Investing Tip #4 – Make your investing tasks automatic

In this post I'll be sharing another tip that caters more for investors. The premise is that as long-term investors, we try to invest as less time and attention as possible in building our investment portfolio. This, of course, doesn't mean that we don’t monitor how well our investment is doing. (The third tip - easy monitoring of your stock transactions - actually talks about it.) But if we could find ways to make our assets work hard for us without doing any additional work, we better grab it.

The key is the reason why we want to be investors – we want to make our money work hard for us, that is, to generate more assets that will in turn produce even more assets. We want to be masters of the power of compounding and layering of work, or doing multiple things at the same time. But that's not enough. We want to achieve that same thing without having a drastic change (or none at all) in our current lifestyle.  Unless you’re really for it, we don’t want to make our profits by fixing our eyes on that computer screen for six straight hours every trading day. While that can be done at times, it will without doubt become impractical in the long run especially if you're not doing this full-time.

So if you notice yourself spending too much of your time monitoring your portfolio in a single day, you might want to take a step backward and see if you’re devoting more time than what’s really needed which could otherwise be spent more productively to address more important areas of your financial life.

So how can you make investing automatic?

Photo credit: Simplify by automatic investing

First, make the funding automatic.

This is pretty obvious.
If you have a bank account in BDO, Metrobank or BPI (or any bank that has online facility), make sure you create an online account. This way you can make your financial transactions all online, like paying your bills and funding your investment fund. This is much better and efficient than going to and lining up in a branch and depositing manually.

To eliminate one step further, you can schedule a fund transfer of fixed amount to your investment fund from say your payroll account to make it automatic every after payday. Once it is set-up, paying yourself becomes automatic.

Second, make the buying of stocks automatic.

If your strategy consists of regularly buying every month with a limit stocks price in your mind, then you can use your online brokers' order options. One example will be that of COL's GTC options. GTC (or Good-till-cancelled) is basically a limit order you can place in the market that is going to be valid for sixty (60) calendar days. 

How does GTC work?
Let's say you want to buy a stock but you want it at a price lower than the current market price, you can use this GTC option to place an order that will wait for that stock to go down to your desired price (your buy below price for example) resulting to a matched order for you. This is much better than placing the same order every single day.
(You can get more details about COL's GTC option here)

Using this GTC option, five minutes is the only time you'd need to devote every month for your stocks investments. That includes logging in to your account and setting up this GTC order. After this, you can go back to your normal life. 

Take note that this task assumes you have a desired price and stock in mind - which leads to a third task that can be also made automatic.

Make choosing your stocks automatic

You can also make picking of your stocks and setting your limit prices automatic, and that is by having a mentor do it for you. While you can definitely do all the analysis by yourself, leveraging on someone better than you doing it is not a bad idea either.

Truly Rich Club for example is one way of making this step automatic.

This club, through its Stock Updates and Stock Alert, advises its members whether it’s buying/selling time for some of the club’s stock picks, and that’s the only time I log-in to my trading account and put that buy/sell order.  Its team also does the analysis and gives an already screened list of stocks and limit prices for buy below price and target price.

With this set-up, I just keep buying the selected stocks while it’s still at the buy below price and sells once they reach their target prices (or near them). All these reports and updates are sent to my email which makes me updated at all times.  If there's any change or sudden news, the club will also take care of that.

By the way, Truly Rich Club primarily uses Fundamental Analysis with some sort of timing. If you're the lazy member, you can go straight to the SAM table that summarizes the stock picks and do your monthly routine. Below is a sample of that easy-to-follow table.

Truly Rich Club's SAM (Strategic Averaging Method) Table

If you're the more curious type, you can digest the explanation of the picks at the second part of the report.  For example, in the last Stock Update sent, Mike Vinas talks about some of its Stock Picks' performance. So whatever investor you'd want  to be, the club is surely a big help.

Focus on your cashflow

As a last advice, do not to focus too much on your stocks but keep an eye more on your cash flow. Find ways on how you can earn more and multiply your streams of income and put a portion of that increase back into your investments. This will maximize the power of compounding in your wealth building.

Start by thinking what you have now that you can offer to the world. Think of your talents and gifts. They can be your natural and automatic way of becoming wealthy!

