Up next in the outlook series is the view of a young financial planner and stock market investor. Despite his age, he is truly full of financial wisdom and his views are one of those that I follow and his advise I often seek. A former I.T. pracitioner turned finance guru. Marvin Germo has been very active in investor education and has become a sought after expert in his field.

The 2013 Outlook of Marvin Germo

I call 2013 a step into the greater! 2012 was great, but 2013 will be the staging point for even grander things to come. 2012 showed the world how great our market is, but 2013 will show how we can sustain it and how we can take it even further.

Based on a recent survey, 93% of every Filipino believes that 2013 will be a very good year for them.  Let me breakdown the reasons why.

 Government

– Never in recent history has there such been such confidence in our present administration.  Local and international businessmen are upbeat to further invest and place billions upon billions of their money in our country.

– The peace treaty in Mindanao will open up opportunities for more business to flourish in a region plague by years and years of war.  Our countrymen down south can now finally live their lives normally and think about progress instead of war.

– The sin tax law will further increase government revenues to create multiples streams of opportunities to further grow our economy.

– The government under spent the past 2 years, and will further compensate to pump in more money this year to make up for the 2 years where it spent less.  This will fuel more growth for our economy and build more infrastructures to help our country move forward.

– 2013 is election year!  This will drive even more consumption, increase sales of companies in media, printing, consumption, logistics, and so much more!   History is on our side telling us that our economy is very vibrant during election years.

Money Matters

– The Philippine Peso is the strongest currency in Asia and as of this writing has just breached its 5^th year high against the US Dollar.  As months go by, expect the Peso to gain even more ground as America’s economy still continuous to be shaky.

– At this point we have one of the biggest reserves in our entire history!  Our government has so much cash at its disposal right now!  We even lent money to the IMF last year as a show of force on how strong we already are.

– Interest rates are low, meaning more businessmen can loan more money to fund their business and make it even bigger.

-Inflation is relatively low, allowing people to spend more at its current levels and further fuel the economy.

 Economy

– The 2^nd best economy in Asia, trailing only China from the last GDP results

– We have one of the hottest stock markets worldwide

– The Philippine BPO sector continues to dominate and remains to be a massive source of income for our country.

– OFW remittances continue to increase thus fueling the consumption and investment opportunities for our country.

– Property boom, there is still a large number of Filipinos who do not have homes and the increasing inflow brought about by the BPO and OFW markets have allowed families to purchase properties of their own.

– Consumption, this will be one of the biggest stories this year as more money moving around allows more Filipinos to spend and consume more.

– Growth prospects of local companies expanding not just locally but also abroad.  SM and Jollibee continues to expand in China.  Universal Robina Corporation is expanding its exports to other parts of Asia among others.

Technicals

I am very much a technical analysis guy as much as I am inclined to fundamental analysis.  Just by looking at charts, it is pretty evident that our market is in a long term uptrend and until I see any evidence that it will reverse, I’ll still be invested in equities or equity funds.  If things play out right, consensus reports see our market going up to 6,500 – 6,800 this 2013.  Who knows, as upbeat as we are right now we might even go to 7,000 at some point in 2013?

Now is the time for us to take a look at our country, move forward and take advantage of the vast opportunities that are coming our way.  I really believe this with all my heart that by God’s favor and Grace we are stepping into the start of one of the greatest days that are nation has yet to see.

Marvin Germo, RFP, ECE, is the General Manager of Ephesians Management Corporation and is a Financial Planner and Advisor who is one of the up and coming personal finance speakers in this generation. His Passion and zeal to educate the Filipino people has translated into transformed lives, financially free families and has moved ordinary consumers into investors.

He is an Entrepreneur and an International Financial Resource Speaker who out of his eager desire to make an impact in this nation has spoken in different spheres of society – corporations, government agencies, churches, schools, clubs, organizations, and numerous public events. His ability to breakdown complicated investment concepts and translate it into something that is simple, basic and understandable has made him one of the most sought after money speakers in the land. He has been a stock market resource person for Studio 23, ANC, TV5, Teleradyo, DZMM, GMA News TV, and 92.3 FM. HE is also a stock market write/contributor for Money Sense Magazine and BussinessMirror

He completed the Registered Financial Planners Institute (RFPI), he is a Stock Market Trader & Investor and has around six years experience in the Philippine financial industry. He specializes in technical analysis and position trading as one of his core modules in his stock market lectures. He also owns (www.marvingermo.com), a financial planning help site. He graduated from Mapua Institute of Technology with a Bachelor of Science in Electronics & Communications. He has completed the Philippine Stock Exchange Certified Specialist Course in the Ateneo Center for Continuing Education.

One of the cardinal rules to achieve financial security is this: Buy assets, not liabilities.

How do you do that? It’s simple… buy or investing things that will potentially increase in value in the future or provide some form of income or return — that’s buying an asset. When you buy things that will depreciate in value over time, or even require more money or upkeep — that’s a liability.

Here’s an overly simplistic example. Buying an iPhone 4 on a plan from Globe. I can choose to get a plan wherein I will put out about 10,000 that will require me to fork out about P2,000 on an average plan for voice, texts and data — or I can use that money to buy stocks from Globe (or PLDT) and keep on buying more shares every month which will also make me practice peso cost averaging. If you opt to have your iPhone and the plan that comes with it, here is your scenario: after the customary 2 year lock period, you would have spent about P50,000 on your bills plus the P10,000 handset cost, a total of P60,000.00. Should you decide to sell your iPhone at Green Hills after 2 years, you might get P6,000 to P8,000 still. Not bad you say?

Here’s the other scenario had you chosen to invest the money instead in buying Globe (or PLDT) stocks. Let’s assume that in the 2 year period, the total value of the stocks increases by an average of 1% per month  through stock price growth & dividends (it can actually grow much more). Here’s how it may look out:

Well, I can’t argue the fact that you may also loose some capital investing in Globe (or PLDT) stocks in a period of 2 years but I’m pretty sure you won’t wipe out your whole investments as the said companies are blue chip stocks, profitable & provides good dividends. In anyway you look it I would think that you’d have more money in investments as against spending it on a liability. You can chose to be a customer of Globe (or PLDT) or an owner of Globe (or PLDT).

Question: Why are interest rates in the banks so low? Will it go up anytime soon and what are the alternatives so my money can earn better?—Dennis Poliquit, Radio DJ

Answer: Dennis, your question is one that you can call a ‘loaded’ question, so to speak (pun intended). Let me try to simplify my answers because the way most people explain it can cause many a nosebleed, me included. In economic terms, interest rates are largely a function of the government’s monetary policy with the central bank as its chief implementor. The government, through the central bank, tries to influence the economy by manipulating interest rates according to the direction of its economic managers. When the government wants money to circulate in the economy, it tries to keep interest rates low with the belief that money will be spent and invested in businesses that drive economic growth. When interest rates are low, people are discouraged from keeping their money with the government, which is the safest and largest borrower through the sale of government securities (debt instruments).

When the government wants to control the cash circulating in the economy, it increases interest rates and you can expect the market to start putting more money in government debt paper because of its low risk. The interest of government securities, also called treasuries (bills, notes and bonds), is also the basis…

To read full column, visit http://business.inquirer.net/7863/why-are-interest-rates-so-low