Financial Literacy

Money is KSP!

2010-03-22T10:25:00.000-07:00

All of us, without exception, make the pursuit of comfort one of our primary objectives in life. In fact, financial planners are taught that people try to maximize their discretionary spending to enjoy life to the fullest. This is also the reason why the entertainment business pays some of the highest salaries (e.g. actors, directors, basketball players, golfers, boxers).

Pursuing comfort does have a cost and money is a common but not exclusive tool to afford the comforts in life. There is nothing wrong with trying to earn a lot of money. The problem starts when people equate money to comfort and happiness, so much so that they end up chasing after money.

Money is kulang sa pansin or KSP (in desperate need of attention). The more you chase it, the more it runs away from you. It’s a tease. But try this – turn around and run away from money and you will something amazing.

When money realizes that no one is chasing after it, it will turn around and be the one to chase after you. There are so many ways of avoiding having to chase after money. Giving away money cheerfully, faithfully, wisely, and quietly is one great way. In my seminars, I tell people that there are four basic rules to boosting your savings, the first one being to give money away first. Obviously, I get a puzzled look from my audience every time I say this. But see, giving away money first helps you to develop that character of not holding on too tightly to money, a way of not chasing after money. Moreover, giving away money, especially when done to benefit others, gives a sense of fulfillment that money cannot buy. My wife and I have done it time and time again. Even when there are times we find some tightness in our budget, we make it a point to give money away. And you know what? Money flows back to us each and every time and in amounts many times larger than what we would give away.

Many surveys have been conducted to determine which country had the happiest people. Results often vary as to which country or race is really the happiest in the world. But all of the survey results invariably say that money and other material possessions score the lowest in making people happy. In fact, family and friends are the ones that rank the highest.

Making money is easy. All you have to do is find that seed of excellence already in you. Each one of us has it, whether it be cooking, driving, singing, analyzing financial statements, lawyering or teaching. You’ve probably heard or read of the book entitled “In Search of Excellence”. Well, you need not look very far because that excellence is right inside of you. When we were born, a unique seed o excellence was planted in each one of us. All you need to do is to recognize that seed, nurture it and let others benefit from it as well.

For those of you reading this column who may not know yet, I wrote a book entitled, “Pwede Na! The Complete Pinoy Guide to Personal Finance”. It became a bestseller just two months after it was launched. But that’s not the point. The royalties from the book are not that great. What is more enriching is the number of people that the book has helped along the way. Currently, the book has a following of 2,000 members through a free personal finance discussion group, where daily personal finance messages, teachings and Q&A’s are exchanged. And where does the concept of money chasing me come in? Well, because of the book, I am constantly invited to give seminars. That’s where the money is. And that is really the best career anyone can have, a career where you can do that thing that you are great in and enjoy doing, get paid for doing it and help others along the way. Do that and you will find true happiness as well as money chasing after you.

Efren Ll. Cruz is a registered financial planner with the RFPI USA. He is author of the bestselling books, “Pwede Na! The Complete Pinoy Guide to Personal Finance” and “Pwede Na! The Complete Pinoy Guide to Retirement & Estate Planning.” He is Chairman and CEO of Personal Finance Advisers Philippines Corporation. This article does not constitute nor forms part of any offer or solicitation of an offer to buy or sell any securities. The opinion and views expressed herein are solely those of the author’s and do not necessarily reflect those of the Personal Finance Advisers Philippines Corporation.

Getting Rich Slowly is the Fastest Way to Wealth

2010-02-20T06:32:00.000-08:00

Nowadays, most people want to get rich quickly. Always wondering about the secret formula of the rich people on how they got their riches. Hence, the get-rich-quick schemes by some networking companies are loitering all over the city streets.

I have to admit I am also an avid fan of the get-rich-quick idea, who isn't right? The thought of waking up one morning and knowing the secret formula on how to be rich in an instant gives me chills! Until reality sets in and pokes me in the eye; "Wake up boy! You are still dreaming!"

Well I have read an article from a very famous financial adviser here in the Philippines, Francisco Colayco. His article proves the old saying that the fastest way to wealth is to get rich slowly. Below is the full article that he wrote.

Spiritual and inspirational articles abound to lift up our lives. What I noticed though is that we tend to compartmentalize our lives.

In particular, our financial lives are considered by most as separate from their spiritual and intellectual activities. The fact is that all of these are intertwined.

