Models, China, and the Struggling Dollar

This article from SPIEGEL ONLINE says a lot about the dollar's state. I won't even elaborate anymore.

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SPIEGEL ONLINE - November 13, 2007, 02:18 PM URL: http://www.spiegel.de/international/world/0,1518,517060,00.html

WEST WING

A Pearl Harbor without War
By Gabor Steingart in Washington, D.C.

The dollar crisis has politicians alarmed worldwide. The US currency has lost 24 percent of its value since the introduction of the euro, and now there is even a chance that China could abandon its policy of pegging its currency to the dollar -- a problem the United States should take very seriously.

Patricia Bündchen, the twin sister and manager of the world's top model, announced that Gisele now prefers to be paid in euros rather than dollars. Almost simultaneously, the Chinese central bank predicted that the dollar is likely to lose its status as the world's leading currency.

One could easily overlook a supermodel's currency preferences, but China is a different story. It's the beast breathing down America's neck.

The most important country in the world for the United States isn't Great Britain, Germany, Saudi Arabia, Russia or Iraq. China holds that dubious distinction, because it is also the country the US can least do without. Without its willingness to buy an almost unlimited supply of US treasury bonds, there would be no American spending miracle. Without a spending miracle there would be no economic growth. In other words, without China the US superpower would lose a significant share of its economic clout.

Great Christmas Shopping Tips

'Tis the season to be jolly... and shop for gifts.

It's fun to shop, but I must admit, Christmas shopping can be really stressful.

Here are my tips for stress-free shopping.

1. Set your budget. Before I actually make my Christmas list, I first decide on how much money I can afford letting go.

2. Make your gift list. Almost all of us do this, I think. My list would be separated into four categories. (a) Family - mom, dad, sister, brothers; (b) extended family - lolo, lola, cousins, titos, titas; (c) Best friends - friends I often see; (d) Acquaintances - officemates, etc.

3. Set an amount per gift. Beside every name or group in this list, I put the estimate amount of my gifts. Then after that, I add everything and see if the total amount fits my set budget (see No. 1).

4. Assign possible gift options. Before I hit the stores, I put possible gift items that I can get for each person which will be within the amount that I have set (see No. 3).

5. Buy in bulk. Bulk items are cheaper. 'Nuff said.

6. Personalize. I get creative when giving gifts for let's say, officemates. I would sometimes make desserts and ribbon them. Or buy bulk cookies, candies or something. Repack them and put colorful ribbons.

7. Schedule your shopping. This saves you both money and time. Set a shopping day. Find out sale schedules and bazaar schedules that interests you. Also, being early eases some of the stress.

8. Hunt for the best deals.

9. Give. Always give something for the less-fortunate. It feels great for both you and them.

--
Here are Christmas shopping tips I got from the Philippine Daily Inquirer, Take Charge of Your Money.

The Rule of 72: What is it?

I learned this when I was 25 years old.

This rule was never taught in elementary, or even highschool math. Yet, this very useful tool is so easy to understand.

Simply put, the Rule of 72 should determine how long it would take for an investment to double its amount given a fixed annual interest .

For example, Php 100 invested at 10% would take 7.2 years to become Php200. Easy, right?

Here's the Formula: No. of years = rate / 72.

So now, how do we use this rule?

Here, look. Let's say you put that extra hundred in your pocket in a regular savings account. If you let it sit there and forget about it, will take you approximately 72 years for your hundred to turn into Php200! (I'm assuming savings gives us 1% rate of return.) That's a long, long, long, time.

But here's what I learned in Investopedia.com. Apparently, the Rule of 72 is only fairly accurate for low rates of return. As the rate gets higher, the rule gets less precise.

But then again, we can always use the future value formula if we want accuracy.

The Money Paradox by Efren Ll. Cruz

Funny, I haven't thought about this until Sir Efren posted this in our yahoogroups.

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Money	High Price/Return	Low Price/Return
Spending	with warranty	without warranty
Investing	not guaranteed	guaranteed

by Efren Ll. Cruz, RFP

Are you an impulse buyer?

I’m sure you are, if you got to read this far.

