OFW Corner: The Remittance

December 28, 2011 1 Comment


This year World Bank forecast that the OFW Remittances will reach $23billion. Actually, this is higher than the Philippine Government forecast of $20billion. These humungous amounts made up 10% of our country’s GDP. Imagined where our country would be without these huge remittances. Right now, Philippines were ranked number 4 in terms of remittance recipient. (Number1 – India, Number2 – China, and Number3 – Mexico)

What is not included in these impressive $$$ amount is the cost of separation by leaving their children without the guidance of their father or mother, and the cost of loneliness and abuses suffered by some Filipinos working in a foreign land. This psychological cost could not be match by any foreign currency earned by working abroad.

POEA data shows that there around 10million OFW all over the world (WOW .. this is more than 10% of the total Philippine workforce).

Last November2011, I read news on Philstar and Inquirer (on the internet) in which P-Noy claims that the Philippine economy is now investment driven, and not very much dependent on the OFW remittance. I might be wrong, but contrary to what he said I think our economy is very much OFW remittance driven. Of course, I am not blaming P-Noy for the exodus of Filipino workers, and I know he cares. But as long as there are Filipinos working abroad to provide their family a better living, no administration have the rights to claim economic prosperity.

I am an OFW for more than 7 years, and I think that working abroad is a temporary approach to provide food and a better life to our family, while our economy is working its way. Sad to say that many decades had past and a gargantuan amount of remittances were sent home, and yet we have not seen the economic prosperity that we are waiting for.

This New Year, I hope and pray that our leaders will have a sense of urgency and political will to keep our economy up and going.

A Merry Christmas and A Happy New Year to all Filipinos working abroad.

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Filipinos on GDP

December 26, 2011 2 Comments


GDP (or Gross Domestic Product). What is it to “Filipinos”?

Before moving on with this topic, let’s define GDP first.

From Wikipedia:

Gross Domestic Product (GDP) refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country’s standard of living.

From its definition, GDP after all is not just the measure of our Government or Pres-Noy performance, but rather our economic performance as a nation. We should be serious when it comes to GDP matters because it reflects our performance compare to our ASEAN neighbors.

Example:

Vietnam recorded a 6% growth last quarter, and Thailand which half of it’s country flooded still manage a 3.6% growth.

 Actually, the Philippines mass population were not concerned that our GDP grow by only 3.2%. In fact, we are more concern about the showbiz news like couples getting separated or Pacquiao (the pambansang kamao) losing to Marquez.

 I was not an economist but if Vietnam could maintain it’s growth at this rate. I think it will surpass us in just a decade.

As an investor, I feel the frustration every time I see our GDP figures way below our ASEAN neighbors.

The problem on GDP growth is not for the government alone, ordinary citizens like us should do our share in making it better.

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Filed under Financials Tagged with ,

Bonds Are Good Investment Too

December 19, 2011 6 Comments


I mentioned before that Bonds yield normally ran neck to neck with the inflation, and despite the fact that stocks historically outperformed bonds over a long period. Investors should not discount that Bonds are good investment too.

There are 3 reasons I know why bonds are good investment.

  1. Steady Stream of Income – Common stocks are not guaranteed with dividends. Dividends on common stock are declared at the discretion of the company’s board of directors. If corporate earnings decline or the board decides to use the money for other purposes, dividends may be reduced or not paid at all. But the Bond investors, by contrast, can generally count on a steady stream of interest income. Investing in the bond provides steady fixed income.
  1. In case of bankruptcy, bondholders claimed are settled first – Bond holders are creditors of the company, and stockholders, as owners of the company, have a claim to its income and are entitled to voting rights. However, in case of bankruptcy, the claims of bondholders—as creditors—are settled first, and common stockholders are last for the collection of any remaining proceeds from the liquidation of assets.
  1. Bond investment is well suited for risk-averse investor with shorter time horizon – Since, investing in bonds offers low volatility, a risk-averse investor will not commit its investment portfolio overweight in stocks, and instead there is always a bigger room for bonds.

