How to smell a scam away

“Make your money work for you” is a very popular slogan used in scams to attract investors.  Now if you are not aware, chances are you will fall to this trap especially if they promised to give enormous returns over a short period of time that will make you rich quick.  There is a very informative and a real life video from pesos and sense about this where a professor of Adamson University was a victim.  Watch it below:

In the Trulyrichclub, our mentor Bro. Bo Sanchez is giving several tips on how to smell a scam away and how to identify its many faces.  It’s a long article but I think worth your time reading.  Here it is: Continue reading “How to smell a scam away”

How budgeting can alleviate your savings experience

There are many such people who may have been saving for quite a long time now, but to no avail. So, what would you be required to do, in order to can save up more? It is important to have enough savings, so that you can lead a secure retired future. Furthermore, savings is important for emergency situations too. Therefore, you need to take stock of the situation, so that you can save up more than before. The health of your finance depends on how you handle or manage your money.

Improving the budgeting techniques

One of the greatest crucial factors, with regards to effective budgeting is, keeping your expenses lower than that of your income. You will have to set up a goal and work on achieving that. If you have been following a budgeting plan, try to set up a new one. In order to get the things changed, with regards to budgeting, you will have to check the old receipts. These can be the receipts based on rent, mortgage, grocery, insurance and debts or even more. Find out what the past expenses have been, on an average and work on the changes as required.

In addition, you will have to:

  1. Follow separate budgeting techniques – You can start following separate budgeting techniques, for different requirements. Like, you can prepare a separate budget for a week and a separate one for the month. Then, you can use a separate budget for your everyday living, and a separate one for traveling and so on. This may help you in saving up more and from every other aspect of your life.
  2. Set up some savings goals – Set up a proper savings goal, so that you can work towards achieving the same. If you have already been saving, you will have to set an even higher goal standard. If you can achieve the new goal, set an even more stringent one.
  3. Gift yourself if you reach the goal – If you think that you had easily been able to reach the goal, you can gift yourself a small nothing. For example, if you had set up the goal for a month, but if you were able to achieve it within 25 days, you can get a gift for yourself.
  4. Try going frugal – You can try going frugal, if you had not been able to save up lots through simple budgeting techniques. You will have to save on electricity, on gas, on other bills and even on grocery through couping.

These are the ways in which you can obtain more savings and can go on to improve your finances too, in the long run. This may further, help you in avoiding debts and thus you may also see improvement, with regards to your finance and credit rating.

Avoid the free lunch attitude

It’s been a while since my last post but here’s another great article from Bo Sanchez’ TrulyRichClub.

Two years ago, I thought I could not sustain or afford to pay the monthly subscription of the TrulyRichClub to receive the twice a month issue of stocks update and other materials.  But after overhauling my finances through reading books, attending seminars and paying myself first, I realized that I’m earning enough.  I also follow the “Simple System” Bo Sanchez discussed in his book “My Maid Invest in the Stock Market” that uses an “envelop”.

This is one of the many reasons why I believe Benjamin Franklin’s saying that “an investment in knowledge always pays the best interest”.  Today, my money grows in numbers that I never expected.  Without the TrulyRichClub, I could have spend it in doodads (unnecessary expenses) and just vanished leaving me hopeless again.  And what about the subscription fee for the club?  Well now, it’s “free”.   Enjoy!