I must admit, there were times when I considered myself an impulse buyer.

When I was in college, my favorite weekend past time was to visit my favorite bookstores (plural, mind you). I’d stay there and browse every aisle. Eventually, when I leave the place, after hours of immersing myself in “literature”, I’d have bought myself a book. Did I need the book?

No.

Same goes for those cute pairs of slippers at 50% off. Those one-of-a-kind dangling earrings in the little shop around the corner. That new mp3 player… And the list goes on.
So I found this article by Marshall Loeb and I’d like to share it with you.

——————

Six ways to curb impulse spending

By Marshall Loeb, MarketWatch
Last Update: 12:01 AM ET Oct 23, 2007

NEW YORK (MarketWatch) — Is impulse buying taking a heavy toll on your budget? Here are six ways to get a handle on your spending:

1. Identify your triggers. Many people use shopping as an emotional outlet. But letting your emotions dictate your spending is nearly always a bad idea. To break yourself of the habit, try to determine what prompts you to spend unwisely and take steps to change your behavior.

2. Avoid temptation. If you’re inclined to overspend, consider a self-imposed ban on window shopping, casual browsing and unnecessary trips to the mall. Hint: If you know you’re going to be in a situation where you’re likely to be tempted, leave your credit card at home and only bring as much cash as you absolutely need.

3. Be a cautious consumer. You may think you’re immune to advertising, but even the savviest shoppers fall prey to marketing tactics now and again. Next time you find yourself eyeing a “new and improved” product, ask yourself why you feel compelled to buy it. Will that new golf club/razor/skin cream substantially improve your life or just deplete your bank account?

4. Take a time-out. If you stumble on a “must have” item, don’t get caught up in the excitement, advises MSN Money columnist Liz Pulliam Weston. Take a deep breath and walk away. Give yourself anywhere from a few days to a few weeks to figure out if this is something that you can afford and really need. After the cool-down period, if you can truthfully answer yes to both questions, go ahead and splurge.

5. Remember long-term goals. Before you buy, ask yourself if you’ll get more long-term satisfaction out of owning this item, paying down your debt or putting money toward that dream vacation. You may get a temporary boost from buying that scarf, but that doesn’t mean it’s the best use of your money.

6. Check you balance. If you find yourself standing in the checkout line, ready to buy something you’re not sure you can afford, hold off, suggests Weston. Go to your local bank or log on to your bank account online. Once you’ve viewed your balance, the purchase may appear far less enticing.

Marshall Loeb, former editor of Fortune, Money, and the Columbia Journalism Review, writes for MarketWatch.

Pacquiao's Paycheck

$7 million or 308 million pesos.

That's how much money Manny the Pacman made after his fight with Antonio Barrera last Sunday. (Inquirer story here.)

Not bad for a day in the ring, eh?

I just hope he won't hurt his body too much.

Peso seen to hit P43:$1

According to visiting HSBC economist, Frederic Neumann, our peso would hit P43 against the dollar by the end of this year. He also added that by next year it would hit P41 and would further rally to P40 towards 2009. (Inquirer story here.)

The rise of the peso is mainly driven by the huge inflow of dollars due to remittances of Filipino workers overseas.

Well, this is good news for some...

1. Importers
2. Travellers (to US)
3. Consumers

Bad news for the others...

1. Exporters
2. Families relying on dollar remittances
3. People with dollar funds.

Men with deep voices father more babies

Now this one's interesting...

According to a recent study, men with deep toned voices tend to father more children than their high-pitched counterparts.

Coren Apicella, a Harvard University anthropology student, spent six months studying the Hadza, a nomadic hunter-gatherer population from Tanzania. For her, they were ideal because they "provide a window to our past."

Hadza still sleep under the stars. Women gather berries and tubers while men hunt using the bow and the arrow. The Hadza are monogamous (but divorce rate is high) and they choose their own partners. They don't use birth control methods either, so they are what we can call a natural fertility population.

The study was pretty simple. It involved collecting voice recordings of 49 men and 52 women between ages 18 to 55 from nine different camps. They were made to say "Hujambo", meaning "hello" into a microphone.

