As many of you know, my financial overhaul began when I signed up at the Truly Rich Club, a membership site by Bo Sanchez. And the very first book I read on the stock market was a free ebook from the club, My Maid Invests in the Stock Market written by him.
In this book, Bo taught his maids how to invest directly in the stock market. From their Php7,000 monthly salary, they would put their small amount in their stocks portfolio with the goal of becoming millionaires in the future.
I read that book in 2013, and it taught me the stock market on a layman's level. It also enabled me to make anyone understand how the stock market works, the same way Bo Sanchez made his maids understood it. I remember teaching my daughter about stocks when she was only eight years old.
It also taught me that anyone can invest in the stock market. Five years and more mentoring later, I can say that the stock market is NOT for everyone. Yes, anyone can do it, but not everyone can stay invested in it -- no matter how diversified your portfolio may be.
To get your copy of that ebook for FREE, click HERE. For starters, this is something you may want to consider. I personally recommend it as your POINT A. But please, move forward after reading it. Widen your knowledge and learn about the stock market from different points of view, and learn from your personal experience as well.
After Seven Years, Bo's Maid Became a Millionaire
In 2017, Bo wrote this book, How My Maid Became a Millionaire, when his house helper turned bookkeeper became a millionaire after investing in the stock market seven years later.
This book is not available in bookstores yet. I just saw a link online. The book is FREE, you just have to pay for shipping. But because I am no longer a member of the Truly Rich Club, I do not have a direct or affiliate link for the book. You can try Google like I did.
Today, as I type away this blog post, with the book next to me here in our room, my daughter asked if I am done reading the book. I said yes. She asked what did I learn from it. I told her that what were taught in this second book were already explained in the first. Personally, I think this was written as a confirmation that yes, you can become a millionaire through the stock market using the strategy of the Truly Rich Club, no matter how much you earn.
Moving On.. Let me share with you some points from the book
The book is divided into two parts.
First is the story of Gina, the maid Bo was referring to in his two books, and how she was able to achieve her first million in seven years through investing in the stock market.
Second is Q and A on stocks investment, with testimonials from the Truly Rich Club members.
Part 1.
I do not want to miss on a point so allow me to give you an idea of the book per chapter. Please bear with me.
Chapter 1 - The story of Gina began when she first arrived at their house applying as a house helper.
Chapter 2 - Gina graduates and promoted to bookkeeper. Bo focuses on the importance of discipline when investing.
Chapter 3 - Bo backtracks and shares how he taught his maids and driver to change their money habits.
Chapter 4 - Bo shares with his banker friend his dream for his maids. The friend thinks that his dream for them was weird and too ambitious.
Chapter 5 - Bo says that banks won't make you rich, focusing on savings accounts giving you less than 1%.
Chapter 6 - Bo teaches the Three Steps to Financial Freedom mainly
1. Spend less than what you make.
2. Follow simple instructions from the Truly Rich Club
3. Invest small amounts consistently
Chapter 7 - Lastly, Bo says that nothing seems to be happening to Gina's money for the first five years. But at a certain point, the money hit a tipping point. This is what exponential growth is about. Question is, will you have the patience to stick around the long runway before the sudden climb?
Part 2.
Let me share some points discussed in the Q & A on Stock Market Investing using TRC's Strategic Averaging Method (SAM).
1. Use the Money Strategy of the Rich which is
Income - Tithes and Investments = Expense
2. SAM guides you in 5 ways through your stocks investment
3. Stocks investment is only for those with cash flow, and is for the long term.
4. Bo shares this principle: It's not the size of your income but the steadiness of your investments that will make you rich.
5. Be an active long term investor.
6. Using SAM will only require you 20 minutes a month.
7. Bo says that daily stock news are there because publishers need to publish, writers need to write, and readers need to read. According to him, they're entertaining, but they're irrelevant to long term investors.
8. Reinvest your dividends.
9. Seniors can still invest in the stock market, but do it for your children and grandchildren.
10. Forget forecasting and listening to hot tips.
11. Manage your emotions.
12. For long term investors, short term crashes mean nothing.
13. Never borrow money to invest in the stock market.
14. Yes, you can do a little trading on the side. Bo recommends that you study at Caylum Institute.
15. Diversify.
16. Mutual funds vs. Stock Market.
17. On market manipulation -- and that he is not doing it because he is loyal to his members.
18. The average growth in the stock market is 12%. This was stated a few times in this 160-paged book.
19. He shares a Simple Budgeting System dividing your income into five envelopes: Eternity Fund, Expense Fund, Enabling Fund, Emergency Fund, Emancipation Fund
20. Earn extra income by being a Truly Rich Club affiliate. It is a commission system wherein if your friend joins the TRC because of your invitation and through your link, you receive 20% of his membership fee.
On the Appendix, he gives a detailed instruction of How to Open a COL Financial Account with its Four-Step Application Process and how to buy your first stocks.
Bo dedicates this book to Edward Lee, Founder and Chairman of the Board of COL Financial and Caylum Trading Institute. Edward Lee is one of the mentors in the Truly Rich Club.
