This Small Habit Quietly Keeps People Poor

 

This Small Habit Quietly Keeps People Poor

Most people think staying poor is caused by one big mistake.

A bad investment.

A failed business.

A job loss.

A major financial emergency.

But in reality, financial struggles are often caused by something much smaller.

Something so common that many people don't even notice it.

It's the habit of spending money without thinking.

Not necessarily on expensive things.

Not on luxury vacations.

Not on designer bags.

Just small, seemingly harmless purchases made repeatedly over time.

And that's exactly why it's dangerous.

Because what quietly keeps people poor is rarely one giant decision.

It's hundreds of tiny ones.

---

The Power of Small Financial Decisions

Imagine someone spends:

• ₱100 on food delivery

• ₱150 on impulse purchases

• ₱80 on snacks

• ₱120 on random online shopping deals

None of those purchases seem serious on their own.

In fact, most people would say:

"It's only a small amount."

But small amounts have a way of becoming big amounts.

Spending just ₱200 a day on non-essential items adds up to more than ₱6,000 a month.

That's ₱72,000 a year.

For many people, that's already:

• an emergency fund

• a business starter fund

• investment capital

• several months of savings

The problem isn't the amount.

The problem is the habit.

---

The "It's Only This Once" Mindset

One of the biggest personal finance traps is believing every purchase is an isolated event.

People often tell themselves:

• "It's only one coffee."

• "It's only one sale."

• "It's only one checkout."

• "It's only one food delivery."

And they're technically right.

The problem is that the same thought happens tomorrow.

And the day after that.

And again next week.

Eventually, "just this once" becomes a lifestyle.

---

Why Emotional Spending Is So Common Today

Modern life is stressful.

People are tired.

Work is exhausting.

Prices keep rising.

Social media constantly shows people enjoying things we don't have.

So it's easy to justify spending as a reward.

You had a bad day.

You buy something.

You feel better.

At least for a moment.

The problem is that emotional spending creates temporary relief but permanent financial consequences.

The happiness lasts hours.

The expense stays for weeks.

Sometimes months.

---

Convenience Is Making the Habit Worse

Years ago, buying something required effort.

Today?

You can spend money while lying in bed.

A few taps and:

• food arrives

• gadgets arrive

• clothes arrive

• loans get approved

• Buy Now, Pay Later options appear instantly

Technology has made spending incredibly convenient.

Unfortunately, saving money still requires discipline.

That's why many people accidentally develop poor spending habits without realizing it.

---

The Real Cost of Impulse Purchases

Many people only look at the price.

Financially successful people often look at opportunity cost.

Instead of asking:

"Can I afford this?"

They ask:

"What am I giving up by buying this?"

That ₱500 impulse purchase could have been:

• savings

• debt repayment

• investment money

• emergency fund contributions

Every peso spent has an alternative use.

Learning to recognize that is a major step toward financial stability.

---

Financial Discipline Is Often Boring

This is something social media rarely talks about.

Financial discipline isn't exciting.

It looks like:

• skipping unnecessary purchases

• sticking to a budget

• saying no to impulse spending

• saving before spending

• delaying gratification

None of these things are glamorous.

They don't get likes.

They don't impress strangers online.

But they quietly build wealth over time.

---

Small Habits Work Both Ways

Here's the good news.

The same principle that keeps people broke can also make them financially stronger.

Small positive habits compound too.

Saving ₱50 daily may not seem impressive.

Neither does tracking expenses.

Or saying no to a few unnecessary purchases each week.

But over months and years, those habits create real financial progress.

Success rarely happens overnight.

Neither does financial stability.

---

Practical Ways to Break the Habit

You don't need to become extremely frugal.

Start with awareness.

Practical Tips:

• Wait 24 hours before buying non-essential items

• Remove saved payment methods from shopping apps

• Track your spending for one week

• Unsubscribe from promotional emails

• Set a monthly spending limit for wants

• Ask yourself if you're buying from need or emotion

• Save a small amount before rewarding yourself

Small actions repeated consistently create big results.