Since I have focused my advocacy on teaching personal financial management, I frequently interpret these inspirational principles in the light of our financial lives.

Borrowed from Mac Anderson’s “The Nature of Success,” Mr. Anderson talks about a lesson he learned from a friend’s grandmother.

Mac was having such a rough week and his friend shared with him what his grandmother told him to always remember: ‘Inch by inch, life's a cinch. Yard by yard, life is hard.’”

Mac took the line to heart and took out a piece of paper and listed all the things he had to do in the next three days.

As he finished each task, he crossed it out from the list. Three days later, he crossed out the last task left on the list. He felt great!

As Mac explains, “…Success doesn't come cascading like Niagara Falls; it comes one drop at a time through short-term, realistic goals. If you believe you can do something (the goals are realistic), you're likely to be highly motivated. If, however, you think you can't (because the goals are unrealistic) your motivation level falls greatly…”

The same principle applies in each one’s personal financial life.

I keep emphasizing the same principle as explained in “Making Your Money Work”. THE QUICKEST WAY TO GET RICH QUICK IS TO GET RICH SLOW.

Unfortunately, more people prefer to get rich the easy way and as fast as possible.

They want to enjoy the money they believe they will be getting very quickly. This is why scams continue to proliferate and fool so many people.

Scams give promises of bigger than normal income every month or even everyday, in some cases.

It is so easy to want to believe when the first thought that should come to mind is if the promise is even realistic. If it is not, then why even be motivated to believe in it.

This is when the next part of the scam comes in. They give the names of people who have already invested and are already receiving the returns.

When you check with these people if the claim is true and they confirm, the inevitable follows. You end up investing and sad to say, the “Get Rick Quick” becomes “Lose Everything.”

In some cases, at the start, the money does come in as expected. As the money comes in though, it is almost automatic that the money is spent in frivolous WANTS.

After all, more money is expected to come in regularly so why not enjoy.

Some scams last for years and at the end of it all, the scammer tells the investor that the investor got his money back anyway through the regular interest paid.

That is true but it has all been spent. At the end, the Investment is all gone and even the WANTS purchased are no longer important.
In a real investment with realistic long-term goals, the returns come in, reinvested (compounding principle) and kept intact. At the end of the period, both the investment and the earnings are kept safe.

Now, while you are doing the foregoing, remember what author Swami Avadhutananda says about Two Days We Should Not Worry.

It is really very important to understand not only for the actual lesson stated but also for the implications in one’s financial life. It goes this way.

“There are two days in every week about which we should not worry, two days which should be kept free from fear and apprehension.

One of these days is Yesterday with all its mistakes and cares, its faults and blunders, its aches and pains.

Yesterday has passed forever beyond our control.

All the money in the world cannot bring back Yesterday.

We cannot undo a single act we performed; we cannot erase a single word we said.

Yesterday is gone forever.

The other day we should not worry about is Tomorrow with all its possible adversities, its burdens, its large promise and its poor performance;

Tomorrow is also beyond our immediate control. Tomorrow's sun will rise, either in splendor or behind a mask of clouds, but it will rise.

Until it does, we have no stake in Tomorrow, for it is yet to be born.

This leaves only one day, Today.

Any person can fight the battle of just one day.

It is when you and I add the burdens of those two awful eternities

Yesterday and Tomorrow that we break down.

It is not the experience of Today that drives a person mad, it is the remorse or bitterness of something which happened Yesterday and the dread of what Tomorrow may bring.

Let us, therefore, Live but one day at a time.”

This should not be interpreted to mean that we should live day to day without planning for tomorrow.

On the contrary, the author simply says that though we cannot change the past, we should and do learn from it.

With these lessons, we can plan for our future but act without worrying. Failure should not be feared for it is merely a temporary event.

If we are to analyze it, living one day at a time simply means make the most of today. This supports my basic principle that each person should be preparing for his retirement every day.

Otherwise, as he grows older, he will precisely be dreading Tomorrow if he did not prepare.

And as he starts worrying that he is not prepared, he will feel all the regret that he did not make use of the time when he was younger.

All it takes is an amount set aside daily and invested on a long-term basis without touching the earnings.

Even during these difficult times, keep saving 20 percent of your income. Live within the 80 percent.

Invest your savings regularly in well-managed funds for at least 5 years.

But in doing so, make sure that you set an absolute amount as your goal for specific time periods.

This way, you will have a clear basis for determining how much your investments must yield every year (annual rate of return).