Remember this crazy story?
Someone who smoked for 20 years is now suing Phillip Morris because he has cancer.  Or how about this story: There’s a thief who sued the owner of the house he was trying to rob, because when he went out of the window to escape, he fell and broke his leg.
Absurd, right?
In other words, we like free lunches. Smoke for 20 years and let others pay. Rob a house and let the owner pay.
Let me tell you another crazy story…
When I give my financial seminars, I give a “No Questions Asked” Money Back Guarantee. That means we give back the fees if participants say they didn’t like the seminar.
I think we’re one of the few organizations in the country who does this. (In fact, in some of our more technical seminars, we’ll even add P1000 when we return their seminar fees—as a way of paying for their lost time.)
One day, my staff showed me a letter from a seminar participant, asking for a refund. The reason was out of this world.
He wrote, “I became too busy with my schedules and I wasn’t able to apply what I learned in your seminar. Can I get a refund?”
I laughed.
I instructed the office, “Give him a refund.”
My staff went berserk. They couldn’t believe it. They said, “But Bo, it’s not our fault that he didn’t apply what he learned in the seminar. It’s his fault. Why will we give him a refund?”
I said, “Out of pity. With that kind of attitude, he’ll always be a failure. Because he keeps looking for the free lunch.”

Graduate from Your Free Lunch

Twice in my life, friends gave me a car.
I’m extremely thankful they gave me a car. When they gave me my first car, I was traveling all over Luzon, preaching to various groups. I couldn’t afford a car so it was such a huge blessing.
Yes, the free lunch is a wonderful gift from God.
But I now believe it’s not His best gift for us.
What is a better gift than free lunch? The capacity to earn and pay for your lunch.
Recently, I bought a new car with my own money. From the sweat of my brow. From the earnings of my businesses.
Hey, receiving a free car was incredible. I loved it.
But I noticed that when I bought the car with my own money, the feeling was a THOUSAND times better! Honest.
Because aside from the car I bought, I felt I grew.
I became wiser. More business savvy. More financially literate. The car was merely a symbol of who I’ve become.
Remember that the first and most important skill you’ll ever need in becoming successful is to take personal responsibility.
If you’re receiving a free lunch today (in any form), thank God for it. Perhaps your parents are still giving you money.
Perhaps you live with your parents and they don’t ask you to share in the expenses. Perhaps a best friend always treats you out. Perhaps a Ninang (godmother) always gives you a monthly allowance even if you’re already 27 years old.
But for the sake of your own personal growth, I urge you: Graduate from free lunches.
Move on. Grow up!
Free lunches are crutches. They’re there to help you while your legs heal. But once they’re healed, you need to throw away the crutches. If you don’t throw away the crutches, your legs will never be fully healed.
In the same way, if you don’t avoid free lunches, you’ll never grow in your capacity to earn.

You Need the Pain of Paying 

One day, a woman came up to me and asked, “Brother Bo, why do you charge for your Kerygma Conference? It should be free. Some people won’t be able to go because they can’t pay P500 for the ticket.”
This is how I answered: “The weekly Feast is free. There are no tickets. But the Kerygma Conference is a 3-day conference we hold once a year. We spend P6 million to make it happen.”
She was shocked, “P6 million? My goodness. Then don’t hold it in PICC. Hold it in an open-air place, like Luneta. So that it will be free.”
Very patiently, I explained, “Even if you hold it in Luneta, it will still cost a lot of money. First, we’ll rent chairs at P20 each. Multiply that by 10,000 people. And then we have to get a very powerful open-air audio system. Probably will cost half-a-million. Plus very powerful lights that will cost a lot too. The stage alone will cost P200,000 to rent. And we’ll have to feed 600 volunteers—which will cost about P600,000 for those three days…”
I noticed she wasn’t listening. She said, “But it should still be free!”
I politely ended the conversation. It wasn’t going anywhere.
Personally, I like charging for the conferences. Why? I get quality attendees. Participants put value in the event.
There’s a personal investment. There’s commitment—and it shows in how people love the conference.
My other reason? I’m breaking the free lunch attitude.
It’s not healthy.
People who like free lunches don’t grow up.
Friend, you need to learn to pay your way to success.
It’s the only way!
I love saying it: Pain is the only way you can grow. And having to pay for your own lunch is painful. But this pain will force you to grow.
Avoid the free lunch.
Start paying.
Take responsibility.