Have fun investing (with less to-dos),

Omeng

PS: For beginners, download you perfect starter -My Maid Invests in the Stock Market ,  and start your journey to your millions.

Sweet Rewards of Delaying Gratification

Lots of advices have been said about the importance of delaying gratification especially in handling our own finances. While this is true, I believe that this principle is not entirely new to us. In fact, I think this is inherent within us.

In my own experience, while I'd definitely want to enjoy the present, I'd  naturally choose and yearn more to enjoy the last stages down the road. For me, it's simply illogical to enjoy now knowing I'd suffer later on. I'd rather do the opposite and delay gratification now and have the enjoyment in its fullest sense at the end. The gospel yesterday seems to have something related to say:

Which of you wishing to construct a tower does not first sit down and calculate the cost to see if there is enough for its completion?  Otherwise, after laying the foundation and finding himself unable to finish the work the onlookers should laugh at him and say, ‘This one began to build but did not have the resources to finish.’ (Luke 14: 28-30).

I remember one time when I celebrated my birthday with some officemates. We've decided to celebrate it at Vikings( whow bigtime!)  We've two options: to do the lunch-out during (an extended) office lunchtime or do it after office time and have a dinner buffet instead. And I recall naturally pushing for the second choice for the main reason that it simply didn't appeal to me to enjoy the buffet when I knew I'd go back to my desk and finish a job. I'd rather finish the job and have the celebration later on (without thinking when it should end) then go straight home  for a good rest.

Investing is actually a concrete example of delaying gratification. While we can readily spend the money we have now and experience the joy it brings, we're delaying that experience to have a much better version of it in the future (hopefully giving it a better meaning and fulfillment for us).

Below is another excerpt from Truly Rich Club's Wealth Strategy acticle  discussing another good point about this value. For those thinking to buy your own house someday (I do!), let this help you see that decision more objectively.

Photo credit: Investing is actually a concrete example of delaying gratification.

***

The Price of Delaying Gratification (Lyndon Malanog)

When my wife and I started our life together, our first goal was to have our very own house to raise our family. In our culture, having your very own house is a major dream of every young couple.

For many of us, a house is not just an investment but a symbol of success and security. But in reality, a new house is only a facility for you to be tied up with a 20-year loan. And because the title of the house is still with the bank, SSS, or Pag-ibig, this only means that you are actually staying in a house you never own for 15 or 20 years. On the other hand, your house depreciates in value and only the lot where your house is located is actually appreciating. In short, unless your house is rented and is putting money into your pocket more than what you are paying the bank monthly, then it is not an asset but a liability.

The bigger the house, the bigger the need for maintenance.

Now let me share to you my first real estate venture.

Getting a Loan for a House

Last 1994, right after our wedding, we decided to buy our own home. It’s a simple home built on a 240-square-meter lot in the area of Rizal with a total price of P300,000. One hundred fifty thousand pesos was the amount that we needed to pay in cash to the first owner and the remaining half will be an assumed SSS Housing Loan.

The P150,000 SSS Housing loan was to be payable in 15 years at a fixed monthly amortization of P3,800 per month. To stress the point, this means that the original amount that I owed SSS was only P150,000.

Let’s do some simple math:

P3,800/month x 12 months/year x 15 years = P684,000

Which means that I am paying 4.5 times the original amount that I owe from SSS.

Here’s the surprising thing: If we opted to start our life together by renting a house and invested our cash out money of P150,000 in an equity fund for 15 years, then today I could have an amount close to P5 million. This means that our money could have grown 32 times vs. my debt, which have also grown 4.8 times. With P5 million, I could have bought an upscale house and lot in an exclusive subdivision plus some extra cash to fund my business plans.

Now or Wait a Bit?

Now you decide if it pays to wait and delay gratification. Don’t make the same mistakes I did. This is the very common problem of people today. “We want something fast and soon” and that’s why we result in debt.

We are living in a culture of consumerism. We earn then we spend. This is a cycle that goes on and on until a person realizes that he will be retiring very soon without a sufficient savings, because all his savings is used up to pay the monthly amortization in the bank.

Make time to learn by reading books and attending seminars. It’s your greatest leverage during this Information Age.

See you very soon and God bless you abundantly.

 ***

Have fun investing (for a better and greater joy),

Omeng

PS: The above piece is a short section of a sample Wealth Strategy article of Truly Rich Club from Lyndon Malanog. 

