UITF Performance, Balanced Funds (Year 2008)

What a year that was. The year of the rat was a sure pest for the global economy. Hope '09 fares better being the year of the ox. Ox? Bull? Maybe that bodes something... Happy New Year!

PNB Mabuhay Prestige: 3.20
BPI Balanced Fund: -27.08%
Metro Capital Growth Fund: -28.58%
BDO Balanced Fund: -41.37%

Source: UITF Online

UITF Performance, Balanced Funds (First Half, 2008)

With a gloomy market, the first half results is almost the exact reverse of the standings for the year 2007. BPI stays at second.

PNB Mabuhay Prestige: 1.47%
BPI Balanced Fund: -20.19%
Metro Capital Growth Fund: -20.26%
BDO Balanced Fund: -26.92%

Source: UITF Online

PERA Is Getting Closer!

The Philippines has one of the lowest savings rate for a nation. Poverty is a clear excuse but even those who are getting paid well seems to be not taking it seriously either. Based on this article, only one of out 10 Filipinos are preparing for retirement. That means, if I say that YOU have a low financial IQ, I have a 90% chance of being right. That's not a pretty sight.

Don't feel too down though. Senator Angara is trying to pass a bill called PERA (Personal Equity and Retirement Account) that will significantly improve the savings culture of Pinoys.

I'm crossing my fingers on this one.

PERA bill to hike savings rate, says lawmaker

MANILA, Philippines - The country’s savings rate is expected to increase once the bill allowing tax-free personal retirement accounts from taxes becomes law, a lawmaker said.

Senator Edgardo J. Angara said the country’s savings rate would go up to about 30% of gross domestic product (GDP) from 19-23%. He noted that the country’s savings rate is among the lowest in the region, with Malaysia, Singapore and Vietnam at 34-40% of GDP.

"[The Personal Equity and Retirement Account or PERA] is one of the best ways to accumulate savings. It will greatly augment Filipinos’ retirement plan," Mr. Angara told a briefing Friday.

The PERA bill was approved by a bicameral conference last June 10. Mr. Angara, who heads the Senate Committee on Banks, Financial Institutions and Currencies, said the law will likely take effect within the year after the Bangko Sentral ng Pilipinas and the Department of Finance come up with implementing rules.

PinoyMoneyTalk thread: Do we have a retirement plan like in the US called 401(k)?

UITF Performance, Balanced Funds (Year 2007)

Just sharing performances of Balanced Funds UITFs, year 2007.

BDO Balanced Fund: 18.93%
BPI Balanced Fund: 12.16%
Metro Capital Growth Fund: 14.36%
PNB Mabuhay Prestige: -0.02%

There are other balanced funds out there, but these are the only ones available at UITF Online.

NBA Millionaire Gone Broke?

If a former NBA superstar can start pulling out his dreadlocks as he faces foreclosures, just imagine how much panic that can subject average income earners like us who have families to feed.

Ex-NBA star Sprewell sells $1.5 million yacht, home could be foreclosed

MILWAUKEE -- Former NBA star Latrell Sprewell's home is up for foreclosure and his yacht sold at auction to help pay off the $1.3 million he owes on the boat, according to court filings.

Sprewell, who once turned down a three-year, $21 million contract extension saying, "I've got my family to feed," has apparently fallen on tough times.

RBS Citizens NA, or Citizens Bank, filed a foreclosure suit last week in Milwaukee County for the $405,000 home Sprewell bought in the Milwaukee suburb of River Hills in 1994.

In court documents, the bank said Sprewell owed $295,138 in outstanding payments plus interest.

I think it's important to learn at least two important lessons here, so we don't fall into the same trap. One, living beyond our means is never a good idea. I don't know how common sensical enough that is. Two, I guess out of so much money he was able to amass during his glory days, he never spent time to being financially literate; or maybe he has a financial planner that he just didn't pay attention to. A "Rich Dad, Poor Dad" book only costs less than $20.

Please take these two lessons to heart. It could be all that Latrell needed to have prevented him from being in this rut.

As they say, "It's not the money you earn, it's the money you keep." I'd rather be financially literate with little money, than be financially stupid with a winning lottery ticket.

Philippine Time Deposit Rates (February 2008)

I asked around for current TD rates, with a minimum placement of P100,000 on a 90-day term. These are not comprehensive, just sharing what I was able to research:

First Country 8.25%
China Bank 3.88%
PBCom 3.75%
The Real Bank 3.50%
Planters Bank 2.75%
BPI 2.50%
BDO 2.25%

There were some concerns on First Country Rural Bank (and perhaps rural banks in general), so please refer to the PMT thread "First Country Rural Bank" for some background. There's also a "Peso Time Deposit Rates" thread you might want to check out.

Hope this helps.

Get-Rich Formula

Here's another nice article about compounding:

The World's Greatest Get-Rich Formula
By Brian D. Pacampara December 5, 2007

You should be highly skeptical of any and all get-rich schemes ... except for the super-simple formula I'm going to show you below. Because this one really works.

It works so well that it's been used by the world's billionaires -- from moguls of yesteryear such as Rockefeller and Ford to today's tycoons Carlos Slim and Warren Buffett.