Some analysis here, analysis there, and the conclusion (or maybe speculation?) was this. The reason why men with deep voices fathered more children is probably because they attract more women with their voice than their tenor counterpart.

Hmmm...

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Here's the full article by BBC News.

Enough of the NBN Deal

As Senator Miriam Defensor-Santiago put it, "it's a squabble over kickbacks, a waste of time."

Hay salamat. Somebody in the Senate finally said it. (Here's Inquirer's story.)

The NBN Deal brouhaha is taking up precious time from the Senate. They could have actually done something more useful with their time. I mean, the first hearing lasted until 9pm!

Personally, I don't think we need this anyway. $329 million for a broadband network, exclusive for the government is way too much, don't you think?

My Mutual Fund - First Metro Save and Learn Equity Fund - 2

Today, I added some more shares for my FAMI SALEF but it will not be credited until maybe tomorrow. I usually just scan my investment form and deposit slip and send it thru email but their DSL connection is not running yet so they won't be able to receive it. I guess I'll have to send it thru courier.

Recently, the FAMI office moved from 20F GT Tower to 18F PSBank Center.

For those who are interested to visit their office, here's the new address:

First Metro Asset Management Inc.,
18th Floor PSBank Center,
777 Paseo de Roxas Ave., cor. Sedeno St.,
Legaspi Village, Makati City.

Their phone number changed too: (632)891-2860 to 65, but they retained their old fax number: (632)816-0467.

The market is down...

... and I think it's time for me to buy some more of my equity fund shares.

Our company's special bonus arrived two weeks ago and another one will be credited next week.

Scarred with my recent losses, I have decided it's time for me to add to my FAMI SALEF shares. Although I don't really follow a pattern with my investing, like monthly or quarterly, this way, I am sort of doing cost averaging.

So there.

Monday, next week, I will make a trip to the bank. :-)

Battling emotions - conquering the investment world

We have this active yahoogroups moderated by Efren Ll. Cruz, RFP. He regularly shares with us articles he finds, facts, and other financial advices.

Recently, he shared this article by Jason Zweig. I think this would be timely.

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8 ways to tame your brain

The investing world is full of traps and our brains are wired to lead us into them.

By Jason Zweig, Money Magazine senior writer/columnist
August 23 2007: 4:05 PM EDT

(Money Magazine) -- Most investors think too much and end up making the wrong moves. Follow these 8 guidelines and make the right ones.

Avoid the "sure thing"

Your "seeking system" is especially turned on by the prospect of a big score, and that in turn will hinder your ability to calculate realistic odds for the success of an investment.
Be on your guard against any sales rep who tries to lure you with jackpot jargon like "can't miss," "double your money" or "the sky's the limit."

Remember: lightning seldom strikes twice

If you've ever had the taste of a big gain, you'll likely be tempted to try to get that feeling back. So be especially wary of investing in stocks or mutual funds that remind you of the one you made a killing on long ago; chances are, any similarities to another investment, living or dead, are purely coincidental.

Think twice

Making a financial decision while you're inflamed by the prospects of a big gain - or a huge paper loss - is a terrible idea.
Calm yourself down (if you don't have kids to distract you, take a walk around the block or go to the gym) and reconsider when the heat of the moment has passed.

Get away from the herd

If you are part of an investment organization, appoint an internal sniper whose job is to shoot down ideas everyone likes. (Rotate this role to prevent one person from becoming universally disliked.)
Similarly, if you're at a barbecue and your friends are talking up a seemingly great opportunity, speak to someone you respect who isn't part of the group before you jump in.

Lock up your "mad money"

Put at least 90% of your stock money into a low-cost, diversified index fund that owns everything in the market. Put 10%, tops, at risk on speculative trades. Be sure this "mad money" resides in a separate account from your long-term investments; never mingle them. Never add more money to the speculative account. (It's especially important to resist that temptation when your trades have been doing well.)
If you get wiped out, close out the account.

