It’s back! Discounted book bundles

Due to numerous requests, we are bringing book our book bundle promo for No Nonsense Personal Finance: A Step by Step Guide and Money Manifesto: Lessons in Personal Finance.

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Both books are valued at P1,100 but you can now get both books at a special price of only P900! And here’s more, shipping to Metro Manila addresses will be FREE during the promo period. Provincial address, please add P100.

Both books are certified best-sellers and have been changing lives of many Filipinos. My books have been endorsed by Francis Kong, Chinkee Tan, Coney Reyes, Christian Bautista, Rica Peralejo, Dennis Sy, Marvin Germo, BSP Dep. Gov. Diwa Guinigundo, Riza Mantaring, Rex Mendoza, Dr. Alvin Ang, Carl Dy and many more!

Here’s how you can avail the promo:

1) Pay via BPI 0249-1113-09 or BDO 006440069496.

2) Take a screen shot of the deposit slip or transaction advise.

3) Email the screen shot to [email protected] and provide your complete address and contact number.

4) Indicate in the email if you want the books autographed.

5) Expect the books in a few days via Xend.

Don’t miss this special promo to get copies of my life-changing books and begin your quest for financial peace!

Hurry! Promo ends this Friday, August 7, 2015.

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Teaching Kids Money

Question: Hi Randell. I’m a mom of two kids—a 3-year-old girl and a 4-month-old baby. I know that they’re still too young to understand what money is, but my husband suggested that we already start teaching them the value of money. I think this is a good thing. Soon, they will be in school and I want them to use their allowance wisely. What’s the best way to do this?—Dina, from Facebook

10408515_10152966198194252_2975267064465762708_nAnswer: Dina, I’m glad you’re already thinking about how to pass on important money lessons to your kids—especially since money management is not part of the typical school curriculum. As a parent, your kids will look up to you for these important financial lessons. In fact, research says that kids start inheriting money habits from their parents as early as 7 years old. Early childhood is a great opportunity to pass on healthy attitudes towards saving and investing.

Your kids are indeed young, but if your 3-year-old is old enough to count, then she is old enough to start learning about money. Start by sneaking in some money lessons in a playful manner. For example, nursery rhymes are a great way to start instilling a money mantra. Create a simple rhyme like, “See a coin? Save a coin!” and mimic the act of putting a coin in a piggy bank. Your little girl might not understand what this means right now, but just like “Mary had a little lamb,” this could stick with her for life.

Storybooks are another great way to pass on positive financial habits. I recommend Rose Fres Fausto’s The Retelling of the Richest Man in Babylon, which is a story and activity book that teaches kids the basic laws of money. Go through the activities with your daughter—it’s a great reminder to adults just how simple these laws are.

By the time your kids are old enough for kindergarten, they can already have their own bank account. This will be important in terms of teaching them how to save, and teaching them that money should be protected. At this age, kids don’t understand abstract concepts like mobile deposits. So you need to make the lesson stick by having them do tangible interactions.

Bring the kids to the bank and encourage them to hand the money to the teller while making the deposit. Show them the bank book and explain that this money can grow if they leave it in the bank and don’t withdraw anything. Help them understand that these are savings they can someday use to buy a car or go to college.

Once your kids are in grade school, you can build upon these financial fundamentals by setting mid-term goals—the kind that requires a bit of discipline and teaches sacrifice. For example, if your child wants to buy a bike, explain that she needs to set her allowance aside for a few weeks in order to afford it. To boost her motivation, you can track progress with a visual graph.

Bringing the kids when you do the groceries offers great opportunities to teach smart financial decision-making. For example, you can compare several brands of cereal, and show that the imported ones taste just like locally made ones—but costs twice as much. And that’s why you won’t buy it. When your kids are older, you can give them a budget and a grocery list, then divide and conquer supermarket duties.

Introducing the benefits of charity and tithing is also a good way to teach healthy money habits. Encourage your kids to donate part of their allowance to a charity or non-profit. You can also volunteer your time as a family, or hold a birthday party in an orphanage. Doing charity work at a young age develops the core value of sharing their wealth to others in need, while teaching them to appreciate the material goods they have. Tithing also teaches them about stewardship and that money is really the Lord’s — they are merely managers. Teaching kids the true purpose of money is a great way for them to see and appreciate its real value.