May your dreams come true,

Bo Sanchez

Photo credit:
http://timehelix.deviantart.com

Time To Upgrade

It’s been a long time since we last posted the stocks update from TrulyRichClub. I believe its time for you folks to do the “upgrade” after several months of receiving the freebies from this site.  As Robert Kiyosaki says, “pay your brokers well”.  I also believe this should be part of your investment (if you’re really serious) while you’re learning and accumulating your wealth.  This will keep your investments safe thru the guidance and inspiration of Bro. Bo Sanchez and his team.  You won’t get stressed and tempted to do “trading” like most people nowadays who are confused about trading and investing.  They will “trade”, earn today and bring it back to the stock exchange after a couple of weeks.  In short, you can sleep at night with less worries and focus on your daytime job.

There is a lot of information you’ll get by joining the club. Once you become a member, you’ll get the timely and whole Stocks Update eReport including tips, Wealthstrategies which provides education on entrepreneurship and other stuffs, and powertalks that will encourage you to be faithful on your investments.  Not only that, you’ll also get the chance to earn passive income by promoting the club to your friends thru facebook, blogs and email by becoming Bo Sanchez’ affiliate. When you earn passive income from the club, you will reach a point that your membership fee will be covered and becomes free. Sounds great right? But of course this won’t happen overnight. In my case, it took me around a year before it happens. So, good luck and I hope you join us.

Note:
We will only post a summary of updates based on our insights 1 or 2 weeks later but not the usual stocks update

truly-rich-club-stocks-update-october-2012

What Is The Best Insurance?

Looking back before 2011 year end, I decided to buy term insurance.  Being a member of the TrulyRichClub for almost a year at the time, I got the regular wealth strategies from the club which happens to be discussing about insurance.
best-insurance-tooThis article pushed me in getting term insurance as it suggests while investing in the stock market or equity funds, it is mandatory that one should get protection.  I was surprised how cheap the annual payment for a pure life/term insurance.

So I called up a friend who referred me to this insurance company and asked him how much he’s paying for his insurance “bundled” with investment.  To my surprise, he’s paying double compared to my annual fee while my insurance coverage is five times than his.

I think this friend of mine doesn’t like to invest directly in stock market so he allowed the insurance company to take care of his investments.  The cons for me is, I will not be expecting anything from the insurance company after completing the term but at least I have protection which suits my goal.

Knowing this, I’d like to share with you this article I got from the TrulyRichClub discussing the importance of insurance.  This will help you think and decide which insurance is best for you specially if you are already investing in the stock market like I do.

Feel free to share.

What Is the Best Insurance?

The purpose of insurance is simple: If God calls you home today, your kids won’t go hungry.

Many people misunderstand this simple logic. I know some people who buy insurance for their kids. I heard one person bought insurance for his baby.
Huh? I don’t get it. Who’s the kid supporting? Her Barbie doll? Her kitten?
Or some single people buy huge amounts of insurance—even if they have no kids or no aging parents to support. Sure, they can buy a little insurance to take care of their funeral expenses, so they don’t become a burden to their siblings. But they don’t reallyneed big insurance.
I repeat: Buy insurance if you’ve got people depending on your income. So that if your income suddenly disappears because you disappear, the insurance money will support them.
But some insurance agents will try to sell you stuff you don’t need, just to earn their commission.

What’s the Goal?

 But our goal in the TrulyRichClub is very simple: To build your wealth over time so that you don’t need insurance anymore.
In other words, the goal is to be self-insured.
But that doesn’t happen overnight. Building millions in your investments will take many years. So while your millions aren’t there yet, buy insurance.
What kind of insurance?

Buy Term Insurance

For TrulyRichClub members who are learning how to invest, you should buy pure and term insurance. It’s the cheapest insurance.
Any other insurance product is a bundled product combining insurance and investment. It sounds nice.
They even come by nice names: Whole Life insurance, Universal Life insurance, etc.
Compared to pure and term insurance, these are very expensive insurance products—precisely because they have an investment component.

