If there is one thing to take away from all this blog, it is to find value. And nothing can be more valuable than a company that earns. Thus, value is equal to earnings.
I didn't say potential earnings. But just earnings. Many people would buy a company because of its earning potential. A potential merger, a potential acquisition, a potential mineral resource on the earth yet to be mined. But the future is unknown. It is all just "potential". I can not count potential as a net worth. Or use "potential" to buy myself a house, a car or another company.
It is very risky to bet on something that hasn't happened yet. As well as bet on something based on the past. For me, it is a lot more accurate to bet on something as it stands, the present condition of the company.
What is a more accurate indicator of a company's standing? It is the balance sheet. In it, you'll be able to see how much debt it has, how much cash reserves and assets it has. Is it in the red? Or is it flourishing? Did it invest on itself? Did it bought back its shares from the public? Are the debts being paid back?
Now to look at its value, we look at the income statement. How much money is it earning? Is it growing? Is it declining? Is it losing to competition?
Once you have found a good company, one that is in good standing and has good value, you may decide to invest on it (buy its shares). But keep in mind that the market, at the time you saw this share, may not be accurately pricing the stock. How then you'll be able to know if its underpriced or overpriced? Even if you found a good company, paying for an overpriced stock will still make you lose money.
One indicator out of many is the use of P/E ratio. It is not the only way, but one way out of many. A single digit P/E ratio may be a good indicator that it is underpriced. While the higher number means its overpriced.
One way to think of P/E ratio is to look at it in a number of years to earn back your investment. If the P/E ratio of the company is 10 (for example), then it will take you 10 years to earn back your investment.
Once you have bought a company in which you think has a good standing, good value and good price, there is one more thing that you need to be successful. And it doesn't take any technical skills to achieve, yet it is the hardest.
The market on the short term is a voting machine. Market participants who buy and sell shares will do so according to their personal beliefs on the companies' prospects. In other words, a bad rumor may put the stock price diving down, even if the balance sheet is still good. In the same way as a good "potential" news will keep the stock price rising, even though its fundamentals are deteriorating.
The skill then for the investor is temperament. The confidence to hold on to ones' investment and sit through its rough times as the market votes for it in the short term. In the long term, the market becomes a weighing scale. Where the votes of traders and short term fanatics will not be reflected. But the same criteria you based in choosing the company.
In the long term, news and rumors and potentials are not the basis, but standing, value and price. It may take you 2 years, 3 years or even 10 years of waiting for the market to realize this. But the rewards will be great.
Merry Christmas!
Monday, December 23, 2013
Wednesday, December 18, 2013
2 Years of Stock Investing Philippines
Look at how time flies! It has been 2 years since I started this blog to track my journey in investing. And so far, I'm loving the process. Here are just random thoughts I could think of as I try to remember the things that happened this year.
I started investing in the stock market following the ideas I read in books. Without any prior experience, the authors were my only guide.
Needless to say, the first years were almost red. I was on the edge if I should trust a person who wrote a book about investing. But today, their wisdom has guided me. They proved to me that value investing works. You just need to have the temperament to hold on tough times.
If it works all the time, it wouldn't be effective as more people would be doing it. The down times for value investing is what makes it effective. Not many people can withstand a 2 year loss of -30%. And not many people are willing to sit through it. Thinking that trading and doing something with the portfolio will make it produce money.
Wealth is created when value is created. And many more wealth when majority has mispriced them. But the real premise is to find value.
Mutual funds adds no value. To the one who knows what he's doing. But takes money from you.
Consider this, a mature economy, the US' stock market returns only 7% per year. Minus inflation of 3%, you're left with 4% of your investment to use for living expenses or whatnot. Now then if mutual funds charges 5.5% per year on management fees, you are -1.5% down. You lose money. If you're not angry about that, you should be.
Even with the least management fees I could find in Philippine Mutual Funds of 1.5% per annum. You're looking at 2.5% per year yield on your investment.
My portfolio is up 20%. Based on capital appreciation alone (dividends are not included). Compared to the PSE Index 4.87% as of this writing. I've beaten the index! YEAH!
Most of the stocks I hold now have yields from 10% reaching 50%. Though not yet a tenbagger, I already have the proof and confidence that I need to continue this style of investing. I do have some losers but I'm still up on the bottom line and they still give me dividends from 3% - 10% per year.
My goals have changed. The original goal of this blog was to reach $1 Million through investing. But I have come to realize that I do not need to have that amount of money. Because the investment income that I have, would already be sufficient for me to live comfortably at P46,000 / month. It is then more practical to pursue other things in life. I have made a page for the goals.
Wednesday, December 4, 2013
Personal Index Fund
Recently, I posted about how disappointed I am with mutual funds. And how these funds suck money away due to fees and commissions. And today, I just finished deploying my cash to mimic the index.
The total cost of it (tax, broker commission) is a one time cost of 1.1% of my cash total. Management fee per year would be 0%. Exit expense would of course be influenced by broker commissions and tax. But I could care less about that since I won't be selling anytime soon. But I could guess that it would also be a one time cost of 1.1%.
To create your own index fund, you just need to copy the PSEi composition. That is, to buy the stocks listed in here.
Pay good attention to the weigh %. For example, 11.48% should be for TEL. If you have P1 million to invest. 11.48% of that money should be used to buy TEL shares, which is P114,800 or 42 shares of TEL. Just do that with the remaining stocks and you will have your own index fund with no management cost. And I'm sure you'll be beating 90% of the mutual fund managers in the Philippines by doing so.
There's also an alternative, recently, there's FMETF. Which tracks the index. So instead of buying 30 companies individually, you can just buy FMETF and be done with it. I haven't bought FMETF yet, I'm not sure exactly if dividends would be paid out as well so I'm still on the fence with it.
I like dividends and its one of the main principle of this blog, to have passive income thru investing.
The total cost of it (tax, broker commission) is a one time cost of 1.1% of my cash total. Management fee per year would be 0%. Exit expense would of course be influenced by broker commissions and tax. But I could care less about that since I won't be selling anytime soon. But I could guess that it would also be a one time cost of 1.1%.
To create your own index fund, you just need to copy the PSEi composition. That is, to buy the stocks listed in here.
Pay good attention to the weigh %. For example, 11.48% should be for TEL. If you have P1 million to invest. 11.48% of that money should be used to buy TEL shares, which is P114,800 or 42 shares of TEL. Just do that with the remaining stocks and you will have your own index fund with no management cost. And I'm sure you'll be beating 90% of the mutual fund managers in the Philippines by doing so.
There's also an alternative, recently, there's FMETF. Which tracks the index. So instead of buying 30 companies individually, you can just buy FMETF and be done with it. I haven't bought FMETF yet, I'm not sure exactly if dividends would be paid out as well so I'm still on the fence with it.
I like dividends and its one of the main principle of this blog, to have passive income thru investing.
Friday, November 29, 2013
Dividend Received! P24,350.00
I just received a dividend payment:
Gross Amount (Php) : 24,350.00
Less Withholding Tax (Php) : 2,435.00
Net Amount after taxes (Php) : 21,915.00
Happy bonus day? :)
Gross Amount (Php) : 24,350.00
Less Withholding Tax (Php) : 2,435.00
Net Amount after taxes (Php) : 21,915.00
Happy bonus day? :)
Wednesday, November 27, 2013
How to Open BPI Trade Account
BPI Trade is an online stock trading service offered by BPI. It allows you to buy and sell online using your BPI savings account to buy shares of companies. To me, its really convenient. I tried opening an account and here's my experience.
Steps to Open an Account
Steps to Open an Account
- Fill Up Application Form
- Print the Application form
- Go to your nearest BPI Branch and bring 2 valid IDs. Have the IDs photocopied.
- Wait for the email confirmation from BPI Trade.
Review
The application process is quite simple. Fill up some forms and give it to your bank. Very easy. But I think BPI Trade fell short on customer service. It took 3 weeks for my application to be processed. With me constantly nagging BPI about the update of my account application. When I finally gave up to speed up the process, they emailed me and said that it will take them 3 more days to process the application.