For these strategies to be effective, you and your husband need to be good financial role models to your kids. Your words and actions should not contradict each other, especially while your kids are young. For instance, if you tell your daughter she can’t buy a toy because it’s too expensive, and you turn around and buy something for yourself, it sends her the wrong message.

Besides teaching your kids how to save and budget, it’s important to pass on a healthy attitude towards money. Giving the impression that you’re struggling to feed the family can instill a fear of money in young kids. Avoid sighing when you open your credit card bill or complaining when you take your wallet out to pay for something. Choose your words carefully. Emphasize that when used carefully, money can be a valuable tool to a good life.

It’s never too early to start teaching kids the value of money, and I’m glad you and your husband are already thinking of how best to do this. I’m confident that you will do a fine job in raising money-smart kids.

“Train up a child in the way he should go; even when he is old he will not depart from it.”—Proverbs 22:6, ESV

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Get both my books at a discount bundles! Instead of P 1,100 for both books, you can now get it at only P900 with free shipping for Metro Manila (add P100 for provincial address).

Here’s how you can order:

1) Pay the amount via BPI 0249-1113-09 or BDO 006440069496.

2) Take a screen shot of the deposit slip or transaction slip.

3) Email the screen shot to [email protected] along with your complete address and contact number. Indicate in the email if you want the books autograph.

This offer is only until August 7, 2015.

 

 

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Thoughts on “The Last SONA”

pnoysona2015A lot of controversy surrounds President Benigno Aquino III’s last SONA, but whatever you think of the man, the economic improvements under his tenure are undeniable. In the span of six years, we’ve gone from “Sick Man of Asia” to “Asia’s Rising Tiger,” “Asia’s Rising Star,” and “Asia’s Bright Spot.”

For the very first time, the Philippines has been rated as “investment grade” by the leading credit agencies in the world (S&P, Fitch, and Moody’s). This is no small feat, and the President deserves applause for his role in this achievement.

Domestic investments are also on the rise. In the President’s words, “ngayon, ang Pilipino, tumataya sa kapwa Pilipino.” From 2003 to 2007, only P1.24 trillion was invested domestically. From 3rd quarter 2010 to 2014, that number rocketed to P2.09 trillion, showing that Filipinos believe in the local economy and are staking their bets on it. I myself have seen this improvement in the increasing number of people asking me how they can invest.

The President touted the increase in net foreign direct investments (FDI), up to USD 6.04 billion in 2014, the highest ever. But I think this is an area that could still use some improvement. As recently as last year, reports showed that the Philippines has the lowest FDI to GDP ratio among Asean countries, as only 1.12% of our GDP came from FDI. Steps must be taken to increase FDI inflows and keep them; this involves loosening regulations that limit foreign investments.

After the President’s fourth SONA, I expressed that there needs to be more and better jobs for growth to be truly inclusive. In this year’s SONA, he pointed to the decreasing number of OFWs, a drop in the unemployment rate to 6.8% last year, and only 15 total workforce strikes in the last five years as a sign of an improving labor climate in the country. Programs like TESDA have helped more Filipinos find jobs, which can only be good for the economy.

Overall, to me, these numbers are good, but the most important achievement of President Aquino is there was a big improvement in the battle on corruption. The World Economic Forum has stated the anti-corruption drive propels the Philippines 33 places up its rankings. The stark improvement of international perception on diminishing corruption is one of the President’s biggest contribution. This not only makes foreigners more likely to invest, but locals as well. This foundation initiated by the President sets the stage for more economic improvements in the future.

Of course, there is still room for improvement, and I know that some of the reforms will take a long time before we can see any positive effects. But I believe that the fundamentals of our economy are good, no matter who takes over. And if we stay on the right track, we can prosper as a nation.

