2015 Year-ender: Thank You

I always loved sunsets, and as 2015 ends, it feels like watching another serene sunset, to end not the day, but the year.

To say that 2015 was a tough year for investments is an understatement. We had a tough 2014, we thought we have recovered at the start of 2015, only to end lower from where we started the year.

It was a tough ride for all those who were invested in the market. Including yours truly. Some notable factors throughout the year:

Hot Money
Hot money’s been flowing out of our stock market as they are slowly making their way back to supposedly improving USA. The foreign funds have been a very big factor in our market’s uphill climb, because they really have a lot of funds to buy up our emerging market. Getting out of our market has been a slow grind for them since they have sizable holdings while our local market (who would be the buyers) can only buy so much at a certain acceptable price in one day.

The Fed has finally started to increase its rates after years of waiting, and with this I hope we are a step closer towards the new normal. Who knows what this new normal will bring to the Philippines.

Global Economies
Everyone’s slowing down, that’s for sure. And it ain’t a bad sign, but if investors factored in a faster growth than what we’re seeing, then some correction is indeed needed. China’s slowing down, EU concerns linger, among others.

Black Swan Events
A war with ISIS involving many nations? A massive earthquake in the country’s capital? Effects of El Nino? Who knows.

Local Landscape
We’re entering an election year and they say elections have been generally good for the country’s economy, hence the stock market. Will this year be any different? Could this be a good 2016 catalyst given that PH is also slowing down on its economic growth?

On the other side, investors are also cautious on being long with our market since there is no clear front-runner yet on the country’s next leadership. Whoever wins, s/he will be crucial in steering the country to the right directions of sustaining growth, and trickling down this growth to the grassroots and countryside levels.

Personally I am still clueless as all candidates have lingering issues which can make or break their candidacy, and their Presidency should they win later on.

Diversification
It’s so hard to achieve growth in one’s net worth when majority of his investments are in the market. That’s why I’m very thankful nonetheless that despite the punishing market conditions, I still managed to grow my net worth by 33%. That is despite losses in the stock market and one-off expenses for wedding preps. I started the year with the goal of just retaining my 2014 year-end net worth so the 33% increase is a big windfall. Also excited for my 2016 financial goal-setting.

MPI, COSCO, AC and DNL have all managed to squeak some gains despite the 4% loss in the 2015 market. Meanwhile, gains made from CEB and MBT have been trimmed down. FPH, my forever patient holding, is still giving me some heartache but I’m still holding on.

Got burned when BLOOM became bust so I had to cut losses. Was able to ride some exciting moments in a handful of this years IPOs though. Still ended with some portfolio paper losses which could have further boosted my net worth.

Next year, stock market and UITF will remain as significant parts of our holdings, but diversification will be the major strategy. Time to grow further the coffee business and time to put in more effort in growing the farm business (more on this next year). Go back to cattle and piggery business? Transport business such as taxi or Uber? Time to diversify to other business ventures being considered.

2016 Let’s Bring It On
A new day, a new year beckons. Cheers to good health and an even more prosperous 2016 for every Juan! Thank you Lord for 2015.

Photo: Sunset at Kabini River (CC BY 2.0) by  VinothChandar 

My Coin Bank Gives Me Better Yields vs PHP100K 3-Year Time Deposit

On my way to a local bank to once again deposit the coins I saved through my coin bank.

Started the practice last year wherein I was able to save PHP5,200 after 39 weeks (9 months).

This time, was able to save PHP3,400 only after 16 months. Still, the fulfillment and discipline is there.

Every end of day or end of week, I empty my coin purse of PHP5s and PHP10s and put these inside a coin bank, just to keep up the habit of saving even in small amounts. Can’t see it, can’t spend it.

Admittedly, daily averages are down, from PHP19.19 last time to just PHP7.00 for this batch. Expense levels this year are exceptionally higher due to wedding preps, plus the downward direction of the market (so more buying / investing instead of loose change). 

Still, as in all investments, it’s always a matter of perspective and attitude.

PHP3,400 in 16 months translates to PHP2,518 in 52 weeks, annualized. PHP2,518 gain in 1 year.

Compare that to a PHP100K time deposit with an annual rate of 1.125% (subject to 20% income tax).