---

Frequently Asked Questions

What habit keeps people poor the longest?

One of the most damaging habits is spending money impulsively without tracking where it goes. Small, repeated purchases can quietly drain income over time.

Why do small expenses matter so much?

Because they happen frequently. While a large purchase may happen once, small expenses often occur daily and can add up to thousands of pesos each year.

How can I stop impulse spending?

Try using a waiting period before purchases, tracking expenses, and identifying emotional triggers that lead to unnecessary spending.

Is it okay to spend money on things I enjoy?

Absolutely. The goal isn't to stop enjoying life. The goal is to spend intentionally instead of automatically.

---

Final Thoughts

Most people don't become financially stressed because of one disastrous decision.

More often, it's the accumulation of small habits repeated day after day.

That's why the habit of spending without thinking is so dangerous.

It feels harmless.

It feels normal.

It feels insignificant.

Until years pass and you realize how much money quietly slipped away.

The good news?

Small habits can be changed.

And sometimes, changing one small habit is enough to completely change your financial future.

The Silent Money Trap Keeping Many People Broke

A lot of people today are not drowning financially because they’re lazy or irresponsible.

Sometimes they’re simply exhausted.

Exhausted from trying to survive in a world where:

• prices keep rising
• salaries barely move
• emergencies happen nonstop
• social media keeps pressuring people to spend
• and loan apps are available in just a few taps

We live in a time where being financially stressed has quietly become normal.

And many people are trapped in a cycle that looks like this:

stress → spending → debt → more stress

The scary part?

Most people don’t even realize they’re already inside it.

---

Loan Apps Are Everywhere Now

Years ago, borrowing money felt serious.

Today?

You can get approved for a loan while lying in bed scrolling TikTok.

Need cash?

• tap
• verify
• wait a few minutes
• money arrives

It feels fast. Easy. Convenient.

And sometimes, people genuinely need help.

But the danger starts when borrowing becomes emotionally normal.

Many people now use loans for:

• cravings
• online shopping
• gadgets
• vacations
• temporary relief from stress

The problem is that debt creates future pressure.

You feel relieved today…
but your future salary is already partially gone.

Then another emergency happens.
So you borrow again.

And the cycle repeats.

---

“Buy Now, Pay Later” Feels Harmless

One of the smartest marketing tricks today is making debt feel painless.

Instead of:

“You cannot afford this.”

The system says:

“Just pay a small amount monthly.”

So people buy things they normally wouldn’t buy:

• expensive phones
• appliances
• shoes
• makeup
• furniture
• online shopping carts filled at midnight

Because the monthly payment looks “small.”

But multiple small payments eventually become heavy.

That’s how many people slowly lose financial breathing room.

Not through one giant mistake…

…but through many tiny monthly commitments stacking together quietly.

---

Social Media Quietly Pressures People to Spend

This is something many people underestimate.

Every day, social media shows:

• travel photos
• aesthetic cafes
• luxury lifestyles
• gadget upgrades
• successful people
• shopping hauls
• influencers saying “you deserve this”

After a while, ordinary life starts feeling “behind.”

People begin spending not because they truly need something…

…but because they don’t want to feel left out.

Sometimes the pressure is silent.

You see your friends:

• eating out constantly
• upgrading phones
• traveling frequently
• buying trendy things

Then suddenly your simple life feels “less.”

So you spend emotionally to feel temporarily better.

But emotional spending rarely fixes emotional stress.

---

Inflation Is Making Survival Harder

Let’s be real.

Even basic living feels heavier now.

Groceries are more expensive.
Electricity costs more.
Transportation costs more.
Rent costs more.

Meanwhile, many salaries barely increase fast enough to keep up.

That’s why many people feel frustrated even when they’re working hard.

Some are not financially irresponsible.

Some are simply trying to survive an increasingly expensive world.

And when people are stressed and exhausted, they become more vulnerable to:

• impulsive spending
• emotional spending
• debt dependence
• “deserve ko ’to” spending habits

Stress affects financial decisions more than people realize.

