Credit Card Debt

Please help me, I'm deeply in debt with credit card.

As I discussed in “WEALTH WITHIN YOUR REACH; PERA MO PALAGUIN MO!�, the highest interest rate charged for loans is the interest on credit cards. That is why you should only use your credit card for emergencies and not for regular purchases. When you are not able to pay the complete amount in your statement, the amount due becomes a loan.

Since you now need to pay off your credit card loan, I suggest that you put all the money you can spare to paying your credit card bill. Just keep what you need to eat, and to pay your rent and utilities, in other words, your basic needs. You will really have to tighten your belts until this is fully paid. You will be in bigger trouble if you don't do that very quickly. You need to really work out a program to reduce your credit card debt over a specific period of time.

The first thing you should do is to sit down and carefully talk about your finances with your wife or husband, cut your expenses drastically, sell whatever you can sell to get out of your credit card debt immediately.

Next, you should do is to negotiate with your credit card company for a lower interest rate. You can do this by surrendering your card and basically telling them that you cannot afford to continue with their high interest rates and that from now on, you will just be paying down your balance. This way, your monthly payment will be reduced greatly! It is best to always be open and straightforward with your creditors.

Ang pinakamahal na utang ay ang credit card loan. Dapat mong sikapin na magtipid hanggat maaari upang mabayaran ito sa lalong madaling panahon.

Una, dapat kausapin mo ang iyong asawa at gumawa kayo ng masusing plano na isusulat ninyo. Pagkakasunduan ninyo na sa takdang mga araw ay bayad na ang ilang porsiyento ng inyong credit card loan hanggang tuluyan na itong mawala. Kung kinakailangan, ipagbili ninyo ang iba ninyong ari-arian upang bayaran ito.

Pangalawa, kausapin rin ninyo ang credit card na nagpapautang sa inyo upang bigyan kayo ng palugid sa pagbabayad na bawas ang interes. Isauli ang credit card sa kanila at sabihing hindi ninyo kaya ang mataas na interes at magbigay kayo ng “payment schedule� na mapapawi ang kabuoang utang. Ito ay dapat ibatay sa masmababang interes. Natitiyak ko na papayang and credit card company sa ganitong paraan.

--------------------------------------------------------------------------------------------------------

Government Securities

--------------------------------------------------------------------------------------------------------

How to Compute

What is the formula to compute future value in the examples given in “WEALTH WITHIN YOUR REACH ; PERA MO PALAGUIN MO!� or during the TV programs?

The formula for computing future value on ordinary annuities (i.e. a set of equal payments made at equal interval of time) is:

FVⁿ = [R ( 1 + i )^nt - 1] / i

where:
FV = Future Value
R = (Monthly Payment x 12)
i = interest rate per annum
n = number of compounding per year. The effective annual interest rate varies on the number of times you compound per year. For example an annual rate of 10% has an effective rate of 10.47% p.a. if compounded monthly. If compounding is monthly the effective interest rate is 10.47% p.a.
t = number of years

A simpler way of doing this is as follows:

Principal x (1 + interest rate) = Total Amount at the end of the year (Future Value)

If you leave your interest with the Principal (Future Value of the formula above) and again compute using this formula for end of the second year, your interest is compounded.

Again you leave the interest of the second year with the new Future Value and again compute using this formula for the end of the third year etc. etc.

Of course, I use a financial calculator that computes all of these very quickly.

Mahirap magtuos ng walang financial calculator. Ang dapat lang intindihin ay ang interes na kikitain mo ay dapat ilagak muli upang kumita ng interes at ang interes ng iyong interes ay ilagak muli at ipagpatuloy ito ng walang patid. Hindi dapat ilalabas o gagastusin ang interes hanggang naabot mo na ang iyong layunin.

--------------------------------------------------------------------------------------------------------

Investing in Pesos or Dollars

Your decision on whether to convert into US Dollars or place in Peso bonds depends on your financial status and goals. These will become clearer when you make your Statement of Asset and Liabilities (SAL) and Personal Income-Expense Statement (PIES) and write your financial plan.

You can use the sample SAL and PIES (Chapter 7) as well as the financial plans (Chapter 9) in “WEALTH WITHIN YOU REACH: PERA MO, PALAGUIN MO� as guides for this very important step.

Ang iyong desisyon kung dapat mag-convert sa US Dollars o mag-invest sa Peso bonds ay nakasalalay sa iyong kalagayan at mithiing pinansyal. Magiging maliwanag ang mga ito kung gagawa ka ng iyong Statement of Asset and Liabilities (SAL) at Personal Income-Expense Statement (PIES) at susulat ng iyong planong pinansyal.

Maaari mong gamitin ang mga halimbawa ng SAL at PIES (Chapter 7) gayundin and planong pinansyal (Chapter 9) na nakapaloob sa “WEALTH WITHIN YOU REACH: PERA MO, PALAGUIN MO� bilang gabay sa importanteng hakbang na ito.

