a stock with a more volatile and, therefore more risky behavior vis-à-vis the PSEi. This is not to say that stocks with high betas should be totally avoided.  You just need to match your risk tolerance with that of the stock you are buying. In other words, buy with eyes wide open. You don’t need to perform the computations for deriving beta as you can simply ask for them from your stock broker.

4) Investment decisions have manufactured and best before dates. Do not cry over spilled milk as they say.  If you are truly diligent in studying your options before investing, you would always make the best decisions given the information available to you at the time.  However, the only thing that is constant in life is change itself. Your investment decisions will have a shelf life as many factors can change with the underlying companies you bought.  So make it a habit to review your investments periodically.  Once a quarter should be good enough.

5) Do not covet your neighbor’s allocation. Even if someone comes up to you to brag about the tons of money he made from a certain investment allocation,that is his allocation and not yours.  You will need to come up with your own according to your own return objectives and risk preference.  How else will you be able to tell your own story?

6) Do not get too excited with breaking news. Stock investing is manic-depressive.  Keep your cool when you come across exciting news. In the first place, if it wereexciting news about a certain stock, it would already be a time to sell that stock and not to buy it. You are supposed to buy before the news breaks. More importantly, it is the long-term earnings and growth prospects of the underlying companies you boughtthat you should focus on.

There are much more stock investing commandments to write about.  But the foregoing should give you enough to chew on for a while.

Thanks to Randell for allowing me to post this guest blog.  More power to you my dear friend.

Efren Ll. Cruz is a Registered Financial Planner of RFP Philippines, personal finance coach, seasoned investment adviser and bestselling author. Questions about the article may be sent by SMS to 0917-505-0709 or emailed to efren@personalfinance.ph.

Copyright 2013 Efren Ll. Cruz, RFP.  All rights reserved. This material should not be published, broadcast, rewritten or redistributed without the express written of the author. 

I’d like to share an excerpt of the book I am writing. I hope that you will find this excerpt helpful.

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Invest In Yourself

I believe the best way to earn is to first invest on your best performing asset—You! Improving yourself will be the best way for you to earn better. Have you ever honestly asked the question, “Am I investing in myself?”

When was the last time you read a good book? When I say good book, I am referring to good reference materials and not those fictional stories of vampires in love or some fantasy magical school.  I noticed that many Filipinos are not in the habit of reading, and I was one of them until my friends from church started giving me books and encouraged me to read more. When I started to read books, I realized that I started getting better at my writing, my teaching, and I was even becoming to be an interesting conversationalist. There were many new things I picked up that were directly or indirectly related to my profession. I did not limit my reading to finance materials. I started to read many books on leadership, marketing, digital media, economics, business and others. Of course, part of my daily reading is the Bible where I get much wisdom, especially for financial matters.

I try to read foreign and local books. The foreign writers that I love to read are Andy Stanley, John Maxwell, Dave Ramsey, Seth Godin, Larry Burkett among others. I’ve also found some local books insightful such as Efren Ll. Cruz’ Pwede Na! A Complete Pinoy Guide on Personal Finance, Chinkee Tan’s Till Debt Do Us Part, Jayson Lo’s YOUnique, Josiah Go’s Marketing Plan, Yeng Remulla’s Productive Pinoy plus a couple of books of Francis Kong.

I don’t limit myself to reading just books; I regularly follow some columnists like Efren Cruz, Cito Beltran, Wilson Lee Flores, John Mangun among others. I also devour a lot of stuff from the internet, reading many blogs by Carlo Ople, Dennis Sy, Noemi Dado, etc. I spend about 1 to 2 hours daily reading, researching and studying materials. I even go through a lot of Twitter posts; picking up potential materials I can use and following the links.

Podcasts are also something I like listening to especially when I am travelling. I make it a point to periodically listen to the podcasts of Dave Ramsey and Ravi Zacharias.

I also converse heavily with a lot of people and my mentors. Coffee or lunch sessions with them have always been a huge learning opportunity for me.  Most notable are my sessions with Francis Kong, Cito Beltran, Josiah Go, Efren Cruz and Rex Mendoza. Sessions with my peers are also great learning opportunities that have truly helped me learn, apply and teach.

I must confess that I still have a lot of unread materials, un-played podcasts, un-opened links and un-served coffee that I need to work on but I will get to them sooner than later.

It is always a good idea to invest on learning. Many Filipinos are not big fans of trainings and seminars—a big mistake if you ask me. The more I learn from trainings and seminars, reading books, talking to great mentors, and reading columns, the more productive I get.

When I was a young insurance professional, I took a special program being offered in the industry. Many of my peers felt it was a waste of money and a waste of time. Instead of being encouraged, many were actually discouraging me from spending hard-earned money (which I didn’t have much of) and giving the seminars the time of the day. While the program was far from perfect, the learning I picked up was able to make me a better insurance professional and gave me a thirst to learn further. I saw myself becoming more confident and competent because of the learning, and my investment definitely paid off because I was able to improve my revenue as a direct result of the program I took. Years later, I rose to become a manager of insurance agents in the company I used to represent. I stumbled upon an imported program for agency leaders but the enrollment cost was quite steep. If I remember it right, the cost was more than P50,000 for me to enroll in the program. Many of the agency managers in my industry were not investing in the program, and most of them cited cost and time as a reason not to. Being the learner that I am, I reviewed the program and knew I could benefit from such a program even if my peers thought otherwise. True enough, I became a better agency manager as a result and my income reflected a rise in multiples of what I paid for the training. I took many more programs and invested in dozens of seminars in a span of 2 decades—some of those carried a hefty price tag like the conference I attended in Singapore once you factor in plane fare, hotel and other incidentals on top of the pricey conference fee.

I have lost track of how much money I spent on my learning but it was all worth it. While there were a number of conferences or books that weren’t really as helpful as I wanted them to be, I’d say that I have learned much from them and contributed to who I am today. The returns are quite difficult to compute but it has really paid off in exponential ways. In fact some of the programs I took, I ended up teaching them myself as the organizations behind them would often ask me if I can teach the programs, for a fee of course.

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The excerpt from the book I’m writing echoes a strongly held belief of mine — the best investment you can ever make is investing in yourself.

Catch this year’s most exiting and insightful investments event: iCon 2013 – The No Nonsense Investments Conference on June 22, 2013 at the SMX. Check out https://www.randelltiongson.com/i-con2013/