Personal Finance Champions: BDO’s EIP

Posted on October 20, 2011 by Randell Tiongson

How can an investment make it to my list of personal finance champions? Here’s why.

As a personal finance advocate, I and many other advocates have been teaching people on the power of regularly saving and investing. Many of us will use charts and illustrations showing the power of compounding especially if we are doing it on monthly basis. However, there is hardly any vehicle for us to do such investment on a monthly or semi-monthly basis; if there is, the minimum amounts required will marginalize many of us.

I have been writing and speaking about the advantages of pooled funds, especially for long term investing (please check my other blogs on pooled funds). Mutual Funds and UITFs are good investment vehicles for the average Pinoy and one can expect better capital growth in the long term for such instruments. However, Mutual Funds and UITFs have minimum amounts and although they are relatively low, many Pinoys still find it difficult to cough up the initial placement that ranges from P5,000 to P10,000. Further, many of us will start on investing on said pooled funds but will stop making additional placements because we find it inconvenient and we lack the discipline for force savings. To learn more about Pooled Funds visit my previously posted articles: Pooled Funds 1 & Pooled Funds 2

When I received a call from BDO’s Chief Investment Officer Marvin Fausto to have lunch, he said that he has something that he wants to show me that I will definitely find interesting. Since Marvin is a dear friend and one I respect and admire a lot, I agreed to meet him provided he pays for lunch (always a cheapskate I am). Mr. Fausto told me about a new product BDO will be launching, a UITF program that can be deducted from one’s savings account on a monthly or semi-monthly regimen. It was interesting but I didn’t think it was really anything new… besides, there are very few Pinoys who can afford a monthly debit of P10,000. What Marvin said after really caught my attention – he smiled and told me that the monthly deduction can be as low as P1,000 a month and the investor can chose among 3 funds BDO is offering: Bond, Balanced and Equities. My jaw dropped and asked him “really, you guys are willing to let people buy into your funds for P1,000? Wow!” Further, the convenience of auto deduction will be good for many of us who are not necessarily well disciplined in savings.  What I also like is that an investor just needs to go through the initial paperwork one time, no further documents, signatures, Know Your Client (KYC) questionnaires after.

Here’s the beauty of the EIP. If I am a conservative investor, I can opt to go for their Bond funds which are generally low risk investments. If I am aggressive and still have a lot of time before I need my funds, I can opt to be a risk taker and invest in their Equity funds. If I want to be in the middle of the ground when it comes to taking risks, I can opt for Balanced funds. While other banks can offer you UITF funds, I don’t think there is anyone that will let you invest for a small amount of P1,000 per month. Finally, there is a real product that is consistent with what we finance coaches teach, regular savings and investing over a long period of time and this time, even those with challenged incomes can now participate.

Truly, the BDO EIP is a Personal Finance Champion in my view. Pinoys should take advantage of investing through the EIP and other financial institutions should take queue from BDO. To Marvin Fausto, Ador Abrogena, Marily de Vera and the rest of the BDO Trust Department, mabuhay kayo!

Check out BDO’s EIP on their website

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Do we still invest in times like these?

Posted on October 19, 2011 by Randell Tiongson

Question: With all the uncertainties in the world economy and markets, is it still wise to make investments in the stock market now?—Kris C. Lim, public relations practitioner

Answer: I have been taking note of all the developments worldwide particularly the economic woes of Europe and the United States.  Downgrading banks, debt default scares, increasing unemployment, recession and political instability are becoming so common that many are referring to our present situation as the “new normal.” Egad, it sure feels that all the business and economic developments we are experiencing will result in the rewriting of all the books as we know it. I don’t blame you for being skeptical in investing your money—I would be, too, and I actually am.

‘New normal’

With the United States and Europe so far from us, should we really be concerned? Definitely. Today’s borderless world economy has resulted in more economies being interdependent with each other. The United States, Europe and Japan are the largest of all markets and even if Asian countries have better fundamentals (and yes, the Philippines is definitely included), we will all feel the pinch as we are all covered by the laws of supply and demand.