These bundled products are Okay if you don’t know how to invest.
And the truth is that many people really don’t know how to invest. And many people are so undisciplined, they need an insurance agent following them up every month to give their monthly payments, with the threat of “forfeiting” or losing their entire insurance if they don’t pay.

But if you’re a TrulyRichClub member, you shouldn’t buy these bundled insurance products.
Why? First of all, you already know how to invest (in equity funds and in the stock market). Second, you’ve got the discipline to do it each month. No need for “threats” hanging over your head.
Here’s the shocking truth: Most of these bundled insurance products with investments only earn between four percent to seven percent each year.
Yes, that’s better than the bank. But that’s much lower than what you’ll earn if you invested your money yourself in equity funds and the stock market, where you can earn between 12 percent to 20 percent each year—if you invest long-term, over 20 years or more.
That difference is huge over time.
So buy term insurance.

“Buy Term, Invest the Difference!”

 

So instead of buying bundled investment product which is expensive, buy term insurance—which is cheap—and invest the difference yourself.
That’s where the wise statement come from, “Buy term, invest the difference!”
Warning: Some insurance agents will not like you to buy term insurance. Because their commission is tiny if they sell this product. They will always push for bundled insurance products.
So ask for it. Tell him, “I like to buy term insurance only.”

Happy learning!

May your dreams come true,

Bo Sanchez

P.S. As you can see, TrulyRichClub members have an incredible edge over 99 percent of the population: You don’t end up buying the wrong products and waste your money.

Top 4 Reasons Why Invest In Philippines

Good day!  Just want to share with you some of the interesting market insights where we can truly say “its more fun to invest in the Philippines”.

  1. Philippines entered as IMF creditor to Europe. – This is amazing news that shows how strong our current economy is.  PH is now turning from “net debtors” to “net creditor”.  I could not believe this fact while watching the local news last night; European countries need our help in order to save their economies from falling.  Wow! More details can be found here.
  2. PH BPO call centre industry surpassed India since 2010 – From the past, India has always been on top in terms of the BPO.  Surprisingly, we beat them since 2010.  This means, more foreign investors are coming in our country.  This results with more demand in call center agent requirements, where TESDA will be pushed to conduct more training including the rural areas or provinces.
  3. PH growth in incomes of 58% the last 5 years – Despite the 2008 Global Financial Crisis, giant companies in our country have been growing tremendously.  Compared with many companies in other countries that closed down their businesses, in the Philippines its booming time and more expansion have been observed.
  4. Growing economy – an amazing growth of 6.4% GDP for first quarter where analysts only expect a growth of 5.00%.  This is approximately 60% more compared to our neighboring countries in Asia with only an average of 2% GDP.  I’ve been seeing this many times in local news and as brother Bo’s said, it’s a great time to “ride” this rocket thru the stock market.
    Go! Go! Go! Philippines! 

Use Your Wealth Wisely

I saw this article from the leaflets of The Feast Ortigas – a Catholic prayer meeting of the Light Of Jesus Family founded by Bo Sanchez.  Read and be inspired to invest!  Use your wealth wisely!

Join the Truly Rich Club

There was a man lost in the desert.  After a couple of days, he ran out of water.  Soon, he became so thirsty and still lost.  Suddenly, from afar, he saw a rusty water pump sticking from the ground.  He ran towards it.  Then, he grabbed the handle and started to pump.  But nothing came out of it.  When he turned around, he saw a pitcher filled with water.  Beside it was a paper with a message that read, “Don’t drink the water in this pitcher.  Instead, pour it on the pump.  And you’ll have all the water you want.”

Imagine you are that thirsty man who has not drunk water for two day and almost dying of thirst, what will you do?  Perhaps, you may be thinking, “What if this message is a big joke?”  The man in the story took a deep breath and poured the water into the pump and started to pump.  Soon, water was gushing out.  He drank all the water that he could take.  Then, he started filling his water containers.  Before leaving, he filled the pitcher with water.  Below the message, he scribbled the following.  “I tried it.  Believe me, it works.”

