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 [email protected].

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. 

When should one be serious about finance? The earlier, the better. When you understand about time and investing, you will really want to start being money smart from the day that you get your first paycheck (or your profit) right? The reality is, young people often start being financially astute much later than they should — and I’m speaking from personal experience. I really have a few regrets of my youth (seems so long ago), the only ones I can think of would mostly relate to financial issues — not saving as much, borrowing too much and not investing enough.

Here’s a very helpful blog written by a good friend of mine, Jesi Bondoc. Jog, as we fondly call him, is not only a Registered Financial Planner (proud teacher I am), he is also a certified yuppie himself. When I see young people like Jog becoming more and more financially enabled, I am hopeful that the Pinoys will be financially at peace sooner than later.

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PERSONAL FINANCE FOR YUPPIES

Jesi Bondoc, RFP

I had the privilege to speak before a handful of young professionals last month in the financial wellness week of a Telco company. It seems that more and more companies nowadays realize the importance of personal financial management for their employees’ professional development.

During the course of our workshop, we have identified several key behaviors in order to enhance employees’ income to create their own financial pipeline. It is my hope that every young professional embrace these behaviors and benefit from them.

1. Always begin with the END in mind. The journey towards financial freedom begins with a solid financial goal. A financial dream may sound similar with a financial goal but they’re not. Financial goals serve as your road map in achieving your financial desires. Your financial goal should be specific, can be quantified and should have a deadline.

2. Be comfortable with money. According to the famous writer Oscar Wilde, “the only people who think more about money than the rich are the poor”. The way you view money will greatly affect how much or how less of it you’ll have. Too much attachment to money is the reason why many people struggle to make money. Once you’re attached to something, you grow emotional about it and the more emotional you are, the less control you have. Detachment is a major reason why rich people get richer. They don’t care so much – they’re not desperate. If you don’t have money, you need to be relaxed enough to know you’re going to get it. When you have it, you need to be comfortable enough to keep some of it – and know there’s more to come. Being comfortable with money doesn’t mean that you recklessly spend every peso you earn and pray that the Lord will bless you with some more. No! Being comfortable with money simply means that you know exactly what to do once you have it.

3. Beware of the “Income Trap”. As young professionals, it easy to get caught with the idea of increasing your income will equate in improving your lifestyle. Not necessarily. Most of the time the higher your income goes up the higher the probability of ending up in a financial mess because your expenses will eventually catch up if you do not understand how to manage your spending wisely. What matters is not how much income you receive but how much surplus is left from it. Start implementing a spending plan to keep tabs on your cash outflow. Effective spending plans are great tools in managing the way you spend your money. It will help you to form smart spending habits that will eventually lead in reaching your financial goals. Spending plans should not be restrictive and difficult in nature. They should be simple, fun and comfortable to follow. You just have to allocate more portions of your spending to things that really matters to you.

4. Pay yourself first. This simply means save first before paying your bills and other discretionary expenses. It sounds simple yet many of us still struggle in embracing the need to set aside a portion of our income for our savings before spending it elsewhere. Set up an automatic savings program where a portion of your monthly income is transferred automatically to an investment or bank savings account dedicated in building your nest egg for the future.

5. Learn how the rich play the game of money. The only difference of a rich person from a poor person is the asset column on their respective balance sheets. The rich buy assets while the poor are accumulating liabilities like credit card debt, car loan, home loan, etc. To create your own financial pipeline that can augment your employment income, you need to learn how to buy assets that can generate more income for you. Investing in paper assets like stocks, mutual funds or UITFs are simple ways to start improving your asset column. Paper assets generally require lesser time to manage compared to other investment instruments making them a great investment tool for busy young professionals.

 6. Giving back. There’s truth to the saying that if you want something, give it away! It may sound insane to others but it is true that through giving you’ll get more. In Hong Kong, I saw fishermen attaching a small fish to their hooks to catch more fish. Farmers give away seeds to the soil to get more seeds. Try slapping someone and you’ll get a slap on the face in return! Same with money, if you want more money try giving some of yours through tithing, donations or adopting a scholar.

Jesi Bondoc is a Registered Financial Planner and Certified Investment Solicitor. He is currently the Director of My Wealth MD and Partners, Inc. specializing in investment advisory and oversight. He also conducts wealth planning seminars and workshops for various corporations in the Philippines. You can reach him at [email protected] or [email protected] and for more info about Registered Financial Planner, please visit www.rfp.ph or email [email protected]