Control your cues

The stock market generates signals that can goad you into trading. Try watching CNBC with the sound off so that none of the hullabaloo about what the market is doing this second can distract you.
If you walk past the local brokerage firm every day so you can sneak a peek at the electronic ticker, take a different route. If you obsessively check a stock's price, use the "history" window on your browser to count how many times you've updated the price that day. The number may shock you.

Use your words

While vivid sights and sounds - say, red down arrows and scenes of mayhem on the exchange floor - fire up your emotions, the more complex cues of language activate analytical areas of your brain.
To prevent your feelings from overwhelming the facts and leading you to sell in a panic, ask yourself:
- Other than price, what's changed?
- Are my original reasons to invest still valid?
- Shouldn't I like this investment even more now that it's cheaper?

Track your feelings

Many of the world's best investors have learned to treat their own feelings as reverse indicators: Excitement becomes a cue that it's time to consider selling; fear tells them they should be thinking about buying.
I once asked renowned fund manager Brian Posner of Fidelity and Legg Mason how he sensed whether a stock would be a moneymaker. "If it makes me feel like I want to throw up," he answered, "I can be pretty sure it's a great investment."

My Mutual Fund - First Metro Save and Learn Balanced Fund

July 20, 2007.

I bought some shares of First Metro's Balanced Fund. At that time, the NAV was pegged at 0.9995 per share. However, First Metro doesn't sell below Php1.00 per share so I bought at 1 peso.

Php40,000.00 less 2% (sales load) got me 39,200 shares.

Market is really really shaky because of the subprime lending scare. So now, I have losses in both of my FAMI accounts. As of last Friday, my balanced fund has a NAVPS of 0.881.

Now let me see. My shares worth has shrunk to Php34535.20. The current market situation ate a huge 13.662% of my initial investment. Yikes!

I must admit, I am a bit worried, but during trying times, common sense is my best friend.

I told myself, "Stick to your plan, stick to your shares, your journey is just about to begin."

Yeah I'd like to think of this as the first speed bump in my journey into the world of investing.

Off Topic: Visited Countries

Wow! I actually have gone to 19 countries. Cool. :-)




Red means I've been there. Map was generated by www.world66.com.

Subprime Lending Jitters

Wiki-what: Subprime lending.

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So my question is:

What will I do with my extra cash? Should I look for bargains or wait till the market stabilizes?

Suggestions? Anyone?

Philippines' 40 Richest

This is old news. Forbes listed this December last year. I'll post this anyway. If only they could mentor me. Hmm....

Drumroll please....