This is how growing our wealth works too.  We have two choices: Drink water now or drink water forever.  Spend our income unnecessarily now or discipline ourselves by setting aside a percentage of our income regularly and invest them wisely.  I pray that our talk today inspire you to choose the second option.

Be blessed.  Be inspired.  Be renewed.

Bro. Vic – Feast Builder

Photo Credit: http://farm8.static.flickr.com/7176/6916117023_a2c6d85a3b_m.jpg

Use Your Pain of Giving to Achieve Great Success: A Holy Week Special Message

Today I’d like to share this very special message from one of the talks given by Bo Sanchez in the 3-day Holy Week retreat held at Valle Verde Country Club in Pasig.

Because this is Holy Week, I promise that I won’t write too long today. Just enough to inspire you to give more to God.
So this WealthStrategies is very special.
Friend, Jesus gave His all to you on the Cross. And God calls you to do the same—to give your all as well.
Here’s my message: You can use the pain of giving to achieve great success.
Let me now talk about pain…

You Need Pain to Succeed in Life

I know people don’t like pain.
I know I don’t.
We avoid it at all costs.
That’s why many people avoid diets, doctors, and dentists.
Because we don’t like pain.
But let me give you a startling fact.
You need pain to survive.
You need pain to succeed in life.
In fact, all permanent success comes from pain.
Any success that doesn’t come from pain will be short-lived.
Check out lotto winners.
I was reading the story of Michael, a garbage collector who won $15 million from lotto. But after just a few years, he lost all his money and is now trying to get his old job back as a garbage collector.
Another guy named Jack won a staggering $315 million from lotto. But he too lost everything after less than 10 years. But he didn’t only lose the money—he also lost his family.
They’re not alone. Go ahead, google “Lotto winners lose money” and you’ll get hundreds of true-to-life tragic stories.
In fact, many lotto winners say it was a nightmare and wish they never won. Because of winning, their marriages broke up, their families disintegrated, their children turned to drugs, and they lost all their happiness.
Easy come, easy go.
I repeat: Real success comes from pain.
If it didn’t come from pain, it isn’t real success.

Hypothermia

Let me talk about hypothermia.
Hypothermia is a physical condition whereby your body’s core temperature drops below 35 degrees
Celsius and shuts down all functions. Including your ability to feel pain.
Remember Titanic?
Our hero Jack died of hypothermia.
And many people who escaped Titanic before it sank eventually died of hypothermia in the freezing waters of the Atlantic Ocean. Because they could no longer feel the pain, they just slept and drowned.
Mountain climbers conquering Mt. Everest, who get trapped in sub-zero temperature, try hard to wake themselves up. They intentionally give themselves pain to survive.
What does this have to do with you?

Do You Suffer from Spiritual Hypothermia?

I know of people who have Spiritual Hypothermia.
They’ve become so comfortable in life.
They’ve become soft. They’ve become lax. They’ve become sleepy. And their life has become meaningless. They have no more burning dreams in their lives. And they’ve started to die a slow death.
Why?
There’s no pain in their life.
I now realize that pain is essential to grow in any area of your life—spiritually, relationally, or financially.
How do you wake up from spiritual hypothermia? Pain.
In fact, there are three sources of inner pain.

The 3 Sources of Inner Pain

The first pain comes from Grief.
The second pain comes from Greed.
And the third pain comes from Giving.
I won’t anymore talk about Grief—because that’s self-explanatory. The most successful people in the world went through intense suffering—bankruptcy, sickness, catastrophe—before reaching the top. Their grief drove them to greatness.
Nor will I talk about Greed. You know that already. Greed is painful too, and it fuels many persons to work, work, and work, forgetting their families and health, just to earn another buck. Let’s face it. There are very wealthy (and unhappy) people out there who achieved their success because of greed.
Today, I’ll focus on the third inner pain that can cause you to succeed: the pain of Giving.