Actually, all of my investment exposure in Bonds is through Mutual Fund. And, I believe that bonds too offer potential capital appreciation.

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Where you are and Where you’re going?

December 12, 2011 2 Comments


There are a lot of people who don’t want to invest their money in stocks, bonds or other investment instruments because they were scared or rather want to enjoy their money now.

I know a lot of people who don’t want to invest because they don’t want to wait for ten years or more to be rich but instead they would rather enjoy spending their money now by buying luxurious things that didn’t appreciates its value, dining on expensive restaurant, etc, etc.

The silly concept about this old school thinking is that the odds are against you. Are you are going to be alive in ten years or more? I guess the right question right now is whether or not your financial status will be better off after ten years of excessive spending (without any saving or investing).

Where we are right now is the result of the good or bad decisions  we have made in the past. If we want to set a brighter financial future for our life, why not start investing now.

Our lack of financial planning will surely lead us into disaster, and we can only blame ourselves for this financial misery. Where we are right now will not make any sense, if we don’t know where we’re going.

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Why Filipinos Are Not Investing?

December 5, 2011 7 Comments


I have made a list of reason (or excuse) why many Filipino’s don’t want to invest or not investing at all. Actually, this is base on my experience when encouraging someone to invest.

Anyway, here are their reasons why they don’t or not investing at all.

  1. I was born from a poor family
  2. I am too young to venture investing (or sometimes too old)
  3. I have no luck (born unlucky)
  4. I need to support my family (sometimes the whole family generation)
  5. I was not a genius (not smart enough)
  6. The economy is not good (bad economic condition suggest not to invest)
  7. My spouse is not supportive
  8. I don’t have a big amount of money to start with
  9. I was scared to loose my hard earned money
  10. My salary is good enough (make sense)
  11. I would rather enjoy my money now than putting it in any investment
  12. Money is the root of all evil (believe me someone answers this)
  13. etc… etc… etc…

Too many reasons isn’t it.

Do any of these reasons (or excuses) sound familiar to you? These types of reasoning make us feel a victim of circumstance, and we are blaming someone or something for our financial misery.

Actually, the folly about this mindset is that when you give yourself an excuse, you are letting someone else or something else controls your life. And since, it is not your fault, you will think that you are helpless to change it.

I think this mindset is the reason why a person never gets rich.

Anyway, if we can only change this mindset and think that we are the one controlling our financial destiny (no external forces controlling us), I guess the road to riches is within our reach. And since, we already realized that we are in control of our financial destiny, it is a fact that our financial prosperity is inevitable.

So my challenge is – “Again, ask yourself why you are not yet rich?”

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Investment Tip : Expect Surprises and Don’t Panic

December 1, 2011 Leave a comment


Investment Tip : Expect Surprises and Don’t Panic

The good thing about investing in Stock and Bond Market is that it is full of surprises. And, the surprises it brings were either a series good or bad. So, handling these good and bad situation will be up to each investors behavior.

Have you ever heard of the word “Cockroach Theory”. The theory goes like this “The first cockroach you see is probably not the only one around; there are likely scores more that you can’t see.” Actually, this same theory is applied on investment which means that the first big positive and negative surprises from a company is unlikely to be the last.

Intelligent investors should expect good and bad surprises to be repeated. Of course investors will be happy for a series of good surprise, but when a series of bad surprises comes his decision making will be put into test.

For me, successful investing is not all about exceptional intelligence but it is rather the proper temperament. Intelligent and calm investor will not easily succumb to the selling frenzy when bad news comes, but rather looks on the fundamentals of the stock his holding.

There were times that market were selling mainly due to sentiments without considering the fundamentals, and this kind of situation offers opportunity for an intelligent investors, but spells disaster for a panic one. If this series of bad sentiments keeps on coming, the intelligent one is happy accumulating more stock position, but the panic one loss every opportunity.

Surprises either good or bad is part of the investment world, so it is only wise to expect more of it, don’t panic and watch out for the opportunity it can bring. If you could keep your heads up when negative surprises comes (while other losing theirs), you will be ahead in this game of making wealth.

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