An important thing to consider in converting to US Dollars is how the exchange rate moves. Unfortunately, no one can tell how the exchange rate will move in the future. Aside from this, dollar placements have lower interest rates compared to the Philippine inflation rate.

Because of this, you will only gain from investing in dollar placements IF the Peso-Dollar rate continues to decline at a rate that will more than make up for the low dollar interest rates. For the last two years, this has NOT been the case. For example, if your dollar earning rate is 3%, the Peso must decrease by at least 5% per year for you to beat the Philippine inflation rate. This is just like earning 8% on any Philippine instrument.

Ang pinakamahalagang bagay na dapat isaalang-alang sa pag-convert sa US Dollars ay kung paano nagbabago ang exchange rate. Sa kasamaang palad, walang makapagsasabi kung paano tatakbo ang exchange rate. Bukod ditto, mas mababa ang interest rate ng dollar placements kaysa inflation rate ng Pilipinas.

Dahil dito, magiging lamang ka lang KUNG ang palitan ng Piso sa Dolyar ay patuloy na bababa para makabawi sa mababang interes ng Dolyar. Sa nakaraang dalwang taon, HINDI ganito ang nangyari. Halimbawa, kung ang earning rate ng Dolyar ay 3 %, ang Piso ay kailangang sumadsad ng 5 % bawat taon para makapantay ka sa inflation rate ng Pilipinas. Katulad din ito ng pagkita ng 8% gamit ang isang investment sa Pilipinas.

Having said these, if you want to convert to dollars and if you are still young, I would advise that you build up your dollar savings partly through the dollar mutual fund of PhilEquity with an initial minimum amount of $2,000. Since your goal is long term, you should not worry about the daily changes of the Dollar-Peso exchange rate. The Peso, after all, is pegged to the Dollar and Dollar inflation is low compared to the Peso inflation rate.

Kung nais mo talagang mag-convert sa dolyar at ikaw ay bata pa, ang payo ko ay palaguin ang iyong dollar savings sa tulong ng dollar mutual fund ng PhilEquity na may initial minimum amount na $2,000. Dahil matagalan ang iyong pananaw, hindi ka dapat mag-alala sa araw-araw na pagbabago sa palitan ng Dolyar sa Piso. Tandaan na ang halaga ng Piso ay nakabase naman sa Dolyar at ang inflation ng Dolyar ay mas mababa sa inflation ng Piso.

You can also invest your dollars in other Dollar mutual funds. Names of these funds are in the list daily printed in the Philippine Daily Inquirer and Business World. Fixed income and balanced mutual funds have less risk than the pure equity funds.

Maari mo ring i-invest ang iyong dolyar sa ibang dollar mutual funds na nakalista sa Philippine Daily Inquirer at Business World. Mas mababa ang risk ng fixed income at balanced mutual funds kaysa pure equity funds.

Foreign exchange is a tricky subject. A word of advice, as in any investment, spread your risk. You should not put all your savings in foreign exchange unless perhaps you plan to live abroad. You must be very clear on what you want to achieve every time you invest. Pay close attention to the amount you expect to earn and the period of time you expect to achieve this.

Hindi madaling paksa ang foreign exchange. Isang payo lamang - tulad ng lahat ng investment, huwag ilagay lahat ng ang ipon sa foreign exchange maliban kung may balak kang manirahan sa ibang bayan. Dapat maging maliwanag ang mithiin kapag nag-i-invest. Pag-aralan mabuti ang halaga na gusto mong kitain pati na rin ang panahon kung kalian mo gustong kitain ito.

--------------------------------------------------------------------------------------------------------

All About Mutual Funds

Mutual funds take the stress away from small investors who want to invest in the financial markets. This is because mutual funds are handled by competent and professional fund managers who choose the right investment for them. It is important to choose the better managed mutual funds since there is no guaranteed return on your investment.

Ang mga mutual funds ay ang pinakamadaling paraan ng pag-invest sa financial markets dahil sa mutual funds, nakakasiguro ang mga maliliit na investor na mahuhusay at propesyonal ang pumipili ng tamang investment para sa kanila. Importanteng piliin ang mutual funds na magaling ang palakad sapagkat walang pangakong kita sa mga naglagak ng kanilang naipon.

A mutual fund is simply a company that sells its shares to investors. Money pooled from selling these shares are used by experienced fund managers to buy carefully selected securities, stocks or other assets, which are in line with the objectives of the fund. Mutual funds allow small investors to raise enough money to take advantage of higher yielding investment opportunities and enable them to buy more types or units of investment, instead of being limited to only one or a few.

Ang mutual fund ay isang kompanya na nagbebenta ng shares sa mga investor. Ang pera mula sa mga pinagbiling shares ay ginagamit ng mga batikang fund managers para pumili at bumili ng mga securities, stocks at iba pang assets na ayon sa layunin ng fund. Dahil dito, makakayanan ng mga maliliit na investor na magsama-sama upang bumuo ng sapat na pera upang makibahagi sa investments na mas mataas ang tubo at makabili ng mas maraming uri o maglagak ng mas malaking investment, sa halip na matali sa iisa o iilan lamang.

