The 3rd No Nonsense Seminar on Finance was a successful one. To those who attended, my sincerest gratitude and I pray that you learned something valuable. To those who helped me promote this event, my thanks too!

God bless.

Sometime ago, while attending our church service at Victory Green Hills, my Pastor (Dennis Sy) said something that made a lot of people pause and think. He said “direction, not intention, determines destination”.  I believe my pastor picked up those words from Andy Stanley’s book The Principle of the Path. Andy Stanley is one of my favorite authors and I do recommend you pick up his books.

Although my pastor was talking about our spiritual plight, the words got me to think about personal finance also.

I have yet to find anyone who will tell me that he does not like to experience financial prosperity. I am pretty sure there are very few people who relish the idea of being deeply in debt or terribly broke. Financial security remains to be a top goal of almost everyone. During my public talks, I would often ask the question “who likes to be rich?” and I’d see about 90 to 95% of the hands being raised (the other 5 to 10% are probably not listening to me).

People are often looking for a grand magic formula to achieve financial success and many of them are also looking for the quickest way to do it. After 20+ years in the financial services industry and observing hundreds of successful people, I know that there is no such thing and quick-rich ideas, though can work, is hardly ever sustainable. Achieving financial freedom is a long and deliberate process, and most of the time a painful process at that. Fortunately, it is not a complicated process but rather a very simple one. My good friend and best-selling author (Pwede Na! Books) Efren Ll. Cruz shared to me 3 ways to get rich:

1) Inherit it (for those born fortunate);

2) Marry it (again, for those born fortunate – physically, haha!); or

3) Spend less than what you make and invest the difference.

The 3^rd option is actually the only viable option. Inheriting money doesn’t always guarantee you can keep your wealth. Marrying for money is actually a guarantee of a miserable married life. The 3^rd option is the sure-fire way to achieving financial prosperity.

The formula is too simple right? But how come majority of us find ourselves lost in the quest for prosperity? Our intention is to be financially disciplined, learn to save, budget properly, etc. Until we see our favorite store on sale, dine at a hotel buffet at a whim, upgrade your car spontaneously, buy furniture unplanned… get the drift? Often times, we lose focus of our goal and we get sidetracked. The intention is still there, we just got detoured momentarily. But hey, “direction, not intention, determines destination”  right? It’s like having a terrible fight with your spouse — it is never really our intention to quarrel with our loved ones, but when we lost our control, we get lost and we eventually suffer. One can always make a course correction and redirect towards the original path that will bring us to our destination but there’s time lost and a lot of opportunities may be lost as well. In money management, like anything in life, time is really important. We can never make up for lost time.

Next time you are faced with a detour, focus on your destination and remember that the fastest and most efficient way to get there is through a straight line.

“Let your eyes look straight ahead, fix your gaze directly before you.” Proverbs 4:25, NIV.

— taken from the May-June issue of Moneysense Magazine.

The whole nation is busy with watching and discussing about politics these past few months. The election was really something that us Pinoys love to spend our time with, campaigning for our candidates and all that – a cycle we go through every 3 years (during elections). Had we been in the U.S. or some other developed nation, people will be busy talking about what’s happening at the stock market.

So what is happening to the stock market? People have discounted the market as a place to invest money into partly because of the recent world-wide financial turmoil, but largely because of financial ignorance. Here’s what you miss… in the last 12 months, our local stock market index or the Phisix has steadily been increasing. A year ago, the index was at about 2200 points. As of yesterday, the market is hovering at about 3200 points. Simply put, had you invested P 1,000.00 in May 2009, your money would have grown to about P1,500 today – a whopping 50% annual rate of return.

Our local market has been performing positively and to the few who took a risk of investing a year ago, they are smiling today. I know of a lot of people who purposely stayed away from the market because they say that during an election year, one should stay off investing.  I don’t why we torture ourselves of doom and gloom scenarios every time we elect our leaders anyway. For those who were paralyzed with our periodic doom and gloom fantasies, you missed making your portfolio grow by a enormous 50% return!

Does this mean that you should go and empty your bank and head on to your stock broker? Wooah! Hold your horses. The stock market, though it gave a very good performance in the last 12 months, is still not for everyone. One should go through a process before making any investments regardless if it’s buying stocks, bonds, mutual funds, uitf, real estate or any other form of investment. Remember to be clear about a few things first: your investment objective, your risk tolerance, your time frame and your risk tolerance.  If investing in the stock market will help you achieve your financial goal, you can take the volatility of market, you are willing to leave your money for a while and you have rudimentary understanding of how the stock market works – then go! However, if you will lose a lot of sleep (and sanity) whenever the stock market moves south, don’t go there even if you can see surges in the market like 50% in a year.  Remember, an investment that can give you a 50% hike in a year can also make you lose as much in the same period. Returns will always be determined by the risks you take – always has, always will! I can’t believe there are still detestable beings preying on the innocent (or the ignorant) making them believe that what they offer is high yield but low risk. Whenever someone offers you an investment that will make your money grow with very minimal risk, he is either misrepresenting or he is scamming you.

Will the market continue on an upward trend like the last 12 months? I have no idea. All I know is that what goes up must come down at some point. However, if you are willing to be patient and will not mind the gyration of the Phisix, then go ahead and allocate part of your money but always be prudent and sensible. Do not put all your eggs in one basket and diversify. If you are not comfortable with letting go of your money, always remember that the money you do not invest will be safe but it does not mean that it will not lose value. Inflation is constant and an invisible risk we are all exposed to. Here’s a very sensible tip that I got from my good friend Efren Cruz: “Invest early, invest wisely and invest regularly”.

“After a long time the master of those servants returned and settled accounts with them.  The man who had received the five talents brought the other five. ‘Master,’ he said, ‘you entrusted me with five talents. See, I have gained five more.'”His master replied, ‘Well done, good and faithful servant! You have been faithful with a few things; I will put you in charge of many things. Come and share your master’s happiness!’”

-– Matthew 29:19-21, NIV