Lyndon Malanog is an Entrepreneur and the Financial Coach of Bo Sanchez, Inc.. He continuously gives “Financial Discipline and Wealth Management” seminars to companies and groups as part of his noble mission and advocacy of educating people. 

Meet Lyndon (and other great speakers Randell Tiongson and Marvin Germo) in person in our Philippine Stock Market Premier Seminar this coming January 25 at Gateway, Cubao! Know how to avoid many mistakes people commit in their financial lives and learn how to have winning investments in the stock market!

Get more details here.
Discounted rate of 2497  1497 ends this January 9  so reserve your slot now. 

Email pinoyinvesting@gmail.com to reserve your seat now.

I entered the market close to the peak in May this year. What would you suggest as a strategy?

Just sharing quick note from COL Financial Mid year market briefing answering the most relevant questions that you may also have now (especially to those who started in the last few months when the market was at its high. Basically the message is that PSE will recover but may experience more correction along the road.  Either way you must have a plan in place that will guide your future actions.

Happy reading!

***

I entered the market close to the peak in May this year. What would you suggest as a strategy? Should I still sell now or hold on to my position?   

It really depends on your investment time horizon and on the size of the portfolio that you currently have. If you are a long term investor and the amount of money that you have invested is something that you do not need in the short term, then you can just hold on to your position. Although it might take a while, we remain confident that the market will eventually recover and reach new highs. If you are a long term investor but are heavily invested, you may want to consider reducing your size. The volatility of the market in the next few months might be too difficult for you to bear if your size is too big.  If you are a short term investor, it might be a good idea to sell your positions now as the market is still expected to undergo a correction (please review our technical analysis presentation to understand our short term view of the market). Aside from cutting your losses, selling your position now would provide you with emotional and psychological benefits. It might be difficult for you to mentally prepare for the market’s eventual recovery if you are sitting at a huge loss

***

Have fun investing ( knowing what to do!),

Omeng

PS:
Learn Fundamental Analysis and know how to pick your winning stocks in a a full-blast seminar with Pesos & Sense' host Aya Laraya this coming Setyembre 28! 
Early bird discount ends today so reserve your seat now.

Learn too the money secrets and principles in how to make it work harder for you!

Best of all, you'll be able to draft your own financial plan (thus keeping you always on track)!

Get details here!

Early bird discount ends today na so reserve your seat now.

Get more details and bonuses here!

Does Peso-Cost Averaging Really Work?

Below is an article taken from Insular Life giving some useful insights about Peso-Cost Averaging [Related articles here : The Easy Way of Investing & How to earn even with falling stocks??!]

This is still part of the series giving you several strategies that have been established throughout the  history.

As you've probably (and yo should've) realized by now, there should be no strategy good for everyone as each person has different personality, and thus plans and time-horizon. It's basically pointless to ask and seek an advice from someone who's trading short-term if in the first you're banking long-term. I urge you to try out each of this strategy yourself and find one that works for you and for your goals. 

Speaking of ehem, ehem, goals:

"Mag iinvest ako para sa education ng anak ko"

Biglang bumagsak ang market, nagreredeem na ng pera. 

Bakit? mag eenroll na anak mo?"

-Rex Mendoza

Set your goals & invest according to it. This will save you from much headaches (and give you time to increase your cashflow instead!)

Happy Investing!

***
Does Peso-Cost Averaging Really Work? By Efren Ll. Cruz,

A lot of people are being enticed to invest directly in the stock market especially now that the Philippine Stock Exchange Composite Index (PSEi) has reached unchartered territory.  And with the economy also posting significant gains, it seems that that PSEi is still headed for the stars.

A school of thought, however, proposes that while investing in the stock market is far superior over the long-run than investing in fixed income instruments, it would be advisable to just invest a fixed amount periodically.  This is called Peso-cost averaging (PCA), with the currency changing depending on what you are investing in (i.e. the strategy becomes Dollar-cost averaging if you invest in Dollar denominated instruments).

