Resume of an Investor

In a corporate world and for people who would want to climb the corporate ladder, we need resume to impress our bosses. I remember my first time writing my resume, that I struggle to write anything relevant just to fill in the space of the paper. Aside from educational background, that's about it for a new grad.

As you may have realized that during your college years that you are doomed to find a job if you graduated still trying hard to write your resume. You may have realized to have a part time job or do an internship just to fill in the void in the paper. This is a good thing and will ultimately give you an easier time than those students who just party their way to college.

Now that the corporate world is just a past for me. I realized that there are also things that I'm trying hard to write about. A resume of an investor is hard. In actuality, its writing your portfolio.

If you would draw a square in a piece of paper. This square will signify where you keep your money. It may be a bank, a safe, a piggy bank or a wallet. Then on the right side, draw or list down your expenses and all the things you want in life, car, house, a boat, travel.

Now, draw an arrow from the square to the expenses and other things you want in life. This signifies money coming out of your keep.

Seems easy right?

Now to sustain those expenses and things you want, you will need to have an income source. On the left of the square, draw your income sources. Draw your face or list your job title, for others, it could be a business and any side businesses you have..

Now draw an arrow from the income source to your square. This signifies money coming in to your keep and then out to be spent on expenses and luxuries.

As you might have imagine, the left side is where you want to focus on. And that is where I had a hard time drawing. A few years ago, I only have myself listed there as an income source. The money that I earn from my salary will sustain my expenses. But if I became sick. I'm not only sick, I'll also starve to death. Which is not good. This made me realize that I should build an income source that would sustain my expenses and all the luxuries I desire.

When starting out, this is the kind of diagram we will see:

But what we want to achieve is to be able to do the things we want without having to work. In that regard, I think focusing all our energy to build our assets should be our main priority. This is the kind of diagram that we must aim to strive.

I don't want to work my life thru retirement. I want to retire young, travel, enjoy life, experience joy with loved ones. I'm sure you also want the same. So if you are reading this blog post, you have to realize that every peso you earn should go to income generating investments that will help you retire early and sustain any lifestyle that you desire.

The Name's Bond

There are only 2 way to riches... Owning and Loaning... We have been discussing stocks for quite some time now, stocks are owning businesses. We now go to bonds which is loaning to businesses and in the most safest part to the government.

I've been contemplating the idea of buying more bonds than stocks. Right now, bonds are available for 6% - 7%. From Treasury to Corporate bonds. And I think that bonds are one of the best way to invest if you focus more on income.

Why bonds rock?

They are safe. The money you invested in bonds are safe whether the economy tanks or not. They provide income thru the interest payments.

Why bonds suck?

Because bonds are loans to corporation and government, your principal investment don't appreciate in value. You'll receive your money back in full once the bond matures.

Why I would buy bonds?

Because they provide income. I'm not interested much on capital gains (though it is good), I much prefer income. And since bonds provide good yields than stocks, I might buy more of these in the future to hit my goal.

Shady MVP

There's something shady about how MVP does business in the Philippines. I can't quite point it out. But there's really something fishy about where his business is going.

Desire to be Rich

Most of us desire to be rich. And we are constantly reminded of that fact when you open the television, talking to other people and even the youth preparing for his college. But contrary to what most people believe, desiring to be rich is but a wish. I think desiring to be rich is weak.

Desires should be strong and definite. General desires are but weak longings. For a man to wish to be rich is of little purpose. For a man to desire P1,000 pesos per month is a tangible desire which he can press to fulfillment. After he has backed his desire for P1,000 per month with strength of purpose to secure it, next, he can find similar ways to obtain P2,000 per month and then P4,000 and then later P100,000 per month and behold! He has become rich.

In learning to secure his one definite desire of P1,000 per month, he has trained himself to secure a much larger one. This is the process by which wealth is accumulated. First in small sums. Then in larger sums as the man becomes capable.

Desires must be simple and definite. They defeat their own purpose should they be too many, too confusing or beyond men's training to accomplish. Keep it simple and definite.

Warren Buffett's Rules to Investing

Puto!

Warren Buffett is arguably the world's greatest stock investor. He's also a bit of a philosopher. He pares down his investment ideas into simple, memorable sound bites. Do you know what his homespun sayings really mean? Does his philosophy hold up in today's difficult environment? Find out below.

"Rule No. 1: Never Lose Money. Rule No. 2: Never Forget Rule No. 1."

Buffett personally lost about $23 billion in the financial crisis of 2008, and his company, Berkshire Hathaway, lost its revered AAA ratings. So how can he tell us to never lose money?

He's referring to the mindset of a sensible investor. Don't be frivolous. Don't gamble. Don't go into an investment with a cavalier attitude that it's OK to lose. Be informed. Do your homework. Buffett invests only in companies he thoroughly researches and understands. He doesn't go into an investment prepared to lose, and neither should you.
Buffett believes the most important quality for an investor is temperament, not intellect. A successful investor doesn't focus on being with or against the crowd.

The stock market will swing up and down. But in good times and bad, Buffett stays focused on his goals. So should we. (This esteemed investor rarely changes his long-term investing strategy no matter what the market does.