The Pain of Giving

Giving is self-imposed pain.
Giving is voluntarily chosen.
By the way, when you give, and you don’t experience pain, you didn’t really give. Your giving is fake.
When you give, it must hurt you.
When you give, it must shake you up.
When you give, it must disturb your existence.
When you give, it must wake you up from your complacency.
When you give, it must rock your world so much, it creates a hunger in you to keep on earning money so that you can keep on giving.
The Bible says, I will not sacrifice to the LORD my God burnt offerings that cost me nothing (2 Samuel 24:24).
That is why this pain heals.
This pain gives joy.
This pain blesses you.
It’s a cheerful pain!
This pain comes when you give.
Why?

Success Must Have a Reason

Success must have a reason.
And I have found my reason for success!
I’ve asked this question many times: Why do I keep working, striving, dreaming, growing, expanding, and increasing?
I have enough. Really.
My family and I have clothes on our back.
We have a roof over our heads.
We’ve got food on our table three times a day.
We even have family vacations.
I repeat: We’re okay.
Why do I keep working? Why do I keep expanding my businesses? Why do I try to earn more?
There’s only one answer: So I can give more.
So I can love more.
So I contribute more to God’s work.
So I can give more to God’s poor.
Oh believe me, I’ll never run out of dreams! Dream of the Kingdom is like the burning bush in my heart—unquenchable and eternal.
I pray that you find your reason for success.
I pray you transform your pain—either from grief or giving—into fuel. Fuel to reach your dreams.

May your dreams come true,


Bo Sanchez

The financial planning process

Here is another great and inspiring article from one of my mentors, Fely C. Santiago.  I’m sharing this for the benefit of those people who are still in the learning process of accumulating their wealth.

Most people never plan to fail; they just fail to make a plan. Why is there a need for a personal financial plan? Because when pay day comes, it’s always easier to spend, shop, and go on gimmicks than to save or invest some money. To most people the future seems so abstract. No wonder you hear a lot of them complain they have “no money”.  They work for 10 or 20 years, get promoted many times with corresponding increases in their salary, but still, they have no savings.  So they never get out of the “rat race”.  They worked so hard every day just to pay their bills.

It’s really not how much you earn but how much you keep that will make you financially secure.

Again why is there a need for a financial plan? Because it can help you achieve all your financial goals like retire in 20 years with P20 million; travel to Europe in five years; build your dream rest house in 15 years; or provide for the best college education for your children. A good financial plan will help you achieve these goals. When you have a plan, you will think twice before spending that hard-earned money.

A solid financial plan is very valuable. It provides direction. Without strategy and discipline, it is very probable to make impulsive and random decisions with your finances. When you see the big word SALE in the mall, or appliance MADNESS, you can easily spend your money even before you earn it by using your credit card.

Financial planning is a dynamic process that changes as your financial situation and position in life changes. The question is how to put financial plan in place? What are the steps?

Personal Financial Planning Process

Step 1 – Examine Your Current Financial Situation 

A good financial plan starts with a financial check-up to understand your current situation. How much money do you make? Where does your money go? Do you spend them on needs or wants? Do you have savings or investments? Do you have any life insurance or healthcare coverage? Do you have debts? What are your assets and liabilities? How much is your net worth? If you lose your income today, how many years (or months) can your savings last you?

To survive financially, you have to step back and see your big financial picture and see the big picture. It will require a lot of record keeping especially when it comes to your expenses. If you know where your money is going then it is easier to identify what you can eliminate or reduce in your expenses.  That way, you will have money to save or invest for the future. It will be a tedious process in the beginning to record all your expenses but it can be an eye-opener and the first step to take control of your financial health.