Let us continue to pray for our beloved nation. Blessed is the nation whose God is the LORD, the people he chose for his inheritance.” – Psalm 33:12, NIV

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Why you should stay away from Success 200

Ponzi-scheme-1It almost feels like every week there’s a new scam that the SEC has to warn Filipinos about. Online investment scams are becoming more common these days as more Filipinos log on to the internet and use it in their day-to-day lives.

This week, the SEC issued an advisory warning people against Success200, telling investors to “exercise self-restraint from investing their money into such investment scheme,” which is a nice, polite way of saying “don’t put your money in this scheme.”

What is Success200? The company is essentially a scheme that asks investors to put in anywhere from P1,800 (low-end) to P36,000 (high-end), with a promised return of P10,000 to P200,000 upon payout exit, respectively. That’s a “guaranteed” ROI of 455.56%, which is unrealistically high and should already set off the warning bells in your head.

On their website, Success200 state that they are a “iuly [note: the typo is theirs, not mine – I assume they meant “duly”] registered domestic corporation with the Securities and Exchange Commission with SEC Registration No. CS201509200 issued May 12, 2015.” But just because a company is registered with the SEC, it doesn’t automatically mean they are authorized to take investments from customers. The SEC itself says in the advisory that the company has not obtained permission to solicit investments, as required under Section 8.1 of the Securities Regulation Code.

Because they have no license to take money for investments, you should not give them your money.

In their defense, Success200 state on their site that they are not an investment company; instead, they claim that they are simply in the multi-level marketing industry. But what are they marketing? The product is supposedly “pure agaricus capsules”, but to earn anything from the scheme, each participant HAS to recruit two other people. In addition to that, each person has to put in money.

Of course, some multi-level marketing opportunities can be legitimate. But if it looks like a pyramid scam, well, you know what they say; if it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck. And if the SEC is warning you away from certain investments, then they have good reason to do so.

Don’t lose your money to scams like this. Many victims of scams aren’t rich; they’re regular working-class people who were duped by fraudsters. Just because someone on an internet forum said that they earned money from one of these schemes doesn’t mean it’s reliable. And just because they have one form of SEC registration doesn’t mean they’re actually allowed to take your money as investments.

If you come across an opportunity like Success200 that’s too good to be true, it probably is. Protect yourself by consulting this handy slideshow on how to detect an investment scam, and doing more research on your own, before putting your hard-earned money in anything. And for investments you can make for just P5,000, you can read this MoneyMax.ph article on the topic.

Read the SEC advisory here.

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What you can learn from the Chinese stock market crisis

While the world had its eyes on Greece and the Eurozone, something big was happening closer to our doorstep — a 30% drop in the Shanghai Composite Index in the span of just three weeks. Hundreds of companies stopped trading, and the Chinese government brought the hammer down to try to stop the skid, even threatening to arrest people who short sell. Many analysts think that these actions may have just made things worse.

china economy

(Photo from HERE)

The Chinese stock market, before this drop, had been having a ridiculously good run, soaring on the wings of individual investors. These small investors started buying a lot of stocks over the last year with borrowed money (also known as margin financing), encouraged by the government to invest in the stock market. Because of this borrowing, more than 80% of Chinese investors are small-time individuals; in most other markets, investors are mostly institutes. The influx into the stock market sent valuations skyrocketing. The Shanghai index increased over the last three years without matching the growth rate of the Chinese economy.

But what goes up must come down, and that’s exactly what happened. Because the growth was being driven by momentum and not fundamentals, people began to fear that it was unsustainable, and began to sell, triggering the steep drop in stock prices. In the long term, the real value of these stocks will be and should be reflected by the market.

So what does this mean for the regular Filipino? At the moment, the Chinese economy’s downturn won’t have lasting effects on us for the short term. The companies listed in the Chinese stock markets are not directly connected to the Philippine economy. This means that ordinary Chinese are taking most of the impact of the crash.

And even after the stock market plunge, China’s economy is still growing at the predicted pace. They already released their second quarter 2015 growth at 7% — although there are questions about the validity of this figure.