---

The Dangerous Stress-Spending Cycle

This is the cycle many people quietly experience:

Step 1: Stress

Bills pile up.
Work becomes exhausting.
Life feels heavy.

Step 2: Spending for Comfort

Food delivery.
Online shopping.
Small rewards.
Impulse purchases.

Temporary happiness appears.

Step 3: Debt

Savings become insufficient.
Loan apps enter the picture.
Credit cards fill the gap.

Step 4: More Stress

Now there’s:

• debt pressure
• interest
• due dates
• anxiety
• less breathing room financially

Which leads back to…

Step 1: More Stress

And the cycle continues.

---

Financial Struggles Are Sometimes Emotional, Not Just Mathematical

This is important.

Money problems are not always caused by stupidity.

Sometimes they’re caused by:

• burnout
• stress
• insecurity
• pressure
• loneliness
• comparison
• emotional exhaustion

That’s why financial healing is not only about budgeting.

It’s also about:

• awareness
• emotional discipline
• slowing down impulsive habits
• reducing comparison
• learning healthier coping mechanisms

A person can know budgeting techniques and still struggle financially if emotional spending controls their decisions.

---

Small Practical Ways to Break the Cycle

You do not need to change your entire life overnight.

Start small.

Practical Tips:

• Unfollow accounts that constantly pressure you to spend
• Wait 24–48 hours before buying non-essential items
• Avoid browsing shopping apps when stressed
• Track recurring monthly payments carefully
• Build even a tiny emergency fund
• Learn to separate “needs” from emotional cravings
• Find free ways to reward yourself occasionally

Small awareness creates big long-term changes.

---

Final Thoughts

Modern life makes spending incredibly easy.

In fact, entire industries are designed to keep people consuming emotionally.

So if you’ve struggled financially before, it does not automatically mean you’re lazy or hopeless.

Sometimes you’re simply navigating:

• inflation
• pressure
• stress
• emotional exhaustion
• and a system constantly encouraging people to spend

But awareness matters.

Because once you recognize the cycle, you slowly regain control over it.

And honestly?

Peace of mind is worth more than temporary online validation or impulsive happiness.

How to Teach Children the Value of Money

Parents play a crucial role in shaping their children's financial habits. Before teaching children about money, it's essential for parents to have a good grasp of money management themselves. By practicing what you preach, you become an example for your children to emulate. 

They learn to be stressed about money if the adults in their life are stressed about money. Or, they learn "money grows on trees" because they get everything they ever wanted. 

In this blog post, we will explore some practical and creative ways to teach children about money, instilling in them a sense of financial literacy and responsibility.

• Consider helping your children open a savings account and match their savings to encourage good saving habits.

• Utilize real-life experiences to teach children about money. For instance, involve them when dining out at restaurants. Let them add up the bill, calculate the tip, and make the payment at the cashier. This practical exercise helps children understand the value of money and how to handle transactions responsibly. Similarly, encourage them to find coupons or discounts when making purchases, as the family did for their Friday night pizza treat.

• Engage children in financial decision-making, such as planning family vacations. Share the budget for lodging, transportation, meals, and entertainment, and discuss the available choices. This helps children understand trade-offs and make informed decisions. Incentivize saving by offering to match a portion of their savings, motivating them to save for something special they desire.

• Support your children's entrepreneurial spirit by allowing them to earn their own money. Encourage them to explore part-time jobs, odd jobs for neighbors, or creative ventures. In one family's case, their son wanted a car at sixteen, so his parents agreed if he paid for it himself. This experience led him to find a car in need of repair and learn the value of money through his own efforts.

While it can be tempting to rescue children from financial mistakes, it's important to establish boundaries and let them find solutions. Acknowledge their dilemmas and ask them for their ideas on resolving financial challenges. This nurtures problem-solving skills and teaches them accountability for their financial choices.