It will earn PHP900 on its first year. Roll-over both principal and interest, it will give you PHP908 the following year for a cumulative gain of (900 + 908) = PHP1,808. So on and so forth.

You have to give yourself more than 3 years to earn at least PHP2,724, your PHP100K just sitting there. And I did that in 56 weeks (13 months), without even needing a PHP100K, of needing the PHP100K to be parked there.

So don’t belittle the power of saving little amounts in a coin bank. It can do you wonders, as long as you have the right mindset, perspective and discipline. 

As for the PHP5,200 I deposited 64 weeks ago, it has now earned additional interest. Sort of interest on interest. That’s money making more money for you.

What to Expect from a ForEx Seminar

Guest Post

As Filipinos, we are rather hands-on with our approach to doing things. For example, we prefer going to malls and physically shopping over buying items online. This trend extends to our investments, where I notice that most Filipino investors would rather attend actual seminars than just studying online courses.

Since you’re reading this blog, I’m assuming many of you have already attended financial seminars before. The most popular seminars are usually those that deal with general investing, real estate, insurance and stocks, with the latter three being some of the most popular types of investments locally. But since I am involved in the forex industry, I’d like to give a different perspective for readers who are considering FOREX as an investment. Specifically, let’s see what topics you’ll typically encounter in a fore seminar.

Start with the basics

Forex seminars will often begin with a short background of the market. Typically covered during these types of seminars are the unique characteristics of the forex market and the features that differentiate it from other investment types. Typically, these seminars will also discuss the main differences between the forex market and the stock market, as these are the two types of investments with the most overlap.

While you probably won’t really learn anything concrete when it comes to the mechanics of forex trading from this introduction, it serves as a good way to get to know the market and what you can expect from it.

Fundamental and Technical Analysis

Once you’ve gotten a good understanding of the forex market as a whole, the next step would be to understand what affects currency prices. Currency prices are dictated by a number of factors, such as interest rates, employment data and GDP, just to name a few examples.  The study of these factors is called fundamental analysis, a term you might have encountered with other investments before. However, unlike stocks, which deal with companies, fundamental analysis in forex trading examines countries and their economic health.

Another important thing you’ll learn during forex seminars is history. No, it’s not history like Heneral Luna, but rather, about how historical data can affect future price movements – a study also known as technical analysis. If you’ve ever encountered a trading platform, you’ve probably seen the different types of charts that pop up on the terminal. Well, when you use technical analysis, you’ll be dealing with a lot of charts and how they form reasonably predictable patterns.

Risk Management

 

As forex trading is an inherently high risk-high reward investment, forex brokers will advise their clients to practice effective risk management. Thus, one of the frequently taught topics during forex seminars is proper use of risk management. Risk management is not limited to a single method – in fact, there are many different kinds of strategies involved, ranging from the use of platform tools to personal emotional control.

Putting it all together

Once you’ve gotten the basic essentials of forex trading down, it’s time to use what you’ve learned. Forex seminars often have portions during which attendees will be given demo accounts, where they will be given the opportunity to trade under actual market conditions.

If you’re really interested in this investment, I think it’s a good idea to attend a few seminars. While it’s possible to learn forex trading by yourself, there’s no substitute for learning from actual market veterans. It will also be a good way to expand your network of investment mentors. At the very least, you’ll get an idea if forex trading is an investment that fits your personal needs. You won’t lose anything by joining, so why not give it a shot one of these days?

 

About the Author:
Bwayan Jordison, is a contributor and Forex Trader at Metisetrade Inc., he writes articles to help and educate everyone about the benefits of investing to Foreign Exchange in the Philippines.

7 Factors that Affect Real Estate’s Longevity

Guest Post

When you are looking for a new home or starting a home renovation, it is important that you understand the factors influencing the value of the real estate of your interest. This is necessary because most Filipinos are required to have a homebuyer’s loan or to refinance loans in the Philippines when commencing with home buying or renewal. Moreover, all providers of loans in the Philippines, whether they are specialist loan providers or banks, require a guarantee of repayment.

For the majority of homebuyers, purchasing real estate is an asset, which could be used to keep a roof over their heads, as an investment for resale, or to gain rental value in the future. No matter the purpose, you, as a potential home-owner, should be mindful of some factors before taking out loans to purchase or upgrade a home.