That's great news. I think. But after the 3rd day, I received my application confirmation email. With no clue what was my username and password in the email. It was like "Congratulations, on your BPI Trade account blah blah blah deposit money blah blah." I said to myself, "great now to login! wait... What's my username again?" I've forgotten! While reading the email again 2 inch closer to the monitor. I realized my username is not there! It has been 3 weeks since I applied and me with the attention span of a cockroach, I've forgotten my username and password. I tried logging in with what I think was my username and password and had it locked. :) I tried emailing them, but no one is replying.
So I tried calling them. Nada. All lines are busy. I waited to call at midnight. Maybe the lines will open. And it did. I talked to a customer rep. 5 minutes waiting for the customer rep to answer and have me wait 10 minutes listening to Christmas song in the background after checking if my account is in their database. She returned and told me to call again after 30 minutes because there's no one to process my request to reset the account.
I called back after 40 minutes. All lines are again busy. I spent 500 pesos worth of load and didn't even get to hear a real person on the other end for the most part of it.
I called back after 40 minutes. All lines are again busy. I spent 500 pesos worth of load and didn't even get to hear a real person on the other end for the most part of it.
P.S. This is actually my 2nd time applying for BPI trade. The first one was really frustrating and it involves customer rep again.
P.S.S. I'm actually worried if problems arises with the account in the future. With the kind of customer service they have, I would imagine serious problems with the account will be a nightmare to deal with.
Wednesday, November 20, 2013
5 Reasons Why I Would Never Buy a Mutual Fund Ever Again
I began tracking my mutual fund a while back because I don't want to be logging in and out of my bank account online. To my surprise, I discovered I'm being f in the ass by mutual fund companies when the price of the mutual fund in my account and the price of the mutual fund in Philippine Mutual Fund Association does not match and decided to investigate and encashed all my shares.
Here's what I found out:
1. Management Fees
A whopping 1.5% to 5% per year. How can someone earn money by holding other people's money without adding value is beyond my understanding. Comparing other country's mutual funds like Vanguard which is a decent 0.20% per year. Mutual funds are charging too much for management fees for copying the index and underperforming.
2. Sales Load
When you invest in a mutual fund, the money you deposit gets reduced. Because you need to pay what they call sales load. Like remitting money, you need to pay a fee to place your money into the fund. The fee is not more than 1% depending on the amount of money you invest.
3. Tax Exemption is a Lie
The main selling point of mutual funds is that it is tax exempt. And it is. But its not a complete answer. The reason it is tax exempt is because so that you will not be taxed twice. You see, when you give your money to a mutual fund, the manager makes the purchase of stocks, he gets taxed. But you pay the tax using the money he got from you and from other people. So in other words, you got taxed already. So its safe to say that the money you got in your mutual fund is tax exempt. Only because you already got taxed in the transaction and to avoid double taxing.
4. No Value, Mediocre Return
Being an investor, I would like to see value for my money. But seeing how mutual fund companies invest, I come to realize that they are not adding value to the money I gave them. How hard is it to copy the composition of the index? Its publicly available, and then you charge me 5% per year just because you copied it? And if they do decide to stray away from index funds, they underperform the market.
5. Exit Commission
In trading, there's a term called spread. A spread is the difference of the real price of a currency when you buy or sell it. So for example, if you trade your PHP to USD which is 43.57 (real price) you can make a transaction for that price, but the broker will add a spread to make money. Usually 1 pip. So you pay 43.58 instead of 43.57. When I encashed my shares. Hoping to exit the fund. I realized that the real price of the fund is no where near the price I paid for the exit. They paid me P10 less than the real market price. It is a 1000 pip spread!!! This blew my mind!
Conclusion
Doing the math, if I have P1,000,000 in invested money. Put it in a mutual fund, I'll get a sales load commission, lets say 0.2% for every P30,000 / month deposit. My money will be deducted by P720 per year. Then I'll have 1.5% management fee per year that's less P15,000 / year. P55,000 / year for 5.5% management fee mutual funds. Then I got the exit depending on the size of my fund, P20,657.
And I held the fund for 5 years, at 1.5% management fee. With 40% yield for 5 years or 8% per year. Using the hypothetical P1M amount.
Let's break it down:
------------------------------
1st year: Starting Capital P1M
+ P30,000 x 12 (monthly deposit)
= 1,360,000
+ 8% mutual fund return
= 1,468,800
Expense:
- 1.5% management fee (P22,032) (compute your fund if 5.5% management fee)
= P1,446,768
- 0.2% sales load (P720)
= 1,446,048
- P20,657 (exit commission) (1000 spread)
= 1,425,391
Invested money: 1,360,000
Bottom line: P1,425,391
---------------------------------------
My net yield :
4.81% per year
or 1.91% with inflation (2.9% October 2013)
---------------------------------------
A net yield of 4.81% per year once I encash the money. Just like the return of a treasury bond. Why go mutual fund if bonds are the same with virtually no risk?
I therefore conclude that mutual funds are not good investments and returns are comparable to bonds. But bonds are better because it has lesser risk than a mutual fund.
With 1.91% yield, it is not an acceptable return on your investment.
Here's what I found out:
1. Management Fees
A whopping 1.5% to 5% per year. How can someone earn money by holding other people's money without adding value is beyond my understanding. Comparing other country's mutual funds like Vanguard which is a decent 0.20% per year. Mutual funds are charging too much for management fees for copying the index and underperforming.
2. Sales Load
When you invest in a mutual fund, the money you deposit gets reduced. Because you need to pay what they call sales load. Like remitting money, you need to pay a fee to place your money into the fund. The fee is not more than 1% depending on the amount of money you invest.
3. Tax Exemption is a Lie
The main selling point of mutual funds is that it is tax exempt. And it is. But its not a complete answer. The reason it is tax exempt is because so that you will not be taxed twice. You see, when you give your money to a mutual fund, the manager makes the purchase of stocks, he gets taxed. But you pay the tax using the money he got from you and from other people. So in other words, you got taxed already. So its safe to say that the money you got in your mutual fund is tax exempt. Only because you already got taxed in the transaction and to avoid double taxing.
4. No Value, Mediocre Return
Being an investor, I would like to see value for my money. But seeing how mutual fund companies invest, I come to realize that they are not adding value to the money I gave them. How hard is it to copy the composition of the index? Its publicly available, and then you charge me 5% per year just because you copied it? And if they do decide to stray away from index funds, they underperform the market.
5. Exit Commission
In trading, there's a term called spread. A spread is the difference of the real price of a currency when you buy or sell it. So for example, if you trade your PHP to USD which is 43.57 (real price) you can make a transaction for that price, but the broker will add a spread to make money. Usually 1 pip. So you pay 43.58 instead of 43.57. When I encashed my shares. Hoping to exit the fund. I realized that the real price of the fund is no where near the price I paid for the exit. They paid me P10 less than the real market price. It is a 1000 pip spread!!! This blew my mind!
Conclusion
Doing the math, if I have P1,000,000 in invested money. Put it in a mutual fund, I'll get a sales load commission, lets say 0.2% for every P30,000 / month deposit. My money will be deducted by P720 per year. Then I'll have 1.5% management fee per year that's less P15,000 / year. P55,000 / year for 5.5% management fee mutual funds. Then I got the exit depending on the size of my fund, P20,657.
And I held the fund for 5 years, at 1.5% management fee. With 40% yield for 5 years or 8% per year. Using the hypothetical P1M amount.
Let's break it down:
------------------------------
1st year: Starting Capital P1M
+ P30,000 x 12 (monthly deposit)
= 1,360,000
+ 8% mutual fund return
= 1,468,800
Expense:
- 1.5% management fee (P22,032) (compute your fund if 5.5% management fee)
= P1,446,768
- 0.2% sales load (P720)
= 1,446,048
- P20,657 (exit commission) (1000 spread)
= 1,425,391
Invested money: 1,360,000
Bottom line: P1,425,391
---------------------------------------
My net yield :
4.81% per year
or 1.91% with inflation (2.9% October 2013)
---------------------------------------
A net yield of 4.81% per year once I encash the money. Just like the return of a treasury bond. Why go mutual fund if bonds are the same with virtually no risk?