1. Henry Sy
$4 billion
82. Married. 6 children.

2. Lucio Tan
$2.3 billion
72. Married. 6 children.

3. Jaime Augusto Zobel de Ayala
$2 billion
72. Married. 7 children.

4. Eduardo Cojuangco
$840 million
71. Married. 4 children.

5. George Ty
$830 million
74. Married. 5 children.

6. John Gokongwei Jr.
$700 million
80. Married. 6 children.

7. Tony Tan Caktiong
$575 million
53. Married. 3 children.

8. Andrew Tan
$480 million
57. Married. 4 children.

9. Emilio Yap
$350 million
81. Married.

10. Oscar Lopez
$315 million
76.


11. Enrique Razon Jr.
$285 million
46. Married. 2 children.

12. Andrew Gotianun
$280 million
78. Married. 4 children.

13. Enrique Aboitiz
$275 million
84. Married. 7 children.

14. Alfonso Yuchengco
$225 million
83.

15. Menardo Jimenez
$210 million
74.

15. Gilberto Duavit Jr.
$210 million

17. Ramon del Rosario Jr.
$205 million
62. Married. 4 children.

18. Felipe Gozon
$180 million

19. Beatrice Campos
$160 million
Widowed. 5 children.

20. Luis J.L. Virata
$150 million

21. David M. Consunji
$145 million
85. Married. 8 children.

21. Bienvenido R. Tantoco Sr.
$140 million

23. Betty Ang
$115 million

24. Manuel Villar
$110 million
57.

25. Mariano Tan
$100 million

26. Rolando & Rosalinda Hortaleza
$90 million

27. Oscar Hilado
$85 million
69. Married. 3 children.

28. Vivian Que Azcona
$80 million

29. Manuel Zamora
$75 million
66.

30. Magdaleno Albarracin Jr.
$73 million
70. Married. 1 child.

31. Jesus Tambunting
$70 million
69. Married. 4 children.

32. Frederick Dy
$65 million
51. Married. 3 children.

33. Tomas Alcantara
$60 million
60. Single.

34. Lourdes Montinola
$50 million
78.

35. Salvador Zamora
$45 million
59.

36. Antonio Roxas
$40 million
64.

37. Wilfred Steven Uytengsu Sr.
$38 million

79. Married. 3 children.

38. Philip T. Ang
$35 million

39. Marixi Prieto
$30 million
66. Married. 5 children.

40. Manuel Pangilinan
$25 million
60. Single.

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See the comprehensive list here.

Stocks Slides Down, and so?

'Stocks continue to slide" <--- www.inquirer.net Business section headline

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And so are my mutual funds. What do I do?

An investor overcome by emotion loses. I have incurred paper losses, yes, but common sense, of course, tells me not to sell.

Why? Because, if I do, I would convert my paper losses into real monetary losses. Yikes!

Generally, I was not affected by the stock market scare last week. I am not a trader but a long term investor. So as long as I have decent returns when it's ripe for me to redeem my shares then I will be fine.

Yep. Optimism really helps. :-)

Energy Saving: Rice Cooker vs. Microwave Oven

May I digress...

Our highschool batch yahoogroups discuss interesting topics in our threads. We have topics ranging from tuna chorizo to the effects of laptops on men's fertility.

The "hot" topic today was cooking rice using the microwave.

Apparently, some of my friends have been nuking their rice and it struck me as amazing. Naturally, I "googled" around and saw some tips on how to do it. For my friends "technique" involves "microwaving" the rice at 5 minute intervals and stirring until done. Generally, they said, it takes them 14 to 15 minutes to cook their rice.

Now, I cook rice using the rice cooker. I prefer leaving it there while doing other stuff while I wait for it to be done. Now here comes my question:

Which of the two methods would be more energy efficient?

So, again, I "googled" around. I am lucky. Believe or not, four Indian scientists did a study comparing the energy consumption of cooking rice using the microwave, electric rice cooker, and the pressure cooker.

The title of the paper is "Energy consumption in microwave cooking of rice and its comparison with other domestic appliances" and was authored by S. Lakshmi, A. Chakkaravarthi, R. Subramanian, , and Vasudeva Singh.

I didn't have access to the full paper ( I'd have to buy it), but the abstract gave me what I needed to know.

Among the cooking appliances, the electric rice cooker was the most energy-efficient while the microwave had the least cooking time (15 - 22 min). Now, this one's useful, right?

And oh, here's the bit that interested me the most. Presoaking the rice will save us energy between 5 to 11%. :-)

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Related to this here's a blog by The Ethicurean.

Investopinoy's "cameo" appearance

Interesting post by moneysmarts yesterday.

I was there too! :-D

A dummy's guide to mark-to-market valuation

Holiday Economics - a new law

Yep! The practice of shifting legal holidays to the nearest Monday is now a law. Hooray for employees like me!

President Gloria Macapagal Arroyo signed Republic Act 9492, "an act rationalizing the celebration of holidays", into law yesterday.

However, not all holidays are included in this law. Exempted are religious holidays: Christmas Day (December 25), New Year’s Eve (December 31), New Year’s Day (January 1), Holy Thursday, Good Friday, Easter Sunday, Eid’l Fitre (October 13) and All Saints Day (November 1).

Click here for the whole story.

My Mutual Fund - Prudential Optima Fixed Income Fund

My first ever mutual fund was with the Prudential Optima Fixed Income Fund.

For my first investment, I shelled out Php10,000 (min. investment is Php5,000). 2% was taken out as sales load so I was left with Php9,800 to purchase the shares at 1.2133 equivalent to 8,077.14 shares.