For example, if you had PhP50,000 to invest and wanted to invest in the stock market, you would probably be able to buy only a few shares of one or two companies. However, if you invested the PhP50,000 in a well managed mutual fund, your investment will be spread over numerous companies in which the fund is invested. A good assortment or mix of investments, or what is called a diversified portfolio (think of putting your eggs in many different baskets), is an effective way to lessen your risk.

Halimbawa, kung mayroon kang Php50,000 at gusto mong mag-invest sa stock market, ikaw ay makakabili lang ng kakaunting shares ng isa o dalawang kumpanya. Pero kung mag-i-invest ka sa isang mahusay na mutual fund, ang iyong investment ay mailalagak sa maraming kumpanya kung saan nai-invest ang fund. Ang isang maayos na kumbinasyon o mix ng investments, o yung tinatawag na diversified portfolio (isipin mo na inilalagay mo ang iyong mga itlog sa iba't-ibang basket), ay isang mabisang paraan ng pagpapababa ng risk.

Investing directly in stock markets is better left to the experts. By investing in mutual funds, you can be assured that qualified fund managers are actively and constantly monitoring the stocks and bonds in the fund's portfolio. Compared to an inexperienced individual investor, fund managers have highly-developed expertise needed to select quality investments.

Ang direktang pag-i-invest sa stock market ay mas mainam na iwan sa mga eksperto. Sa pamamagitan ng mutual funds, makakasiguro ka na may mga kwalipikadong fund managers na aktibo at patuloy na magmo-monitor ng mga stocks at bonds sa portfolio ng fund. Kumpara sa isang bagong investor, ang mga fund managers ay may kasanayan sa pagpili ng investment na mataas ang kalidad.

Earnings of mutual funds grow more because it follows KSK Commandment # 6 - the principle of compounding. Gains from the sale of equity or fixed income securities of the mutual fund are REINVESTED into the purchase of new equity or fixed income securities for the same mutual fund. Therefore, when you finally sell your shares in the mutual fund, you already reap the benefits of compounding the earnings of your investment.

Ang kinikita ng mutual funds ay lumalago dahil sa Commandment # 6 ng Kalayaan Sa Kakapusan (KSK) – ang compounding. Ang kinikita o tinutubo sa pagbebenta ng equity o fixed income securities ng mutual fund ay INI-INVEST ULI at ipinambibili ng bagong equity o fixed income security para sa nasabing fund. Kaya naman pag ipinagbili mo na ang iyong shares, sigurado kang nag-compound na ang kita ng iyong investment.

In addition, mutual funds invest in stocks and securities that are subject to final withholding tax. Investors in mutual funds are no longer subject to this tax. Last and certainly not least, mutual funds can be turned into cash at any time at the current market price.

Bukod pa rito, ang mga mutual funds ay ini-invest sa stocks at securities na pinapatawan ng final withholding tax. Ang mga investor sa mutual funds ay hindi na pinapatawan ng ganitong buwis. Sa pagtatapos, ang mutual funds ay maaring gawing cash sa anumang oras sa umiiral na market price.

Please note that each mutual fund has its own terms and conditions. We suggest that you talk with the managers of the mutual fund you are considering to invest with to determine if their product fits your own financial objectives.

Dapat isaisip na bawat isang mutual fund ay may kani-kaniyang terms and conditions. Iminumungkahi naming makipag-ugnayan sa mga fund managers ng mutual fund na iyong napipisil na pag-invest-an para malaman kung ang kanilang mga produkto ay ayon sa iyong mga financial objectives.

---------------------------------------------------------------------------------------------------------

Comparison of Mutual Funds and UITF

In addition to MFs, there are now UITFs, which is a new type of investment in the Philippines. It is managed by a Trust institution which is usually a bank with a trust license. Not all banks have a trust license. UITF replaced the Common Trust Funds (CTF) to follow international best practices. Wala na ngayong CTFs.

Trust institutions are not part of banking operations. Therefore, UITF, is not a "deposit product". It does not carry a guarantee and it is not insured by Phil. Deposit Insurance. Corp (PDIC).

Trust institutions earn only thru management fees and it is the obligation of the trust institution to give to the client everything that has been earned by the fund. This is why trust funds usually perform better than bank investments such as savings and time deposits.

May mga nagsasabi na ang trust fund manager ng isang bangko ay baka piliin lang ang mga produkto ng sariling bangko para paglagakan ng pera ng UITF at hindi ang iba't ibang produktong maaari pang paglagakan. Kung totoo man ito, kung ang bangko ay kilala at mahusay ang palakad, malamang magaling naman ang mga produktong iniaalok nila. Ang mahusay na bangko ay laging mag-iingat sa reputasyon nila.

