Stock Market Investing FAQ

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For the past days, since I became active in writing blogs again, I have been receiving a number of queries about stock market investment. This post aims to address those concerns. Here are to name a few:

1. I want to invest in the stock market. How do I start?

          Before asking how, you must have an answer to WHEN do you want to start. Most of the time, people want to invest, they ask questions and get answers, but then do not start investing at all. I encourage you to start investing NOW. If the market is down, do not wait for it to go up. This is a great time to buy because this means that you can buy great companies at a lower price. When the market goes up, keep on buying these great companies. TEL (PLDT) which costs Php2748/share now will definitely cost more than that after twenty years right? Back in 1986, it costs less than Php10/share.

          Once decided, the question now is how do you want to invest in the stock market? Is it Directly or Indirectly?

Directly is when you have a stockbroker, who acts as a middleman every time you buy and sell stocks, but it is YOU who decide which companies to buy or sell. To be able to do this, you must have the time to learn how the stock market works and how people earn money and lose money from it. As for me, my stockbroker is COL Financial. It is the leading and fastest growing online stockbrokerage firm in the Philippines. They offer investment seminars for FREE. Please check their website for schedules.

Indirectly is through a mutual fund. This is for people who want to invest in the stock market but do not have the time and knowledge to do so. A fund manager will do this for you. Talk to your financial advisor (ahem!). Discuss with her the kind of investment that you want (either low risk low return, or high risk high return), how much money you want to invest (maybe one time payment or multiple pay), if you want something that is pure investment, or you prefer that has insurance coverage. It can be as flexible as you need it to be.

2. How much money do I need to invest in the stock market?

          If directly, you can start by opening an account with as little as Php5,000. If indirectly, you can invest even with only Php20,000 per year.

          Investing 20% of your income for your future is a good start, which increases as your income increases.

3. Can anyone invest in the stock market?

          As long as you have a regular source of income, like your salary, then you can invest in the stock market. It is not as complicated as it seems to be. Even my kids, who started investing at aged 5 and 1, are stock market investors. Of course, it is I who manage their accounts. As parents, I believe that it is our responsibility to do what we can NOW to secure their future.

4. What is the interest rate in the stock market?

          On average, it ranges from 12 to 20 percent per year, compounded. Although this is not guaranteed, it is still higher than what your favorite bank could offer. Plus, it is higher than the inflation rate. Do not lose the value of your money. Invest it where it grows faster to beat inflation.

One Last Note

          To truly appreciate it, what you invest in the stock market is money that you will not be using for the next five years, at least. Remember that this is a long term investment. If you put your "pamalengke" money in there, you might be needing it soon and have no choice but to sell at a loss. 

Set aside an Emergency Fund. Your investment in the stock market will be your Retirement Fund.

I hope this post was helpful. If you have other queries, please post them on the comments below.

Happy investing!

The Pain of Giving Will Lead You to Great Success



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My mentor taught me that if you want to achieve great success, the key is to PURSUE PAIN.

You get those 6-pack abs after weeks of painful push ups and sit ups.
You become a remarkable guitarist after years of learning and practice that caused those painful calluses on your fingers.
You are a superb father who spends time with your children because you have experienced the pain of having a broken family.
You are now a happy millionaire because you underwent the pain of being broke.

You need pain to survive. You need pain to grow. There are people who have become so comfortable in life that they have become lax. Their lives have become meaningless because they have no more burning dreams. Remember that life is short, and we are meant for bigger things.

I encourage you to get out of your comfort zone and start growing -- spiritually, relationally, or financially -- by pursuing pain.

The Three Sources of Inner Pain

The first pain comes from Grief. This is intense suffering like bankruptcy, catastrophe or sickness, that drove most successful people to greatness.

The second pain comes from Greed. Greed is painful, too, when it fuels people to work, work, and more work, forgetting their families and health, just to earn another peso. I'm sure you are aware of very wealthy (and unhappy) people who achieved their success because of greed, and lost the things that are more important than money.

The third pain comes from Giving.

The Pain of Giving

Giving is self-imposed pain.
It is voluntarily chosen.
When you give, and you do not experience pain, your giving is fake.
When you give, it must hurt you. It must shake you up. It must wake you up from your complacency.
I have realized that when you give, it must rock your world so much, that it creates a hunger in you to keep on earning money so that you can keep on giving.
This pain gives joy.
This pain blesses you.

When I started child sponsorship through World Vision, there was pain in giving at first because I did not even know the child. But when I received a handwritten snail mail from my sponsored child, I had butterflies in my stomach. It was overwhelming. It gave me joy beyond explanation knowing that I was able to help, not just a child, but her family as well. Then I knew that I was doing the right thing.

There are those people who would criticize me, because although I am earning enough for myself and my family, I still make ways to earn more. Why? So I can give more. My dream is to help send more kids to school every year.

I pray that you find your reason for success. And that you transform your pain -- either from grief or giving -- into FUEL to reach your dreams.

Be blessed and be a blessing!