To simplify, when people start to make less money because of a weakening economy, they will buy less of the goods and services we offer and that will not be good. A weakened economy will usually have a negative effect on profitability of corporations, and stock prices will likewise go down. When economies are not robust, people are also fearful of the future and investment markets react negatively.

Make a killing or be killed

Now back to your question. Should you invest now when we are under the ‘new normal’ environment? Well, the answer can be tricky. There are two scenarios that can happen. First, you can actually take advantage of the low prices of stocks and start bargain hunting. When you properly select blue-chip stocks that are profitable, well-managed and have a lot of good potentials, you can be sure that their prices will rebound when the market starts picking up.

Some prices are now at their lowest in months and buying them may be a good idea. On the other hand, buying stocks today might also be like catching a falling knife if the market continues to plummet. There is always that risk and buying a lot of stocks today with the current market condition is tantamount to speculating. When one speculates, he can make a killing or be killed—that’s just the rule of risk and return.

Personally, I would probably start looking for good-quality stocks that are now trading near their 52-week lows; just make sure that these companies have strong fundamentals and continue to be profitable despite the condition of the economy. However, it is unwise to have a high exposure or a big part of your portfolio invested at this conjecture as the market can continue to go south with no real recovery anytime soon.

Investment options

The whole European situation continues to make people fearful and that will be a cloud over our heads for an indefinite period of time.

You may also want to just invest through pooled funds like the UITF or Mutual Funds and leave all the trading, buying and timing to professionals who are focused solely on investing the funds. Experts actively managing funds can minimize losses during bearish environment and improve gains on bull runs.

If you chose to invest now in the stock market, or at any time for that matter, it is always prudent to look at this asset class as a long-term venture to weed out the volatility, or spread the risk over time. Further, do not be in a hurry to invest the bulk of your funds just yet because when the market does recover, it will not do so overnight and you will have time to re-enter the market when the trends are more evident.

Just a friendly reminder whenever you invest in the stock market or any other investment—consider your investment objective, time frame and risk tolerance first and foremost.

Be wise, stay prudent and be patient.

Originally posted at the Inquirer http://business.inquirer.net/25557/do-we-still-invest-in-times-like-these

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Personal Finance Champions: Efren Ll. Cruz, RFP

Posted on October 4, 2011 by Randell Tiongson

Efren is one of the country’s most notable champions of financial literacy. He is a best-selling author, columnist and one of the most sought after speaker/trainer in the arena of personal finance. You will find Efren giving lectures all over the country educating hundreds of participants each time. There are also thousands of people who have benefited much from reading his two books. More than being notable, I am proud to say that Mr. Efren Ll. Cruz is perhaps one of the most respected individuals in the financial services industry.

I first met Efren after in 2006 after a class in Registered Financial Planner (RFP). Henry Ong, RFP President invited me to join their lunch Efren and his friend Atty. Caloy Ocampo. My initial impression on Efren was that he was a tad timid and very unassuming. He mentioned that he just wrote a book entitled Pwede Na! The Complete Pinoy Guide to Personal Finance which I ended up buying from him that day. As I read his book, I was enamored at the wisdom of Efren and I can discern his passion to help ordinary Filipinos get financially literate and achieve financial freedom. That fateful lunch was the beginning of my admiration for Efren, in fact I am proud to say that I am one of his earliest fans and I continue to be a fan!

Efren has an impressive pedigree in his area of expertise. He holds an MBA from the University of the Philippines and has been in the financial services industry for over 25 years, 18 years of which is in fund management. Efren is no stranger to managing wealth, working for institutions like Far East Bank, Grepalife Asset Management, Standard Chartered Bank and others. He is also one of the driving forces behind the mutual fund industry, serving at the Investment Company Association of the Philippines (ICAP) twice as President and once as Chairman. He also co-founded the Fund Managers Association of the Philippines. Efren has definitely earned the respect of his peers because of his hard work and dedication.

