My Mutual Fund - First Metro Save and Learn Equity Fund - 3

It's been long since I last posted. I am now in Japan so I haven't made any transactions with First Metro.

Anyway, stocks are getting a beating nowadays, so I was doing my 'strategizing' (in my newbie kind of way) on what to during these low times. Finally, after some thought, I decided to just stick it out and 'forget' about my investment. Yes. Forget. For the time being.

Why? Well, the logic here is really very simple. Humans are born emotional, and when it comes with their hard-earned money, the emotions spikes up to double, triple, or even a hundred fold! And guess what's bad for your investment? Yep. Emotions.

So, as what most couples do to heal themselves during a break-ups, they forget, or at least try to forget. Then, after some time, when everything has settled, life becomes pink again.

I'd like to think of my relationship with investing as such. No rash actions. I just have to calm my thoughts and wait patiently until I make my next move.

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By the way, First Metro has a new website up and running. Their old site (www.fami.com.ph) has a dead link, I thing. Here's the new site: http://www.firstmetrofunds.com.ph

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.

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

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.

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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.

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."

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.

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!

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.)