However, it’s the threat of a slowed-down Chinese economy that would be a problem for us. If China’s growth falls below 7%, that could affect many of manufacturers in ASEAN including the Philippines — since our region provides a portion of the intermediate goods for China to finish or complete.

There are a few lessons you as an individual investor (or one trying to be) can take from the Chinese stock market crash, though:

1. Don’t sell in a panic. A lot of people’s first instinct, when faced with a crash, is to sell, which just makes the crash worse. Don’t panic; always have an eye on the medium- to long-term. With the strong fundamentals of the Philippine economy, more likely than not any dip caused by panic about the Chinese stock market will ease over time.

2. Focus on the internal strength of the economy. Many of the infrastructure projects are limited to local blue chip firms. They should be setting the stage for future returns once these projects go online. Hopefully these projects funnel and facilitate the movement of income from these big firms to the smaller ones.

3. Don’t borrow money to invest. I would recommend that you only invest money you already have and won’t need in the medium- to long-term instead of getting margin loans to make investments. When you buy stocks with borrowed money, you can’t afford to ride out a crash by holding on to your stocks until prices climb back up; you have to sell what you can so you can pay back your lender. And if the market has fallen by a lot, you might lose all your money and can’t repay your debt. Only invest what you can afford to lose.

All these economic crises hitting at once may make you worry about your own investments. But the Philippines, despite being exposed to China’s volatility, is still targeting 7 – 8% growth, according to Economic Planning Secretary Arsenio Balisacan. We still don’t know how we’ll be ultimately affected by what’s happening in China right now, but the effects should be manageable in general.

If you’re an investor, remember to stick to your investment timeline and long-term goals, and keep an eye on the China story as it develops over the next few weeks and months but do not be in fear.

——————

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Get my best-selling book in discounted book bundles and comes with free shipping!

No Nonsense Personal Finance is at P500.00 and Money Manifesto at P600.00. If you get the both books, it will now be just P1,000.00 and comes with free shipping!

Here’s how you can order:

1) Deposit to BPI # 0249-1113-09 (John Randell Tiongson)

2) Send copy of deposit slip to [email protected] with your full address and telephone number.

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Money Summit 2015

The best investment is learning! Join Money Summit & Wealth Expo this July 17 & 18, 2015 at the SMX Aura.

To know more about the event, visit their website at http://money-summit.com/

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A basic guide to ETF’s

ETFI’ve said before that I pray that more Filipinos become moderate investors, even if most of them are conservative now. A good way to become a moderate investor is by educating yourself on the different investment instruments, and distributing your investments across them.

One investment instrument that gets a lot of attention is “pooled funds”, in which you join a “pool” of other investors, and a fund manager handles the whole pool of money depending on the objectives of the fund. Mutual funds and UITFs fall under this category.

But there’s a relatively recent addition to this category: ETFs, or exchange traded funds. ETFs became available in the US in 1993, Europe in 1999, and the Philippines in 2013. While there are many types of ETFs available in more advanced markets, they haven’t made a big splash here yet. I’ve been getting a few questions about ETFs, so I’ve put together a basic guide here so you can learn more about them.

What are ETFs?

An exchange traded fund is an investment fund that’s traded like a stock. There are lots of kinds of ETFs; some of them track foreign stock market indices, specific sectors like energy or oil, or commodities.

But the most basic type of ETF simply tracks a benchmark index to match its performance. So if an equity index ETF is tracking the Philippine Stock Exchange index, its underlying securities would consist of stocks like Ayala Land, SM Investments Corporation, PLDT, BPI, and so on, much like an equity mutual fund or UITF.

In short, think of an ETF as a mutual fund that you can buy and sell on the stock market. And because ETFs are traded like common stocks, they don’t have a NAVpu or NAVps like UITFs or mutual funds; their share prices change throughout the day as the market trades.

Basically, you get the diversification of a mutual fund with the flexibility of stock trading combined in an ETF.

What are the pros and cons of ETFs?

