How to Use Time to Make Millions Pesos

Start early!

When it comes to saving money and investing for your future, it’s never too early to start. Every payday, most of us are faced with the dilemma whether to start saving today or put it off until next month.

Here’s a story of a young man who knew that he could earn more for his future by starting to save earlier.

At age 22, Ping took the first steps in making his money grow. Every month, he saved P2,000 of his monthly income. Then he placed it in a good and stable investment that gave 10% compounded interest yearly. He did it for 10 years until he was unable to add more to his investment and forgot about it.

On the other hand, his friend Pong took his sweet time before investing. He waited until the age of 40 when he had money to spare. He followed the same steps but he doubled the amount to P4,000 so he could catch up with Ping.

Reap the rewards!

Twenty years later, at the age of 60, Ping and Pong crossed paths again. Can you guess who had more money?

Remember, Pong invested late but his P480,000 was TWICE as much as Ping’s initial contribution. With 10% annual compounded interest, Pong’s investment became 2 million pesos.

But Ping, who invested EARLIER, gave his money more time to grow. Even though he stopped putting in money after a while, his money continued to earn interest. Although his total investment was only P240,000, at 10% annual compounded interest, his earnings reached

6 MILLION pesos. THREE TIMES the amount of Pong’s earnings!

Start early. Earn more. That’s smart investing!

What should we start doing early so we can earn more?

Save regularly. Set aside a portion of your monthly income regularly for the specific purpose of investing. No matter how small, the key is doing it regularly.

Spend time to learn. Knowing the different kinds of investments available to you is beneficial to making your money grow. Find out what your options are and choose the one that best fits your needs.

Focus on your goal in life. Whether it’s getting married, living in your dream house, driving your own car, travelling abroad, or retiring comfortably, you need to establish SPECIFIC financial goals. Write them down to constantly remind you to make saving and investing a priority. Discipline and focus are the keys to achieving your dreams.

Start early and use time to your advantage to achieve your financial goals. Time is money and if you start investing early, your money will start growing too!

“Time is the only resource you can never get back.” When it comes to investing, time is one of the most important assets.

Shared by Coach Amos

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Philippines Beats Indonesia in Gaining S&P Investment Grade repost

By Karl Lester M. Yap - May 3, 2013 1:53 PM GMT+0800

Philippine stocks rose to a record after it beat Indonesia to win an investment grade from Standard & Poor’s, as President Benigno Aquino outshines Susilo Bambang Yudhoyono in improving government finances and spurring growth.

The rating on the Philippines’ long-term foreign-currency- denominated debt was raised one level to BBB- from BB+, with a stable outlook, S&P said in a statement yesterday. In contrast, the assessor revised its outlook on Indonesia’s BB+ rating to stable from positive.

“We’re continuing to address constraints to growth,” Philippine Finance Secretary Cesar Purisima said in a Bloomberg Television interview with Susan Li today. “We’re fast tracking our infrastructure projects. We’re looking at areas we can open up to foreign investors.”

Aquino’s drive to transform the nation into one of the region’s fastest-growing economies is gaining strength, with the government forecasting record investment pledges this year as companies including Murata Manufacturing Co. expand. In Indonesia, President Yudhoyono has delayed cutting fuel subsidies that have drained government finances even as he tries to allocate more funds to infrastructure spending.

“For the Philippines, this is yet another confirmation that Aquino’s reforms have borne fruit, which would help in attracting not just short-term flows, but long-term direct investments,” said Santitarn Sathirathai, a Singapore-based economist at Credit Suisse Group AG. “The rating momentum for Indonesia is moving in the wrong direction.”

Capital Inflows

The Philippine Stock Exchange Index (PCOMP) rose as much as 1.9 percent today to a record. Indonesia’s benchmarkJakarta Composite Index (JCI) slid a second day.

The peso climbed to a four-week high, rising 0.3 percent to 40.93 per dollar, according to Tullett Prebon Plc. In the past 12 months, it is the biggest gainer after the Thai baht among 11 Asian currencies tracked by Bloomberg.