Teaching children the value of money is an ongoing process that requires patience, creativity, and consistency. By being good financial role models, involving children in real-life experiences, and encouraging entrepreneurial endeavors, parents can instill important financial skills and values. By imparting these lessons early on, we empower our children to make sound financial decisions, develop responsible money management habits, and pave the way for a prosperous future.

Mastering the Art of Frugality: Practical Tips for Saving Money

In a world where consumerism is rampant and expenses seem to be ever-increasing, mastering the art of frugality is a valuable skill for Filipinos seeking financial stability. By adopting practical money-saving strategies, you can take control of your finances, achieve your goals, and build a more secure future. In this blog post, we will explore some effective tips and tricks for saving money.

Embrace Smart Shopping Habits

One of the fundamental steps in saving money is to be a smart shopper. Look for sales, discounts, and promotions when purchasing groceries, clothing, or household items. Compare prices, opt for generic brands, and consider buying in bulk for long-term savings. Additionally, make use of coupon apps and loyalty programs to maximize your savings.

Cook at Home and Meal Prep

Eating out can be costly, especially if done frequently. By cooking meals at home and practicing meal prepping, you can significantly reduce your food expenses. Plan your meals for the week, create a shopping list, and stick to it. Prepare your lunch and bring it to work, saving you time and money. Not only will this habit save you money, but it also promotes healthier eating.

Reduce Energy Consumption

Lowering your energy consumption not only benefits the environment but also helps you save money on utility bills. Unplug electronic devices when not in use, switch to energy-efficient appliances and light bulbs, and consider installing a programmable thermostat to regulate energy usage. Simple habits like turning off lights, using natural light, and air-drying clothes can significantly affect your monthly bills.

Utilize Public Transportation and Carpooling

Transportation costs can take a significant chunk out of your budget, especially if you rely on private vehicles. Opt for public transportation, carpooling, or biking to reduce fuel expenses whenever possible. Explore options like ride-sharing apps or join carpooling communities to split commuting costs with others. Not only will this save you money, but it will also contribute to reducing traffic congestion and pollution.

Cut Down on Unnecessary Subscriptions

In the era of digital streaming and subscription-based services, it's easy to accumulate multiple subscriptions that you rarely use. Take a close look at your monthly subscriptions and assess their value. Cancel any services that you no longer need or use sparingly. This way, you can eliminate unnecessary expenses and allocate that money towards more important financial goals.

Practice the 30-Day Rule

Impulse buying can quickly derail your budget. Before making a non-essential purchase, give yourself a 30-day waiting period. This rule allows you to reconsider the purchase and evaluate if it's truly necessary. Often, you'll find that after 30 days, the urge to buy has diminished, saving you from spending money on something you didn't truly need. I can totally relate to this. And it feels so good when you're able to control yourself from impulse buys.

Emphasize Free and Low-Cost Entertainment

Entertainment expenses can add up, but there are plenty of low-cost or free alternatives available. Instead of going to expensive movie theaters, consider movie nights at home with friends or family. Explore local parks, museums, or community events for affordable leisure activities. Take advantage of libraries (for those who like peace and quiet) or online platforms for books, movies, and educational resources without spending a fortune.

Saving money requires discipline, awareness, and a willingness to adopt frugal habits. By incorporating these practical tips into your lifestyle, you can take control of your finances, reduce unnecessary expenses, and work towards achieving your financial goals. Every peso saved today is an investment in your future financial security and well-being. Start mastering the art of frugality and reap the rewards for years to come.

Invest young, retire young

In a rapidly changing world where financial independence is a common aspiration, the concept of retiring young has gained significant popularity among ambitious individuals. While the idea may seem far-fetched, especially for young individuals starting their careers or running side hustles, it is indeed possible to achieve early retirement by adopting smart investment strategies. In this blog post, we will explore the importance of investing at a young age, discuss various investment opportunities and provide practical tips on how to build a solid financial foundation for early retirement. Investing at a young age offers several advantages that can significantly impact your financial future.