Efren is a favorite of many publications; as a contributor or columnists for Business Mirror, Moneysense and the Philippine Daily Inquirer. He is also a frequent resource person for many Radio and TV shows, too many to enumerate. He is one of the directors of the Registered Financial Planner Institute and a regular moderator of the program where he teaches on personal finance and investments.

One of Efren’s main advocacies is financial education for the workforce. Efren and his company, the Personal Finance Advisers Philippines Corp. has been in the forefront of providing financial literacy to many employees. He makes employers understand that it is in their best interest that employees are financially literate to ensure competitiveness and minimize work conflicts that will have a severe impact on bottom line. Efren Cruz has been actively seeking corporations to allow him and his company to teach their employees despite the great odds they face.

Another area where I admire Efren the most is that despite handling and teaching money all these years, he remains to be God fearing and always remind his listeners, participants and readers about the real purpose of wealth and money – to honor God, first and foremost.

I am so proud to say that Efren is one my esteemed mentors, an ally, a colleague and a most cherished friend. Efren, is on the top of my list as Personal Finance Champion. My prayer is that the country will have more Efren Cruz. Mabuhay ka Kuya Efren!

Check out his company website.

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All about pooled funds, part 2

Posted on October 1, 2011 by Randell Tiongson

Question: I wanted to ask more about pooled funds, specifically equities and balanced funds. I would also like to know if I can invest in these with small amounts on a regular basis.—Val Baguios, International Organization for Migration (IOM) staff

Answer: In my last column, I gave a general introduction of pooled funds, particularly bonds or fixed income funds. I will now discuss other general funds—equities and balance funds.

Equity funds, sometimes referred to as growth funds, are pooled funds invested primarily in equities via the stock market. The bulk of the investments made, say 90 percent, is invested in stocks that are traded by the investment manager. In the Philippines, nearly all of the equity funds are invested in blue chip stocks, or those that are considered premium, seasoned and resilient such as PLDT, Ayala, San Miguel, SM and several banks. The decision on where and when to invest and when to sell is left with the investment manager, who may opt to take a passive approach of buy and hold or an aggressive stance. He may also opt for a combination of the two.

Generally, the objective of an equity fund (also known as stock fund) is long-term growth through appreciation of capital, although dividends may also be an important source of returns. It is believed that the stock market will give the most growth in investment provided there is enough time for stocks to appreciate and that proper trading of stocks are being executed. However, equity funds may also be the most volatile among pooled fund categories, as they mirror the gyration of the stock market.  Equity funds are the most risky among the pooled funds in the Philippines.

The Philippine Stock Market Index or Phisix is the benchmark when it comes to equity funds. I notice that the performance of the equity funds (in UITF and mutual funds) has generally been better than Phisix, that the fund managers are doing a swell job. Equity investing is a good way to hedge against inflation as its potential return should be better than inflation. However, I also have to emphasize that it also offers the most risk.

Balanced funds are funds invested in both equities and fixed income/money market securities. According to Investopedia.com, a balanced fund is “a fund that combines a stock component, a bond component and, sometimes, a money market component, in a single portfolio. Generally, these hybrid funds stick to a relatively fixed mix of stocks and bonds that reflects either a moderate (higher equity component) or conservative (higher fixed-income component) orientation. In other words, balanced funds are combination funds that are designed to generate moderate returns with moderate risks. The funds normally have set limits on investments in asset classes, say a 60-40 mix in favor of fixed-income instruments vs stocks. Some funds have more flexibility …

Complete text found at http://business.inquirer.net/21783/all-about-pooled-funds-part-2

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Budgeting tips for students

Posted on September 26, 2011 by Randell Tiongson

Here’s a video where I gave some simple budgeting tips to a student for the show News to Go.

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Personal Finance Champions: a great start!

