Before Jumping Into Investment

September 14, 2011 2 Comments


After a series of articles encouraging every Filipino to invest. Are you ready to venture the exciting world of investment?

Here are some tips before jumping into Investment.

  1. Make sure to set aside at least 6 months of emergency fund. This will protect your investment in case you need big amount money for an emergency.
  2. Do your homework. Don’t fall to an investment scam. Beware of the investment companies that offers double your money scheme. For a newbie, I suggest to start 1st on a mutual fund or UITF.
  3. Match your risk appetite with your investment choice. If you have a low appetite for risk, I suggest you go for a conservative investment like bonds (fixed income) or money market. However, if you want a higher return and you can withstand the high volatility of equity market, you can invest directly on the stock market.
  4. Know your Investment Horizon. If you have an investment horizon of more than 5 years, I think it is wise to go for a high yield and high risk investment instrument. It is proven that a longer investment time will ride out stock price volatility.

Goodluck and Happy Investing…………

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The Wife Investment Portfolio

September 5, 2011 9 Comments


Do you believe in a saying that “Diamonds are girls best friend” and things like gold, precious stones, silver and other  precious things are her other good friends?

You maybe asking this – So what’s the sense of including this topic on my blog?

This evening after checking the price of GOLD in the Bloomberg, I was surprise that it was almost 1900USD per ounce.  I was thinking that most woman, especially the wife were so fond of collecting gold and other precious metals, that if you will consider this as part of an investment portfolio. They will going to beat the equity and bond portfolio of an expert fund manager.

Unless, the equity fund manager have an investment in a mining company that produces gold and other precious metal, they will never have a chance in beating the Wife Investment Portfolio. (Note that from year to date the world equity market plunges while, the GOLD prices sky rocketed.)

The “Wife Investment Portfolio” were not found in any investment books or strategy. It was merely a product of my “Investment Imagination”.

Congratulation to those who made an investment in GOLD last quarter,I guess they are already jumping with joy.

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What is your Saving Strategy?

July 19, 2011 2 Comments


Do you have a bank savings account? How often do you make a deposit on this account?

Do you have a strategy in saving money?

There are 2 money savings strategy that I know, and I want to share it with you.

  1. Income – Expenses = Savings
  2. Income – Savings = Expenses

“Income – Expenses = Savings” Strategy

The formula means that the moment you receive your income (or salary) you go ahead for the expenses, and whatever left from your income will be your savings. Most Financial advisers and planner says that this approach is the saving habit of the poor.

I definitely agree with them.

So the next question will be : Is this your money saving strategy? If it is, you should be afraid because you will retire poor.

“Income – Savings = Expenses” Strategy

In simple language, at the moment you receive your income (or salary) you keep a certain amount for your savings and the rest will be for your expenses. They said that this is the “Saving Strategy of the Rich”,  and if this is your money saving approach, you have a good chance of becoming wealthy.

This approach requires a high level of discipline. Actually, it is really a matter of the right order. (Save first then spend the rest.)

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Quotes:

How much you earned will only matters less, what matters most is how much you save.

by: Anonymous

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Investment Strategy: Buy and Hold

July 4, 2011 1 Comment


In investment, the buy and hold strategy is a long term investment approach based on the view that the financial markets will give a good rate of return despite its volatility. They said that the best advocate of this strategy is Warren Buffet.

How does it work?

I will say that this is one of the simplest investment approach. All you have to do is select a stock with sound fundamentals and buy it, and then hold it over a period of time until a realized earning is achieved.

Below are the benefits of the Buy and Hold Strategy

1. For a newbie investors, the concept of buying securities at low and selling it at high does not really works. Sometimes, the timing entry of unsophisticated investor yields negative results due to the market volatility, so it will be wise for them to apply the Buy and Hold approach.

2. Cost Based ground – buy and hold requires few transactions. Every transactions on the trading floor requires fees, the fewer the transactions the lesser the fees incurred.

One of the famous investment quote made by Warren Buffett said “Our favorite holding period is forever”. Actually, this quote brings arguments to many sophisticated investors.

Anyway, I can give you an example of a person who applied the “Buy and Hold Forever” investment strategy.

Do you know Grace Groner?

from: Wikipedia

Grace Groner was an American woman recognized after her death for a posthumous gift of 7million dollars to her alma mater, Lake Forest College. In 1935, she purchased three sixty dollar shares in Abbott Laboratories, where she also worked for 43 years. Over the years, her shares split many times, and she reinvested the dividends each time.

 When she died on January 19, 2010, her will was opened by her attorney, and he found out about the wealth that she had accumulated over the years. He was informed of her intentions, which stated that all her money, which by then totaled seven million dollars, should be donated to Lake Forest College.

In my own point of view, I think putting all your investment in 1 nest is a very risky approach. I think a little diversification is necessary.

Anyway, Grace Groner’s hold and buy forever strategy works. Her faith (mixed with little luck and courage) on the company that she has worked and invested gives her an awesome earnings.

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source: Wikipedia

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Investment Strategy : The Rule of 100

July 1, 2011 Leave a comment


The “Rule of 100” in investment.

For a newbie investor, they know that Stocks and Bonds are both profitable investment instruments.

So the next question they will be asking is how much stocks and bonds will they allocate in their portfolio? Is it wise to have a portfolio of stocks alone since, this investment promise a high returns? Or it is better to have a basket of bonds investment alone since, the risk it offers is low?

In INVESTMENT, there is a saying that “Whatever your age, or whatever your source of income. A bond will always be a part of your portfolio”.

The “Rule of 100” is an investment approach that will help any unsophisticated or newbie investor in allocating stocks and bonds in their portfolio. This is the simplest financial rule and mostly used by individual investor. In this rule, you don’t need to be a genius in allocating the stocks and bonds in your investment basket.

Example : Simply take 100 and subtract it with your age and the sum will be the suggested percentage of your exposure to equities (stock) market. Let’s say you are 25 right now, applying the rule of 100 by simply subtracting your age will result to 75. This mean that your portfolio should have a maximum 75% investment in stocks to optimized your long termed growth.

As you getting older, the rule of 100 will simply reduce your exposure to a risky stock market investment.

For a sophisticated investor they may say that this investment rule is an old school approach. But for me, I think this is good strategy for allocating our equities and bonds portfolio.

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