Why Invest Young?

a) The Power of Compounding: Time is your greatest ally when it comes to investing. By starting early, you give your investments more time to grow and benefit from the compounding effect. Compounding allows your money to generate returns on both the initial investment and the accumulated returns, resulting in exponential growth over time.

b) Risk Tolerance: As a young investor, you have the advantage of being able to take on more risk. You can afford to invest in higher-risk, higher-reward opportunities, such as stocks or entrepreneurial ventures, as you have a longer time horizon to recover from potential losses.

c) Flexibility: Investing young provides you with the flexibility to make mistakes and learn from them. You have time to recover from any setbacks and adjust your investment strategies accordingly.

Investment Opportunities

a) Stock Market: Investing in the stock market allows you to become a part-owner of companies and benefit from their growth. Start by educating yourself about the basics of stock investing, such as understanding financial statements, diversification, and risk management. Consider investing in low-cost index funds or exchange-traded funds (ETFs) to gain exposure to a broad range of stocks.

b) Mutual Funds: Mutual funds pool money from various investors to invest in a diversified portfolio of stocks, bonds, or other securities. They offer a convenient way for young investors to access professionally managed portfolios and reduce individual risk.

c) Real Estate: Real estate investment can be an effective long-term wealth-building strategy. Consider investing in rental properties, Real Estate Investment Trusts (REITs), or real estate crowdfunding platforms. Start small and gradually expand your portfolio as you gain experience and financial stability.

d) Retirement Accounts: Take advantage of tax-advantaged retirement accounts. These accounts usually provide tax benefits and compound your savings over time, ensuring a comfortable retirement.

e) Cryptocurrency: Cryptocurrency, such as Bitcoin, Ethereum, and others, has gained significant popularity in recent years. While it comes with higher volatility and risks, it has the potential for substantial returns. Before investing in cryptocurrency, take the time to understand the underlying technology, the market dynamics, and the associated risks. It is advisable to start with a small portion of your investment portfolio and consider diversifying across different cryptocurrencies.

To invest and trade cryptocurrencies, you'll need to use a reputable cryptocurrency exchange. One popular exchange is Binance, known for its wide selection of cryptocurrencies, user-friendly interface, and robust security measures. Binance offers a seamless trading experience with advanced features like limit orders, stop-loss orders, and margin trading. If you're interested in signing up for Binance, you can use my referral link to create an account. By signing up through this link, we'll both get a 100 USDT cashback voucher if you deposit more than $50 into your account. However, feel free to explore other exchanges as well, and choose the one that best suits your needs.

Building a Solid Financial Foundation

a) Set Clear Financial Goals: Define your financial objectives, such as retiring at a specific age or achieving a certain level of passive income. Having clear goals will help you stay motivated and focused on your investment journey.

b) Create a Budget and Track Expenses: Develop a budget that aligns with your financial goals and helps you control your spending. Track your expenses diligently to identify areas where you can cut back and redirect funds toward investments.

c) Save and Invest Regularly: Consistency is key when it comes to investing. Commit to saving a portion of your income each month and regularly invest it in suitable investment vehicles. Set up automatic transfers to make the process seamless.

d) Educate Yourself: Continuously educate yourself about personal finance and investment strategies. Read books, follow reputable financial blogs, and attend seminars or webinars to enhance your knowledge. Empower yourself with the necessary skills to make informed investment decisions.

In summary, investing young provides a tremendous opportunity to secure your financial future and retire early. By harnessing the power of compounding, exploring various investment opportunities, and building a solid financial foundation, you can pave the way for a prosperous retirement. The key is to start early, be consistent, and continuously educate yourself about the ever-changing investment landscape. With determination and discipline, retiring young can become a reality for ambitious young individuals like you.

Disclaimer: The information provided in this blog post is for educational purposes only. It does not constitute financial advice. Before making any investment decisions, consult with a qualified financial advisor.

Demystifying Credit Cards: Empowering Your Financial Journey

In the realm of personal finance, credit cards often evoke a sense of fear and trepidation among many people all around the globe. Concerns about debt, high-interest rates, and financial pitfalls can overshadow the numerous advantages credit cards offer.

