SOUTHEAST ASIA TRADING PLATFORM

The Securities and Exchange Commission has approved last week the participation of PSE in the Southeast Asian Trading Platform. This platform will facilitate trading of Philippine stocks to Malaysia, Singapore and Thailand.

Initially 30 biggest and most liquid stocks would be brought for cross-border trading.

The countries are the Philippines, Malaysia, Singapore and Thailand

The stock exchange are the Philippine Stock Exchange (PSE), Bursa Malaysia (BM), Singapore Exchange (SGX) and the Stock Exchange of Thailand (SET).The four will be electronically interconnected

Benefits for Philippine companies will be the trading of their listed securities to the 3 ASEAN nation.

Benefits for stock buyers, the possibility of buying stocks of the 3 ASEAN nations like:
1. Malaysia -Maybank, Sime darby, CIMB Group, Public Bank and Maxis
2. Thailand - PTT CHEMICAL PUBLIC COMPANY LIMITED,THE SIAM CEMENT PUBLIC COMPANY
LIMITED,THAI OIL PUBLIC COMPANY LIMITED
3. Singapore - SINGTEL, WILMAR INTERNATIONAL, DBS GROUP of Singapore

This platform will change the landscape of stock trading in our country.

Arnel L. Cadeliña
nelcadelina.blogspot.com

Laws that will affect our investing strategies

The following are the capital market legislation we are waiting to be implemented:

1. Personal Equity Retirement Account (PERA) Act- encourage the accumulation of savings and investments to augment inadequate pension and retirement benefits. Status: Approved but tax regulations that would govern the grant of tax incentives for the investors still under review.

2. Real estate Investment Trust (REIT) Act - promote the development of the capital market by expanding the participation of Filipinos in the ownership of real estate.Status: Approved but tax regulations that would govern the grant of tax incentives for the investors still under review.

3. Collective Investment Schemes Law- authored by Senator Angara which aims to unify laws and regulations governing all types of pooled investments and provide a competitive environment.
Status: pending

The Philippine Stock Exchange Online Trading System

CitisecOnline.com is doing the online trading for several years but the announcement of the PSE that they will provide online trading services for trading participants that can in turn be offered to investors will revolutionalize how we buy and sell stocks. Investors in the provinces and the OFWs are waiting for the online trading system for a very long time. I am forecasting a PSE that is more active once the system will be functional.

To date, most trades in the country are still done via phone calls or physical interaction with stockbrokers or agents.The system will not kill the stockbrokers but rather take advantage of the Internet and the continuous growth of online transactions by allowing us, investors, to place our orders to the brokers online.

The online trading system will level the playing field.

Congratulations to PSE president and chief executive officer Hans Sicat for this project and hoping and praying that you will select the best solutions provider before the year ends.

I can not wait trading online!

nelcadelina.blogspot.com

Economics and Investing: A direct relationship

Investing in Real Estate

Those who took accounting subjects it was taught to us that a house is an asset.Our professors are correct but in personal finance we treat house as a liability. Why? We spend money for the maintenance, utilities, furniture and fixtures. It is a total cash outflow. If you would like to make it an asset, you have to think of ways to make your house earn money. Can you launch a business in your garage? can you convert unused space for a boarding house? Can you make a home-based business?. There are myriad of ways but first we have to accept it is a liability in order for us to be on our toes to make it as an asset.
Those who will buy real estate there are several factors that will contribute to the increase of market value of your prospective property. My stint as an appraiser during my 3 years stay at Pag-IBIG Fund taught me the following:

1. LOCATION is a primary factor. Appraiser always give a high appraisal for those real estate that are near commercial areas, schools and church. They gave low appraisal for those property located neat a creek or river that has history of overflowing. Transportation is also a factor- real estate where 24 hour transportation is present is always priced high.

2. CORNER LOT AND FRONTAGE.If you have an opportunity of buying a real-estate that is located in a corner lot ,has a wide frontage, heavy traffic of people and wide streets with pedestrian lane, you hit the jackpot. Buy it now, the increase of market value will double or even triple in 5 years time.

3. DRAINAGE AND SEWERAGE SYSTEM. You should be very careful on buying property where drainage and sewerage system is defective or non existent. The risk of your property being flooded during the rainy season is high hence the market value will be low. Therefore generally property located in elevated area fetch higher that those in low-lying area.