My Take on the Book
After being a member of TRC for five years, I decided to cancel my subscription recently.
Why?
Because I think I have learned what I needed to learn from the club, and decided to move forward and continue to gain knowledge about the stock market from another point or points of view available.
The birth of this blog, and my discovery of my passion and my purpose was through TRC, and for that I will always be grateful. It was my Point A.
The birth of this blog, and my discovery of my passion and my purpose was through TRC, and for that I will always be grateful. It was my Point A.
But because I am no longer an affiliate of TRC, with no intention of inviting you to the club for the 20% commission, I can honestly say that my opinion in this post is unbias.
I will be providing you with FIVE additional information, based on what I have learned over time from other mentors and personal experience, which are as follows:
1. Bo mentioned that mutual funds usually charge 2% per year for management fees, yet he did not say how much COL Financial charges for buying and selling transactions.
Below are COL Financial charges I found on their website.
How much are trade charges?
The following lists the corresponding charges for buying and selling transactions:
For Buying and Selling:
| Fee | Amount | Remarks |
|---|---|---|
| Commission | 0.25% | Of the gross trade amount |
| Value Added Tax (VAT) | 12% | Of comission |
| Philippine Stock Exchange Transaction Fee (PSE Trans Fee) | 0.005% | Of the gross trade amount |
| Securities Clearing Corporation of The Philippines Fee (SCCP) | 0.01% | Of the gross trade amount |
| Additional Fee for Selling | ||
| Sales Tax | No. of Shares X Price X 0.006 | |
2. It was repeatedly mentioned that the average stock market return is 12%. The PSE index in October 1987 was 755.04 index points. In October 2018, exactly 31 years later, it was at 7093.75. That is a 7.49% average return per year, not 12%.
3. You can invest in the stock market even if you do not have cash flow. What matters is you have money to invest. You can do this through single pay VULs or lump sum stock market investing.
4. Yes, banks may not make you rich, but they can actually give you more than 1% annual return. My favorite bank gives me 3.5% interest for my Php100,000 held for one year. Guaranteed.
5. It is true that anyone can invest in the stock market, but not everyone can stay invested in it as I have said earlier. Filipinos are usually conservative and many cannot bear losing money no matter how small it may be. All I read in the book points to the direction of the 12% annual return, and said nothing about risk; except for the risk on penny stocks which we all know about.
If you bought shares of MBT (Metropolitan Bank and Trust Co.), in October 2013, its price was at 90 per share in. Five years later, it is only 65.55 per share. MBT is a blue chip company. Five years can be considered long term. But it didn't grow 12% every year on average. It actually declined by 27%. There is risk. Even with blue chips.
This is also the reason why I prefer investing indirectly in the stock market through a mutual fund with Insular Life. I let the experts do all the hard work while I enjoy the time to do what I do best.
The choice is yours. You can either invest directly or indirectly in the stock market.
If you cannot take losses in your portfolio, do not get into stocks. There are more options available for you.
At the end of the day, we will all agree that we invest to make our dreams real -- but it must also give us sound sleep every single night. And believe me, that 27% loss for a six-digit investment made me do a lot of thinking.
Investing, and life itself, will always be about this thing called Risk - Return Trade - Off. The higher the potential return, the higher the risk. How much of that risk are you willing to take to get the return that you want?
Keep learning, and even unlearning.
Keep acting on what you learn.
By doing these two, you minimize your risk.
P.S. I hope you find this post helpful. Kindly click the SHARE buttons below.
P.S. 2 Got questions in mind? Send me an email at financialplanningforpinoys@gmail.com. I would love to hear from you.
If you bought shares of MBT (Metropolitan Bank and Trust Co.), in October 2013, its price was at 90 per share in. Five years later, it is only 65.55 per share. MBT is a blue chip company. Five years can be considered long term. But it didn't grow 12% every year on average. It actually declined by 27%. There is risk. Even with blue chips.
Final Word
Investing in the stock market for five years taught me a lot of things -- both financially and emotionally. I've had my share of 80% gain overnight with an IPO, and 27% loss for a portfolio held for three years, all of which are blue chips. I am the investor, and the person I am today who can control her emotions, because of the stock market.
This is also the reason why I prefer investing indirectly in the stock market through a mutual fund with Insular Life. I let the experts do all the hard work while I enjoy the time to do what I do best.
The choice is yours. You can either invest directly or indirectly in the stock market.
If you cannot take losses in your portfolio, do not get into stocks. There are more options available for you.
At the end of the day, we will all agree that we invest to make our dreams real -- but it must also give us sound sleep every single night. And believe me, that 27% loss for a six-digit investment made me do a lot of thinking.
Investing, and life itself, will always be about this thing called Risk - Return Trade - Off. The higher the potential return, the higher the risk. How much of that risk are you willing to take to get the return that you want?
Keep learning, and even unlearning.
Keep acting on what you learn.
By doing these two, you minimize your risk.
P.S. I hope you find this post helpful. Kindly click the SHARE buttons below.
P.S. 2 Got questions in mind? Send me an email at financialplanningforpinoys@gmail.com. I would love to hear from you.