In this post, we'll debunk the fear surrounding credit cards and shed light on the untapped potential they hold. It's important to note that while credit cards can be advantageous, they should be used responsibly to avoid falling into debt. It's crucial to make timely payments, keep track of your spending, and avoid carrying high balances that accrue interest. By using your credit card wisely, you can enjoy the benefits while maintaining financial stability.

Having a credit card can offer several advantages when used responsibly. Here are some key benefits:

• Convenience and Flexibility: Credit cards provide a convenient and widely accepted payment method. They allow you to make purchases online, in-store, and over the phone without carrying cash. With a credit card, you have the flexibility to make large purchases and pay them off over time, which can be helpful for emergencies or when managing cash flow.

• Building Credit History: Credit cards play a significant role in establishing and building your credit history. By using your credit card responsibly and making timely payments, you demonstrate your ability to handle credit. This helps you build a positive credit score, which is important for future loan applications such as a mortgage or car loan.

• Rewards and Perks: Many credit cards offer rewards programs where you earn points, cashback, or airline miles for every money spent. These rewards can be redeemed for travel, merchandise, statement credits, or other benefits. 

• Emergency Situations: Credit cards can be valuable during emergencies when you may need immediate access to funds. They provide a safety net in unexpected situations, such as medical emergencies, car repairs, or home repairs. Having a credit card can provide peace of mind knowing that you have a financial backup plan.

• Travel Benefits: Some credit cards offer travel-related perks, such as travel insurance, airport lounge access, and no foreign transaction fees. These features can enhance your travel experience and help you save money when you're abroad.

It's time to shed the fear and apprehension surrounding credit cards and recognize them as powerful financial tools. By understanding and leveraging their advantages, we can enjoy the convenience, security, rewards, and financial flexibility that credit cards offer. Responsible credit card usage is key. Stay informed, create a budget, pay your bills on time, and use credit cards as a means to enhance your financial well-being. Embrace the potential of credit cards and embark on a journey toward financial empowerment.

Earning thru Lazada's Affiliate Program

I'm a regular customer of Lazada - I have tried buying small home appliances, office equipment, beauty products and gizmos especially when they are on sale. They have a diverse selection of products and I noticed that more and more known brands have already partnered with them. Shopping is hassle-free and truly effortless, plus they offer convenient payment options and free shipping for most of the items. I usually choose cash on delivery (COD). For items which ship from abroad, COD is not available, so you'd you have to pay via credit card and other available payment options.

Since I have a blog which I plan to revive, I applied for Lazada's Affiliate Program yesterday. Then I received an email confirmation this morning stating that my application has been successful! Yey! I will go through the tutorials and will make an update in a few days :)

BPI 24/7 Online Banking

I've been doing electronic payment with BPI for quite sometime and they really provide great service esp for people who has no time falling in line on long queues just to pay bills. With just a few clicks, I do banking transactions instantly without the need to travel unlike before. I also find their employees really friendly and professional (unlike other employees from other banks). Anyway, this is about online banking so I'll just stick with the topic :)

Here are the things you can do with BPI online banking:

• View real-time balances of your Deposits, Consumer Loans, Credit Cards, Investments and Express Cash Accounts.
  
  
• Transfer funds between your own deposit accounts enrolled in BPI Express Online and to the accounts of your family members, relatives and friends.
  
  
• Pay your utilities, loans, insurance, ISPs, country club fees and a host of other bills online.
  
  
• Reload your own or someone else's Globe Handyphone or TM prepaid phone.
  
  
• Apply for a deposit account, auto or housing loan, credit card, E-Credit, or Express Cash accounts online.
  
  
• Request for a Stop Payment order of issued checks real time.
  
  
• Re-order checkbooks, request for copies of financial documents and other credit card related services.

To discover more products and services featured in BPI Express Online, you can take a quick look at their Online Tour.

Truly BPI 24/7 Banking gives you the freedom to make the widest range of banking transactions anytime, anywhere.