So let me see, as of July 20, last Friday, Prudential Optima was worth 1.4041 per share. My Php10,000 is now worth Php11,341.11. That's around 13.4% return in 14 months. :-)

Im happy.

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Important:
Contents of this post is personal and does not endorse Prudential Optima. For information about their products you may visit their website at http://optima.prudentialife.com.

My Mutual Fund - First Metro Save and Learn Equity Fund

Last year, I made my first mutual fund purchase.

It was with the First Metro Save and Learn Equity Fund (FMSALEF).

I started small, just placing a little over their minimum of Php5,000. I had saved up Php6,000 from my minimal workers salary for the first 4 months in my job. It was really teeny-tiny since after the 2% sales load, I was left with Php5,880 to invest, but I was really excited with it. Anyway, that money bought me 3,990 shares at 1.4735 NAVPS (Net Asset Value Per Share).

I have made subsequent purchases of SALEF after that. As of last Friday, June 20, the NAV for SALEF was pegged at 2.3544 per share. My Php6,000 is now worth Php9,394.05. That's 56.6% return after a year and a month. :-)

Not bad, really. Considering a time deposit would give me only 3.5%.

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Important:

I am not directly affiliated with First Metro Investment Corporation. If you want to get more information about their products, you can visit their website at www.fami.com.ph.

Cheers!

What is a Contingency Fund?

A contingency fund is also called as your emergency fund or “safe and sound” money.

By definition, according to most financial planners in the US, the emergency fund should be equivalent to 3 months worth of your living expenses if you’re an employee. This amount will be higher if you’re self-employed, around 6 months worth.

Why 3 months? This time-frame is based on the average time a US employee would find employment in case he/she loses her present job, thus the name “emergency” fund. In the Philippines, we don’t know the average time a Filipino employee would take to replace a lost job but with our current unemployment rate, I assume it would be safe to save up more than 3 months worth. Maybe 6 months will be enough or higher if you want.

Next to debt payments (if you have any but better if you don’t ), building the contingency fund is the next step to financial freedom. This money should be kept in instruments where it is accessible but also pays a decent interest. Now, bear in mind that you want capital preservation for this fund so I would not recommend putting this into stocks or any high risk investment instruments. You can opt for a savings account if you want to be very liquid, but then again you can look into time deposits, T-bills, or a well-managed low risk mutual fund for example.

It is always safe to save for the rainy days, they say. Build your contingency fund so that if you fall hard, you will have a cushion to fall into.
Good luck to us!

What is a Mutual Fund?

There are a number of ways to keep your money.

Aside from the usual savings and time deposit, you may have heard (or not) of an instrument called mutual fund.

This industry is relatively young in the Philippines as compared to older economies like the United States.

I visited www.icap.com.ph, the official site of Investment Company Association of the Philippines and here is how they defined Mutual Fund.

What is a Mutual Fund?

A Mutual Fund is an investment company that pools the funds of many individual and institutional investors to form a massive asset base. The assets are then entrusted to a full time professional fund manager who develops and maintains a diversified portfolio of security investments. People who buy shares of a mutual fund are its owners or shareholders. Their purchases provide the money for a mutual fund to buy securities such as stocks and bonds. A mutual can make money from its securities investments in two ways: a security can pay dividends and interest to the fund, or a security can rise in value. The fund passes any dividends, interest or profits on the sale of its portfolio securities, less fund expenses, to shareholders in the form of distributions.

In the Philippines , there are currently four basic types of mutual funds---stock (also called equity), balanced, bond and money market funds. Bond funds invest primarily in bonds such as treasury notes issued by the Philippine government and commercial papers issued by reputable companies in the Philippines . Having a full basket of only fixed-income securities, bond funds provide capital preservation while maintaining a conservative stance in terms of asset allocation. Like bond funds, money market funds also have a conservative stance since they have a full basket of fixed income funds. The main difference lies in the term of investments of money market fund investments, which is one year or less. Equity funds invest primarily in shares of stock issued by Philippine corporations. The dominance of stock issues within the portfolio positions the fund to attain a more aggressive rate of growth. Balanced funds invest in both shares of stocks and bonds, thereby accessing the growth potential of stocks tempered with the presence of secure fixed-income instruments. Professional fund managers create value for shareholders by providing superior yields within controlled risk exposures. Certainly, expective in both security selection and asset allocation go a long way in ensuring better long-term rewards for mutual fund investors. (Source: Investment Company Association of the Philippines)

What's your saving habit?