"If The Business Does Well, the Stock Eventually Follows"

The Intelligent Investor by Benjamin Graham convinced Buffett that investing in a stock equates to owning a piece of the business. So when he searches for a stock to invest in, Buffett seeks out businesses that exhibit favorable long-term prospects. Does the company have a consistent operating history? Does it have a dominant business franchise? Is the business generating high and sustainable profit margins? If the company's share price is trading below expectations for its future growth, then it's a stock Buffett may want to own.

Buffett never buys anything unless he can write down his reasons why he'll pay a specific price per share for a particular company. Do you do the same?

"It's Far Better to Buy a Wonderful Company at a Fair Price Than a Fair Company at a Wonderful Price"

Buffett is a value investor who likes to buy quality stocks at rock-bottom prices. His real goal is to build more and more operating power for Berkshire Hathaway by owning stocks that will generate solid profits and capital appreciation for years to come. When the markets reeled during the recent financial crisis, Buffett was stockpiling great long-term investments by investing billions in names like General Electric and Goldman Sachs.

To pick stocks well, investors must set down criteria for uncovering good businesses, and stick to their discipline. You might, for example, seek companies that offer a durable product or service and also have solid operating earnings and the germ for future profits. You might establish a minimum market capitalization you're willing to accept, and a maximum P/E ratio or debt level. Finding the right company at the right price -- with a margin for safety against unknown market risk -- is the ultimate goal.

Remember, the price you pay for a stock isn't the same as the value you get. Successful investors know the difference.

"Our Favorite Holding Period Is Forever"

How long should you hold a stock? Buffett says if you don't feel comfortable owning a stock for 10 years, you shouldn't own it for 10 minutes. Even during the period he called the "Financial Pearl Harbor," Buffett loyally held on to the bulk of his portfolio.

Unless a company has suffered a sea change in prospects, such as impossible labor problems or product obsolescence, a long holding period will keep an investor from acting too human. That is, being too fearful or too greedy can cause investors to sell stocks at the bottom or buy at the peak -- and destroy portfolio appreciation for the long run.

You may think the recent financial meltdown changed things, but don't be fooled: those unfussy sayings from the Oracle of Omaha still RULE!

http://finance.yahoo.com/news/pf_article_108903.html

Cashflow - Income Generating Investments

Wealth like a tree, grows from a tiny seed. The first penny you save, is the seed from which your tree of wealth shall grow. The sooner you plant that seed, the sooner shall the tree grow. And the more faithfully you nourish and water that tree with consistent savings, the sooner may you bask in contentment beneath its shade.

Investing in cashflow could be boring at first. You don't quite feel its effect and its returns are not that exciting during the first years. Probably the next 10 years. Needless to say, the seedling is dependent on you. But if you take care that investment, like a tree, it will take care of you during your old age.

The 10% Rule on Everything

I would like to try the 10% Rule on a whole new level. Everytime I pass money around to use for savings and investments, I'll take 10% of it and keep it for myself.

For example, I have an imaginary P200,000 revenue from business and other income. I'll take 10% right off the bat before using the money to pay for expenses and investments.

200,000
- 20,000 <-- 10% goes to savings
-------------
P180,000

Now I'll pay my expenses and investments.

P180,000
-  36,000 - expenses
-  50,000 - investment on capital gains
-  50,000 - investment on cash flow
---------------
P 44,000

Wow. I still have P44,000 left to spare. I can use this money to anything I like, either to spend it on clothes, travel or re-invest it to make another cashflow. I'd rather spend it to enjoy life. Or I can put it on the savings and maybe build myself a sizable savings to buy myself a land. I look forward to buying my own property soon.

On Stocks

Here's I think the 10% rule would show its versatility. Once my stock declared a dividends and then paid me. I'll save 10% of the dividends (also after expense like tax), on cash position so I can build a fund of cash to either withdraw for my personal use or to take advantage of opportunities when it happens.

For example, right now I have P15,000 per month income on dividends, Thats around P180,000 a year. Let's use the annual dividends for computation as dividends are not really on schedule with per month, its usually on an annual basis.

P180,000
-  18,000 <-- 10% goes to cash position.
------------
P162,000 - reinvested to current holdings

I think by this way, I can still reinvest the money, but have a budget to spend on personal wants, enjoy life and not to over-save. Just remember the rule, keep 10% of everything that comes from earnings.

Goal Achieved! - P15,216 a month

As I type this with a growling stomach, I feel excited as I am now a step closer in building wealth. The book, richest man in babylon has always fascinated me. It is a way in which to get rich slowly and surely and being rich is inevitable once you follow the rules of Arkad.

That was my goal in the first place. To plant a humble "wealth tree" and become rich later in life. My wealth tree as of now is earning P15,216 a month. Right on spot on my goal for this year. Its not something to be excited about. But looking back a few years, I used to live on a salary of P9,000. This kind of passive income should make me financially free years ago.

Goal Update - P13,736.41 per month

I'm almost at my goal. The goal of achieving P15,000 per month passive income from stocks is almost at hand. Right now, my per month income from dividends is at P13,736.41. Almost there!