I just love BPI!

Forex Trading

Forex trading is an international exchange market whose daily average turnover is more than 1.5 trillion dollars. The word “FOREX” is abbreviated as FOREIGN EXCHANGE and in broad manner we would say it’s a market where one currency is traded for another and this is done in the hope that one can make profits on any losses or gains in the movement of currencies.

The trade of currencies is done in pairs i.e., the currency which one buy’s in the belief that in future its price will rise, the trading term related to this is called “the long position” and the other to sell in belief that its value will fall in future and the profit is made by buying it back on the lesser value, and the trading term related to this is called “the short position”.

The whole profit making in FOREX depends upon the movement between the 2 currencies which is not so high, so to make huge profits, one has to buy hundreds of dollars worth of currency at a time. Independent brokers and currency dealers make up a small percentage of FOREX TRADING but the major part comes from the banks, investment management firms and brokerages and according to The Wall Street Journal, the top ten currency traders which includes Deutsche Bank, UBS, HSBC, Barclays, etc., account for almost 73% of trading volume.

The trading can be done 24 hours a day except on the weekends, so it provides great opportunity for FOREX traders to work at their own conveniences. Due to its extreme liquidity and very high trading volume, the foreign exchange market is quite unique, but it said that FOREX TADING is not as easy as it seems so. A person new to FOREX TRADING should brush up his skills before getting his hands wet and should study both fundamental & technical analyses.

source: dailyarticle.com; photo from www.forexbreakthrough.com

Save for your retirement while you are still young

For almost all young adults who have just started their first job, or who are just getting ready to settle down and marry, planning for their retirement is not at all in their minds. For those who have just gotten their first job, the experience of receiving your paycheck is a thrilling and empowering feeling. Now you have money to spend for the things you’ve always wanted to get. Billboards and glitzy print ads beckon you to accumulate all sorts of products and services that make you enjoy the life that you feel entitled to. At last!

But, listen, time waits for no one. Sooner or later, you will find yourself with a closet full of out of fashion clothes, outdated gadgets, and toys that you have outgrown. Worse still, you may still have credit card bills to pay for these things, and zero cash saved up for even your next vacation to Boracay. This time will come, if you’re not careful. And believe me, that time could just be around the corner.

If you’re smart, you should begin to plan for your retirement as soon as you receive your first pay check! Here are ten reasons why you should prepare now:

1. If you are employed, and your company is setting aside money for your SSS or GSIS or company retirement, guess what? What your company is setting aside is not going to be enough.
2. Time is in your favor. Who has more time to save for retirement at age 60? You, or your uncle who is 30 years older than you?
3. Because of # 1, you don’t have to sacrifice a lot in order to save a lot. If you and your uncle wanted to accumulate P1 Million by the time you’re both 60, you would have to save a smaller amount regularly, because you have more time to save. Right?
4. You can make more aggressive investments now but get rewarded with higher returns. Usually, these higher risk investments have a way of recovering very well over a longer period of time.
5. Inflation is not in your favor. You know it. Don’t be in denial. It will cost you more to retire than earlier generations ahead of you. So, don’t think that it will be affordable enough for you by that time.
6. You can start small and grow. Even setting aside a small portion of your paycheck each month will pay off in big pesos later.
7. It’s easier to develop the habit of saving while you are young and you have no major obligations.
8. As you accumulate savings over time, your money will start working for you, rather than you working for money.
9. No matter how much you love your parents, do you like the idea of supporting your parents because they failed to save for their retirement? Well, don’t impose your failure to save on your children. They deserve a life of their own.
10. It’s great to enjoy your savings! Imagine the nice and easy life you can enjoy when you have saved enough. If you want to keep working even when you’re old, you will go to work because you like to, not because you have to. And – when you have saved enough to take care of a comfortable lifestyle – you can occupy yourself with work which probably won’t pay much, but which will be fun and self-fulfilling.

source: http://www.save-and-learn.com; photo from www.forbes.com

Part 2: Stocks Investing

Part II: What is the minimum amount needed to invest in the stock market?