I therefore conclude that mutual funds are not good investments and returns are comparable to bonds. But bonds are better because it has lesser risk than a mutual fund.
With 1.91% yield, it is not an acceptable return on your investment.
Sunday, November 17, 2013
Identity Crisis
Hello, my name is Juan dela Cruz and I am a/an <insert job here>.
For example, a person buying the latest gadgets will earn him/her the title "Techie" or "Geek". A person buying travel tours will earn him the title "Traveller". A person buying coffee at Starbucks as "Sosyal!". A person buying all things for cars will earn him the title "Vin Diesel AWESOME". Though not explicit, it does give people the idea of what is your identity when you flaunt the things you own.
These kinds of people now associate their identity with the things they own.
Why we see only the good parts of their lives on facebook is proof that we care about our own identity and we like to be perceived as successful. But I think it also has to do with status symbol and to be seen as superior to other people. People loves to be appreciated and recognized and I think having a good identity will enable them to get the attention they crave.
The Job Identity
Many people associate their identity with their jobs. But as more and more jobs are being created, more and more jobs are embarrassing to tell others about. Like toiler cleaner or street sweeper or supermarket packer or call center agent. So companies, will generate awesome titles so employees would be able to wear proudly this title "Sourcing Specialist"or "Technical Support Engineer".The Things I Own Identity
Some wise people would realize that the title is not something to identify themselves. Its just words combined with other words to make it sound awesome. So they buy stuff as a status symbol as if these things are what makes them different.For example, a person buying the latest gadgets will earn him/her the title "Techie" or "Geek". A person buying travel tours will earn him the title "Traveller". A person buying coffee at Starbucks as "Sosyal!". A person buying all things for cars will earn him the title "Vin Diesel AWESOME". Though not explicit, it does give people the idea of what is your identity when you flaunt the things you own.
These kinds of people now associate their identity with the things they own.
The Social Media Profile Identity
On the other hand, when people don't have money, nor the job to be proud of, they get their identity by posting on social media. As if the pictures, profiles and the messages they post on facebook is they best way to present their identity.Why we see only the good parts of their lives on facebook is proof that we care about our own identity and we like to be perceived as successful. But I think it also has to do with status symbol and to be seen as superior to other people. People loves to be appreciated and recognized and I think having a good identity will enable them to get the attention they crave.
Wednesday, November 6, 2013
New to Investing Where to Start?
The Clueless Newbie Investor
You then realized, you can't do this forever. I mean, if you love your job then that's good. But what about the people who don't love their job? Like 90% of the people in the world. Its like hell. Torturing you everyday so that at night you could rest and torture you the next day. It has to stop.
You want to be in control of your life. Doing things you want to do anytime, anywhere. And getting a business degree now would mean giving up your work. your family might be depending on you to bring home the bacon and that's a problem. So what now?
You can not work forever...
Well, you don't have to worry. Because the true beginning of investing is realizing that you can not work forever. A few of our ancestors have realized this fact. But our parent's upbringing might have been overprotective and wants us to be safe.
What do I mean by that? If you look into the not so distant past. There have been a lot of people who became rich, financially free without having their own business or a business degree. But they learned investing. They bought companies. Our parent's just wants us to have a "safe" future and ingrained us with the knowledge that doing good work means good future that is the industrial age (where being industrious is a virtue). But that will be proven wrong as we go into information age where information is power.
Knowing that you can't work forever is the start. The enlightenment. And doing some simple math, you'll also realize that no matter how hard you work, you can not outwork money that is invested in the right place. Work therefore is useless after you have enough money to make it work for you. You then realize that time is more important than money. It is nirvana. You'll realized that time will be better spent on things that would make you happy.
Before we go into that happiness and stuff, we have to know how to invest. So where do we start? If I'm employed, depending on my paycheck, for my needs. Then I don't have much choice but to suck it up and be good at work. But the thing is you can start investing even you know nothing about it. The first option is investing in mutual funds. A Mutual Fund is a pool of money from small investors gathered together to purchase a stock. In other words, you invest in a company with other people, in which you wouldn't have been able to, if you only have your money or necessary knowledge in investing. A Mutual Fund is managed by a financial manager who does the investing for you. This is a good start in investing.
Your goal is to have control of your finances, that is, learning how to invest yourself is the best gift you could ever give yourself. Mutual fund gives you the opportunity to invest while you learn to do so.
Now you'll realize why your parents wants you on the safe side of being good at your job. If you'll notice, there's no risk involve in having a stable job. The risk is apparent in investing. You can lose money if the market or the company went under. You have to realize that investing and risk goes hand in hand. And freedom can not be attained without sacrifice. Just like our ancestors did.
Here's the thing, in the short term, investing involves more risk than a stable job. You can lose money in investing while a job continues to provide you money each month for the work you done. But in the long term, a job is riskier than investing. A person not loving his job will suffer depression. A recession can make you lose your job. But while these happen in the long term, investing on the other hand provides you with different income streams that will fill your pockets with money passively. Should recession or job layoffs come, investing will take care of you.
Remember that investing is applied knowledge. The more you know about investing, the better your chances are at being financially free early in life. The key thing is to know what you don't know and have the courage to stare at that weakness in the face. Learn to spot what is correct and false in the knowledge you seek. Because just like a job sucks your life energy, there are a people who would also do anything, say anything to get your money, your buy out to freedom. Educate yourself and you'll be immune to those. Unknown field such as investing could be scary. But take it one step at a time.
Saturday, November 2, 2013
Dividend Received P42,525
Its been a late dividend report here. Since I got some free time. Might as well post it. I received a dividend last week amounting to P42,525. I reinvested it to the company that gave the dividends.
Happy Halloween!
Happy Halloween!
Thursday, October 24, 2013
Knowing & Breaking The Rules That Are Absurd Will Make You Rich
We all know these kinds of rules. Go to college, get a job, marry at 25, travel at least once a year, get a grand wedding -- its a once in a lifetime event, get a car, work 9 to 5 till you're 65, get a big house and many others. But do you know what happens when you follow rules?
Well, you pretty much get decent things in life. Not much. But decent. And I like to call it "safe". As an outsider looking in, some people might say you're doing good. But deep inside, we know, you're dreading your life. A life living in chains of your job and rules imposed by society. Not be able to do what you want. Just barely have enough savings. Always lacking the time. But if you do find the time, you lack the energy to do anything. Always day dreaming of the day you could possible do the things you're passionate about. How about that childhood dream of yours?
Hey! Don't worry. A lot of people have followed the same rules and guess what? You're not alone.
Well, you pretty much get decent things in life. Not much. But decent. And I like to call it "safe". As an outsider looking in, some people might say you're doing good. But deep inside, we know, you're dreading your life. A life living in chains of your job and rules imposed by society. Not be able to do what you want. Just barely have enough savings. Always lacking the time. But if you do find the time, you lack the energy to do anything. Always day dreaming of the day you could possible do the things you're passionate about. How about that childhood dream of yours?
Hey! Don't worry. A lot of people have followed the same rules and guess what? You're not alone.
Here's another rule that society seems to have: "If everyone is doing it, it must be right." Since you are right, then you don't have to blame yourself for your misery. You then, blame the government, terrorist or other people, the economy or whatever crap you can think of. Just not you. Right? Right! You're a victim of the corrupt politicians. Boo f*cking hoo!
I apologize for the language. But since I know you're not a minor anymore, I know you could handle a little harsh words. Its time to grow up. Its time to grow some cahones!.
There are a lot of crazy rules out there. Some are even in the constitution. But, do you have to follow them? No! Would that make you bad if you do not follow them? No! There's one thing that the government or any other outside force can not influence. It is your mind. It is your freedom. If you follow society blindly, follow their rules as if its the ultimate truth, you just gave up your freedom. The only last freedom you can ever have. The freedom to think. And you give them power. A lot of wars started this way.