Pros:

  • Cheaper diversification. Buying into just one ETF gives you exposure to a whole group of equities, meaning you don’t have to buy each individual stock yourself. So for a small amount of money, you can have a diversified portfolio. Anybody who can buy the minimum board lot can therefore participate in the growth of the Philippine economy. And ETFs are transparent about their structure; you can just visit their site and see the underlying securities that make up the fund (and in what percentage).
  • Can cost less than actively managed funds. Mutual funds charge management fees of around 2%. UITFs can have trust fees of 0.20% to 1.50% per year. With buying and selling stocks, your costs will be lower. This is because an ETF is passively managed, meaning you’re not paying a fund manager for his services; you’re just paying brokerage fees.
    • Here’s an example to make things clearer. If you invest Php 50,000 in a UITF, you’d pay up to P750 (1.50%) in fees. (There may also be fees for early redemption.) Compare that to the total trading costs of buying Php 50,000 worth of an ETF on the PSE, which is P147, and P397.50 when selling. These small differences add up to a lot, so ETFs can be cheaper cost-wise in the long run.

Cons:

  • Can’t beat the market. Because an ETF is designed to track an index, its aim is not to beat it, but just to match it. So if you were looking for investments to beat the PSE, you’d be better off with actively managed funds that seek to beat the index. You’re well diversified when you buy into an ETF, but remember: diversification limits your losses, but it also limits your gains.
  • Can cost more than other pooled funds. If you like to invest small amounts regularly, like Php 10,000 each month, you’ll get charged for every transaction when you buy into an ETF. If small, regular investment is your strategy, you may be better off with a mutual fund or UITF that doesn’t charge you transaction fees each time, which can reduce your returns.

What options are available to the Filipino wanting to invest in ETFs?

Unfortunately, you don’t have a lot of choice in the Philippine market yet. So far, the only ETF here is the First Metro First Metro Philippine Equity Exchange-Traded Fund (First Metro ETF), an equity index ETF which started in December 2013. Other banks such as BPI and BDO have expressed an interest in launching their own ETFs, but they are still considering tax rules and regulations, as well as market appetites, before they do so.

Are ETFs for you?

The answer really depends on your investment goals and risk tolerance. If you can’t tolerate volatility with your money, equity-based ETFs may not be for you. But if you have an eye on the long-term and can take the risk, consider including ETFs in your investment plan. ETFs are still pretty new to the Philippines, so keep an eye out for more ETF options in the future.

I hope this guide has given you the basics about this new asset class that you can add to your portfolio. But before you jump in, remember this quotation from Warren Buffett: “Never test the depth of river with both feet.” Educate yourself on the risks, and you’ll make the best decisions with your investments.

Always remember to invest according to your investment objectives, time frame, risk tolerance and don’t forget to diversify properly.

 

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Francis Kong’s Standout for Outstanding Performance event

Francis Kong is the undisputed inspirational guru of the country. To a great degree, he has influence me and countless others to be become a better person. I have always looked up to him not only because he is inspiring but because of his no nonsense approach to personal development.

As a participant of his many seminars for many years, attending the first one in 1997, I have been blessed with the wisdom he so imparts generously. Francis is a Ten Outstanding Filipino (TOFIL) awardee in 2014, an award-winning columnist, award-winning radio broadcaster and best-selling author of over 10 books.

On September 9, 2015, Francis will headline another life-changing conference entitled Standout for Outstanding Performance and he will be joined by Chinkee Tan, Karen Davila and his son Bryan Kong.

To learn more about his event and to register, please CLICK HERE. Do not miss this highly recommended event.

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SEC Alert: Hyper Program International

warning-sign1On May 18, the Philippines Securities and Exchange Commission issued an alert concerning the firm Hyper Program International and its affiliates, warning investors to stay clear. But what are the reasons for the worries surrounding Hyper Program International (HPI)?

It helps to know some background information about the company. The firm began in Quezon City in 2014 as a direct marketing operation selling collagen-based cosmetic products. This includes face masks that claim to revitalize the skin, collagen soap, a drug called Gluta Colla-C and Collagen Coffee.

Its founding statement promised investors that HPI would be “creating business to build people and change life and to provide infinite growth and possibilities to its members.” HPI claims to use a common direct marketing strategy to sell its products. Using social media networks on sites such as Facebook, HPI recruits investors to join its Rewards System and then claims to pay them a bonus due to their customer loyalty.