There are some differences in the management policies of MFs and UITFs but as a general rule, these do not really affect the possible earnings of the investor. In the final analysis, the important concerns are:
1) Reputation of the fund manager,
2) Entrance and exit fees,
3) Minimum investment required for those whose funds are limited,
4) Type of fund…fixed income, equity, balanced or money market, and
5) Customer service

May kaunti pang kaibahan ang pamamalakad ng MFs at UITFs ngunit wala naman itong malaking kaibahan sa kikitain ng namumuhunan. Ang dapat intindihin ay:

1) Ang reputasyon ng fund manager. Para sa MF, ang fund manager ay isang korporasyon at para sa UITF, trust division ng isang bangko. Dapat tingnan ang mga pangalan ng Board of Directors sapagkat hindi magpapagamit ng pangalan nila sa mga hindi kanais-nais na fund manager o bangko ang mga respetadong tao.

2) Ang entrance at exit fees ng bawat klase ng MF at UITF ay naiiba. Kayat kailangang intindihin itong mabuti upang hindi malugi at madagdagan ang kita.

3) May dalawang MFs (Philequity at Kabuhayan Fund) na tumatanggap ng PhP5,000 na initial investment at PhP1,000 sa mga sumusunod. Ngunit ang ibang MF ay mas mataas ang kailangang unang investment.

4) Sa UITF, ang pinakamababang initial investment ay PhP10,000 sa Banco de Oro.

5) Ang bawat MF at UITF ay may iba't ibang uri ng paglalagakan. Maaring pagpilian ang fixed income, equity, balanced at money market. Mayroon ding pesos o dollars. Iba't iba rin ang patakaran sa bawat uri ng paglalagakan kayat kailangang tanungin sila nang maigi.

6) Ang customer service rin ng bawat MF at UITF ay magkakaiba. Ang mga binabanggit ko ay ang mga sumusuporta sa aming adhikain. Ngunit obligasyon ng namumuhunan na kausapin sila upang maintindihan ang kani-kaniyang palakad.

---------------------------------------------------------------------------------------------------------

What is your advise regarding pre-need plans?

Pre-need Plans are investments and are good options. Pre-need plans force you to save plus automatically provide you with a low-cost insurance coverage. However, it is important to check out the company you intend to buy a plan from and the people behind it. You can check their status with the Securities and Exchange Commission telephone number 63-2-721-5058.

During January 1997- December 1998, Mr. Colayco was President of the Philippine Federation of Pre-Need Companies, Inc., of which he is currently a Director. For delicadeza, he would prefer not to comment on specific Pre-need companies.

However, he wrote a recent article in the Hong Kong Sun and the Cebu Daily News that may be helpful to all pre-need planholders.

THE PRE-NEED INDUSTRY IN PERSPECTIVE

Napakaraming tanong ngayon tungkol sa Pre-need kaya't naisip kong ipaliwanag ang mga nangyayari..

The Pre-need industry is composed of Pre-need companies that have sold:

1) Education plans made up of two types: Open-Ended (or Traditional) and Fixed-Value

2) Fixed-Value pension plans, and

3) Fixed-Value life plans.

Kahit iba't-iba ang mga plano, dalawang klase ang uri ng Pre-need kung ang pagbabasihan ay ang tipo ng obligasyon ng Pre-need company. Ito ang Fixed-Value at ang Open-Ended. Sa Fixed-Value, alam na ng plan holder at ng Pre-need company kung magkano ang eksaktong halaga na makukuha ng plan holder sa takdang petsa.

Fixed-Value means that both the plan holder and the Pre-need company already know how much the plan holder will get when the plan matures.

Sa Open-Ended naman, ang matatanggap ng plan holder ay base sa sisingilin ng paaralan sa paggamit ng plan holder. Ang halaga ay hindi malalaman hanggang gamitin na ang plano at sumingil na ang paaralan.

Ang 80% ng Pre-need ay nasa Fixed-Value plans. Kung tutuusin, kung hindi mawala ang kompyansa ng plan holders sa buong industriya at magpatuloy na magbayad ng kanilang hulugan, ang mga kumpanyang mahusay ang patakbo ay kayang bayaran ang mga Fixed-Value plan holders sa takdang petsa.

Fixed-Value education plans, Fixed-Value pension, and Fixed-Value life plans make up about 80% of the entire business of the Pre-need industry in terms of contract price. Based on today's conditions, the millions of plan holders holding these Fixed-Value types of plans can be serviced by their Pre-need companies when their plans mature

Ang may problema ay ang Open-Ended educational plans (Traditional plans). Ang mga ito ay 20% lang ng buong Pre-need industry. Ngunit may solusyon kung magkakaisa ang mga kumpanyang Pre-need at ang mga plan holders na magkamayroon ng hangganan ang halagang pangbayad sa matrikula at ipatupad ito sa maaring ilang taon habang sinisiguro naman na ang mga benefisyo ng plan holders ay siyang makatarungan.

WHAT WENT WRONG WITH TRADITIONAL PLANS?

Before 1992, tuition fee increases of schools were regulated with a government-mandated ceiling on tuition fee hikes. Therefore, the traditional educational plans were in reality, Fixed-Value plans. However, starting school year 1992, the government wanted schools to improve the quality of education. To be able to do this, the schools needed to improve its facilities and give better salaries to teachers. The schools needed higher income to cover its higher expenses and the government allowed tuition fee increases, generally, with no limit. As expected, tuition fees went up very quickly.