Let's try to break some rules. Here's a rule: "Eat 3 times a day." Seems like a very "factful" rule. Everyone knows that right? But doing a bit of research, humans like us, have evolved their bodies from that of a primate to survive eating only once a day. Some goes so far as to eating once every other day. Sounds absurd right? But guess what? US soldiers training for recon missions such as snipers do it. Why? Because the body can handle it. It trains your body to be efficient in the use of energy. The only reason we eat 3 times a day today is because its the diet of farmers. When farmers became cool when people learned they can plant their food (instead of running around all day hitting animals in the head with a club), everybody starts to do it. The rule was set. 3 times a day it is. Says the office worker. So his waistline gets bigger without even knowing. Sitting at a desk all day will make a farmer weep. So the food will be stored and not used. In those love handles.
Ok. Let's say you follow the one meal diet of warriors, you might be thinking, "I'll eat breakfast as my only meal because that's the most important meal of the day." Actually. Its dinner. When people was still hunting for their food (our ancestors), they didn't eat until dinner. They eat only once a day, dinner. Why? Well, they have a different meaning of fast food back then.
What are you trying to prove? Well, if you could eat once a day. Imagine how much you could save. And how strong your body would be. Another rule: "Health and wealth can not go at the same time". Think of all the rules that your parents, your boss, your religion imposed on you. Research about their history. Then decide if its beneficial for you to just break them.
Another rule I particularly love: "Go to college" I know some of you might have raised an eyebrow. But hear me out on this. What's the reason you go to college? Use what you learn and then try to get a decent job and earn money. Right? Well, maybe get some respect from other people. But ultimately, its about the money. And there's nothing wrong with that. Now, if you realized this first hand. If its all about the money, why not just enroll yourself in a technical school that will train you 6 months and get yourself a job abroad earning P100,000 per month? That totally trumps someone who got a degree for 5 - 7 years then work P15,000 a month in the Philippines.
When I first realized this, I said "Shit. My parents made a mistake." Well, being a grown up now. I should blame myself. I made a mistake. Because I thought this was the way to go since all people are doing it. If only I did more research instead of playing video games, I might have saved a lot of time and reach retirement much much sooner. But a more mature approach would be to blame no one. As this information was not available to me at the time, same as my parents, I have no control of the path I lead then.
What rules of society you think is crazy and what can you do to break them and even use them to your advantage?
Wednesday, September 25, 2013
Looking Poor: A Challenge That Would Make You Rich
I see a lot of my childhood friends getting better things in life. You know, the usual car, house, big bikes, travel, jewelries, nice clothes, nice watches, nice gadgets. While these are good things. These are just that... "things".
While me, this...
I have another way to look at it. If I buy a car, its not a one time expense, I also pay for the maintenance, the accessories (for the avid fanatics) and the gas price. Same thing for the other nice things. All of those are not just one time expense. They are recurring expenses. When I buy something, I already think if there are future expenses to own those things.
Does all those things, when purchased, help me reach my goals? If buying these things wouldn't make me rich, then why are people buying it? Perhaps it is to "look rich".
Warren Buffett said, "You can either look rich or be rich. Unfortunately, not everyone has the time to be both."
Here is my challenge...
Look poor.
Wear worn out jeans, wear slippers to the mall, ride a bike that you yourself maintain, borrow tools from relatives, buy used gadgets, buy broken gadgets and repair them, eat at cheap restaurants or better yet, learn to cook. Be creative at looking poor. There's a lot of fun in doing it. I myself enjoy it.
I remember the time when a friend asked me, "you seem to be doing good, you have your own business, but you don't look like your getting anything out of it. Where's the car? You walk everywhere. Where's the house? And why don't you get rid of that awful cellphone? ". I own a Nokia 3310. I still own it to this day. The only reply I told him was that I don't need it and I'm just doing "alright" not good but alright.
I would like to reply that I invest all my money in the stock market and other things. But I don't want to look rich nor look intelligent.
He has a nice car. A Subaru STX. Nice clothes, phone and everything that rich people own. I don't want to tell him that he's making a mistake nor to enter a pissing competition.
I don't want any attention.
There's a great feeling in doing all of this. You get to meet genuine people who will not judge you based on how much money you have in the bank. And thus, you'll have friends / relationships that will want to be with you not because of your money. No one will ask you to help them in their financial needs. Everyone will look down on you. You will be misunderstood. But its great training. In life, you can't explain yourself to everyone. You will learn to let go of your ego and your eagerness to explain yourself. You don't have to. You don't need to.
Looking poor gives you that freedom that rich people don't have. You can walk anywhere without worrying if you'll be robbed. Imagine that, you can now travel anywhere you want, with peace of mind.
You will be rich. Because there's not much money involved in maintaining your status or appearance. You'll save a lot of money without everyone noticing it. More money means, earlier to buy your freedom from the rat race.
And most of all. Its really fun to look poor. There's a feeling that when you look poor among your peers, you don't look like a threat to them. They'll like you more. Much like insecure people like dumb people, cause they make themselves look smart. :)
Oh, maybe you could do both. Look poor and dumb. That could be fun.
While me, this...
I have another way to look at it. If I buy a car, its not a one time expense, I also pay for the maintenance, the accessories (for the avid fanatics) and the gas price. Same thing for the other nice things. All of those are not just one time expense. They are recurring expenses. When I buy something, I already think if there are future expenses to own those things.
Does all those things, when purchased, help me reach my goals? If buying these things wouldn't make me rich, then why are people buying it? Perhaps it is to "look rich".
Warren Buffett said, "You can either look rich or be rich. Unfortunately, not everyone has the time to be both."
Here is my challenge...
Look poor.
Wear worn out jeans, wear slippers to the mall, ride a bike that you yourself maintain, borrow tools from relatives, buy used gadgets, buy broken gadgets and repair them, eat at cheap restaurants or better yet, learn to cook. Be creative at looking poor. There's a lot of fun in doing it. I myself enjoy it.
I remember the time when a friend asked me, "you seem to be doing good, you have your own business, but you don't look like your getting anything out of it. Where's the car? You walk everywhere. Where's the house? And why don't you get rid of that awful cellphone? ". I own a Nokia 3310. I still own it to this day. The only reply I told him was that I don't need it and I'm just doing "alright" not good but alright.
I would like to reply that I invest all my money in the stock market and other things. But I don't want to look rich nor look intelligent.
He has a nice car. A Subaru STX. Nice clothes, phone and everything that rich people own. I don't want to tell him that he's making a mistake nor to enter a pissing competition.
I don't want any attention.
There's a great feeling in doing all of this. You get to meet genuine people who will not judge you based on how much money you have in the bank. And thus, you'll have friends / relationships that will want to be with you not because of your money. No one will ask you to help them in their financial needs. Everyone will look down on you. You will be misunderstood. But its great training. In life, you can't explain yourself to everyone. You will learn to let go of your ego and your eagerness to explain yourself. You don't have to. You don't need to.
Looking poor gives you that freedom that rich people don't have. You can walk anywhere without worrying if you'll be robbed. Imagine that, you can now travel anywhere you want, with peace of mind.
You will be rich. Because there's not much money involved in maintaining your status or appearance. You'll save a lot of money without everyone noticing it. More money means, earlier to buy your freedom from the rat race.
And most of all. Its really fun to look poor. There's a feeling that when you look poor among your peers, you don't look like a threat to them. They'll like you more. Much like insecure people like dumb people, cause they make themselves look smart. :)
Oh, maybe you could do both. Look poor and dumb. That could be fun.
Tuesday, September 3, 2013
Not Much Excitement in the Philippine Stock Market
Nothing much is happening in the Philippine Stock Market. With all the political turmoil and news, you're bound to break the bull run. And it did happen...
I don't feel anxious or scared that I still have position in the market. I'm quite happy, actually, because I can buy lower priced share. The challenge now is to know at what price is the stock a bargain.
Visiting the pse.com.ph website, I still see the companies such as SM, JFC and a lot of indexed companies adding more shares to shower their managers with money. I still see no point in this and I will still stay away from this company as far as I am concerned. I will be picky with the stocks I chose from now on. If I can't find a valuable stock in the Philippine market, there is still the US stock market available to me.