Posted on September 24, 2011 by Randell Tiongson

In the next few hours, I’m off to be a moderator for a session on an on-going International Conference on Poverty A

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How to focus

Posted on September 19, 2011 by Randell Tiongson

I recently guested in Antony Pangilinan’s show “Magbago Tayo’ at Radyo 5 (92.3) & Aksyon TV. My good friend and school buddy, and one of the country’s best training expert Ardy Abello was pinch hitting as the host as Anthony (also a good friend and school buddy) was in Davao.

I shared my thoughts on the usual personal finance stuff I usually talk about which was great, but I was delighted to interact with another guest who was talking about his new book, Productive Pinoy. The author was Yeng Remulla, a very young and successful entrepreneur who was also a former member of the famous band True Faith. Yeng’s book is an awesome way for us to review ourselves and improve our productivity. It is really encouraging to see young guys like Yeng taking the lead in helping improve Pinoys in general. During the hearty discussion in the show, Ardy and I was enthralled by the wisdom of Yeng — specially when Ardy shared an excerpt from his book. The snippet was all about how to stay in focus and Yeng’s 10 point recommendation hits the spot, bulls eye!

Here are Yeng’s priceless tips:

(1)  Phone in Silent Mode. Use the features of your phone. Missed call logs are there to help you. Don’t worry you can always return the call when you are ready. Don’t feel guilty!

Note: Don’t miss a call for an important event or a transaction about to happen.

(2) Ignore text messages during your Focus Time. You can always read it later. Don’t put it to vibrating mode either.

(3) Turn off your email notification app or your email app.

Close any window in your desktop that you are not using. Yes, including those Messenger and Facebook windows.

(4) Check your email two to three times a day only. Avoid checking your email every 10 minutes. Set time intervals. Set a few minutes in the morning around 10:00am, then check again around 3:00pm. Find out what time works for you.

This will allow you to reply to your emails in bulk, saving you time and allowing you to focus on other things. Besides, it’s more fun to answer emails simultaneously.

(5) Close and lock the door. If you run a home-based business, you’ll find it difficult to separate work and home. Decide to close doors. Consider that room your nine to five office. Let your family know that you need that “uninterrupted” time to get things done.

If you are attending to kids, set your FOCUS Time during nap time or while they are watching their favorite TV shows. In this way, the interruption is minimal (they forget about you when they are watching).

(6) Set a fixed schedule for your FOCUS Time. Make it predictable. Make the people around you aware of this schedule. This will lessen interruption. Let them know that this is your sacred private time.

(7) Your To-Do List must be within reach. Let’s say you are working on a project and your creative juices are flowing; suddenly, you remember something important that you need to do and it’s not related to what you are currently doing. This is how to proceed: Grab a pen and write it down on your To Do list. Then, forget about it and continue with what you were doing earlier.

Writing it down or dumping it on paper frees your mind from thinking about it. If you are running your To-Do List app in your computer, keep that window minimized or in the background. Pop when needed.

(8) Hire an assistant to filter your calls. Answer only calls that you need to answer yourself. Write an instruction on how to handle phone calls– give it to your assistant. This will save you time and energy.

(9) Finish all errands in the morning or in the evening.

Deciding when to do errands frees your mind from worrying about it. Block an hour or a little more to do errands all together.

(10) Go somewhere else. Leave the house or the office. Go to the nearest café, the ambiance might inspire you. It might get you in the mood to be creative or analytical. Go to Starbucks and try a hot, grande breve latte. Put 3 packs of brown sugar. It’s not in the menu, but the barista will be delighted to make the drink for you. Sip and enjoy!

I’m enjoying Productive Pinoy book and it is teaching me so much on how to improve things I normally do. A highly recommended book not just for entrepreneurs but for everyone.

Well done Mr. Yeng Remulla! We need more guys like you to write books and teach guys like me.

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All that Jazz

Posted on September 13, 2011 by Randell Tiongson

I continue with my search for products that provide us with good value. I know that I often say that we should save, save and save (and invest too) but we also need to spend. It is very impractical to say that we should not spend on things we need… what we should do is to make sure that what we spend on is of good value — and gives us a bang for every buck we spend on, so to speak.