4. CLEAN TITLE. In our country there are people who are expert in making bogus documents and Jose Pidal is their hero. Therefore you have to be careful by checking with the register of deeds the property that is offered to you. When we say clean title it is registered and free form liens or claims. Check also the tax declaration to make sure the real property taxes are paid regularly.

These are the 4 ways I know that can help you decide based on my three years stint as appraiser of Pag-IBIG Fund Lucena City.

Happy hunting, then.

nelcadelina.blogspot.com


* thank you greaterlearning.org for the photo featured here.

The importance of emergency fund

My son was hospitalized for eight days because of dengue. In his first two days of sickness we thought that it was just an ordinary case of fever because his platelets were above 200 thus normal.When the fever did not subside on the third day we decided to bring him to the hospital just to make sure. Our suspicion was confirmed when his platelets plummets to less than 200 and reaching as low as 84 on the sixth day. His chilling never stopped and his blood pressure dropped to 90/50.

I thought I am losing my son. I lost count on how many medicines I bought and how many dose of dextrose they inserted on his veins. As a parent, the fear factor was there. We had only prayers to hold into and the rosary our sole company on those agonizing eight nights. In that time of uncertainty, we literally knocked on heaven's door.

It was heaven's sent that his doctor was well-trained on handling dengue cases and she was accepting calls even past midnight. She instructed the nurses to monitor the vital sign of my son every two hours.

On the 7th day the platelets began to jumped to more than 100, the fever subsided and the blood pressure returned to normal. We thanked God for this turned of events.

As we contemplate on what happened, we accepted the fact that even though our house and our backyard are clean, the mosquitoes carrying dengue can fly from house to house and multiply quickly on rainy days. One family can not solve the continuous rise of dengue cases. Cleaning the surrounding should be a community effort and the local government should assists.

Meanwhile, I paid the hospital around P20,000. A huge amount that can be used to other important expenses. When I read the newspaper today that there is a dengue outbreak in other parts of the country, I feel for the parents who need money to buy medicines for his child. It is no joke to be sick in our country and those who have no income and no emergency fund will put the child in danger. These are the reasons why there are children dying of dengue though is a curable sickness.

As a parent our choice is clear: to save the life of our child .......notwithstanding the astronomical hospital bills in our country.

Investing in iPad?

A university in the visayas required the students to buy the P27,000 iPad. They even spread the news that their enrolment goes up because of the result of this new way of "learning".

As a parent is it worth to invest our P27,000 in a tablet?

I am teaching business subjects for the past 9 years and I came into conclusion that the iPad and the likes of it are not the right tool to develop critical thinkers. Here are my reasons:

1. Instead of following instructions of the professors, the students are too darn distracted.

2. Though some tablet has FreeThinker software, still students can not take notes using the iPad. Worse, they can not even edit their documents.

3. Since clumsiness is part of the territory when you are young, there are some students forgetting where they left their tablet and dropping the P27K iPad will be common in campus corridors.

4. We have to accept that Steve Jobs and his pals created iPad to entertain the users.For you to read digital books is a secondary reason, that is why when they market it they always say : it is your best choice to watch video, view photos, listen to music, play games, with satisfying and fun. Education? never mentioned.

5. maybe you are not aware, you can not replace the battery of the iPad. What will you do then?

6. iPad IS NOT DESIGN FOR CONTENT CREATION.

My dear friends nothing beats creativity and critical thinking inside the classroom. Good professors,well written books and a sturdy laptop or netbook are the need of your children.

Go ahead and buy your children the iPad or the other tablets flooding the market
but be ready to see your children listening to songs, watch video, Internet, email and so on in every second that they like it.

They will do it not only in your home but also inside MY CLASSROOM.

Expect peso to appreciate to P41

The peso could appreciate to the P41-per-dollar territory by year-end as investors in search of yields continue to flock to Asian markets including the Philippines(Alegado, 2011).

This a good news and a bad news as well. Let us revisit our micro and macroeconomics. A strong currency is good because:
1. Investment grade status of the Philippines will improved.
2. The debt ratios of the country will improved.
3. Inflation will be controlled.
4. We can buy foreign goods (such as iPAD and laptops )at lower prices.
5. Buy more domestic goods and services.
The strong currency is bad news because:
1. it hurts domestic producers or exporters because it decreases the foreign demand for their goods and services
2. Less money for OFWs and their families.