How are your stocks going?
Tuesday, June 4, 2013
Stock Market Overpriced :)
The fall of the stock market is because of its overpriced evaluation. There's nothing more satisfying for me than to have my bet come true. Good thing, resorted to cash position. Just accumulating more cash to add when the price of stocks in the Philippines becomes underpriced.
Cashflow update: P46,664 / mo
Cashflow update: P46,664 / mo
Monday, May 27, 2013
Happiness from Different People
I realized that people have different meaning to the word happiness. A person may claim that happiness is found in the company of friends and family. Others, from exploring different cities and travel. And others, thru the search of knowledge through solitude.
Who is right? Where do we find happiness?
The search for happiness is hard because people are different. Sometimes, we search for happiness because someone told us it is happiness. But I think, that happiness comes from searching one's self. Thru knowing yourself. And then, when you know yourself, you can search for your happiness.
Let me explain what I meant by that. There 4 temperament in personality. I think it is best to start from personalities and temperament if we try to know ourselves.
4 Temperament
Who is right? Where do we find happiness?
The search for happiness is hard because people are different. Sometimes, we search for happiness because someone told us it is happiness. But I think, that happiness comes from searching one's self. Thru knowing yourself. And then, when you know yourself, you can search for your happiness.
Let me explain what I meant by that. There 4 temperament in personality. I think it is best to start from personalities and temperament if we try to know ourselves.
4 Temperament
- Artisans
- Guardians
- Idealists
- Rationals
Here is where we people find happiness. By knowing our temperament, we know which is our definition of happiness.
The Artisans
The artisans are the artists. The freewilling soul that wants to travel. Therefore, they find and think of happiness as a ride. Experiencing different cultures and cities and traveling the world. They will say that happiness is found in traveling or experiencing different cultures or expressing art. That is true happiness for them.
The Guardians
The guardians are the protectors. They define happiness as being and treasuring their loved ones and friends. Happiness for them is being with family and friends and spending quality time with them. Building new experiences with them. They also think that happiness is found through hard work and being a good loyal serviceman/woman to an organization.
The Idealists
The idealist are inspirers. They think happiness is found by inspiring others to be the best they can be. They think happiness means finding one's self and meaning of life. And they define happiness by helping others, teaching and by developing one's character and virtue.
The Rationals
The rationals are the strategist. They find happiness thru knowledge. Their outmost form of happiness is turning their ideas, visions and plan come to life. They are happy building things, systems and plans. To them, the search for knowledge is the search for happiness itself.
Conclusion
I find this idea really interesting. I used to think that happiness is found by traveling. While I continue to travel, climb mountains, I realized that I don't really find much happiness after a few travels done. It is fun and it does give you a new perspective. But after a few while they are all the same. I mean, people are still the same, where ever you go. And as long as you have the money, you can keep on traveling.
Then I realized that I was a rational. So the next time, someone told you that true happiness is to travel. You know he's an artisan. When he told you that happiness is being with family, he is a guardian. Know thyself and you'll define your own happiness.
Sunday, May 19, 2013
My Contingency Plan
On my 2019 goal, I plan to buy a real estate property to develop as a farm or a school. This goal I think is a long way to go. But I think, it is also important that I execute this right to get the most out of my money.
What I'm trying to say is that, the Philippines is in a bull run. Maybe perhaps, a very over extended bull run. I don't want to bet that its wrong and I don't want to bet most of my money that its right. What I want, is that to win on any kind of scenario.
For example, the bull run we are experiencing today, greatly increased my net worth. With due diligence and discipline of contributing a fix amount of my income 60% to index funds and the remaining to income producing investments, I realized that to take advantage of buying a real estate in the future, I should be prepared for the recession or the real estate bubble.
I think, we are encountering a real estate bubble in the Philippines. There is an oversupply of condominiums and homes. And I think, when this bubble burst, it is the time for me to buy my land or put up a school. Since this is the time, price of real estate are at a discount.
The plan now is to accumulate cash from here on, until the time recession happens. While still contributing to my index fund and income producing streams (they should never stop).
The challenge is raising enough cash to contribute the same amount of money to income producing streams and index fund and still have enough left over for the real estate fund for recession.
I am thinking of putting up another business. Since two of my friends have expressed their interest to start a business and have me as a partner. I think this is a good opportunity as well to earn more.
What I'm trying to say is that, the Philippines is in a bull run. Maybe perhaps, a very over extended bull run. I don't want to bet that its wrong and I don't want to bet most of my money that its right. What I want, is that to win on any kind of scenario.
For example, the bull run we are experiencing today, greatly increased my net worth. With due diligence and discipline of contributing a fix amount of my income 60% to index funds and the remaining to income producing investments, I realized that to take advantage of buying a real estate in the future, I should be prepared for the recession or the real estate bubble.
I think, we are encountering a real estate bubble in the Philippines. There is an oversupply of condominiums and homes. And I think, when this bubble burst, it is the time for me to buy my land or put up a school. Since this is the time, price of real estate are at a discount.
The plan now is to accumulate cash from here on, until the time recession happens. While still contributing to my index fund and income producing streams (they should never stop).
The challenge is raising enough cash to contribute the same amount of money to income producing streams and index fund and still have enough left over for the real estate fund for recession.
I am thinking of putting up another business. Since two of my friends have expressed their interest to start a business and have me as a partner. I think this is a good opportunity as well to earn more.
Monday, May 13, 2013
Philippine Elections 2013
How does it feel to be in a country where you pay the taxes, you work all your life but you don't have any effect on the election results?
The Philippine election is a disappointment.
I think, most people know what I mean. The middle class probably know whom not to vote. But the poor class is still the majority. This is a democratic country. Where the majority is "suppose to be right". It sounds good for most people. But what if the majority is dumb to pick their own leaders?
“The most perfect political community is one in which the middle class is in control, and outnumbers both of the other classes.” - Aristotle
The middle class who works, pays taxes have no say in this so called display and exercise of freedom and democracy. It's just a load of crap to me. Sugar coated so it sounds politically correct. Since the poor people control the majority, they will continue to whine about how poor they are and how the government should help them. While the middle class will pay the taxes to feed the poor. A very good system if you ask me. Its a very good system to chase away middle class in the country and live abroad.
And I must admit, this is the first time in my life that I thought that migrating would probably be the best thing to do. And I can see why most Filipinos feel they have to go and live abroad.
The link above summarizes all the problems and the reason why we are in this state of politics in the Philippines today. It is worth a read.
Wednesday, May 1, 2013
Being Frugal vs Being Kuripot
My mother knew about the car loan offered at my bank and insisted that I buy a car. And while I defend myself with words such as "I don't need it for now.", she and my siblings called me "kuripot". In my mind I'm just being frugal. But how many people really know the difference between being "kuripot" and being frugal?
A lot of rich people who are self made millionaires, being frugal is one trait they all have in common. Being frugal is a virtue of spending money on things that are necessity or are important for our daily lives. Being frugal means being smart with our money. Being frugal is knowing the consequences of where we put our money.
Being frugal is a mindset. It is not being afraid to spend money. But rather, you know enough the consequences of spending money, that you don't want to commit to the repercussions. For example, you need P1,000,000 to retire. But all of a sudden, you wanted to buy a car. It could be comfortable commute to work and "may" make you productive, but think of the consequences. A brand new car may cost around P600,000. If you spend P600,000 pesos on a new car, you just spring board yourself back a few years. Because of how much years you need to work just to replace P600,000 for your retirement.
Being frugal in a way is delaying gratification. Its ok to commute for now. If it means I could save the P600,000 and achieve my retirement fund.
Being a kuripot is being a "miser". A person who is afraid to spend because he is not confident in replacing the money he spent. A kuripot is someone who thinks far too long to part with his money, even if the money is used for necessities. And then gets angry if the money is lost. A kuripot suffers depression when he losses money. Suffers anxiety when the risk of losing money is great. He would rather stash his money in a box, bury it somewhere (like a savings account) than risk it in an investment.
A kuripot in a way is too attached to money that he is affected by it. A frugal person, knows the use of money and would not matter to him if the money will be used to a better cause.
