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STOCK MARKET IS SCARY

STOCK MARKET IS SCARY

I was in college then when I heard about stock investing, other than the movies. A professor at our university is known to have been investing in stocks. He is a certified public accountant. His professional career is at its peak and his investments are doing quite well until all of a sudden he went broke. Word goes around that he lost everything in the stock market.

That professor stopped coming to school and everyone is talking about how scary the stock market is. Students and teachers alike talked about how risky it is to invest in the stock market. They are saying that you have to look at the graphs, charts and stock prices frequently because it could drop or rise in minutes.

And the movies all too vividly showed how busy investors are monitoring the ups and downs of the market. Fortunes are made and lost in a single blink of an eye if you don't watch your investment with eagle eyes. The fortunate ones lived lavish lifestyles while the losers jumped off bridges. Roughly 80% of those who put their money in stocks are losing their wealth.

I thought to myself that it’s not the life for me. The charts and graphs are too intimidating. Besides it is too stressful to watch the prices go up and down. I mean why torture my self. Another thing is you need lots of money to start talking to those well stiff looking brokers in their extravagant offices.

With those things in mind, I totally brushed aside the thought of stock investment. It is way too scary. Until one day I bought a book entitled “My Maid Invests in the Stock Market.” I just got intrigued by the title and said to my self that it was nonsense. But reading it totally blew me away.

Bo’s maid started religiously investing P2,000 every month in the stock market in February 2010. After about 5 years, her invest is already valued at P826,593. This is insane! How was she able to grow her money that much when my professor, a certified public account at that, lost everything in the stock market. She is a house help with little education to understand the complexity of price movements and little time monitor them.

As a certified accountant myself, I took it upon my self to know how these can happen. After immersing my self reading books and searching the internet I came across the book by Benjamin Graham, “The Intelligent Investor”. This opened my eyes to the reality that investing need not be that complicated as long as you have chosen the super big companies and bought the shares at the right price. It dawned on me that those losing their money are those who made the stock market a gambling den.

What I mean to say is that if you are an investor you look at the long term prospect of your money. That is you let it grow and won’t touch it in 5 years minimum. On the other hand, the traders are those who buy a stock today with the hope that its value increase in the short term horizon of say one day or a week then they sell. I now realized that my professor was a trader and not an investor. Traders can gain money fast but could also lose it faster that I can say cheese. Trading is for the pros not for simple persons who do not have the skill and time to read charts and monitor the prices on a daily basis. It is a full time job and therefore it does not create passive income.

If I am to put money in the stock market, I want my money to give me passive income, that is my money growing even if I am sleeping. I don’t want another full time job. It must be another income stream with little intervention on my part.

Bo’s maid grew her money because she received mentoring from Bo himself. Bo teaches her what stocks to buy, when to buy and when to sell them. Bo also guides her how to have a wealthy mindset that would attract money to her. I want Bo to be my financial mentor as well. But I thought that would be very expensive until I found out about the Truly Rich Club (TRC).

Without any second thoughts I joined TRC. Heck it only cost me P499 very month and I got to have Bo Sanchez as my mentor. It is even less that what I spend on cellphone load monthly. Here Bo guides me as I commence my journey to Wealth and Spirituality. It is very easy to join. Just click www.trulyrichclub.com and follow the instructions.

Enjoy financial freedom and a life of blessings.

Bank Savings just won’t cut it

Since childhood we were taught to save. Save for the future like ants saving for the rainy days. So we set a side portion of our baon and put it in the bank.

Ten years after, the savings is gone or, at best, too little to matter.

The amount saved went to the latest gadgets, spent on things we never even recall what. It is so easy to spend money because we always find a dime a dozen reason to spend. Every time the money in the bank becomes enough to buy something, then it finds a way to slip away.

Now that we have joined the working class we started earning. Yet it seemed not enough. We are left with little to nothing to save after deducting all expenses. And so we kept aiming for promotion.

At last we got double our salary after being promoted to managerial position. A manager needs a car and so we bought one. After all the expenses we are still left little to nothing to save. There too many reasons to spend the savings.