 If Filipino enterprises increase their domestic sales and Filipinos consume or buy more Filipino made products then the strong currency will positively affect our economy. This is what the Japanese, the Koreans and the Chinese did for them to have a strong economy. Added to that the Philippines should produce more goods and services that are bought and consumed by consumers in order for the economy to have solid growth.

Why is it that President Aquino's 2nd SONA failed to mentioned the concrete goals how to generate or increase employment opportunities and how to increase production and consumption of goods and services. This is the cycle of growth we need and should focus on...

Arnel L. Cadelina
nelcadelina@blogspot.com


Reference:
Alegado,A. (2011, July 25).Peso seen at P41 by yearend, Business World,p.S2/1.

The Filipino Investor pays tribute to Rizal@150

When you study at the Ateneo, whether undergraduate or post graduate, the images of Rizal are ubiquitous.As if the Jesuits want you to know that Rizal is Ateneo and Ateneo is Rizal.To ever-remind you that their most distinguished alumnus was our national hero, they named their library as Rizal because they know as an Atenenan the library will shaped a huge part of your education. Then they invite you to visit their Rizaliana Collection to reinforced the belief that the national hero was once their student and his being creative,critical thinker, nationalistic and non-violent revolutionary ways were the result of the Jesuit education. You can not escape the rub.

Once your done with your study and working from sunrise to sunset, the images of Rizal will not leave you. Every town he has a monument and every one peso you got, he is there being the most depicted image of the Philippine currency.

In tribute to Rizal at 150. Let us revisit the poem of Rafael Zulueta y da Costa:

Not yet, Rizal, not yet
The glory hour will come
Out of the silent dreaming
From the seven-thousandfold silence
We shall emerge saying WE ARE FILIPINOS
And no longer be ashamed

Sleep not in peace
The dream is not yet fully carved
Hard the wood, but harder the blows
Yet the molave will stand
Yet the molave monument will rise
And God’s walk on brown legs

Why BIR is wrong?

Yesterday,July 6, 2011, The Philippines Bureau of Internal Revenue issued a memorandum circular no. 27-2011 saying that only mandatory contributions of SSS, GSIS and Pag-IBIG Fubd are exempted from income and witholding tax. Any contributions above the compulsory amount cannot be excluded from the gross income of taxpayers and are therefore subject to tax.

Filipino investors who are members of Pag-IBIG Fund are required to contribute as an employee a maximum of 2% of their monthly compensation. Majority of Pag-IBIG Fund members are lower class and middle class who aspire that their Pag-IBIG savings will help them save for their retirement.

With the 2% contribution, a typical member of Pag-IBIG can have around P200,000 after 20 years of savings. Since P200,000 is not enough when you retire, Pag-IBIG Fund offers a scheme called Pag-IBIG II wherein members, whose gross monthly income exceeds P5,000.00 would have another savings option that would provide them with a yield higher than those given under their existing membership with the Fund.

A minimum P500 monthly contributions can be made. The scheme will help the members to accumulate additional fund for their retirement.

This is the additional contribution the BIR want to tax.

It is understood that the state needs money for its operation but the state exists because of the people who are paying religiously their taxes. If the state can not help the people in terms of assistance in their retirement years then the state should help the people who want to save by providing incentive such as exemption of tax for the Pag-IBIG II contribution.

The BIR should tax more those who spend not those who will save.

The BIR should repeal their

latest ruling..

Dont Cry for Me Lucena City

As of today, my hometown Lucena City has two mayors. One suspended by the DILG but retained by the Supreme Court and the other installed by the DILG and recognized by COMELEC. Both of them holding office in two different places.

If you are busy making money and all of these political circus keep on pestering your brain you might be correct that Lucena City is going nowhere.

Our forefathers who created Lucena City vision it as the center of commerce not only in Quezon but in the whole Southern Tagalog. It was carved near 2 ports: Dalahican and Cotta , located between two rivers (Dumacaa and Iyam) and strategically accessible in all directions. So the vision is outstanding. The heirs are spoiling it by focusing on short-term strategies that benefits only their inner circle.