While people will continue to accuse and laugh at me of being kuripot. I don't mind. We know who will get the last laugh.
Wednesday, April 17, 2013
3 Groups of People that Can Teach Us Investing
I have been a huge fan of Philosophy. Ever since I first learned about it in college. I think that above all else, we differ from other animals because of our ability to think and philosophy is just that, being able to think better and more rational.
Thinking of all these things, investing, making money, amassing wealth, will surely lead you to read about the lives who amass wealth. Like Warren Buffett or George Soros. But learning about these people more, they are also a fan of Philosophy (George Soros is a philosopher himself). So there's a common ground here. Being rich and wealthy, is just a product of great thinking and a beautiful mind.
Of all the people who claimed to have answered all the mysteries in the world. Modern religion for one, though many believed, I think missed the mark by a long shot. They had it wrong. I think there are only 3 groups of people who had it right. Which makes sense. And for which I admire.
#1 - The Stoic Philosophers
The stoics are the most calm people on Earth and the most rational. A lot of Stoic philosophers have died attending to nothing but reason and proving that its better to die than to take ones free will. The Stoics are the master of "mastering emotions" not showing any anger, or hate, or excitement, they have been one of the cornerstones of modern religion and rational thought.
The stoics also told us to live simply. To obey the natural course of things. To be happy of the things we can control and have contempt to the things we can not. And to find God and beauty not in the heavens, but here with us -- Nature is god. Nature is us.
The stoics told us to not fear death or suffering. For everything is according to Nature. We were born and we will die. Whatever happens in between or when it happens, doesn't really matter much in accordance to how infinite the world will go on after we die. We are but a spec of dust in the vast universe. So your suffering today, your joy, your status, your pleasure or your wealth, doesn't really matter. In a few years after your death nobody would even know you existed.
What can the stoic philosophers teach us about investing?
Tranquility and Calmness
Remember that whatever happens to your wealth, be it be robbed, scammed, stock market crash, remember that its part of the course of nature. It is not in our control. We are just a steward of the wealth we are given and we should not treat it as our own. Such that, if it was taken away from us, be sure to feel nothing. Always have a peace of mind. Always be calm whenever you make or lose money in investing. Life goes on.
#2 - The Buddhist Monks
The Buddhist Monks are the happiest people on Earth. It has been proven by scientific study that, meditation makes the brain larger and makes the person happier. What kind of emotion does meditation invoke? And it turns out this emotion is also responsible for living a happy life. That emotion is "Gratitude". Buddhist live a simple life. They live on top of a mountain. Eating just simple meals. Giving away all of their possessions or any material things. Lifetime of celibacy. Yet they never come short of giving thanks to everything.
They give thanks to the monkeys, to the soil, to the worms and to all things on this Earth, living or not. Because in the end, we are all one.
The buddhist told us to not live in the past nor think of things in the future, but to live in the present. Thinking about the past makes you sad, thinking about the future makes you anxious. Remember the master turtle in the movie "Kung fu Panda"? "The yesterday is history, tomorrow is a mystery, but today is a gift. That's why its called present."
Living in the present gives a person the ability to be happy and to "seize the day". To do the things he wants to do today. Because that's all that matters. What happens tomorrow, may happen. What happens today, at this very moment, is our choice.
What buddhist monks can teach us about investing?
Being in the Present, Happiness and Gratitude
That is to think of today. Forget about if a stock would go up or down tomorrow or in a few years. Focus on today. Do you need to add more money to your fund? Do it so.. Regularly, without thinking about if the recession would be tomorrow. Think of today. Be happy of your choice and let it go.
#3 - The Native Americans
Of all the people on Earth, the Native Americans are the most free. They are the people who lived according to nature. They never desired riches or any material things. Therefore they are not tied or can be manipulated.
What the Native Americans lack in money, is the abundance of knowledge and harmony with nature and also love for one another. All of the things in their body are from nature. Even their knowledge of survival is above anyone else. You can place them in any environment and they would live comfortably. This is the kind of freedom that few of us will achieve in our lifetime.
We, modern people as we call ourselves, buy services for the skills we do not have. We buy services to fix our leaking faucet, we buy services to make us coffee even the littlest things as preparing our food, we also buy. Consumerism at its finest. We become good at only one thing... Our jobs.
We people boast if we have a new car. But think of how much oil it consumes, how much metal from the Earth that was extracted. While we make a footprint of the destruction we made in Nature, the Native Americans have no footprint at all. Living in harmony for more than 4000 years.
There was a story about an Indian chief talking to a government official that goes:
An old Indian chief sits in his hut on the reservation, smoking a ceremonial pipe and eyeing two US government officials there to interview him.
One government official asks, "Chief Two Eagles, you know the white man for 90 years - his wars and his technological advances, his progress, and the damage he does."
The Chief nods in agreement.
The official continues, "Considering all this, in your opinion, where does the white man go wrong?"
The Chief stares at the government officials for over a minute and then calmly replies "When white man finds land, Indians are running it. No taxes, no debt, plenty buffalo, plenty beaver, clean water, women do all the work, medicine man free, Indian man spend all day hunting and fishing, all night have sex ..."
The chief leans back and smiles. "Only white man dumb enough to think he can improve system like that."
What the Native Americans can teach us about investing?
Freedom and Simple Living
To become financially free is to live a simple live. To live frugally and not spend money on things you do not need. Focus on the bare essentials at life. Focus on things that really matter. For what does it matter if your friends say that you're poor or unfashionable? Being rich, financially free is tightly connected to being frugal and simple living.
Thinking of all these things, investing, making money, amassing wealth, will surely lead you to read about the lives who amass wealth. Like Warren Buffett or George Soros. But learning about these people more, they are also a fan of Philosophy (George Soros is a philosopher himself). So there's a common ground here. Being rich and wealthy, is just a product of great thinking and a beautiful mind.
Of all the people who claimed to have answered all the mysteries in the world. Modern religion for one, though many believed, I think missed the mark by a long shot. They had it wrong. I think there are only 3 groups of people who had it right. Which makes sense. And for which I admire.
#1 - The Stoic Philosophers
You have power over your mind - not outside events. Realize this, and you will find strength.
Marcus Aurelius
Marcus Aurelius
The stoics are the most calm people on Earth and the most rational. A lot of Stoic philosophers have died attending to nothing but reason and proving that its better to die than to take ones free will. The Stoics are the master of "mastering emotions" not showing any anger, or hate, or excitement, they have been one of the cornerstones of modern religion and rational thought.
The stoics also told us to live simply. To obey the natural course of things. To be happy of the things we can control and have contempt to the things we can not. And to find God and beauty not in the heavens, but here with us -- Nature is god. Nature is us.
The stoics told us to not fear death or suffering. For everything is according to Nature. We were born and we will die. Whatever happens in between or when it happens, doesn't really matter much in accordance to how infinite the world will go on after we die. We are but a spec of dust in the vast universe. So your suffering today, your joy, your status, your pleasure or your wealth, doesn't really matter. In a few years after your death nobody would even know you existed.
What can the stoic philosophers teach us about investing?
Tranquility and Calmness
Remember that whatever happens to your wealth, be it be robbed, scammed, stock market crash, remember that its part of the course of nature. It is not in our control. We are just a steward of the wealth we are given and we should not treat it as our own. Such that, if it was taken away from us, be sure to feel nothing. Always have a peace of mind. Always be calm whenever you make or lose money in investing. Life goes on.
#2 - The Buddhist Monks
The purpose of our lives is to be happy. Dalai Lama
The Buddhist Monks are the happiest people on Earth. It has been proven by scientific study that, meditation makes the brain larger and makes the person happier. What kind of emotion does meditation invoke? And it turns out this emotion is also responsible for living a happy life. That emotion is "Gratitude". Buddhist live a simple life. They live on top of a mountain. Eating just simple meals. Giving away all of their possessions or any material things. Lifetime of celibacy. Yet they never come short of giving thanks to everything.
They give thanks to the monkeys, to the soil, to the worms and to all things on this Earth, living or not. Because in the end, we are all one.