Though it's a little more "mathematical" than my previous blog about compounding, it drives the same point: that the factor of time is very important. You have to start now, because time waits for no one.

A Crystal Ball That Predicts Your First Million

So you like magic and mysteries, fantasies and fairy tales, eh? Sorry, but this blog is nothing about the sort. But when it comes to talking about having one million, it never fails to bring anybody to enter into some dreamy state. Imagining the places you can go to, stuff you can buy and whatever else you can do with it, who wouldn’t want one million? A short while later, you snap back to reality and get back to your job. The scene is just too familiar.

Nothing wrong, of course, with this habit of daydreaming. After all it’s a nice way to motivate yourself to keep on doing, or being better at, what you do. But one practice that’s probably being overlooked along with this habit is asking yourself one important question… “How do I get my first million?” (Is that a blank face?)

There are lots of answers out there, but what I’m going to explain here is probably the most simple, yet most powerful tool you’ll ever come across. It’s called compounding. (Rich folks are laughing at us, 'cause this concept is like the alphabet to them.)

This is how Webster defines it:

to pay (interest) on both the accrued interest and the principal

Don't be too scared, it’s less complicated with an example. Say you have 100 and deposit it in a savings account that earns 10% per year. For three years, this is what you get:

100 x 1.10% = 110 (first year)
100 x 1.10% = 110 (second year)
100 x 1.10% = 110 (third year)

Total interest: 30

With compounding, you put back your interest or profits so that it helps increase your deposit amount. Here’s what it looks like with compounding:

100 x 1.10% = 110 (first year)
110 x 1.10% = 121 (second year)
121 x 1.10% = 133.1 (third year)

Total interest: 33.1

Can you see that difference?! With the same 100, compounding generates far better profits than you could ever imagine. Unbelievable!

OK, that really shouldn’t convince you just yet. To demonstrate how powerful compounding really is, I made an Excel sheet where you can put in your current age, how much you can save monthly, how many years you want to save and how much annual interest you can get.

In the example below, a 25-year old who commits to saving 2,000 monthly for five years at an annual interest of 10% can reach his million by age 50 (without compounding, at age 67). With just a measly 2,000 with consistent effort for just five years, it's written in the stars that you're going to be a millionaire by age 50!

And if you came late in the game, say at age 35, all you need to do is double your monthly savings and you’d be a millionaire too at about the same age.

This is so simple, why hadn't I known this before?!

So if that got you curious as to when you’ll get your very own million, feel free to download this crystal ball compounding calculator (virus free, but scan it nonetheless). Play with it and see what age should you start, how much should you save monthly and for how many years for you to reach that goal.

For those who are familiar with pension plans and other insurance products, this is the same concept why you get a significant amount of money at the end with the little contribution that you make.

There’s really no magic, just math folks doing a trick with numbers.

When you’ve downloaded the calculator, try this one: monthly savings = 0, annual interest = 50%. You get very neat results.

So start saving, investing and compounding now! If I had embraced this concept ten years ago, imagine what difference that would’ve made. Well, daydreaming is over… Plan your future accordingly!

Please check these other articles about compounding:

The Power of Compounding Interest

The Power of Compounding

For where you can get high interest rates, there are available bank deposits and mutual funds around where you can invest in. Check these PinoyMoneyTalk threads for some info:

About PESO TIME DEPOSIT accounts

Best Time to Invest in MFs/UITFs?

Get On The Bandwagon

Do you have savings or time deposits sitting to make 2-5% profit a year? Don't be too excited, with the current year's inflation at 2-3%, you're really not taking home a lot.

Stock market pays for experts, amateurs
By Alcuin Papa, Elizabeth Sanchez-Lacson
Inquirer
Last updated 02:03am (Mla time) 10/14/2007

MANILA, Philippines -- The profits they make in the stock market on a weekly or even daily basis can easily equal, if not rival, most monthly salaries of fairly high-level corporate executives.

But Danny Go and Bonner Dytoc, middle-class blokes who are not even 40 yet, consider themselves no different from the rest of us. Except for the fact that they are smiling all the way to the bank.

The mass of Filipinos may not yet be feeling the effects of the new highs in the Philippine Stock Exchange Index (PSEi). But market traders like Go and Dytoc have been making a killing since the local market started rising around a year ago.

If you want to get serious about making your money grow, please invest them. For the young ones new to the word investing, it's a way of making your money grow without you having to lift a finger. Or, at least not that much. There are a lot of instruments around that can make that happen for you, from bonds, mutual funds and stocks. Your choices will just depend on how much "reward" you want to get.

Have you heard of NAVs, UITFs, portfolio, diversification and asset allocation? If these are too foreign, how about "taking profits"? Now, we're talking... To put it simply, those are but a few words that go along making passive income.

If you're a little anxious, don't worry. There's a crowd of investing newbies and experts that are grazing the PinoyMoneyTalk forums, sharing knowledge and ideas about financial matters. The threads are very inspiring and informative. Here's to share a few:

How to budget money, manage time and maximize your money-making experience

Malaki na ba ang makaipon ng P1M by age 30?

I hope everybody takes time to sit in the forums and educate themselves. A lot of what you'll learn here are stuff they never teach in school. Get out of the rat race and be prosperous, Pinoys! Don't be left behind!