“The upgrade on the Philippines reflects a strengthening external profile, moderating inflation, and the government’s declining reliance on foreign currency debt,” S&P said. “In our assessment, the stalling of the reform momentum in Indonesia and a weaker external profile have diminished the potential for an upgrade over the next 12 months,” it said separately.

Higher ratings may boost capital inflows into the Philippines and prompt the central bank to add to measures to curb asset-bubble risks. Bangko Sentral ng Pilipinas last month cut the rate it pays on special deposit accounts for a third time this year, while keeping the rate it pays lenders for overnight deposits at a record-low 3.5 percent.

Continued Strength

“The Philippine central bank has done a good job in managing inflows,” S&P credit analyst Agost Benard said in a teleconference today. Still, the peso will likely have to appreciate as inflows continue to rise, he said.

Moody’s Investors Service, which rates the Philippines one step below investment grade, is keeping a close eye on developments on the ground, Singapore-based sovereign analyst Christian de Guzman said in an interview today.

“Much of the momentum has continued in terms of growth, as well as the health of external payments position, as evidenced by the continued strength of remittance inflows and stability of foreign exchange reserves,” he said. “However, revenue performance is starting to slow and begs the question if efforts to increase tax efficiency have already been maximized.”

Philippine revenue collection fell a second month in March, a report showed yesterday, even after the implementation of a “sin tax” on alcohol and tobacco products. Indonesia’s rating of Baa3 above the Philippines is still justified, de Guzman said, citing a longer track record of growth and fiscal management.

Infrastructure Investment

Aquino has increased state spending and narrowed the budget deficit while seeking more than $17 billion of infrastructure investments to spur growth to as much as 7 percent this year. The Philippine economy, which was more than twice the size of Malaysia and 10 times bigger thanSingapore’s in 1960, expanded 6.8 percent in the fourth quarter.

The president has taken on the Catholic Church with a bill to provide free contraceptives to the poor, arrested his predecessor on graft charges, and ousted the country’s top judge for illegally concealing his wealth. Transparency International raised the country’s ranking on its annual corruption index last year to 105, versus Indonesia’s 118.

Fitch Ratings was the first to upgrade the Philippines to investment grade in March. Moody’s Investors Service rates the nation one step below.

Fuel Prices

Ratings changes aren’t always followed by investors. French bonds and U.S. Treasuries both made gains after the nations were stripped of their AAA credit ratings, in a sign that downgrades may have little bearing on borrowing costs. Almost half the time, government bond yields fall when an action suggests they should climb, or they increase even as a change signals a decline, according to 38 years of data compiled by Bloomberg.

Yudhoyono said this week he will only increase fuel prices after Parliament approves compensation programs for the poor, a move that could delay efforts to contain a budget deficitthat may be more than twice as much as estimated without subsidy cuts.

Fuel Prices

Failure to reduce subsidies last year drained government finances and led to a record current-account shortfall, hurting the rupiah as foreign investors lost confidence. Indonesia’s economyprobably expanded near the slowest pace in more than two years last quarter as a decline in commodity prices hurt exports.

Indonesia may implement incremental measures such as a moderate increase in fuel prices, S&P’s Benard said, while stopping short of bold measures given the stage of the electoral cycle the country is in, he said.

S&P said yesterday it may raise the country’s rating if the fuel reforms are finalized, the state budget is improved, or if structural reforms boost economic growth. The assessment may be lowered if renewed fiscal or external pressures are not met with “timely and adequate policy responses,” it said.

“Policy and exchange-rate management need to be more focused on sending the right signals to the market so as not to induce portfolio outflows,” Benard said.

Source: Karl Lester M. Yap, Bloomberg. 3 May 2013.

To contact the reporter on this story: Karl Lester M. Yap in Manila at kyap5@bloomberg.net
To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net

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Why is it so difficult to save?

QUESTION: I have been trying to save but it’s like fighting a losing battle as I keep on nibbling away at my savings until they’re all gone.  It’s like going on a diet, that’s the word die with a “t.” Do you know of an effective way of saving?—Housewife from Quezon City via e-mail.