The buddhist told us to not live in the past nor think of things in the future, but to live in the present. Thinking about the past makes you sad, thinking about the future makes you anxious. Remember the master turtle in the movie "Kung fu Panda"? "The yesterday is history, tomorrow is a mystery, but today is a gift. That's why its called present."
Living in the present gives a person the ability to be happy and to "seize the day". To do the things he wants to do today. Because that's all that matters. What happens tomorrow, may happen. What happens today, at this very moment, is our choice.
What buddhist monks can teach us about investing?
Being in the Present, Happiness and Gratitude
That is to think of today. Forget about if a stock would go up or down tomorrow or in a few years. Focus on today. Do you need to add more money to your fund? Do it so.. Regularly, without thinking about if the recession would be tomorrow. Think of today. Be happy of your choice and let it go.
#3 - The Native Americans
I am poor and naked, but I am the chief of the nation. We do not want riches but we do want to train our children right. Riches would do us no good. We could not take them with us to the other world. We do not want riches. We want peace and love." Red Cloud
Of all the people on Earth, the Native Americans are the most free. They are the people who lived according to nature. They never desired riches or any material things. Therefore they are not tied or can be manipulated.
What the Native Americans lack in money, is the abundance of knowledge and harmony with nature and also love for one another. All of the things in their body are from nature. Even their knowledge of survival is above anyone else. You can place them in any environment and they would live comfortably. This is the kind of freedom that few of us will achieve in our lifetime.
We, modern people as we call ourselves, buy services for the skills we do not have. We buy services to fix our leaking faucet, we buy services to make us coffee even the littlest things as preparing our food, we also buy. Consumerism at its finest. We become good at only one thing... Our jobs.
We people boast if we have a new car. But think of how much oil it consumes, how much metal from the Earth that was extracted. While we make a footprint of the destruction we made in Nature, the Native Americans have no footprint at all. Living in harmony for more than 4000 years.
There was a story about an Indian chief talking to a government official that goes:
An old Indian chief sits in his hut on the reservation, smoking a ceremonial pipe and eyeing two US government officials there to interview him.
One government official asks, "Chief Two Eagles, you know the white man for 90 years - his wars and his technological advances, his progress, and the damage he does."
The Chief nods in agreement.
The official continues, "Considering all this, in your opinion, where does the white man go wrong?"
The Chief stares at the government officials for over a minute and then calmly replies "When white man finds land, Indians are running it. No taxes, no debt, plenty buffalo, plenty beaver, clean water, women do all the work, medicine man free, Indian man spend all day hunting and fishing, all night have sex ..."
The chief leans back and smiles. "Only white man dumb enough to think he can improve system like that."
What the Native Americans can teach us about investing?
Freedom and Simple Living
To become financially free is to live a simple live. To live frugally and not spend money on things you do not need. Focus on the bare essentials at life. Focus on things that really matter. For what does it matter if your friends say that you're poor or unfashionable? Being rich, financially free is tightly connected to being frugal and simple living.
Monday, April 15, 2013
Dividend Received P89,474!
I got a dividend payment today.
Gross Amount (Php) : 89,474.00
Less Withholding Tax (Php) : 8,947.40
Net Amount (Php) : 80,526.60
My new net monthly passive income is now P45,164. This is due to the reinvested dividend and extra money invested.
We are looking good so far and we might also reach financial freedom this year! P50,000 here I come!
Thursday, April 11, 2013
Retire First, Then Get Rich
We Filipinos have a different notion for the word "retire". When we talk about retirement, its either living on pension, old and unable to work, or having a large sum of money and just waiting to die. But actually, the word "retire" means to withdraw from. In our case, work.
Our nation was built with the idea of the industrial age. Where getting a degree to get a job and to work in a company until you are not able to work. Trying to live how our grandfathers and fathers have lived their lives. To me, there's nothing wrong with it. But why ignore the benefits of our age, where all the opportunities are yours for the taking.
I think that all Filipinos want to be rich. And many will trade of their kidneys and precious growing years of their child to do so. But to be rich is not just merely striking a jackpot. Its a habit. And to become rich, there's just one hindrance to your goal -- your job.
It may be a contradicting thought that your job is the reason why you're not rich. If in fact, that is the only way you earn money. I think that your job is the one that's holding everyone of us back to be rich. How many of us really love their job that every morning we tap dance to work? "I'm happy being trap in traffic every morning, every waking day of my life". Said by no one ever. With all that stress, and still you're not rich. What's the problem?
The problem is, you're following the herd. You're living a life that you are taught to live. Pause for a second when you see a line of people piling up on MRT station. See all their faces. All stressed out and disturbed by other people who is just like them. You're going to fight your way again inside the MRT cab. You arrive at work. Do your job, then commute back then get stuck in traffic. Same old people you saw this morning. Only with different faces. You arrive home tired and then you're going to do it again tomorrow. Ask yourself, for how long are you going to do this shit?
Now ask yourself, how you could think differently. Is there any easier way to do the same thing with little effort. What if I could retire early so I don't have to do all of this every morning and just focus on amassing wealth? Retirement doesn't necessarily mean you would stop working. It only means, working is optional.
What if you focus all your efforts to build a passive income that could compete with your salary? Without bringing despair to others or doing bad things to others. Would you still need your job? NO! Why the hell would I bother being stressed out every morning where I can just sleep and wake up to any hour I want and still get paid every month?
"But I love my job!." Then that is great. You'll get promoted easily. Because you're not afraid to take risk. And you're not afraid to get fired. Which means, your boss will trust your judgement more, because you're not kissing his ass. All you do will be out of love and not because of money. That will completely change you.
Majority of people does it backwards. They work and work and work until they are old, and then they retire. If you see the flaw in this logic, you do not have the health to live life when you already broken your body to earn money. Most people fall into this category. And when most people do it, its usually wrong. That is my humble opinion. The reason there's a small number of rich people in every country, its because they do things differently from the majority.
Being with the majority means being average. Being average means, being just enough. And that is not the road to riches. To refuse the urge to follow the herd, means the self discipline to MAKE your own road to travel, your own decisions to make and your own life to live. When all people are trying to get rich and then retire. Try to retire first and then get rich. That is the difference!
Saturday, April 6, 2013
The Cost of Not Following One's Dream
If we can self study all the skills we want, we could. Given enough time and patience, we can be a master of any skill that there is. Some skills are needed to achieve a goal. Some skills are used to express ones self. Some skills are used to help others and some skills just for fun.
But for any reason, probably the most important skill for us, is to learn how to quit our job that we don't like to pursue something that we are born to do. That is my decision in learning how to invest in the stock market and creating this blog as a journal. But skills take time to develop.
I recently attended a "free seminar" (I'm into free seminars) for the industry I'm in. And its for an advanced class in the field of programming. The venue, is a TESDA center in Manila. TESDA provides free or even cheap technical education to Filipinos and I think its good education that can be compared to universities. Why not? The instructors at TESDA are part time university professors and one of them is our resource speaker.
But that is not the reason for this post. Inside the TESDA campus are people who have no money for education and trying to learn a skill. But some of them are people who followed the wrong dreams that were though of other people for them and trying to play catch up to pursue the passion they dreamed of as a kid.
One of them was a nurse that I met. He was asking, after our class ended, if he could join since it was free. I said yes and there are no application form or test to do. Just come in and join the class. He said that he has always been passionate about programming but it never took of since he took nursing. He could not find a job as a nurse so he thought to learn the skill that he really wanted as a kid.
But the problem here is that, our class is for the advance people. He, on the other hand, have no clue what a program is. And he said that he was on his way to attend a Microsoft Word class. He doesn't know how to use MS Word? He was I think in his 40's now.
I can't help but feel sad for this guy. Not only that he have wasted his time pursuing things that he did not like, he also don't have any realistic view of how much a skill gets mastered. Programming, like any other art, takes a long time to master. And I think there's a moral lesson here.
How many graduating nurses in our country really do love to be nurses? How many of them have the idea in their mind to go abroad as soon as possible?