The appreciation of property value is a benefit that investors like to see. However, it is vital for you, the loan holder, that the property doesn’t depreciate below the value of your loan. Banks and loan providers err on the side of caution when providing a home loan. This is done so that if the worst was to happen and the loan becomes left unpaid, they can be sure that through repossession of the property, full repayment of the loan can be ensured.

To aid your decision-making process, listed below are a few factors that can affect the appreciation or depreciation of a real estate investment. 

1. Location

Everyone has heard the axiom “location, location, location”, and the reason it is such a prevalent cliché is because there is truth behind it. Proximity to employment centers, medical facilities, shops, and schools is a determining factor for many families and young couples when buying a home. Proximity to a wide array of local amenities and good transport links increases the value of your potential property. 

2. Geographical Stability

This is a condition specific to areas of geographical or geological instability. Areas that are prone to the effects of natural phenomena, such as flooding, tsunamis, earthquakes, or volcanic activity, are poor choices when buying property. You would be considering the aspect of your family’s safety, in addition to your loan viability and your insurance costs. 

3. Age and Condition

The age of a property doesn’t automatically reduce its value. However, the condition of a property makes a huge difference. An old but well-maintained property can achieve a valuation that is the same as that of a new build of equivalent specifications; sometimes, even higher.

Keeping your potential property well-maintained will keep its value high. When you take out home loans in the Philippines, you should remember that the property must retain the level of valuation at the beginning of your loan, or a higher level of valuation.

4. Size and Improvements 

The size of a home affects the initial value of the property. However, making poor renovation choices will cause your potential house to depreciate in value. Increasing the number of bedrooms and bathrooms is a good move to increase the value of your home, whereas removing walls and facilities or reducing the number of bedrooms is not.

When you are approaching a provider of loans in the Philippines for a home improvement or refinancing package, you should address how much the modifications will increase the value of your potential or existing property. The benefit should be equal to or more than your loan.

5. Population Movement

In our country, population densities move to areas that are more attractive. This is a slow process and can be difficult to predict or identify. However, you should understand how this phenomenon may affect the value of your potential property. 

If the employment hub of a city moves from the center of the town to the outskirts, half of the city will have to travel farther to work, reducing the value of a real estate property in terms of its ‘proximity to employment hub’ factor. The other half of the city in turn receives a boost to their property values for being closer to the employment hub. 

Growing cities grow that envelop neighboring towns and villages can have both a negative and a positive effect on properties within the area. For development purposes, land will be in demand and will commend higher value. However, homes in the area may depreciate because the development planned isn’t compatible with a residential area.

6. Legalities, taxes, urban zoning, etc.

Taxation zoning, government development, and economic stability play a role in the longevity of real estate. Changes to zoning within a town or a city can affect the value of a property. 

Increased taxation in the center of the city will decrease the value of residential property in the area, making it cheaper for residents to live outside the center and commute.

Likewise, rezoning part of an area previously classed as residential to an industrial development may cause a decrease in value of adjacent properties.

Conversely, this could also increase levels of property value by introducing a new employment hub.

7. Surrounding area

No one can predict the future, but when you are buying property, you should pay attention to the surrounding area. Homes built in developing areas are subject to the whims of the developers operating in the vicinity. Paying close attention to the developments that are in motion (or those planned) for the areas adjacent to your property will be a key factor in determining the increase or decrease in value of your real estate investment. 

These are just some of the main factors that can affect the longevity of a real estate venture. It is essential for you to pay attention to these factors when considering taking a loan to finance a home. The current value of a property is only the first step in deciding whether or not it is a worthy investment. Your loan provider will also look into the long-term viability of the loaned money secured on your potential property. Therefore, it is always best to be informed.

 

 

Kash Martinez, understands the intrinsic attributes of making excellent content that suits the needs of every business especially when it comes online financing. She can conceptualize and implement marketing plans, explores profitable B2B opportunities and then absorb Loan Solutions PH services.

Photos:
Property for Investment/Rent/Selling/Real Estate by  MarkMoz12 

Other Photos from contributor

COL Financial Mutual Funds and Android App

I got an email from COL Financial informing me that I can now buy and sell mutual funds via their website. Finally!