Bago mag-1992, lahat ng plano ay mayroong LIMIT sa halagang maaring ibayad sa matricula. Noon, may batas na nagbabawal sa mga paaralang magtaas ng matrikula na higit sa 10% taon taon. Ngunit noong ginusto ng pamahalaan na itaas ang antas ng kalidad ng edukasyon, pinayagan na ang mga paaralan na magtaas ng matrikula. Dali-dali naman itong ginawa ng mga paaralan. Mula noon, ang Traditional plans ay naging Open-Ended plans na.

SAAN KINUKUHA NG PRE-NEED COMPANIES ANG PANGBAYAD SA PLAN HOLDERS SA TAKDANG PETSA?

Pre-need companies have to invest the money that they receive from the plan holders in good yielding investment instruments to be able to earn enough to pay for the plans when these mature. Unfortunately, the schools began to increase tuition fees at rates much higher than inflation and even higher than what could be earned by the investments of the Pre-need companies. To make matters worse, the Asian financial crisis in 1997 brought interest rates and investment yields down to historical lows.

Ang Pre-need company ay naglalagak ng mga installment payments ng plan holders sa mabubuting instrumento na magbibigay ng mataas na interes o kita. Dito nila makukuha ang pangbayad sa plan holder sa takdang petsa. Ngunit noong masyado nang mataas ang matrikula ng mga paaralan, wala namang ganoong kataas na interes o kita ang maaaring makapagbigay ng parehong taas ng interes o kita. Malulugi lang ang Pre-need company kung ipagpapatuloy ang Open-Ended plan.

Because of the tuition increases, in certain cases, Pre-need companies that sold plans costing about PhP20,000 have to pay education benefits in excess of PhP120,000 per school year today or a total of about PhP500,000. This means that the Pre-need company had to earn a return on their in excess of 30% p.a. compounded annually. This is a fantastically high return for the plan holder but it is return that a Pre-need company cannot achieve for its investments. Therefore, a Pre-need company loses money with each traditional plan sold.

This situation continues to worsen since individual schools increase their fees based on market forces and the Pre-need company cannot predict the future payments to be made on the traditional plans.

POSITION OF THE PHILIPPINE FEDERATION OF PRE-NEED COMPANIES

In the middle of the present Pre-need crisis, the focus must remain with the PLAN HOLDER. He is the reason why this industry exists and why it has continued to grow over the last 38 years.

It is important that the solution to the crisis MUST ENSURE THAT THE PLAN HOLDER IS GIVEN, AT THE VERY LEAST, AN EQUITABLE RETURN ON HIS INVESTMENT.

The basic problem lies in the unpredictable costs of servicing Open-Ended educational plans. At the present rate, the indefinite availment of Open-Ended plans is no longer sustainable. The Pre-need industry and plan holders must agree on a maximum amount for availments of the Open-Ended educational plans.

Walang makakatulong sa mga plan holders, kahit ang gobyerno, kung ipagpapatuloy pa ang Open-Ended plans. Kinakailangan talagang mag-usap ng masinsinan ang mga plan holders, ang mga may ari ng Pre-need companies at ang SEC kung ano ang pinakamabuting solusyon.

In these dialogues, Pre-need companies and plan holders have to find a fair way acceptable to all. Everyone may have to make sacrifices so that all Traditional educational plan holders can be served and given their benefits equitably. This will also ensure the continued viability and operation of the Pre-need industry. After all, this industry has already given benefits, far more than any financial investments, to the ordinary Filipino family. The great masses of Filipinos and the Pre-need industry need each other.

---------------------------------------------------------------------------------------------------------

Savings of At Least PhP 5,000

Where do I invest PhP 5,000 and increments of PhP1,000 to earn higher than bank savings account interest?

The minimum bench mark for a good after–tax investment return is that rate which is equal to or higher than the inflation rate prevailing at the time of the investment period. In general, two to four points higher than inflation is a good rate of return.

Before anything else, you should have a clear idea of what your personal net worth should be at a specific time in the future. This amount is your basic investment goal. This personal net worth target is also the value of your net assets that should be generating income. This will be one of your basic guides in deciding whether or not an investment opportunity is right for you.

Bago ang lahat, gumawa ka ng planong pinansyal. Alamin mo kung magkano ang iyong kailangang ari-arian na kumikita sa naitakda mong panahon. Basahin ang Chapters 7 at 9 ng libro kong “WEALTH WITHIN YOUR REACH; PERA MO PALAGUIN MO!� Ito ang batayan mo kung tama ang iyong paglalagyan ng iyong naipon.

Secondly, you have to analyze what percentage is your PhP5,000 and Php1,000 to your total savings (your investible funds). The main principle is you should at any time know how much of your total investible funds are at risk. As a matter of principle, you should not “put all your eggs in one basket.� Additionally, you have to understand that your own tolerance for risk taking. Generally, when you are young, you can take more risk. Conversely, the older you are, the less risk you can take.