If time is needed to gain and practice a skill. Doing the job you don't really like, does make it seem like wasting half of your life doing. Is it worth it? I don't think it is.
But for any reason, probably the most important skill for us, is to learn how to quit our job that we don't like to pursue something that we are born to do. That is my decision in learning how to invest in the stock market and creating this blog as a journal. But skills take time to develop.
I recently attended a "free seminar" (I'm into free seminars) for the industry I'm in. And its for an advanced class in the field of programming. The venue, is a TESDA center in Manila. TESDA provides free or even cheap technical education to Filipinos and I think its good education that can be compared to universities. Why not? The instructors at TESDA are part time university professors and one of them is our resource speaker.
But that is not the reason for this post. Inside the TESDA campus are people who have no money for education and trying to learn a skill. But some of them are people who followed the wrong dreams that were though of other people for them and trying to play catch up to pursue the passion they dreamed of as a kid.
One of them was a nurse that I met. He was asking, after our class ended, if he could join since it was free. I said yes and there are no application form or test to do. Just come in and join the class. He said that he has always been passionate about programming but it never took of since he took nursing. He could not find a job as a nurse so he thought to learn the skill that he really wanted as a kid.
But the problem here is that, our class is for the advance people. He, on the other hand, have no clue what a program is. And he said that he was on his way to attend a Microsoft Word class. He doesn't know how to use MS Word? He was I think in his 40's now.
I can't help but feel sad for this guy. Not only that he have wasted his time pursuing things that he did not like, he also don't have any realistic view of how much a skill gets mastered. Programming, like any other art, takes a long time to master. And I think there's a moral lesson here.
How many graduating nurses in our country really do love to be nurses? How many of them have the idea in their mind to go abroad as soon as possible?
If time is needed to gain and practice a skill. Doing the job you don't really like, does make it seem like wasting half of your life doing. Is it worth it? I don't think it is.
Tuesday, April 2, 2013
The Philippine Stock Market to Soar 3 More Years
The Philippine stock market's bull run to last 3 more years says the news. And the analysts may be right. But it doesn't mean its reasonable. The Philippines having upgraded its investment ratings and the masses just learning about investing in the stock market and foreign investors coming in to invest may drive the market up even further. But it doesn't necessarily mean its reasonable and that the Philippines is undervalued to make it a good buy.
The Philippine economy's tracker which is the index is composed of the 30 largest companies and conglomerates. And in my humble opinion, each one of these 30 (with the exception of a few) are so overbought and diluted that's its very expensive to invest today if we're basing its P/E ratio.
But ordinary people like us have no way to predict when its lowest point and its highest point. Nor would I like to try. So what to do?
I think the best way to handle the situation is to invest by cost averaging. Putting aside a fixed amount of money each month to invest in the Philippine index.
And then, focus on stocks with strong dividend payouts. Should recession come, you're safe with a steady flow of income from dividends. In which you can reinvest or add to your cost averaging.
The Philippine economy's tracker which is the index is composed of the 30 largest companies and conglomerates. And in my humble opinion, each one of these 30 (with the exception of a few) are so overbought and diluted that's its very expensive to invest today if we're basing its P/E ratio.
But ordinary people like us have no way to predict when its lowest point and its highest point. Nor would I like to try. So what to do?
I think the best way to handle the situation is to invest by cost averaging. Putting aside a fixed amount of money each month to invest in the Philippine index.
And then, focus on stocks with strong dividend payouts. Should recession come, you're safe with a steady flow of income from dividends. In which you can reinvest or add to your cost averaging.
Friday, March 29, 2013
I Rejected The Auto Loan
The teller in my bank has been kind enough to offer me an auto loan. I think that 5% per year on the interest of the loan is a good deal. And it makes it hard for me to reject the offer.
The thing is, although I want a car, I don't have any good use for it at the moment. I like walking and commuting and using my sister's "endless love" korean style bike. Its funny and I like to use it.
More than anything, any loan will only deduct the amount of cashflow I will have per month. The loan will cost me P15,000 a month of expenses which I really don't want to commit to.
Instead of getting the loan. I realized, I should be learning how to lend properly. Because of the incident of one of my borrowers did, I took a seminar about private lending. Some legal aspects, risk management and knowing the ins and outs of lending to a private person or small business.
The thing is, although I want a car, I don't have any good use for it at the moment. I like walking and commuting and using my sister's "endless love" korean style bike. Its funny and I like to use it.
More than anything, any loan will only deduct the amount of cashflow I will have per month. The loan will cost me P15,000 a month of expenses which I really don't want to commit to.
Instead of getting the loan. I realized, I should be learning how to lend properly. Because of the incident of one of my borrowers did, I took a seminar about private lending. Some legal aspects, risk management and knowing the ins and outs of lending to a private person or small business.
Wednesday, March 27, 2013
My Very First Problem with Lending
Ok. I think, the time has come for me to encounter a problem with lending. Only the first month, this person is hinting that he's not gonna pay the money he borrowed. It might have been my fault for lending him money. And I think I know where I made a mistake.
He was a friend of a friend and a desperate one at that. I should have not lend money to people who are desperate. Only to people who will have a rock solid reason for borrowing. Like expanding a business, or expense to go abroad. If only I could have seen the sign. The good news is, I lowered the money he's allowed to borrow from P10,000 to P5,000 because I was unsure of him at first. And the bad news is, I have to do the dirty job of collecting his dues.
Just a note to my future self. Businessmen, good. Desperate guy, bad.
He was a friend of a friend and a desperate one at that. I should have not lend money to people who are desperate. Only to people who will have a rock solid reason for borrowing. Like expanding a business, or expense to go abroad. If only I could have seen the sign. The good news is, I lowered the money he's allowed to borrow from P10,000 to P5,000 because I was unsure of him at first. And the bad news is, I have to do the dirty job of collecting his dues.
Just a note to my future self. Businessmen, good. Desperate guy, bad.
Wednesday, March 20, 2013
The Long Awaited Correction of PSE & Cashflow Update
Cashflow Update
Cashflow is up +P2,250. Total NET Passive income is P41,164... Yes! I'm almost there to financial freedom. Another P9,000 of passive income and I'm free.
Saturday, March 9, 2013
Cashflow Update March 2013
My current passive cashflow is now net after tax P38,914 per month. This is due to bonds and increasing dividend payouts by companies owned. I'm waaaaay beyond schedule by 1 year and I'm almost at the next milestone of P40,000.
The cashflow is not yet permanent as most of it is from lending. When the borrowers paid the principal, I'll be back to 15,000 per month. But that is probably a good thing as well because by that time, I would then have more money to invest in stocks or bonds to up that cashflow again. So I guess P38,914 might as well be a permanent one, now that I think about it.
The cashflow is not yet permanent as most of it is from lending. When the borrowers paid the principal, I'll be back to 15,000 per month. But that is probably a good thing as well because by that time, I would then have more money to invest in stocks or bonds to up that cashflow again. So I guess P38,914 might as well be a permanent one, now that I think about it.
Wednesday, January 23, 2013
Tuesday, January 22, 2013
Cashflow and Goals Update
Cashflow Update:
My current Passive Cashflow is P15,215. That is until last month. This month, my cashflow is P30,215. That is because I managed to secure a bond with a friend and my cousin. I loaned money to them and in return, they would pay me an interest. If they manage to pay off their debts to me this month, then by next month, my cashflow would be back to P15,215. Otherwise, I'll be enjoying a P30,215 per month of passive income.
Goals Update:
To increase my ability to earn, I'm currently undergoing training and will finish by next year. That's also the reason why the lack of updates on the blog.
My current Passive Cashflow is P15,215. That is until last month. This month, my cashflow is P30,215. That is because I managed to secure a bond with a friend and my cousin. I loaned money to them and in return, they would pay me an interest. If they manage to pay off their debts to me this month, then by next month, my cashflow would be back to P15,215. Otherwise, I'll be enjoying a P30,215 per month of passive income.
Goals Update:
To increase my ability to earn, I'm currently undergoing training and will finish by next year. That's also the reason why the lack of updates on the blog.
Subscribe to:
Posts (Atom)