This then will be your guide in deciding when to liquefy part or all of your investments in the process of monitoring the progress of your investments.

It is easy enough to get into an investment. But the real challenge is knowing when to get out.

The typical mistake is to invest with no specific money goal except to maximize growth. They invest based on unreasonable expectations and not on achieving a specific amount for a specific purpose at a certain future date.

These are the investors who are able to buy low but end up selling lower because they panic when prices dive unexpectedly.

More often than not, they could have sold high but did not, because they assumed that they there is still room for additional gain.

A Better Way to Growing your Money

2010-02-10T18:02:00.000-08:00

It's been a long while since I posted articles regarding Mutual Funds. Well here is a nice article published in Philippine Daily Inquirer dated July 27 regarding the advantages of investing your money in Mutual Funds over time deposits in banks.

I have been an MF investor myself. I have invested a fairly considerable amount of money in one of the biggest mutual fund/life insurance company here in the Philippines. I must admit that its doing exceptionally well. As I have mentioned before in my past postings, I withdraw my money from a time deposit account and transferred it to a mutual fund investment. The growth of my money that I received from the time deposit account for almost 5 years was no way near the increase that I got for a year investment in MF. Let's say just 5% of the growth of my investment last year when I invested in mutual munds. (not bad huh?!)
I would not divulge the mutual fund company; they have to pay me for that. hahaha!

Anyways kidding aside, here is the article that I have read from the PDI. I will just attach the image that I got from a website as well.. All About Financial Planning

Where to Invest In 2010?

2010-02-07T05:48:00.000-08:00

New year, new hope! 2010 is the year of the Tiger! Maybe its your year to be finally financially free or my year or the year for all of us. Who know, right?! That's the beauty of having hope, there is something to look forward to. A fresh start to a fresh year!

I have been busy with my work the past few months. Of course with my family, spending more time with them and enjoying each other. I have also been reading books; programming books for my profession (I am Software Engineer by the way) and business books. One particular book that has caught my attention is the one written by Larry Gamboa - "Think Rich Pinoy!"

Larry Gamboa is one of the financial mentors of one of my favorite authors, Bo Sanchez. In the book the author opens his secret regarding real estate investments and how he found riches in foreclosed properties. By the way Larry Gamboa is a doctor in Business Administration from the University of Michigan.

Travel the road to riches with Larry Gamboa and discover:

Why most Pinoys are Poor
The antidote to fear
The secrets of the rich Tsinoys
How Pinoys are becoming rich in Seven Steps

I am not done yet reading the book but the first few chapters that I have read looks very promising. I will have another post regarding this topic. Right now I need to go to bed and bond with my family(hahaha!) Til my next post.. or you can grab a copy of the book. It is worth investing!

Making Money Online

2009-01-24T19:43:00.000-08:00

When the subject of making money online is discussed, what comes to mind is selling and marketing. This is mostly true but the trend now is internet blogging and PTC sites.

What is PTC?
PTC means "Paid To Click" wherein advertisers pays you every time you click and view their websites. A website that has no visitor is an ineffective site. To encourage individuals to visit their site, they are willing to pay for your time to click their ads and view their websites.

How to Get Started?
1. A valid email address
You have to have a valid email address. If you don't have one, just sign up. There are a lot of free emails. The popular ones are G-mail, Yahoomail, Hotmail, etc..

2. Create an account in Alertpay
Creating an alertpay account is fast and easy. Use this link to register in AlertPay.

3. Create an account in Paypal
Do the same thing go to Paypal and create an account. When you'll be asked for credit card you can hit cancel. Credit card is not necessary.

How Do I Earn Money?
The process is easy! You simply click a link and view a website for 30 seconds to earn money. You can earn even more by referring friends. You'll get paid $0.01 for each website you personally view and $0.01 for each website your referrals view. These numbers are case to case basis. Some PTC sites pay more, some pay lesser.

An example earnings:

* You click 10 ads per day = $0.1
* 20 referrals click 10 ads per day = $1
* Your daily earnings = $1.1
* Your weekly earnings = $7.7
* Your monthly earnings = $33
* Your total annual earnings = $401.5

The above example is based only on 20 referrals and 10 daily clicks. Some days you will have more clicks available, some days you will have less. What if you had more referrals? What if there were more ads available?

I have personally tried PTC sites and already have cashed out some of my earnings through alertpay. Some sites are legit while others are scams. There is money in PTC but it would require patience and hard work!