Every person has their way of keeping money. Here's mine.

1. I pay myself first.

I set aside a minimum of 20% of my paycheck (gross). The moment it is credited to my employee account, I take a mental note of how much 20% is and round it up to the nearest hundred. I set this aside (mentally) and discipline myself not to touch it.

2. I have my biweekly allowance.

Since my paycheck arrives biweekly (ours is every 10th and 25th of the month), I automatically get a fixed amount which goes into my wallet. This amount is based on a budget I made that will supposedly cover my daily expenses, like food, transportation, leisure, etc. How much this is, I won't disclose. ;-)

3. Plow back extra money into my savings.

At the end of the two week period, any extra money that I have goes into my savings. This is after I have paid any bills, loans, and whatnots.

4. Create a separate account for emergency fund.

This I still have to follow religiously. I created a separate account where I can put my emergency fund. Part of my savings goes here.

5. Finally, I spend wisely.

I shop around before I buy. Every major purchase I make is made with a decision. I'm allergic to impulse buying.

Mama's Advice on Buying a Property

Two weeks ago, my mother and I had this conversation over the telephone.

me: Ma, my stay with our company dormitory will expire January next year (2008), I have to look for a place as early as now.

mama: So what are your plans, anak?

me: Well, I was thinking maybe, if I can afford it, I'll buy a house or a condo somewhere near my work.

mama: Do you really think you need to purchase a property? You're still young, anak, and still mobile.

me: Sayang kasi ang rent money, ma. Maybe if I could get a place with a rent to own scheme? What do you think? Should I rent or buy?

And here's what my mama told me:

Ask yourself these first: What will be my purpose for the place? How long do I think I will stay there? Do I see myself moving in a few years? Months?

Now, should you decide in acquiring a place you should ask yourself these questions:

1. Will it or does it serve your purpose?
2. What is it's business potential? Will it be easy to sell or rent out when the time comes that you won't need it anymore?
3. Is the location good? Does it have any hazards? How are the surroundings? Will it be prone to flooding during the rainy season?
4. How about the price of the property? Do you think it is undervalued or overvalued? What were the materials used? Did it use high quality building materials?
5. Who are the builders of the place (if it is new)? Who were the previous owners (if pre-owned)?
6. What are the financing schemes? What are the terms of payment? Is it reasonable? Do you think you will be able to afford the mortgage?

me: Ma, so will I buy now rent first?

mama: Assess your cash outflow. Can you afford the monthly amortizations? Will you be able to handle the maintenance costs of your house? Or if you buy a condo, will it still fit your budget if you include the association fees, etc.? You must first assess your capacity to pay or else your property will eat up your salary.

me: Oh, ok. I will ma.

Then, our conversation shifted to something else...

After some thought about the matter, here's my conclusion. Maybe it's wiser for me to rent first and wait for the time that I will be able to really afford my own place. (Which I hope will be soon.)

PAG-IBIG Lowers Interest Rate

26th of June 2007, Wednesday

Good news for those planning to acquire their homes through Pag-ibig.

Here's an Inquirer report (by Cynthia Balana) that caught my eye:

Pag-IBIG Fund lowers loan rates

InquirerLast updated 06:58am (Mla time) 06/27/2007
MANILA, Philippines -- The Home Development Mutual Fund, popularly known as the Pag-IBIG Fund, has further lowered the interest rate on housing loans between P300,000 and P750,000 to seven percent, Vice President Noli de Castro said Tuesday.

The time Pag-IBIG cut interest rates on its housing loans was in November 2006.

De Castro, chair of the Housing and Urban Development Coordinating Council, said the rate reduction was meant to make housing truly affordable and accessible to ordinary workers.

He said the latest cut in interest rates targeted members in the middle-income bracket or those earning P16,000 to P20,000 per month.