Alamin mo kung ano ang porsiyento ng iyong PhP5,000 o PhP1,000 sa iyong naitabing pera na. nakalaan pang lagak o pang pamumuhunan. Kailangan alam mo rin kung magkano ang perang maaari mong ipagsapalaran. Kung ikaw ay bata pa, maaari ka pang magsapalaran sapagkat maaari ka pang makabawi kung sakasakaling magkamali ka. Ngunit kung may edad ka na, dapat kang mag-ingat at pumili ng instrumento na bawas ang panganib ng pagkalugi.

Kahit ano pa ang kalagayan mong pinansyal, hanggat maaari, hindi mo dapat ilagay lahat ng iyong naipon sa iisa lamang instrumento.

After examining your financial condition, you have three basic options:

A. If you are not in a position to take risks, the most risk-free investments are Treasury Bills and Treasury Bonds. Read Chapter 19 of the book “WEALTH WITHIN YOUR REACH; PERA MO PALAGUIN MO!� The longer the term, the higher the interest. However, small denominated TBills or TBonds of PhP5,000 are easily taken and are not always available. You could bring together your friends/relatives to pool your funds to buy the more available bigger denominations.

Ang instrumentong pinakabawas sa panganib ay ang Treasury Bills at Treasury Bonds. Basahin ang Chapter 19 ng libro kong: “WEALTH WITHIN YOUR REACH; PERA MO PALAGUIN MO!� Kalimitan naubusan na ang mga bangko ng mga PhP5,000 TBills. Kung ipagsama-sama ninyong mga magkakamag-anak at magkakaibigan ang inyong naipon, baka maaari kayong bumili ng mas matataas na halaga ng TBills at TBonds. Pag-ingatan lang ninyo ang inyong kasunduan na dapat ay nakalagay sa pormal na kasulatan.

B. If you are young and can take risks, the growth investments that are relatively less risky than investing in the stock market are mutual funds. There are different kinds of mutual funds. However, most mutual funds require a bigger initial capital (normally around PhP50,000 or more) There are, however, three that will accept investments of Php5,000 as a start and Php1,000 increments after. These are:

Philippine Equity Fund
http://www.ebizfinancialservices.com
Ms. Mayet Gozun - mgozun@e-businessphil.com
+632-634-8631 to 32 +63915-534-5876 Ms. Janice Fernando +632-638-9990

Kabuhayan Fund
http://www.mutualfund.com.ph
  +632-890 -3827 or +632-890-1758 loc 403

OR

---------------------------------------------------------------------------------------------------------

Savings of PhP 250,000

Where do I invest P250K, P500K? Or P1.0M?

Again, I have to qualify my answers based on the ability of the investor to take risks, or what is called his risk tolerance; his liquidity requirements; or his financial objectives in terms of growth, safety of capital or income stream. More important, what portion of his investible funds is PhP250K, PhP500K or PhP1.0M?

Bago ang lahat, gumawa ka ng planong pinansyal. Alamin mo kung magkano ang iyong kailangang ari-arian na kumikita sa naitakda mong panahon. Basahin ang Chapters 7 at 9 sa “Wealth Within Your Reach�. Ito ang batayan mo kung tama ang iyong paglalagyan ng iyong naipon.

Alamin mo kung ano ang porsiyento ng iyong PhP250K, PhP500K or PhP1.0M sa iyong naitabing pera na hindi kakailanganin sa medyo matagal na panahon. Kailangan alam mo rin kung magkano ang perang maaari mong ipagsapalaran. Kung ikaw ay bata pa, maaari ka pang magsapalaran sapagkat maaari ka pang makabawi kung sakasakaling magkamali ka. Ngunit kung may edad ka na, dapat kang mag-ingat at pumili ng instrumento na bawas ang panganib ng pagkalugi.

Kahit ano pa ang kalagayan mong pinansyal, hanggat maaari, hindi mo dapat ilagay lahat ng iyong naipon sa iisa lamang instrumento.

Ang mga sumusunod na payo ko ay mas kumplikado sapagkat malaki na ang halagang pinag-uusapan. Kung gusto ninyo ng paliwanag, maaaring sagutin ninyo ang mga tanong sa ASK F.J.C. at ipadala sa amin.

If the investor wants MAXIMUM CAPITAL GROWTH over a period of at least five years, I would recommend that he invest this money into EQUITY MUTUAL FUNDS. This assumes that the investor is still about 40 years or younger and that he is able to take moderate to high risks. For the sake of financial prudence, a good portion of the investments could be allocated to the top performing mutual fund and the balance among the other good performing mutual funds. The best gauge for these funds are their average yearly performance for the past Ten (10) years, or at least, the past Five (5) years. Based purely on this average returns, the expected returns on equity mutual funds may average up to 15% after tax compounded annually.