Meanwhile those who are working hard and raising their families in honest ways are penalized by having a dysfunctional local government. We can not stop their wrangling but they should be ashamed that the Filipino Investors based in Lucena City deserved a better local governance. History is harsh to those who are ineffective, look at Saleh, Gaddhafi.....

Buying Individual Stocks

Those who have experienced buying individual stocks directly instead of mutual funds will give you one common advice: be very careful. Why? because buying individual stocks will not need the diversification test required to minimize the risk.

If you have already investing in mutual funds you have experienced receiving annual report from you fund managers informing you how they picked the stocks they invested in. You noticed that they have strict limits on the number of companies they invested in.

It is only wise that you act like a fund manager in picking your own individual stock by buying only stocks that are favorites of fund managers. Check your mutual fund annual report and you will see the stocks that I am talking about.

Second step is to research the stock you selected by checking the company and the management team handling the company. Judge them based on their style and management experience.

Third, once you bought the stock, you have to make sure that you manage it. You made a choice of buying directly therefore devote time to manage it.

Fourth, what will you manage? the checking how the volume of shares traded in the stock market. You have to check your stock on a daily basis or weekly basis if you are too busy. The bottom line is you should make a historical perspective of your stock's price usually for 52 weeks to establish a basis whether to keep or sell your stock.

This is my personal experience on stock buying. How's yours?

The Consumer Country (a re-blog)

Mario (not his real name) was an MBA classmate of mine when we were working then in Ayala. We have a lot of qualities in common that’s why we were at eased with each other for at most 10 years.

One thing that differ him from me is that he is a spendthrift.

Every payday I save money to invest in my house and college education of my children. Mario is different, he spend as if there is no tomorrow. Branded clothes, shoes, neckties, handkerchiefs and regular dining in fine restaurants are his usual “investments”. He is known in his office for being maporma.

When we reached 30 years old, Mario and I decided to have a small drink at the Greenbelt. After we downed 2 bottles, Mario got under the influence. He began to tell stories to me that he was heavily in debt. More than hundred thousands because of the plastic (credit card!!!). He can not pay anymore the loan because he has other loans with lots of people. He is about to be kick out from his apartment if he will not pay the rent which is due for 3 months. His girlfriend abandoned him when she learned that he was bankrupt. Mario was totally devastated. Victim of zero savings habit and 100% consumptions propelled by his eveready credit card.

My life was reversed of him. I am not rich but I have a house and lot , college plan for my two children are paid in full and I have investment in mutual funds all before I reached 30.

Mario and I parted ways when I left PILTEL in 2001. I never heard any news about him. But I see a lot of Mario’s in our country. Children of OFWs, government or private workers and sabungeros. Only few people I know who has the propensity to save and invest.

Our country is a consumer country. With the exception of the Tsinoys and some enlightened countrymen the norm in our blood is to spend and consume. Postponing pleasure today in order to have a pleasant future is somewhat a blasphemy in our culture.

To exorcise this spendthrift demon, some like Mario need to suffer first before expelling it while others kill it even before it step on their door mat.

The roads are difficult for the latter but sure as the sun shines it brings reward.

Bank Passbook and ATM

When I was in grade school one of my memorable moment was getting my very first bank passbook (no ATM then!). I recall the bank was Solid Bank and the memory of seeing my name on the passbook and checking the amount reflected on it I still vividly remember.

When I saw the first interest earned by my savings, I began to asked myself how did they computed the amount. I realized then and there that my money can earn in a bank but I wondered why was it so low.

Today I am convinced that banks don't pay much interest on my money even though they charge high interest rate when they loan it for me. No wonder banks earned record profit margins last year and at the expense of their customers.

What is insulting nowadays is that the small interest earned on your savings account they add tax charges on it. They will charge you more if you use your ATM in other banks not affiliated with them.

Second, we Filipinos treat our passbook as deferred savings account because we withdraw the money as frequent as possible. The banks made sure that you do spend because ATM's are easily accessible.

Let us be honest here. Most of us can not accumulate money in our bank savings account.

The Real Savings Account? It is when you save your money, not withdrawing it every time and forgetting about it because it saved for specific long-term objective like college education or buying a house. You can not do that in your passbook savings.

Use the banks as temporary custodian of your money and when you accumulated enough for investment then it is the right time Mutual Funds and Stocks step in.

For the 20 to 30 Year old Filipino Investor

I received an e-mail from Slovenia (Yes, Slovenia!} sharing that he was influenced by my blog.