I think it was late last year when they disclosed that they are indeed working on this feature with various mutual fund providers. At least now, one need not open various accounts with the brokers, just this one Col Financial account, and still have access to various funds with diverse performances.

One just has to access this tab which can be easily seen in the home page.

Before buying, one will have to take the obligatory risk assessment questionnaire first (similar to UITFs) before posting one’s orders. The assessment will give out a list of funds that are matched with the assessed risk appetite. In case one wants to buy funds that are beyond the assessed risk appetite and capacity, one simply needs to tick the waiver box and signify that s/he is aware of the additional risk taking.

I haven’t bought one yet and still exploring the offerings. Information per fund includes minimum first investment, succeeding investment amounts, fees and charges, and more importantly, the holding period and historical performance per fund. Pretty much all the information you need in a mutual fund. Some links still feel glitchy or lagging in response, which I assume shall be improved as this portion of the site matures.

Still, this is certainly good news for those who are itching to diversify in other funds but don’t know where and how to start. Risk on!

---

I just downloaded the COL Financial app for Android, and frankly, it does not look too good. I still prefer the web browser-based look, maybe because I’ve been used to it for 8 years now.

To download, just access the website through your android phone, click on the “Downloads” link at the home page, then voila!.

It will need more familarization to use this app, and I’m not really sure whether I’ll use it since I do most of my trades using a laptop anyway. Looking forward to more improvements on this app.

How You Should Spend Your Loan… And How You Should Not

Guest Post

Your loan has passed approval; you have completed the documentation and the funds are in your checking account. What will you spend your loan money on?

In most situations, there is a specific reason for you to take out loans in the Philippines. Whether you needed a business bridging loan, home loan, car loan or personal loan, you needed the additional financial freedom to achieve something specific. Therefore, you know how to spend your loan and in case of secured loans, the bank or other secured loan providers know too.

In some cases though, you may have taken a personal loan or a home equity loan for a specific purpose, but eventually you find that you no longer needed the extra money. For instance, you may have intended to install a new bathroom, but the shop had reduced the fixtures to half the original price when the bank granted your loan. Such good fortunes (and cash windfalls) do occur occasionally . So, how will you spend the available money?

How you should spend your loan:

1. Use it for the item or project, which you originally intended

It may not be possible; the business opportunity may have passed or the item you wish to buy may have gone to someone else. It may be that you have had a miraculous recovery from a medical ailment, which no longer requires a lengthy hospital stay.  However, if you have taken out a specific type of loan, ensure you stick to spending your loan as intended. Even if the business opportunity passed, keep the money safe so that it is available the next time the opportunity comes up.

2. Take up another project that will generate returns

With some specific secured loans in the Philippines, there should be a clause to allow you to return the whole amount within thirty days of drawing out the loan. However, if you have passed this point of being able to return the loan amount, without incurring an interest charge, you may want to find another use for the money you borrowed. 

3. Use it to replenish savings fund

If you have taken out a home or car loan, the chances are that the down payment has wiped out your savings. Using any of the funds left over from your loan to replenish your savings fund is a good way to leave yourself a buffer for future financial constraints.  It is always better to have savings, small or large, as a failsafe in times of financial uncertainty. The recent global economic crisis has made us all aware of this.

4. Make improvements to your home or business

If you have bought a new house or have taken out a home equity loan, you should best use any additional funds to improve your home. Homes depreciate if not well maintained, but will appreciate if you make improvements. Make that spare money work in your favor. Likewise, if you have taken out a business loan, you should invest the money into your business by improving some processes or mounting an ad campaign.

5. Pay of a smaller debt or a higher interest source

If you have enough to completely clear one or smaller debts with higher interest rates, do it. With most personal and home equity loans, the interest rates are far lower than those of credit and store loans. Therefore, you will save a significant amount on the interest payments if you can clear out these smaller debts.

How you should NOT spend your loan:

1. On a frivolous spending spree

It can be very tempting to have a spending spree when you have available money. It may seem a nice idea  when you have some spare cash you were not expecting to have, but being frivolous with your money is never a good idea. Taking out loans in the Philippines is not an excuse to indulge a shopping habit.