Having realized that money often finds its way out of our pocket and that our savings is not growing enough, we find less value in the habit of saving. And so we develop the mentality that whenever we have money we need to buy a TV, a car, the latest gadgets or anything concrete that we can see or touch because at least we have bought something as a “remembrance” rather than losing it to many things we cannot even remember.

Of course one of the problems is the “Parkinson’s Law” but more on that in the future. Perhaps we can look at the fact that savings just won’t cut it.

We view savings as another pocket to draw money from whenever we need or want to buy something. We save to consume and not for growing money.

Remember what we were told during childhood? Remember the ants saving for the rainy days? Yes that one.

Ants save during dry season so that when winter or rainy season comes they have something to eat.

            
But eating is consuming. If you consume something it never grows but is destroyed in the process.

            
The saving ant analogy won’t cut it. Money will never grow because at the back of our minds we have the impression that we save so that we can consume it later. Our saving ant is a good ant but he saves and consumes and saves over and over again in a vicious cycle.

            
If that savings is intended to grow then we should let it be in the bank. Right?

            
Wrong. As long savings is left in the bank that money will never grow. On the contrary it will diminish its value.

           
I am pretty sure we still remember our folks saying their P100.00 can buy more then. My lolo used to tell me he can buy soft drinks with his 50₵. That was truly amazing.

           
We realized that the bank is giving us less than 1% yearly interest. Heck even if the bank gives us 2% interest every year still the prices of things we buy are increasing at a much faster pace. This is what we call “inflation”.

            
So the growth of our money in the bank will always be overtaken by the increase in the prices of stuffs of everyday.

           
Savings will not work as a vehicle to grow our money. It just won’t cut it. What will then?

Investing.

HUGE BUSINESS/INVESTMENT OPPORTUNITY

The potential is HUGE for Microfinance Lending to be a Money Making Machine and a way to express generosity by helping the poor. Deutsche Bank in 2007correctly called it as an “Emerging Business Opportunity”.

Every nook and turn in our community I can see Sari-Sari Stores, Bananaque or Barbeque Stand owned by Nanays and Ates. These serve as either a supplemental income for the household or as main source of livelihood. This alone tells me that Pinoys are born entrepreneurs.

These Nanays and Ates belong to the lower income estrata of our society. As such they are deprived of access to financial support to help their microbusiness grow.

This circumstance forces them to go to “Loan Sharks” for financing. In turn they are charged on the so-called “5-6” system or an interest of 20% per month. At this point though, interest rate is the least of their concerns. On top of their priority is the ready source of fund at the quickest possible time. As a result, the Loan Sharks are getting wealthy.

There are only 5.1M microfinance borrowers served by Rural Banks, NGOs and Cooperatives (June 2010 http://www.microfinancecouncil.org). Which means that roughly 80% of the microfinance sector in the Philippines is unserved/underserved. And this is where the investment opportunity unfolds.

While the microfinance sector individually owns little, but considering they dominate in matter of numbers in the Philippine population, makes it a very fertile ground – a huge client base. W. Sycip, the son of Albino Z. SyCip, co-founded China Bank, called it “Financial Power of the Poor”.

Based on my research and 15 years experience in the microfinance sector, the Return on Investment ranges from 30% to 45% every year, making it one of the most profitable investment opportunity there is. In fact, I am currently operating a microfinance company which started operations 5 years ago. At present it is producing a net Return of Investment of 79.60% every year.

The uninformed however believes that the risk to the investment is high. But the collection rate of good MFIs is 98%. My experience shows that the default rate in microfinance is less compared to conventional and regular loans. This is highly attributable to stringent standards of discipline observed by Microfinance Institutions and their borrowers.

Besides there are select methods that can be used to turn an otherwise unsecured loan to a secured loan through various guarantee programs.

Microfinance Business or Investment can indeed be lucrative and at the same time provide significant impact to poverty alleviation.

Like any other investment opportunity, the real risk is in the lack of understanding.

For more information about microfinance visit http://wisemicrofinance.blogspot.com/

CREATE WEALTH

Money is only in the mind. Once the mind shifts to create wealth, money flows easily and effortlessly.