Protect Your Money: Learn the Six Signs of a Financial Scam



The first rule on money is this: If you earn it, do not lose it. Warren Buffett clearly tells us this in the quote above.

For the past years, there have been reports of investment scams all over the globe. The most familiar for us Pinoys was the Aman Futures Group, an investment and privately held company based in Malaysia with branches in the Philippines.

Just a brief background, Aman Futures was reported as a pyramid scheme that duped 15,000 people in Mindanao and the Visayas of Php12 Billion. The "double your money" was a phrase being pitched to join the network. Sadly, over 100,000 Filipinos were victimized.

You need to learn to protect your money. There is no use in having a good amount, especially when it is hard-earned, and then just lose it all in a financial scam. Here are the six signs of a scam:

1. Insane Interest Rates

Bigger than Aman Futures was Multitel by Rose Baladjay back in 2002. The wealth damage was Php100 Billion and has victimized at least 2 million people. The company attracted investors by offering 4 to 5 percent guaranteed monthly interest for a minimum investment of Php10,000. As an alternative, it offered a "double your money" come-on to investors who chose the 18-month lock in scheme.

That would be 60 percent per year! That is an insane interest rate.

Insanely interest rates mean that a scam is going on. They use the Ponzi scheme wherein the company gets money from new clients to pay off the interest of old clients. When there isn't enough money coming in, everything explodes.

    2. Guaranteed High Interest rates Per Year

Keep in mind that only banks can give you a GUARANTEED interest rate per year -- and it is not high. Specifically, it gives you a measly interest rate of less than one percent for your savings account and 1.5 percent for your time deposit.

Even investments in the stock market does not give a GUARANTEED interest rate.

    3. You Can't Understand How They Earn Money

When you are asked to invest your money in a company that promises insane interest rates, ask how they earn money. Usually, they give you an explanation that will only confuse you. Or they will say something about trading European currencies. Our mentors taught us that this is highly volatile and that 97 percent of these traders lose their money.

    4. It Is Just Too Good To Be True

Months ago, I received an email from an attorney of a foreign bank telling me that I was chosen to be the recipient of a huge inheritance money from a British lady who had no heirs. It was unbelievable! When I asked how I could get the inheritance, I was instructed to send $400 to expedite the transfer to my account.

Bottom line, if they ask for money, it's a scam.

    5. They Seem To Be Good And Credible People

The people who are inviting you to invest in these scams may actually be very nice and honest people. But they could be just as ignorant as you are.

In the Royal Manchester Five scam, the top sales managers were Born Again Christians. They believed in their company so much that they asked their religious friends to invest.

    6. Your Financial Advisor and Financial Manager Are The Same Person

Since I have become a member of the Truly Rich Club, I began sharing to friends and colleagues what I have learned about investing. For some, I am their financial advisor. But I do not hold their money.

Instead, I ask them to invest their money in the stock market through buying shares of gigantic companies like PLDT, BPI or Ayala. Even our stockbroker does not hold our money. They act only as middlemen during the purchase.

For my friends who do not have the time to learn how to invest in the stock market directly, I encourage them to invest through an Insular Life's VUL instead. Here, the insurance company's experienced fund manager takes care of their money.

If it is a scam, your financial advisor is also your financial manager. He holds your money. He invests it. He has full control over it. Therefore, he can run away with it.


Make Simple Investments

Today, I invest in two things only.

First, I invest in my personal small business wherein I am in full control of my money.

Second, I invest in the stock market. I buy gigantic companies. Even if I'm not in control, it's okay, because those who are in control are legends like Henry Sy, John Gokongwei and Jaime Zobel, etc. When you invest in the best companies in the stock market, you partner with business titans.

Keep away from scams.
Make investing simple.
Happy investing!


Reference:
1. http://en.wikipedia.org/wiki/Aman_Futures_Group
2. http://www.financemanila.advfn.com/2008/03/philippine-scams-and-pyramids/

My BIG Dream Was Fulfilled

As most people know, I have been a member of the Truly Rich Club and I am a big fan of Bo Sanchez, a best-selling author, entrepreneur, preacher and lay minister in the Philippines. He is known as the "Preacher in Blue Jeans." Last January 8, I thought of writing him a testimony for TRC. Knowing that he maybe receiving thousands of email everyday, it was expected that my letter would go unnoticed. 

But to my surprise, only a few days after, I received a reply from TRC, asking for my photo to accompany my letter which they will be featuring at a future newsletter! Whoa!  That was unexpected. So, at 1am, while my heart was still beating fast and loud, totally overwhelmed, I replied to that email with my photo attached.

And here it is now! I was seeing my name, my photo, and my story at the Wealth Strategies Issue Number 183, January 2014, Page 14! I will definitely have this framed! 

 

 

 

 

 

 

Dreams do come true, even those BIG DREAMS which you never thought would even be possible. And as my mentor would always tell us, DREAM BIG DREAMS BECAUSE GOD IS A BIG GOD! I encourage you to do the same.

 

Be blessed!