I am very happy that I have a reader from Europe but I am in my best mood if more Filipinos will appreciate the Filipino Investor blog.

Why? because personal finance in my country Philippines is not being taught from basic to tertiary education (unless you major in Finance). This unawareness is contributory to the poverty that engulfing millions of Filipinos.

The Filipino people are the reason behind my passion to write the "Filipino Investor"because the destiny of our country we shared whatever the outcome . This is my share for patriotic purposes.

My friend at Slovenia benefits also because personal finance is universal and surely can be applied to his personal investment strategies.

Now to my blog:

If you are on your twenties to early thirties, a Filipino Investor can afford to be aggressive. As Money magazine said " You have nothing to lose but few more years of your working life. You have nothing to gain but an earlier retirement?.

Once you saved P50,000 to P100,000 you can now invest strategically in the following ways:

1. 70% in growth stocks.
2. 20% in equity mutual fund
3, 10% in money market fund or Time Deposit.

The above strategy offer you an annual returns of 9% or more based on past performance or the worst case scenario of 7% or less.

nelcadelina@blogspot.com

next topic: For the 30 to 40 years old Filipino investors

Buying Your First Home

For my blog readers you noticed by now that I write only articles based on my own experiences. It is my guiding principle that I will share only what i did passed through.

Now, those who would like to buy their first home, your own time factor is critical when designing an investment and savings plan for home ownership.

Please do not be surprised if i tell you now that I planned my first home five years before I wanted to make a purchase. I was 25 then.

Today young people I know ,including my own business students, they can not wait five years to buy a house. Really the trend today is to be fast and furious.

I can not blame them since they are experiencing their own rat race.( which surprisingly this race is abhorred nowadays by my generation)

But what is the benefit then of preparing for 5 years before buying a first home?.

The primary reason is that you will have more for downpayment or equity and less loan to pay for.

Here are my further advise to you then:

1. Review where your money is going and where you could save.
Can you forget that Starbucks coffee and drink Nescafe instead?. Trim your expenses like a possessed person and save a lot in mutual fund preferably balanced fund.

2. Visualize your dream house. Photograph it or draw it. Put in places you see everyday and set the date when you will build it.

3. Open a savings account intended only for your first home. Make regular deposits whatever the amount you got.

4. Monitor your progress to remind you that you are determine to have your house.

Remember this my dear-first-time-buyer-of-their-first-home your first house is the best investment you can make. It will be your sacred nesting ground.

May your house blessing happen soon.

nelcadelina.blogspot.com

Stock or Equity Mutual Fund

In mutual fund the best way of earning money is investing in stock or equity mutual fund. Judging from my past investment history, I did earn more in equities than in balance or money market fund for the reason that the rise of the price of stocks will carry the NAV upward.

Since 2003 I've been investing in mutual funds and over the years I gravitated to the First Metro Equity Save and Learn Equity Fund and ATR Kim Eng Equity Fund primarily because of their low cost structure, a reasonable initial minimum investment, the availability of performance data in their website and the ease of redeeming the funds.

What I learned over the years is that a Filipino Investor should primarily focused on knowing the consistency of performance of a stock mutual fund company. Do not be impressed with those 1-year, 3-year and 5-year performance tables you see in Business World newspaper everyday.

Here are then my tips for you:

1. Analyzed the stock mutual fund based for its total return for full calendar years .

2. Give more weight for the most recent year's performance than the prior year's because fund grows in size.

3. Check the stocks bought by the mutual fund company through their website if it provides the investment style of growth, core and value classification.

The following are the stock mutual fund available in the Philippines:
ATR KimEng Asia Plus Recovery Fund Inc.** (USD$)
ATR KimEng Equity Opportunity Fund, Inc.

First Metro Save and Learn Equity Fund, Inc.

Philam Strategic Growth Fund, Inc.
Philequity Fund, Inc.

Philequity PSE Index Fund Inc.

Philippine Stock Index Fund Corp. *
Sun Life Prosperity Phil. Equity Fund, Inc.

The best way to start if your interested is to visit their website and compare the funds with each other including their investment style. From then , you are already halfway of having passive income.