Step 2 – Identify Your Financial Goals

What are your dreams? When do you plan to retire? How much money do you need for the education of your children? Setting your financial goals is critical to create a successful financial plan. You can’t achieve your financial goals if you don’t know what they are. Defining your financial goals involves writing them down, putting a value in each of them and determining when they should be accomplished. You can classify you goals into short-term (one to three years — a wedding plan); medium-term (four to ten years – purchase of house and lot); or long-term goals (more than 10 years –college education of your baby)

You can use SMART guideline to set up your financial goals – Specific, Measurable, Attainable, Realistic andTime-bound. Your financial goals must have deadlines else you might not enjoy what you worked hard for. If you set up a goal to purchase a BMW in 2020, then by all means buy that BMW when you have the money at that time!

Also take note that as you age, your financial goals also change. Just keep in mind though that goals aren’t elusive.  Rather, as events happen and goals are achieved, they give way to other goals. Financial goals are like stepping stones. Without a solid financial plan as a solid footing, it’s easy to lose your step and get off-track from reaching your dreams.

Step 3 – Develop a Plan of Action

After analysing your current situation and defining your financial goals, the next step is putting a plan of action. What are the specific actions you need to take to bring you from your present financial position to the attainment of your financial goals?  Let’s say you want to retire in 20 years with P20 million, how much money do you need to save each month starting today? Which investment vehicle will you put it in? At what rate of return?  If your desired savings is less than what you can afford then define specific action to take to increase your cash flow to meet your desired savings or investment target.

In coming up with your action plan, you also have to take into consideration changes in your life or unexpected events. What if something happens and it turns out to be catastrophic and tragic? How do you get yourself protected? If something happens, you want to make sure that you have access to instant money to get you through that situation.

Specific action must address every aspect of your financial plan that would cover debt payments, income or asset protection, long-term healthcare, creating emergency fund, planning for retirement, college education, investment strategy and estate planning.

Step 4 – Implement Your Plan

I would say this is the most difficult part in the financial planning process – execution of the financial plan. Unless you implement your plans, then nothing will change in your financial life. You will never achieve your financial goals if you don’t implement your plans. Have a bias for action!

This step will require a lot of discipline like paying yourself first every payday so you meet your savings and investment targets.

To implement your financial action plan, you may need assistance of agents or brokers. For example, you may use the services of an insurance agent to purchase property insurance or the services of an investment broker to purchase stocks, bonds, or mutual funds.

Bottom line, just do it!

Step 5 – Monitor, Re-evaluate, and Revise Your Plan

Your financial plan will not stop when you implement it. As mentioned earlier, financial planning is a dynamic process and will have to be adjusted when there are changes in your personal, social or economic status. Periodically you must review your progress and assess your financial decisions. Birth of a new child will mean revising your financial plan as it can affect your cash flow, education plans or retirement plans.

If you seriously follow these steps, I assure you a sound financial plan will give you peace of mind. Uncertainty about finances creates a lot of anxiety. We all know money is the most common cause of marital stress and broken families. If you know where you stand financially, where you are going, and how you’re going to get there, you’ll feel more confident about your financial situation, about yourself and about your relationships.

If you haven’t started working on your financial plan, just follow these financial planning process and you’re on your way to financial freedom!

Original link to this article can be found here.

Understanding Pooled Funds – by Fely Santiago

I started investing in pooled funds in 2008; then the market crashed!  I was so scared in being a first time investor of pooled funds. But today, after two years of regularly investing, even as low as P1,000.00 each month, my rate of return stands at 30 percent. Not bad for an amateur. I wish I started this 30 years ago as soon as I started earning from employment.

What are pooled funds? They are investment vehicles that offer a higher rate of return compared to bank deposits but not without risk. They are measured in terms of net asset value per unit (NAVPU) or net asset value per share (NAVPS). There are two kinds of pooled funds here in the Philippines –unit investment trust funds (UITF) and mutual fund.

UITF versus Mutual Fund

The major difference is that UITF is a bank product managed by the treasury department. Unlike in mutual fund where you buy shares, you buy investment units in UITF. Therefore you do not have shareholders right when investing in the latter.