He said this group constituted 23 percent of the labor force based on the statistics of the National Statistics Office.

“This is the next logical step to take. Remember that in November 2006, we already addressed the affordability issue of the lower income brackets, or 77 percent of the work force, when we reduced the rate from nine to only six percent per annum for a P300,000 housing loan,” De Castro said.

At seven percent, the monthly amortization, including principal and interest, is now down to P4,990 from P6,860 previously for housing loans of P500,000 to P750,000.

De Castro stressed, however, that carrying out “an honest to goodness interest reduction scheme” should also be complemented by streamlined loan requirements.

He directed Pag-IBIG Fund officials to look into the requirements of banks to see how the institution could further improve in this area.

Cynthia D. Balana

Link to the inquirer.net.

Give up Starbucks?

The cost of Starbucks.

I two close friends working at this call center in Makati.
At the end of the week, I would sometimes drop by their office right before they start their night shift.

Starbucks is right beside their building and I can't help but notice that the place is always full of call center agents. Some would be having coffee right before they go to work while some would bring their mochaccinos up to their stations.

Now, a thought just came to me. It is safe to assume that one of these agents would have bought at least one Starbucks coffee every single work day. Being a personal finance addict, I cringe at the thought. I can already imagine how much money is wasted from their paycheck!

So here, I will try to run the numbers and see how much one can save sans the tall frapuccino.

Let's assume that one tall frap is Php120 and an agent works 5 days a week.
So that's Php600 as week. Multiply by 4, that's Php2400. Hmmm... so assuming, just assuming, this agent gets paid Php15000 a month. Then, the daily caffeine fix would have eaten up a whopping 16% percent of this agent's total monthly income!

Had this person refrained from buying the green coffee, and instead dunked the Php2400 to his savings. This would have earned him yearly savings of Php28800.

Hmm... Now if this was invested in an instrument, let's say, a very good mutual fund... The results would have been better... But I don't have my calculator right now. So I'll skip this.

Maybe in my next entry I will continue this Starbucks story.

The one who says, "Own the Internet"

A few months ago (around February of March?) a friend sent me an email about a web company called Agloco. Well, I checked it out.

Agloco is just short for A Global Community. It's tag line says "Own the Internet".

Here's what I took from their site:

What is AGLOCO™ all about?

AGLOCO™ is the first Internet based economic network, which enables you
as a Member to Get your share of the Internet. Advertiser's, search
companies, online merchants and other businesses currently pay lots of
companies to deliver people like you to them for attention and commerce.
With AGLOCO™ they will be paying YOUR company. AGLOCO™ is also a global
community of Internet users whose active Members can paid for all their
online activity. By downloading our proprietary Viewbar™ technology, members
benefit from engaging content tailored to their interests. AGLOCO™ also pays
its members to refer their friends to the community (and for those friends
to refer more friends through four levels of extended referrals.

After reading, I told myself: Why not give it a shot? Right?

So maybe you can check it out too.

Here's the link to my agloco. :-)

http://www.agloco.com/r/BBCZ1508

How does the Filipino spend?

I stumbled upon a fact sheet released by the Senate Economic Planning Office which highlights the final results of the National Statistic Office (NSO) 2003 Family Income and Expenditure Survey (FIES).

Here are the bits and pieces that caught my attention:

1. The average family income increased by 2.5% from 2000 to 2003.
Take inflation in, it actually declined by 10%.

2. Lower-income families spent more than they earned.

3. Income of the richest 10% is 20 times more than that of the poorest 10%.

4. Food takes up almost half of the total family expenses.

5. By 2003, the family tends to eat out more than in 2000.

6. Spending on transportation and communication increased.

This data of course is a bit outdated but we can somehow see where our money goes. I wonder what the numbers would be in 2007.

The Beginning

The idea of having a blog came to me yesterday while I doing a monthly summary of my personal expenses.Before that, I was reading the Moneysmarts blog of Salve Duplito which led me to entrepinoys.blogspot.com by Eu-Leh and so on.

To cut it short, I was inspired.


So here it is. Investopinoy begins.