Greed has been man’s downfall since time immemorial. When it comes to our finances, greed clouds our judgment and in many cases it can even make us compromise our values. In investing, greed makes one too optimistic on possible returns based on some experience or even the potential of remarkable growth. While the principle of risk & return always dictate the performance of one’s investment, greed will make one go beyond his risk tolerance in anticipation of fantastic yields. In business, greed makes one engage in cut-throat enterprise and often times have collateral damages like ruined business relationships and even legal issues. After all, it is the love of money which is the root of all evil (1 Timothy 6:10). In the movie Wall Street, Gordon Gecko made a famous line that seems to have been the mantra of many… “Greed is good” (‘That greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit’). Well, it is because of greed that there was the recent financial tsunami which almost put the whole world economy into chaos. In fact, the US has yet to recover from their financial crisis which was really a result of greed. Greed is often times the reason for our economic woes. Regardless of how we romanticize it, and despite Holywood’s dangerous seductions, greed is not good.

Fear is not necessarily a bad behavior. In fact, fear allows one to act in prudence and makes us check if we are already becoming greedy. The issue here is too much fear, or crippling fear. Many a times, people would not take any risk at all when it comes to money and they will find themselves with hardly any financial growth because of it. It is a common notion that Filipinos are ultra conservative when it comes to money and to prove a point, one only needs to look at where our money is actually invested – locked in 30 to 90 day short term deposits that give you almost negligible returns. While keeping your capital safe is important, we must also be reminded that inflation is constant and it will erode our wealth. To illustrate, let’s assume that you place your savings in short term placements like time deposits earning 2% p.a. and you don’t mind the low return because safety of capital is your paramount concern and  you will probably keep the money there for maybe 3 to 5 years . Let us assume that during those years, the inflation rate will be at an average of 5%, you are actually losing real value in your money with the erosion of its purchasing power by as much as 3% per year. In the end, you will actually experience a real loss despite having no capital loss. In risk management, risk avoidance is not always a good choice because avoiding risk also means one can’t gain. I really like the Parable of the Talents (Matthew 25:13-40) – it is as a very good illustration of fear.

Just like greed, ignorance is a very dangerous attitude. While people lose money because of greed or too much fear (in purchasing power), people do so knowing what they are getting into. Losing money because of ignorance makes one well, ignorant. It is said that you should never ever, ever, ever, ever put your money into something you don’t understand. It is ironic that despite Filipinos being risk averse (ultra conservative), we are also prone to a lot of scams. Citibank came up with a survey that says our FQ or financial quotient is very low as compared to other countries. Financial education, though immensely important, is not on the top mind of our citizens. Schools look at financial education from a text book approach rather than on a personal finance perspective and many homes will not discuss money issues until the family is in severe financial situation. I counseled so many individuals that are in dire financial conditions and most of the time, the core of their problem is ignorance – financial ignorance.

So what is the solution to all these? Financial education and checking one’s heart. We need to live a life of purpose which will keep our greed in check. It is not hard to realize that our purpose goes beyond ourselves, isn’t it (Matthew 6:33)? Overpowering fear is an issue of faith – we need to believe that we are not given a spirit of timidity, but a spirit of power (2 Timothy 1:7). The only fear we should have is a godly fear (Psalms 111:10). As to ignorance, we only need to open our hearts and minds and embrace learning and seek godly wisdom (Proverbs 8:12).

Catch my event “Steps to Financial Peace” with guests Francis Kong, Paulo Tibig and Jayson Lo. Details at http://www.randelltiongson.com/steps-to-financial-peace/

Attend the Personal Branding for Finance Practitioners

July 8, 2011     RFP Office, Tektite Bldg., Ortigas, Pasig City

AN OVERVIEW:

This interactive, cathartic and practical seminar will help you understand, create and send out the unique brand that is YOU. Today’s business world is fast paced and so are the decisions and judgments we are making. There are more than a lot of business men and women, financial advisors, entrepreneurs both young and experienced bringing the same products, skills and services to your field in the industry. But why do some people still stand out above the rest? Best bet is that these people, consciously or not, have their own unique personal brand.