To see if PCA really works, let’s apply backtesting using the historical data on the PSEi.  Based on the research of my company, the Personal Finance Advisers Philippines Corporation (PFA), investing in the PSEi would have produced the following returns:

 Source: Philippine Stock Exchange

             *assumes investment of Php100,000 at the end of each year

             **up to November 29, 2012

You may be tempted to say that investing one time reaps the most rewards as shown in the simple average column.  But simple average is deceiving in that it assumes that all the money you can and need to invest will be invested at one time.

Not very many people have the capacity to invest all they need to in one go.  Moreover, investing all at once ignores the risk in not diversifying through time.  No stock market moves in an upward straight line.  This is because, as Jesse Livermore (the world’s greatest stock trader) once pointed out,

“Wall Street never changes, the pockets change, the suckers change, the stocks change, but Wall Street never changes, because human nature never changes.”

Livermore said that the FGHIs of investing, (i.e. fear, greed, hope and ignorance) periodically pull down the markets.  The pull can be gentle like in a price correction or be a violent tug like in a stock market crash.  History is replete with evidence of crashes from the Tulip and Bulb craze in 1634 to the Great Depression in 1929, to the Asian Financial Crisis in 1989, to the Dotcom Bubble in 2000 , and to the Global Financial Crisis in 2008.

Will there be financial crises again in the future? Most definitely!  Ignoring this predisposition of markets foregoes opportunities in investing at cheaper levels, as what always happens during crises.

Another deceiving thing with simple interest is that it does not give the effective return. The annual compounded return is the better measure of effective return.  And as can be seen from the previous table, investing over the long-term, especially over 25 years may not seem all that great.

So if most cannot invest all they need to invest in one go and, even if they did, would be foregoing valuable opportunities to buy cheaper, what should be the strategy?  The better way is to do PCA of index component stocks.  And as shown in the earlier table, PCA investing, with the exception of the 1-year measure, outperforms one-time investing in all other measures.

The other advantage with PCA is that excessive stress from investing is avoided through automatic investing rather than in timing the market.  Excessive stress is one of the major causes of heart disease and no amount of money is worth chasing after if it comes at the price of high stress levels.  Believe you me, my kidney function was cut in half during the Asian financial crisis when I was still managing funds.

So doing PCA on index component stocks works. And if you don’t have even the time to invest under this strategy, because of the details of having to rebalance your portfolio to match that of the PSEi, simply invest in stock index funds.

Want the stress-free way to financial freedom. Do PCA.

 ***

As the old cliche goes, Plan your trade and trade your plan.
PLAN to be a long-term investor; don't become one dahil nalaglag hawak mo.

Have fun investing (stress-free!),
Omeng

 

PS: In strategies like PCA, choosing the right stocks is more important than timing the market.
Learn Fundamental Analysis and know how to pick your winning stocks in a a full-blast seminar with Pesos & Sense' host Aya Laraya this coming Setyembre 28!
Early bird discount ends tomorrow so reserve your seat now.

Learn too the money secrets and principles in how to make it work harder for you!

Best of all, you'll be able to draft your own financial plan (thus keeping you always on track)!

Get details here!

Early bird discount ends tomorrow na so reserve your seat now.

Get more details and bonuses here!

How to have money and how to have life

In one of our  previous blogs, I've shared a quick note on the basic difference of the two approaches in a stock market: investing versus trading. [You can read it here. ] Its main point is that an investment is based on a long-term thesis, while a trade is any stock purchase made to profit from a short-term catalyst. If you'll notice, the key is aside from time, it's the catalyst, or the reason, of buying a stock.

Thus it added that dips in prices are just a chance to buy more of the stock in question, PROVIDED you still believe in the thesis that brought you to it in the first place. And the market we have now is something like that -  providing catching-up time for those who wish to bank profits over the longer term.

But trading can always be an option, provided too that you know your catalyst.

That's why just last month, I organized a Technical Analysis seminar for those who want to have a taste of it. At least if they believe it is for them and try it, they will be equipped with some basic checkpoints in making a trade (at least the entry and exit) and understand how it works in a bigger picture.

But for many, especially those who have a dayjob, timing the market can be a difficult option. As shared by Bo in below excerpt, aiming for more gains naturally requires more from the market participant. And in the case of not meeting that more, investing using fundamental analysis may be next best area to look on.

Enjoy reading below article sharing some challenges you'll have should you want to wear your trader's hat.