Kung ang hangad mo ay PALAGUIN HANGGANG MAARI ang inyong kapital, ang angkop na pamamaraan ay maglagak ng salapi o bumili ng bahagi (shares)sa EQUITY MUTUAL FUNDS. Ito ay bagay sa mga nangangpital na may edad na 40 at pababa. Sa ganitong edad, maykakayahan pang pumasok sa mga may kataasang risko o sapalaran. Alinsunod sa maingat na pamamahala ng pangangapital, maari na ang malaking bahagi ng puhunan ay ilagak sa nangunugang equity mutual fund at ang natitirang puhunan ay ipangbili naman sa ibang maasyos ding mutual funds. Ang magandang basehan ng husay ng mutual fund ay ang kanilang karaniwang pagganap o resultang pinansyal sa nakaraang sampung taon o limang taon man lang. Batay dito, ang maaring asahang resultang pinansyal maaring umabot sa 15% after tax taon taon.

My assumption in recommending the above is that the investor's investible funds are not limited to PhP250K, the PhP500K and the PhP1.0M. The investor is assumed willing to take maximum risk as well as he just wants to MAXIMIZE his gains and hold the investments for at least FIVE years.

Ang mga tinagubili kong ito ay batay sa kalagayan na ang nangangapital ay marami pang puhunan at hindi lang yaong Php 250,000,o Php 500,000 o Php 1,000,000. Dahil dito, ang kakayahan niyang tumanggap ng risko ay malaki at kaya niyang hawakan ang kanyang pangangapital ng limang taon at higit pa!

If the investor's standing is that he wants only to take moderate risks but still wants to maximize his potential gains, then I would recommend that he invest the bulk (maybe 70%) of his funds in two or three BALANCED MUTUAL FUNDS (i.e. combination of around 50% equity and 50% fixed income investments) Then, I would continue to recommend that he put at least 30% of his investible funds into the top performing Equity Mutual Fund and let it stay there for at least five years. In this regard, expected returns may average up to 12% after tax compounded annually.

Kung ang gusto ng nangangapital ay di gaanaong taas na risko, pwede pa rin niyang ilagak ang mas marami sa ng kanyang puhunan sa BALANCED MUTUAL FUNDS. Ang mas maliit na bahagi ay pwede pa rin ilagak sa EQUITY MUTUAL FUND at iwanan doon ng mga limang taon. Ang posibleng ganansya sa ganitong paglagak ay maairng umabot sa 12% after tax taon taon.

If the investor may need that cash in less than five years, mutual funds are still the best investment PROVIDED HE KEEPS HIS FUNDS FOR AT LEAST TWO YEARS. JUST NOTE THAT IN EQUITIES, THE LONGER THE HOLDING PERIOD, THE BETTER.

In general, if the amount invested in mutual funds represents a substantial portion of an investor's investible funds, he could divide this investment between two or even among three mutual funds. The important thing is not so much to pick the best but to avoid the losers and at least be with the top two or three. This way, his diversification will further reduce the downside risk but maintain the same degree of profit potential. NOTE HOWEVER, THAT BY LAW, MUTUAL FUNDS DO NOT GUARANTEE ANY RETURNS.

Kung ang puhunan ng nangangapital ay halos nakalaad sa mutual funds, dapat lang na ibahagi niya ito sa dalawa o tatlong mutual funds. Ang pinaka mahalagang alituntunin ay hindi yaong MAKATAYA SA PINAKAMAGALING kung hindi yaong MAKAIWAS sa TALUNAN. Dapat lang na ang personal na stratehiya sa pagpalago ay makasama sa mga magagalling. Sa ganitong paraan, nababawasan natin ang panganib na maaring magpatalo ng puhunan.habang nabibigyan naman ng malakas na posibilidad na kumita ng maayos ang kapital. . ALAMIN NA ALINSUNOD SA BATAS, WALANG GARANTIYANG BINIBIGAY ANG MUTUAL FUNDS.

If the investor simply wants ready cash without any risk, then his only option would be to invest in Treasury Bills. If he can put his money on longer term and not take any risk, then his option is to invest in Treasury Bonds or other Government-issued Bonds. Read Chapter 19 of the book “WEALTH WITHIN YOUR REACH; PERA MO PALAGUIN MO!�

Kung ang hangad ng nangangapital ay “liquidty� o yaong magkamayroon ng daan sa daliang “cash�, ang tanging hakbang ay maglagak sa Treasury Bills o Savings deposit na kumita ng mababang interes. Kung kaya namang mas mahabang panahon, pwede ring ilagak sa Treasury Bonds o ibang uri ng Bonds ng Gobiyerno (Pag-Ibig;Land Bank , etc). na mas mataas ang interes. Ngunit dito and pinaka mababang halaga ay mga Php 250,000 at ang kita batay sa haba ng panahon.

The investor can also join the KSK SMP Cooperative for a portion of his investible funds. The Coop will invest in TBills and TBonds and mutual funds, among others.

Kung gusto mong maglagak ng pera mo sa KSK SMP Coop, sasama ka sa ibang mga miyembro. Pag-iipunin natin ang pera ng lahat ng miyembro at ilalagak sa lahat ng nabanggit sa itaas.