Although UITF is a bank product, it is not covered by Philippine Deposit Insurance Corporation (PDIC). This means investors bear the risk of losing their money. Additionally, UITF is not governed by any specific law but since they are offered by the banks, they are still under Philippine banking laws regulated by the Banko Sentral ng Pilipinas (BSP).

On the other hand, mutual funds have strict regulations from Investment Company Act of the Philippines which are highly regulated by the Securities and Exchange Commission (SEC).

So what is a mutual fund? Many people still don’t understand what it is.  Well, struggle no more. Mutual Fund is like a cooperative where you put your money together. It does not matter how much each member initially puts in. Some can put in minimum required amount which is P5,000.00 in most cases; and for additional investment,  as low as P1,000 pesos. This money is then handled by a Fund Manager who is responsible for fund allocations. The Fund Manager chooses which stocks or bonds to invest on. However, he is limited by certain guidelines of investments as promulgated by Securities and Exchange Commission.

Mutual Funds are offered by investment companies independently registered with SEC. Therefore, when you buy a mutual fund share, you become a shareholder of that company and you acquire the rights of a regular stockholder; including right to vote and right to receive dividends, among others.

Types of Funds

Financial goals and risk appetite will determine which fund is most suitable for an individual. The more popular funds one can get into are:

Bond Fund

This fund primarily invests in government-issued securities. It’s like giving your money to be used by the government with the promise that the government will pay it back with interest. In short, this is your money lend to government.

It is considered risk-free because the government has two ways of paying investors: print more money and raise revenues through tax collections. On the average, Bond Fund performs four to six percent a year.

Money market fund

Similar to bond funds, money market fund also has a conservative stance since they invest in fixed income securities. These securities mature in one year or less hence, the term money market. Money market fund performs two percent a year on the average.

Stock fund or equity fund

Equity fund primarily invests in shares of stock of listed companies. The bigger allocation of equities within the portfolio allows the fund to attain a more aggressive growth rate. Thus, this is riskier, more volatile, and can result to either higher gains or high losses. Since equity fund tracks the index, the rise and fall on a daily basis is reason for the volatility of the fund.

In 2008, Philequity Fund, one of more popular mutual funds lost 41 percent.  In 2009 however, it recovered and recorded a high of 65 percent! A lot of those who knew how to invest in the mutual funds earned a lot.  For the past 16 years though, Philequity Fund grew at an average of 20 percent despite the ups and downs of the market.

Balanced fund

Balanced fund invests in both bonds and equities. It combines the low-risk-low-gain of the bond fund and the high-risk-high-gain of the equity fund.

Instead of having the money allocated on the risky equity funds, or on the conservative bond funds, the money pooled together is invested by the fund manager on both giving investors the best of both funds. Balanced fund performs 12-15 percent on the average.

Today, there are a total of 42 mutual funds listed in the country. 20 of these are bond funds, nine are equity funds, eight are balanced funds while the remaining five are money market funds.

On the other hand, there are 78 UITFs listed in the country.  32 are peso bond funds, 21 are dollar bond funds, 10 are peso money market funds, five dollar money market funds, nine peso equity funds and one dollar equity fund.

Now that we know what mutual funds are, I challenge you now to transform this knowledge to action and reap the harvest later. If you invest on a fund that can earn a rate of 12 percent a year for the next 25 years at P1,000.00 pesos a month, you will be able to accumulate P1.8 million (P105,881 in present value).

Make that P5,000.00 per month and you’ll have P9.4 million after 25 years (P552,939 in present value). So who says, it’s difficult to accumulate millions?  Continue investing ten years longer and you’ll accumulate P32 million (P606,064.97 in present value)! The higher the rate of return, the higher your money will grow in the long run to meet your needs for retirement, child education and cash fund.

So there you are! It does not take you much money to accumulate millions. What you just need is the financial literacy how and where to invest; and the discipline to put in small amounts on a regular basis that will soon accumulate to millions.

Now that you know what are pooled funds, don’t delay. Start investing NOW!

Original post can be found here.