Although I am a personal finance person and the resounding theme of what I write and speak about is money, its proper use and its growth; but I am also a dude and what does most dudes like a lot is fashion, not! While many of us, specially the married men, do not ogle at other women anymore (I only stare at my wife), we do so with cars. Cars remain to be one of those things we like to look at, drive and own.

I’m on my 3rd car which I was blessed to review and this time, I was able to use and enjoy the mighty Honda Jazz. The Honda Jazz is one of those ‘iconic’ vehicles that a lot of people simply go ‘ga-ga’ over. Personally, I was not a big fan since I’m not into small cars, owing to my body frame. When my friend called me and asked if I would want to test the 2011 Honda Jazz, I agreed but was not really too ecstatic, it’s just a small car after all.

All my pre-conceived notions about the Jazz were instantly thrown out of the window the moment I sat in the driver’s cockpit. Firstly, the Jazz is not as small as I thought it was. I’m not sure if it’s just optical illusion but I was really delighted that the Jazz was really roomy – even for a big guy like me. The biggest come-on of the Jazz is its roominess relative to its size. I love the leg room, head room and its over-all spaciousness. The riders at the rear will likewise enjoy the space. It is amazing how the Honda Jazz can have so much space considering it is a sub-compact car. I particularly enjoyed the folding seats so you can load bigger cargo. The ease of folding the rear seats is also a big plus and so convenient.

So the car is roomy, a big benefit — but space is not the only criteria for value right? I like looking at the interiors of the car, particularly the dashboard since a driver spends a lot of time inside a car and a functional and ergonomic panel that is pleasing to the eye helps us stay sane amidst the stressful Manila traffic. A great sounding stereo where I can plug my iPod plus an air conditioning system that keeps the whole car cool despite the scorching Philippine heat is definitely a win-win combination for me.

The car is nifty, the car is spacious and the car is functional… but does it drive as good as it looks? While many reviewers like to test cars by taking them outside Mega Manila, the real test for me is how the car handles in our city streets – after all, I spend more time driving in the city than I do outside. My best gauge of driving pleasure is that if at the end of the day I am not exhausted from driving, the car gets two thumbs up from me. After traversing through the crazy streets of Metro Manila, going to places for meetings from one after the other, and the occasional request from my wife for unscheduled errands, the Jazz was such a dependable partner. Was I tired after ‘playing’ with the Jazz for a whole day? Not at all! I was actually looking forward to my wife asking me to do errands because it is an excuse to use the definitive Honda for another spin.  With only a 1.3 L displacement, the response of the Jazz was impressive – it is zippy and handles the streets like it was hugging the road. The suspension was also smooth even if it is on a small platform.

Like I said before, the acid test of any car for me is how my family enjoys it. I got twoyoung boys who love to tag along with me and they were raving about the Jazz, from how it looks from the outside and in the inside. My Teenage girls also liked the car a lot, even asking me to buy one each for them – well, I told them that after they graduate and earn their own income, they can get themselves their own Jazz with their own money – but with my blessings! Since my wife drives a lot too, I asked my wife to drive the Jazz as well and did she approve of the popular car? She said just said that she wouldn’t mind having one for herself to replace our older cars – that’s one of the best endorsement any car can get.

I never really got why the Honda Jazz was a very popular car and why its owners rave about their cars with cult-like behavior. A few days with this diminutive yet grand automobile, I have become a huge fan of the Honda Jazz.

My only issue with the Jazz is its cost — the model I tested, 1.3 L A/T, has an SRP of Php 792,000. But I suppose one needs to pay the price for the quality and value the Honda Jazz brings. After all, you get what you pay for.  Oh, before I forget, the best feature of the Jazz for a personal finance guy like me is its fuel consumption! Is it efficient? You bet! I estimate about 14 kms. to a liter and that city driving with insane traffic at times!

The Honda with all its Jazz, got themselves a keeper.