WHY SHOULD I ATTEND?

Learn from Randell Tiongson, one of the country’s popular names in personal finance, a columnist for the Inquirer and MoneySense, and one of the directors and founders of RFP Philippines. Randell will teach you the secrets to building, winning and transmitting your personal brand. After this seminar, you will have uncovered why personal branding is so important to helping you on your way to wealth.

PROGRAM OBJECTIVE AND BENEFITS:

• Creating a personal brand for Finance Practitioners
• Why is branding important
• How branding can help your profession
• How branding can result to higher productivity
• Ways to be known beyond your circle
• Ways to improve your personal brand
• Case study presentation

Registration Details

Registration is on a first-come, first-served basis. Don’t miss this event, reserve your slots now!

• Date: July 8, 2011
• Venue: RFP Office, Tektite Bldg., Ortigas, Pasig City
• Time: 1:30 to 5:00 pm
• Contact Number: (632) 494 1322

As parents, the future of our children is always foremost in our minds. I am actually looking forward to the day my children will spread their wings and explore the world and the only thing I can do is pray for them as they make decisions that will define their destinies.

Last Saturday, I partnered with a mother and son team to bring about a repeat of Blue Chip, a program that teaches the youth on finance and entrepreneurship. Christopher Young is only 17 and a junior high student, he took the task of organizing Blue Chip for his friends and acquaintances, with the help of his energetic mother, Karen Young. There were more than 40 young ones taking the program and all this because a young boy believed that a program like Blue Chip will really help him and people of his age. A supportive mother like Karen brings out the best in our youth as she guided him, supported him and co-labored with him to ensure that Blue Chip will be a success. When the organizing of the program became difficult as participants were not responding the way it was forecasted and sponsors were lukewarm in their support, Chris and Karen were steadfast in their commitment to Blue Chip despite the odds. The audacity of a 17 year old boy to mount a program like Blue Chip was inspiring — stories like these make me feel secure that the next generation will do great things in the future. Parents like Karen are great role models in nurturing successful children.

I was so honored to share the platform with other speakers who shared the vision for the next generation. My friend and Pastor, Jayson Lo touched the hearts of the kids by reminding them what is really important in life imploring them to invest in relationships and value character above everything else. Carlo Ople, the country’s most notable personality in the social media environment was a big hit with the kids as they really learned from someone who understands and share their passion on social media. Carlo espoused the role of communication for business and career building. Paulo Tibig encouraged the youth to dream and dream big and strive for success. He reminded the youth that success is not achieved overnight and those are winning strategies for success as an entrepreneur. Jaret Garcia shared his story as a student making money and the challenges he needed to overcome business challenges. My lecture was about financial management and investing and I echoed the value of discipline in handling money. A real treat that day was interviewing and listening to the young Anton Fausto, a 14 year old investment whiz kid who also shared how he manages his own portfolio. More than inspiring the youth, the Blue Chip speakers gave practical instructions in achieving successes in money and business.

The day after Blue Chip, I attend Sunday service at Victory Green Hills and was delighted that the topic for the service is about the next generation. A very youthful pastor named Bojo Bonifacio was preaching about the next generation using biblical context. Hearing Bojo was a treat – a young 26 year old pastor leads a throng of exuberant teens, raging hormones and all that and remaining to be relevant and yet grounded on biblical truth. I was in store for another treat when Pastor Bojo called for 2 women on stage, a teenager to pray for the youth and a mother to pray for the parents. Praying for the youth is my 17 year old daughter Gabbie, a freshman in college. She admonished the youth to be in faith and be steadfast in their faith as well as challenging them to follow the examples of Christ and not of the world. My beautiful wife prayed for the parents, petitioning the Lord to give parents the grace, patience, temperament and love as they are tasked with the difficult role of parenting. Hearing my wife and daughter pray one after another warms my heart and I can only thank the Lord for such a blessing.

I admonish everyone to do everything they can to prepare the NEXT GEN. The greatest atrocity we can do in this generation is to forsake the next.