According to the SEC, this had entailed promising returns of between 35 and 40 percent within 40-45 days. As the SEC also reports, investors in HPI are paid their bonus if they then recruit other investors. Investors are also rewarded, in theory, if they recruit customers to purchase the collagen products marketed by HPI.

However, the Commission warns investors that HPI has not been issued with a securities license, making any investment potentially illegal. The SEC warning notes that the firm may be in breach of Sections 8(8.1) and 12 of the Securities Regulation Code. The penalty for participating in an unlicensed securities operation can be between P50,000 and P5,000,000 – and a 7 year prison term can also result from prosecution.

Unregulated securities scams can result in investors losing all of their capital, which is why the SEC attempt to issue licenses to officially approved firms. Because HPI has been refused a license, anyone thinking about making an investment in the firm would be advised to think twice. It seems likely that the company has an unsound business model that seeks to exploit online investors.

Direct marketing is a common source of employment in the Philippines, with around 4 million people involved in the sector across the archipelago. However, there is sometimes a small difference between a genuine marketing network where all sellers are rewarded for their work, and a pyramid scheme which only enriches a few criminals at the head of the organization.

The SEC clearly suspects that HPI has been acting as a pyramid scheme, where investors are rewarded solely for recruiting others (who pay for the privilege), instead of for their sales activity. That’s why the Philippines SEC issued its strongly worded warning to anyone thinking about making an investment in HPI which, on the surface claims to be a forward-thinking, dynamic sales operation. Anyone still considering investing or offering investment opportunities with this companies has been warned and may face prosecution if they take part.

 

You can view the warning of the SEC at their website or click HERE

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Why Price Comparison Sites are the Future

MasterCard recently released the results of its Financial Literacy Index, a research-based report that examines levels of financial know-howwww photo in the Asia Pacific region. They found that financial literacy actually declined across the region. The Philippines was awarded 66 in the area of Basic Money Management; a score of less than 70 is considered an issue.

Improve Your Financial I.Q.

While some Filipinos understand everyday concepts like budgeting and saving, many are confused by the technicalities of finding the best car insurance or credit card deals. Personal finance comparison sites can fill in those knowledge gaps. They empower buyers to compare and make financial decisions based on their own knowledge – and that knowledge is bolstered by information and help options that can educate them on various concepts.

Saving Time & Money

The rise in popularity of these websites corresponds to the overall rise internet use. It makes sense; what used to take hours or perhaps even days to call various companies and wait to hear back with a quote can now be accomplished in minutes just by using a single price comparison website. And – people aren’t left with that nagging feeling that there was a better deal out there waiting to be had.

Growth in Southeast Asia

While the phenomenon has been noted globally, it’s perhaps in Southeast Asia that both the rise and the potential for financial comparison sites are greatest. The growth of internet use in Southeast Asia has been phenomenal, with 194 million new internet users between 2010 and 2020 between Singapore, Malaysia, Thailand, Indonesia, the Philippines and Vietnam.

Internet use is high even among low income citizens of the Philippines, typically in the form of mobile telephony and not via a stand-alone computer. Fully 90 percent of users engage with blogs and social media and internet banking use is roughly on a par with the rest of the world. As they’ve adopted the digital lifestyle, price comparison shopping for everything from dresses in the shopping mall to car insurance has been on the rise too. The market has responded with a flood of price comparison sites and start-ups over the last two years.

Peace of Mind

moneymaxAlong with getting the best price and options, visitors can be assured of the accuracy of the information they’re getting. Growing sites like MoneyMax.ph offer comparison pricing for car insurance and other financial products along with options that explain financial concepts in everyday language. This helps close the gap in financial literacy with price transparency and consumer choice.

Across the globe, financial institutions and even government players are sitting up and taking notice of the enormous rise in the use of these websites. Soon, having to call individual banks and companies to find the best deal will be a practice of the past. Through these websites, Filipinos have quick access to all this information, and become empowered to make choices that are right for them.

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