2. On nothing 

This is not the same as not spending the money you have available. This means that if you are going to spend the loan money you have available, do not spend it on intangible things. Spending unexpected money on things such as cable television installation or cosmetic treatments and procedures that have no intrinsic value other than making you feel better or happier is not a good idea. 

3. On trading stock or currency options

You should not use a loan from a bank or lender to speculate on stocks and bonds or currency markets. These markets can be erratic and unless you are already an experienced trader or broker, you are unlikely to make a profit and you are more likely to lose the money with no significant chance of return. 

Remember that if you are going to borrow money from the bank and pay interest, you need to be sure that you are spending the money wisely in a way that will bring a greater return than the interest you will pay. Most loans in the Philippines have safeguards in place to allow for total repayment in the situations where the loan is no longer required or for partial repayment if the required amount is significantly higher than the loan approved and granted.

Poor spending choices can turn a loan investment into bad debt. Carefully consider the types of loans in the Philippines that you choose. Conditions and repayment terms may also be useful to note if you wish to make a lump-sum partial repayment. 

 

 

 

Contributor:

 

Kash Martinez, understands the intrinsic attributes of making excellent content that suits the needs of every business especially when it comes online financing. She can conceptualize and implement marketing plans, explores profitable B2B opportunities and then incorporate Loan Solutions PH services.

 

Photos: From Contributor

The 3 Different Types of Pinoy Savers

Guest Post

Truth be told, most Filipinos are not blessed with a lot of opportunities to grow their savings and earn bigger income. Our economy is not really in the best shape to provide such opportunities for the average Filipino household. 

On the bright side, it has taught many of us to be wiser when it comes to our personal savings, budget, and investments.

And quite frankly, we can tell the different types of savers and their pros:

The Practical Saver

This is the generic Filipino saver who firmly believes that the less you spend, the more you save. This is true considering that limiting your expenses is a reliable way to save more by the end of the month. In fact, most other types of savers are practical savers to an extent. But the practical saver resorts almost exclusively in economic choices such as jeepneys, affordable phones, value meals in fast-food restaurants, and simple clothing to maximize their savings.

The Advantage:

The bulk of a practical saver’s earnings usually goes straight to a savings account. While comfortable, safe, and reliable, the practical saver is probably hesitant to take risks in investment opportunities that can grow their income faster. Lastly, this type of saver will do well with a time deposit account since they can easily stick to a strict budget.

The ‘Bahala-Na’ Saver

This type of saver thinks that it is enough to maintain a savings account to be financially stable in the future – if financial security is even in this type of saver’s mind. Sure, they put some of their money on a savings account and probably have a steady source of income. But as far as their expenses go, they are definitely far from being economical. 

The Advantage:

Apparently, this type of saver considers getting discounts as means of “saving money”. Though it may not be the best way to save money for the future, they are keen when spotting good deals and more willing to take them than practical savers. Perhaps, their only advantage is they’re always on the lookout for discounts. Hence, they are among the first to avail of the latest credit card promos and deals. 

At one point, most Filipinos probably experienced having the ‘bahala-na’ attitude. Some people eventually realize the need for better saving measures, while others may be unable get out of this mindset for several years. In time, you need to learn when to put down your credit card; BDO, Metrobank, BPI to name a few.

The Risky Saver

The risky saver believes in one thing: money should work for you. They dislike being called as mere savers and prefer the word investor instead. It doesn’t matter if it’s a small sari-sari store, a street food business, stocks, or mutual funds. If you invest money for more sources of income, then you can be considered as a risky saver.

The Advantage:

They may not be as economical as practical savers or as indifferent as ‘bahala-na’ savers, but they are definitely aware of their financial status and will prioritize on getting bigger income. They may not be financially stable or successful now, but this type of saver can have a brilliant financial future simply because of the willingness and courage to take risks. Of course, they back this up with the diligence to do research and learn how an investment works from the ground up.

 

Jen Agustin is a writer/digital marketing supervisor for eCompareMo, a complete online comparison portal for Filipinos looking for quick, secure, and complete banking and insurance information in the Philippines. She love to travel whenever she can.

Photo contributed by guest writer.