***

Why You Should Never Be a Trader

Because we always have new members in the TrulyRichClub, I need to define terms here…

Investors buy stocks and don’t sell for six months to 20 years.

Traders buy stocks and sell them after a few hours or days.

Here’s another difference: Investors buy only the giants we recommend in our list . Traders buy anything, especially penny stocks, because they’re more volatile, and thus give them more opportunity to earn more money (theoretically).

Here are 3 Reasons why you should never become a trader:

1. Traders Pay More Fees.

Every time you buy and sell stocks, you pay a fee. Yes, the fees are cheap.

But still, they do add up. And that’s subtracted from your profits.

2. Traders Need More Expertise.

Some of my friends are fulltime traders. The stock market is their fulltime job. They don’t do anything else.

Guess what: A lot of them still lose money!

Despite ALL their training.

3. Traders Need More Time.

How much time a day will you spend in actively trading?

One hour? Two hours? Three hours?

Question: Why not just invest that one, or two, or three hours ON your business? 

Even if you trade only one hour a day, that’s already five hours a week.

If you’re a salesman, use that one hour to call up former customers just to say “Hi” and build relationships.

If you’re an entrepreneur, use that one hour to study how to market your products through the internet.

Believe me, you’ll earn more money!

And whatever added profit you earn from your business, you can plow back to the stock market as an investor!

***

As a summary, remember to be get SET! Consider your
S - ize of money

E - xpertise

T - ime.

Have fun investing (while having a life),

Omeng

PS: Learn Fundamental Analysis and know how to pick your winning stocks in a a full-blast seminar with Pesos & Sense' host Aya Laraya this coming Setyembre 28!

Learn too the money secrets and principles in how to make it work harder for you!

Best of all, you'll be able to draft your own financial plan (thus keeping you always on track)!

Get details here!

Early bird discount ends this Sept 7 na so reserve your seat now na.

Get more details and bonuses here!

PS2: Kahapon I received a short email (sharing) from a friend.
I told her I was blessed so  I thought of sharing it with you na rin. 
It's going with the principle that if you receive something you find helpful for free, you have a moral obligation to share it. So here it goes!

God’s afternoon!

You might want to join us in our next charity activity!

^^

If you have a dream institution you want to give to, kindly email me =) 

Actually, I’m thinking of going to Aeta community kaso I don’t have contact info kasi..

So maybe we can have kiddie party na lang =)

Best of all, we have budget ^^ 

 

So all I ask of you is suggest, join and have fun!

*^^*

Ohhhh life.. I feel really old..

Grabe.. since grade school I was part of Marian Crusaders, visiting churches, then high school travelled places to become missionary..

Sumabit ako sa jeep I really thought pwede babae..

Naki-hitch rin ako after missing the “last trip” to a certain province, good thing a priest in car past by ^^

Visited prisons, joined feeding programs, numerous donation packing activities, YFC conferences and GK builds!

That worship night when the worship leaders asked us to give up everything – yes everything! Wallet ko inalay ko! Hahahah (estudyante pa ako nun)

I remember a quick chat with a nun (I wanted to be a nun before)

And she said she was rejecting my application because she wants me to go out and explore the world..

Haha!

Mukha ngang tama siya..

Yesterday during prayer time I told God I’ve lived a life of giving and I felt I really had the life..

Dunno why I felt a little tired.. or I felt over it

But I realized that maybe torn lang among so many possible options in life ^^

I’m really thankful because when I looked back, I found myself soooo happy in these times that I have served, no matter how sickly, how unwell, how problematic life was

From the bottom of my heart thank you for joining me in humble, happy causes ^^

Malay natin, we die young, we live young, we live more and more in God’s happy time

Then while surfing the net, I saw a close image of Jesus’ feet nailed on cross

Ohhh.. kulang pa.. my deeds will never be enough ^^

O diba, it actually made me pause, and think.. then realized.. it's a life of giving indeed that make us have a life. 

When I see people spending their last minutes here on earth, ALL they want to do is to give, (to love). Wala ngang discussion ng kahit anong investment e! so di pla yun ang ultimate desire ng tao.

May I always be driven by that principle.

blessed too? you know what to do.  :)

PS:  if you know how we can reach out sa mga kababayan nating aetas, let's help this person.:)
And if you want to join us in this charity activity, let me know, wokie?!