My best wishes always,

nelcadelina.blogspot.com

Mutual Funds

Investing in mutual fund is easy but the Filipino investor should read the fine print first before any money is parked in mutual fund. It is a common mistake for those without background in Finance that they think Mutual Fund is only for the rich but the reality is it is the most suitable investment for the common man as it offers an opportunity in diversified securities at a lower cost.

A mutual fund is an investment company that pools the funds of individual investors to form a massive asset base and the money is invested by a professional fund manager.

The income earned through these investments are shared by its share holders in proportion to the number of shares owned.

There are many advantages of mutual funds but the foremost are liquidity, diversification and tax exemption benefits.

My tip is to parked your money for 7 years since it grows over time.

Mutual fund is the best medium for retirement and college education.

Since mutual funds qualify as securities and not deposits, they are not guaranteed, their values change frequently and past performance may not be repeated

However, fund managers and the funds themselves operate under strict securities regulations. For example, mutual funds are owned by the shareholders and are separate legal entities from the companies that operate them.

In the Philippines there are only few kinds of mutual funds namely:

1. Stock or equity fund
2. balanced fund
3. fixed income
4. money market

Those who are in their 20's and late 30's I advised that you invest in stock or equity mutual funds because time is on your side.
For the 40's and 50's balanced funds are the best and for the near retirement fixed or money market.

Browse www.icap.com.ph and choose mutual funds that fit your taste. In my case, I am inclined to First Metro Save and Learn equity and ATR KIM ENG equity.

You can invest online therefore take advantage of it and you can monitor your investment by checking the Net Asset Value (NAV) at Business World Newspaper or the website of your chosen mutual fund company.

Remember, mutual Fund will make you earn provided you have the patience.

Good luck.

nelcadelina.blogspot.com

next topic: The equity mutual fund

Pag-IBIG Fund as Retirement Savings

I worked in Pag-IBIG Fund for 3 years right after graduation. During that time the Fund was voluntary because of the backlashed that the Fund was a creation of Marcos. I have an open mind being a neophyte that a job in the government is better than not earning a single cent.

Im an activist during my college days but being with Pag-IBIG Fund for 3 years convinced me that the Fund was one of the good legacy of Mr. Marcos.

The idea is simple, Pag-IBIG will be provident savings program that is fast, easy and affordable way to save for future needs.

Since we as a people are slackers when it comes to savings, the government forced us to save thru salary deduction. The process is proven correct because the contributions I made as a member makes together with my employer counterpart are credited to my Total Accumulated Value (TAV).

This means double savings immediately with the addition of the employer counterpart contribution.

Aside from being fully guaranteed by the national government, members’ contributions are deducted from the gross income prior to computation of the income tax.

Members’ savings earn annual dividends that are also tax-free. The dividend rate varies depending on the net income of the Fund at yearend.

I bought my house thru Pag-IBIG Fund Housing program and I now have around P100,000 total accumulated savings since I started to be a member in 1989.

The vision of Pag-IBIG Fund is to promote and integrate a nationwide sound and viable tax exempt mutual provident savings system suitable to the needs of the employed and other earning groups, and to motivate them to better plan and provide for their housing needs by membership in the Home Development Mutual Fund, with mandatory contributory support of the employers in the spirit of social justice and the pursuit of national development.

My Pag-IBIG savings will be my supplementary retirement pay and because of this I am convinced that Pag-IBIG Fund is doing a good job and deserve a praise.

My friends at Pag-IBIG Fund, specially in Lucena Regional Office, I salute you!

nelcadelina.blogspot.com

next topic: Investing in Mutual Fund

The 3 months cash reserve for Emergency

Before we begin to invest, many financial advisers plead, ask and urge us to have a 3 months cash reserve fund for emergency. It is a very wise advise because if we have none we will be force to use our credit card or even worse withdraw our retirement savings to pay for hospital bills, funeral or home repairs.

It is therefore a priority for a Filipino Investor to build a 3 months cash of living expenses as an emergency fund that you can withdraw anytime. This can be in a savings account, time deposit or money market fund.

The amount to be saved differs for everybody but the rule of thumb is how much you need to survive in a month and then multiply it by three.

Be careful though in determining the amount by distinguishing what are your wants and what are your needs. You will be amazed how easy it is easy to build a 3 months cash reserve.

My best wishes, always.

nelcadelina.blogpsot.com

next topic: Pag-IBIG Fund as Retirement Savings