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

Video recap of the June 11, 2011 Blue Chip courtesy of Kris Young.

Answer: This is a question that ‘hits the spot,’ as the saying goes.

I just read an article stating that Singapore has the highest concentration of millionaires in the world with 16 percent of its households having at least $1 million in assets, as determined by a study released by the Boston Consulting Group.

Switzerland comes next on the list with 9.9 percent of its households having $1 million in assets. Hong Kong comes in at fourth with 8.7 percent and the United States is at 7th with 4.5 percent.

Don’t even ask where the Philippines ranks as I can’t seem to find it in the news feeds… ouch!

I was in Singapore last weekend on a business trip and whenever I am there, I marvel at how progressive a tiny country with hardly any natural resource can be. I enjoy going to Singapore because it gives me an image of how the Philippines can be when we put our acts together.

We don’t need to limit our sights to Singapore; we can also look at …

Read full column at http://business.inquirer.net/3554/why-our-neighbors-are-richer-than-us

The rising cost of goods and services have been a big concern to us Filipinos for many months now. Official numbers puts inflation at around 4% but it seems that the rising prices goes beyond the official numbers. Generally, the barometer to measure inflation is the Consumer Price Index of the CPI. An earlier 3 part blog delved a lot about the rising prices and how we can survive amidst the higher cost of goods and services. For me, CPI is not a very realistic measurement of personal inflation since there are many items in our budget that are not being measured in the index such as education, among others. We all experience that tuition and education related expenses are somewhere between 5 to as much as 12% and if education composes a big chunk of our budgets, actual realized inflation will be much higher than the index.

Read Rising prices blog, part 1, part 2, part 3

I was listening to a podcast earlier and hyperinflation in Zimbabwe was referred to in a coy manner. Zimbabwe has suffered an incredible rise in prices in the past that actual measurement of inflation is rather moot. It was said that hyperinflation in that African country was so bad that prices doubles every 30 hours or so.

Just what is hyperinflation anyway? Investopedia has this to say:

Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is a situation where the price increases are so out of control that the concept of inflation is meaningless.

Investopedia further explains…

When associated with depressions, hyperinflation often occurs when there is a large increase in the money supply not supported by gross domestic product (GDP) growth, resulting in an imbalance in the supply and demand for the money. Left unchecked this causes prices to increase, as the currency loses its value.

One of the most famous examples of hyperinflation occurred in Germany between January 1922 and November 1923. By some estimates, the average price level increased by a factor of 20 billion, doubling every 28 hours.

The experience of Zimbabwe is now for the books… they actually have multi-billion dollar notes so the term ‘Billionaire’ does not really mean anything there. The good news is Zimbabwe has since been able to curb its unbelievable hyperinflation and is trying to put it’s macroeconomic situation in order.

Looking at the situation of Zimbabwe or even other countries which registers double-digit inflation gives us a bit of relief and we must acknowledge that we are still a blessed nation despite our many issues.  There are many things we should be thankful for, we just need to be reminded from time to time.

Let them thank the LORD for his steadfast love, for his wondrous works to the children of man! - Psalm 107:15 (English Standard Version)

There are many other areas one should consider when choosing an insurer other than its ranking such as claims experience, customer service, charges, etc. Further, chose a life insurance intermediary (agent, broker, adviser) who will take time to educate you in the rudiments of risk management and not just push a product.

Let me go back to the economic gibberish once more. Whenever we curb our consumption, assuming that a substantial number of us do, we can actually prevent prices from rising and even cause it to decrease. It’s called the Law of Demand & Supply. Let us be refreshed on what this fundamental economic principle is all about – nosebleed courtesy of Investopedia.