If the investor wants to take active role in investing his funds, then I suggest he look into small franchise businesses. IN NO CASE SHOULD HE PUT AT RISK 100% OF HIS INVESTIBLE FUNDS IN SETTING UP HIS OWN BUSINESS EVEN IF THEY ARE FRANCHISE BUSINESSES. START-UP BUSINESSES OFFER THE HIGHEST POTENTIAL GAIN AS WELL AS THE HIGHEST RISK OF CAPITAL LOSS. IN SUCH CASES, THE INVESTOR MUST BE PREPARED TO LOSE WHATEVER CAPITAL HE INVESTS IN SUCH VENTURES.

Generally, I would not recommend that an investor put more than 30% of his investible funds in a start-up business. The exception might be for those in their early twenties whose capital is limited and thus still cannot afford to diversify but can afford to lose their principal capital as they have still a great deal of time to recover. In setting up your own business, it is essential that you have personal interest (better still, personal passion) in whatever type of business you will engage in. In the end, businesses succeed or fail based on the owners' ability to execute and manage his business plans well.

Sa mga gustong sila mismo ang magpatakbo ng kanilang puhunan, ang payo ko ay pag-aralan ang FRANCHISE BUSINESSES. Seguraduhin lang na huwag na huwag ilagak ang 100% ng inyong puhunan sa sariling negosyo kahit na ito ay FRANCHISE. Bagamat ang sariling negosyo ay ang pinakamataas ang potensyal na magbigay yaman, dito rin naman ang pinakamalaking panganib na maubos ang kapital. Ang statistics dito ay mahigit na 85% ng nagumpisa ng sariling negosyo ay nalugi!

Bukod dito, sa tingin ko, hind dapat maglagak ng higit ng 30% ng inyong kapital sa isang pag-uumpisa na negosyo. Ang maaring maliban sa ganitong patakaran ay yaong mga batang negosyante na nasa edad bente o bente singko anyos pa lang dahil kaya pa nilang tumanggap ng talo at malamang kulang pa rin naman ang kanilang puhunan. Sa lahat na ito, ang pinankamahalagang konsiderasyon ay ang inyong tunay na MATINDING HILIG O PAGKAGUSTO sa isasagawa ninyong negosyo. Ang tagumpay ng isang negosyo ay ang kakayahan, pagmamalasakit at pananagutan ng may-ari sa pagpapatakbo ng kanyang negosyo. Ito ay nasa Chapter 8 ng “WEALTH WITHIN YOUR REACH; PERA MO PALAGUIN MO!�

You may want to check BPI Asset Management, Trust Marketing Division at 8169053, 8169032, 8455080 or 8455022, or visit any BPI/BPI Family Bank Branch and let your Relationship Manager assist you through a Client Suitability Test. You may also inquire from Philippine Equity Fund, Inc. (Philequity), Mutual Fund Management Company of the Philippines or First Metro Asset Management, Inc.

---------------------------------------------------------------------------------------------------------

Starting a Business

I want to start a business. What do I do?

In setting up your own business, it is essential that you have personal interest (better still, personal passion) in whatever type of business you will engage in. In the end, businesses succeed or fail based on the owners' ability to execute and manage his business plans well. It is best that you understand what your unique genius is as I discussed in Chapter 8 of “WEALTH WITHIN YOUR REACH; PERA MO PALAGUIN MO!�. You will be happiest in a business that you really like to do provided you have made a thorough study and analysis that it has good chances of making money.

I am biased in favor of Franchises as discussed in Chapter 19of “WEALTH WITHIN YOUR REACH; PERA MO PALAGUIN MO!� because you will have more support during the start-up stage, which is usually the most difficult. As in all cases, it is your responsibility to INVESTIGATE before you invest any amount in a franchise business. One of the good ways to investigate is to talk with EXISTING FRANCHISEES. They can give you the correct information about the franchise.

Sa Chapter 19 ng “WEALTH WITHIN YOUR REACH; PERA MO PALAGUIN MO!�, ay mayroong usapan hinggil sa FRANCHISE BUSINESSES. Ngunit ang dapat intindihin ay ang nangangapital ay tanging may responsibilidad sa pagsusuri ng isang Franchise. Ang isang maasahang pagsusuri ay ang makipagusap sa mga FRANCHISEES at alamin ang kanilang karanasan sa ilalim ng FRANCHISOR ng negosyong pinagaaraln.

You will surely learn a lot from the experiences of entrepreneurs in various businesses so you may want to read: Entrepreneur magazine, published by Summit Publishing Co. Their Offices are at Level 1 Robinson Galleria Tel Nos. +632-631-8971 to 85.

Kung gusto ninyo ng sariling bisnes na pag-uukulan mo ng iyong panahon, kinakailangan na alam mo ang iyong tunay na kakayahan na tinalakay ko sa Chapter 8 ng : “WEALTH WITHIN YOUR REACH; PERA MO PALAGUIN MO!�. Mas gusto ko ang mga franchise na tinalakay ko sa Chapter 19 sapagkat may tutulong sa iyo sa umpisa.