Answer: Your ability to spend is determined by your capacity to stick to your goals within an environment that is full of temptation. And yes, in the age of technology, temptation walks to you.
Just look at how ads find their way into your favorite cable TV channel, your bookmarked Internet page and even your personal cell phone. To be sure, our urge to splurge has always been there. Temptation just tips the balance toward spending.

To paraphrase the Good Book, temptation is like a roaring lion looking for someone to devour. Yet, despite all its strength, temptation will not succeed if we realize our weaknesses and address them effectively.

I need to emphasize “realizing weaknesses” because we fall prey to this human behavior called overconfidence.  In behavioral economics, overconfidence refers to our unfounded belief that we possess superior abilities in managing our budget, controlling our debt, choosing insurance policies and growing our wealth through investing in securities or a business.
Try to recall the times you told yourself that you would not succumb to the urge to splurge even if you went to a mall with a 70  percent off promo, and then left the mall with shopping bags galore.

Try to see how many Ponzi scams have robbed people of their hard-earned savings over and over in the past decade or two despite the warnings from the Bangko Sentral ng Pilipinas and Securities and Exchange Commission. People say it’s so easy to spot a scam but readily fall into it when blinded by the (false) promise of a high return yet low risk investment product.
Once we acknowledge that we are weak, we would then be in a better position to adopt the TWAHCD practice. The what?

Look at a picture of what you want to enjoy in the future. Let’s say it’s a picture of Boracay. By just looking at the picture, a thought will enter your realm of consciousness. That thought would manifest itself into a word like vacation or relaxation.
If you keep on coming back to that thought and word, they will drive you to action perhaps like saving up for the vacation.  But going to Boracay is not cheap so perhaps you will save gradually.  By saving gradually, you will be forming a habit.

As people see your habit of religiously saving up, they will say that you have eventually developed the character of being a saver.  And because of that character, you will be able to reach your destiny, both figuratively and literally.

So TWAHCD is nothing more than thoughts turning into words; words inspiring action; actions becoming the habit; habit melding into character, and character leading you to your destiny. But let’s focus on the AH because the famous philosopher Aristotle did say “We are what we do repeatedly. Excellence then is not an act but a habit.”  This was echoed by Malcolm Gladwell in his book “Outliers” where he said that one of the formulas for success is to do something repeatedly for 10,000 hours.

To nurture that habit of saving, you must start out with small mortifications. A person who is just starting out to become a professional weightlifter will not lift the heavy weights right away for fear of physical injury.  Similarly, you should not try to save large amounts right away for fear of financial injury.

Mortification means killing the desires of the flesh. Start to kill the small desires first.  As I say in my training, if you are so used to drinking coffee with sugar, try to drink it without sugar for the next couple of days.  Eventually, you will get the hang of it.

If you have trouble saving P100 a day, try it out first with P10 a day.  But you have to have a concrete plan for saving that P10 a day. As they say, goals have to be smart or specific, measurable, achievable, relevant and time-bound.

A smart goal would be to save P10 a day for 30 days as it would eventually lead to a fairly significant amount of savings of P3,000. To achieve this, you could stop buying extra rice. Another smart goal would be to visit places where the urge to splurge would not be strong. So instead of malls, you could visit public parks for the next four weekends. And be sure to make it a family affair so that it is more fun.

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Financial mortification multiplied daily will eventually lead to financial discipline.

If you want to learn more about the proper way to save, borrow, insure and invest, please visit www.personalfinance.ph. There are a lot more free resources there for you to benefit from. You may also want to attend EnRich™on May 25, 2013 (moved from May 18), our public training on personal finance. Details for EnRich™ can be found on the website.

Remember that excellence in saving is not a single act but a habit.

(Repost from Efren Ll. Cruz a registered financial planner of RFP Philippines, personal finance coach, seasoned investment adviser and bestselling author. Questions about the article may be sent by SMS to 0917-505-0709 or e-mailed to efren@personalfinance.ph. To learn more about the RFP program, attend a free orientation on May 9, 7pm at the PSE Center. Email at info@rfp.ph to register.)