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Pick up your shovel

Posted on September 13, 2011 by Randell Tiongson

I got this from my friend Raffy Pekson …

5000 years ago, Moses said to Israel, “Pick up your shovels, mount your asses and camels, and I will lead you to the Promised Land.” When Welfare was introduced, the government said, “Lay down your shovels, sit on your asses, and light up a Camel, this is the Promised Land.” Today, the government has stolen your shovel, taxed your asses, raised the price of Camels and mortgaged the Promised Land to China!

So funny, but oh so true. With everything that is going on and the way the ‘new normal’ operates, it’s time to pick up our shovels and work our land.


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On Second Chances & the 2011 Outstanding Alumni

Posted on September 8, 2011 by Randell Tiongson

A few months ago, my former teacher in Economics called me up and asked for my CV. She said that she wants to nominate me for the annual school alumni awards. I was honored and thankful to even be considered.

Most people assumed that I was an exemplary student, but I am far from it and I want to share something that’s really personal to me for this post.

I had a very colorful history during my University years. When I entered college, I was a mediocre and too care-free. During my freshmen year, I never paid attention to my classes nor do I even listened to my professors. As expected, I started to fail my classes and since my school had standards to uplift, I was being debarred from re-enrolling. I can vividly recall the fateful day in the summer of 1985 when my parents got the advise from the University letting them know of my debarment. My father was furious and it really broke my mother’s heart. You see, my mom and I had a special relationship. She was my very first fan and at a young age, she told me that I will do great things in life. In a palanca letter in high school, my mom told me that among her 7 kids, I was the most different and that I will do great things in life. My first ‘real-life’ lesson happened in the summer of ’85 and I was determined to remedy my situation.

My solution? I turned to the Lord. At 19, I prayed and prayed to the Lord that He save me from my situation. A distant relative appealed my situation to the college regent, a Dominican priest who agreed to hear my appeal. The priest talked to me and felt pity on me, so much so that he said he will give me a second chance but I need to be in academic probation. He only asked that I do well this time and that at the end of the semester, I should go back to him to show my class cards.

Did I learn my lesson and take my studies seriously? You bet! On the first semester of my academic probation, my grades were all up and I narrowly missed being in the Dean’s List. It was probably the first time in my life that I became diligent; I opted to sit in the first row, intently listening to my professors and actually taking time to study my lessons. As promised, I came back to the college regent and happily showed my class cards. Upon seeing my grades, the priest looked at me with a smile and told me “I knew you can do it… keep it up”. Since then, I never failed a class, never failed a test, never missed an assignment.

The rest of my stay in college became great and by my senior year, I became a student leader and even becoming the president of an umbrella organization composed of about 10 to 12 universities. About 2 years after graduation, I found myself in the same college, this time teaching a few classes on Business Administration. I bumped into the priest who gave me a second chance and this is what he said…  ”a few years ago, you were pleading with me to stay in the university — now, I am talking with you here at the faculty room.”

I have graduated from the University of Santo Tomas with a degree in Commerce majoring in Economics in 1988. Since then, I taught there for a semester and been back a couple of times to speak to students and teachers.

The other day, a mailman was in my house and handed me a letter. When I opened it, I was delighted to read this…

Reading this brought back a lot of memories and on the importance of 2nd chances. Fr. Terry Campillo, O.P. — thank you for believing in me when no one else did. To my mom (she passed away before I graduated), thank you for never losing your faith in me and for planting the seed that I can do great things in my life. To my teachers who patiently taught me and also guided me, my appreciation. To my dear wife who stands by me regardless of our situation, my undying thanks.

And to my Lord & Savior, Jesus Christ — my eternal gratitude. You loved me despite my sins; you were faithful even I was not; you stood by me despite my rebellion. You orchestrated everything in my life because you are after my welfare, even if I wasn’t. All of these is because of your grace and all of these is for your Glory. Thank you.

But God demonstrates his own love for us in this: While we were still sinners, Christ died for us. – Romans 5:8, NIV

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