“Supply and demand is perhaps one of the most fundamental concepts of economics and it is the backbone of a market economy. Demand refers to how much (quantity) of a product or service is desired by buyers. The quantity demanded is the amount of a product people are willing to buy at a certain price; the relationship between price and quantity demanded is known as the demand relationship. Supply represents how much the market can offer. The quantity supplied refers to the amount of a certain good producers are willing to supply when receiving a certain price. The correlation between price and how much of a good or service is supplied to the market is known as the supply relationship. Price, therefore, is a reflection of supply and demand. “

Simply put – increase in demand will result to a lower supply, therefore prices go up. A decrease in demand will result to an increase in supply which will drive prices down. Juxtapose this with a national consumption level, say on the way we spend on mobile communication. If we curb the way we use our mobile phones, the telecom companies will be alarmed with the reduction of their revenues and will entice subscribers with more promos, discounted rates and the like just so that consumption will revert to more comfortable levels. We can use the same argument for other goods and services like chicken, electricity, water, gasoline, etc. This should work, well at least in theory. History will reveal that some industries have reduced their prices because the demand level dipped and the only way for them to survive is to cut down prices. Many of the things we consume have disproportionately high profit margins such as soap, shampoo, detergent, toothpaste, etc. If we can only educate the consumers on how they can prevent prices from rising by manipulating our consumption, we can actually have healthier bank accounts.

If the others will not see the light and affect an epic change in the national scene, we can still do so on an individual level. All we need is the resolve to be more prudent, stay away from having a consumer lifestyle, care less about what our nosy neighbors think of us, practice delayed gratification and so forth and so on. Prices will always rise whether we like it or not but we will only be victims if we allow it to be so.

Let’s check our lifestyle: “Some who are poor pretend to be rich; Others who are rich pretend to be poor.” – Proverbs 13:7, NLT

Let’s be diligent: “Lazy hands make a man poor, but diligent hands bring wealth. – Proverbs 10:4, NIV

From my perspective, I don’t think inflation is just at 4 to 5% — and my wallet agrees with me.

Just what is inflation? Investopedia defines inflation as “the rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling. Central banks attempt to stop severe inflation, along with severe deflation, in an attempt to keep the excessive growth of prices to a minimum.” In practical terms, it means that prices will rise according to the inflation rate over one year (per annum); if inflation is at 4%, a P100 per kilogram of Chicken today will cost P104 per kilogram next year.  Consumer Price Index or CPI is the barometer to which inflation is measured. In general, the consumer price index reflects changes in the cost to the average consumer of acquiring a basket of goods and services that may be fixed or changed at specified intervals, such as yearly. The basket includes the most basic goods the average Filipino family consumes – general food items, utilities, oil, etc.

Alright, enough economic gibberish – no one wants to be reminded of the boring economics classes we had to take during our student days. Unfortunately, the ‘boring economics’ we all hate is pretty much the reason why we are all dumbfounded – trying to figure why the value of money in our wallets are shrinking.

Our knee jerk reaction to rising prices is always to be overwhelmed, and for a good reason. I’m not sure if this applies to other folks but here’s how I react whenever inflation is very high: disbelief, anger, frustration, blame, acceptance, indifference. I get shocked that prices goes up so fast so soon (like fuel); then I am annoyed as to why prices are going up such as external factors (middle east situation, financial crisis, etc.); I move on to being frustrated – frustrated at the government for not making the right responses, frustrated at myself for my microscopic income; then I blame the government for being inept and sometimes blame myself for missed business opportunities that would have cushioned the rising prices; I slowly begin accepting the harsh economic realities that life is as such and there’s really nothing I can do about it; finally, I move to being indifferent – after all, my ramblings will not bring prices down and I resign to the fact that there’s nothing I can do.

… to be continued.

Millionaires don’t always earn their money overnight; they often get there via hard work and shrewd investment. Many of us don’t mind doing the former, but it’s the latter that often stymies those who need a little chat from a mentor to know where they can start.

Whatever your goals are, you have to become a no-nonsense investor, because great investment opportunities can be losing poker games if one does not pay full attention to what is going on. I also caution many people against putting everything they have in a high-yield investment, because one should only take risks when you already have savings and non-risky investments to fall back on.

Following my advice may take some discipline and attention to detail, but if one believes in making money work for you, after all the hard work you put into earning it—you’ll be part of a generation that’s working smarter, not just harder.