Trading stocks is done though board lot or round lot system, which means there is a minimum number of shares one can buy or sell at a specific price range.

The Board Lot Table determines the minimum number of shares one can purchase or sell at a specific price range. Therefore, the minimum amount needed to invest in the stock market varies and will depend on the market price of the security as well as its corresponding board lot. Prices of stocks move through a scale of minimum price fluctuations.

The Philippine Stock Exchange uses the Board Lot Table.

How can i profit in the stock market?

Investors can profit in the stock market thru any or a combination of the following;

• Capital Gains - These are profits made due to an increase in the market price of a stock from the buying price.
  

• Cash Dividend - A dividend given to shareholders in the form of cash. It is computed by multiplying the number of shares held by the cash dividend rate declared.
  

• Stock Dividend - A dividend given to shareholders in the form of additional stocks. It is computed by multiplying the number of shares held by the percentage of the stock dividend declared.
  

• Stock Rights - Stock rights offering is the option given to the present shareholders to buy additional shares of stock at a price lower than its market price.

Is there any risk involved in investing?

Yes, since risk is always a part of any investment. And because stock investment is the most volatile, a better attitude would be to limit and manage your risk. A maximum level of gain or loss should be set and calculated decisions should be made when this level is reached.

Do I need to keep track of my investment?

Yes! Having placed some amount in stocks, you should spend some time and effort in studying your investment. You should keep track of the stock price and follow closely the developments of the company. This way, you are able to foresee possible gains or losses that will guide you in making sound and wise investment decisions.

Daily quotations of stock prices can be obtained from your stockbroker or from all leading newspapers. You may also get information from our official website: www.pse.com.ph or from the PSE-Public Information and Assistance Center (PIAC) at telephone numbers 688-7602 to 03.

Source: http://www.pse.com.ph

Part 1: Stocks Investing

What are Stocks? Securities?

Stocks are shares of ownership in a corporation. When you become a stockholder or shareholder of a company, you become part-owner of that company. Securities, on the other hand, are proof of one's ownership or indebtedness in a company. Examples of securities are treasury bills and commercial papers, which are considered as short-term and are traded in the money market; and stocks and bonds, which are long-term and traded in the capital market. Securities are easily bought and sold in the stock market.

What are the types of Securities that I can buy in the Stock Market?

Most of the issues listed in the PSE (Philippine Stock Exchange) are common stocks. Other types of securities such as preferred stocks, warrants, PDRs and bonds are also traded.

1. Common Stocks - These are usually purchased for participation in the profits and control of ownership and management of the company. Holders of common stocks have voting rights. They are also entitled to an equal pro rata division of profits without preference or advantage over another stockholder. However, they have the last claim on dividends and are the last to collect in case of corporate liquidation.
   

2. Preferred Stocks - Its name is derived from preference given to the holders of these stocks over holders of common stocks. Holders of preferred stocks are entitled to receive dividends, to the extent agreed upon, before any dividends are paid to the holders of common stocks. However, preferred stocks usually have a specified limited rate of return or dividend and a specified limited redemption and liquidation price.
   

3. Warrants - A corporation can also raise additional capital by issuing warrants. A warrant, normally issued on a detachable basis, allows its holders the right, but not the obligation, to subscribe to new shares at a set price during a specified period of time. It is usually provided free of charge and traded separately in the securities market.
   

4. Philippine Deposit Receipts (PDRs) - A PDR is a security which grants the holder the right to the delivery or sale of the underlying share, and to certain other rights including additional PDR or adjustments to the terms or upon the occurrence of certain events in respect of rights issues, capital reorganizations, offers and analogous events or the distribution of cash in the event of a cash dividend on the shares. PDRs are evidences or statements nor certificates of ownership of a foreign/foreign-based corporation. For as long as the PDRs arenot exercised, the shares underlying the PDRs are and will continue to be registered in the name of and owned by and all rights pertaining to the shares shall be exercised by the issuer.
   

5. Small-Demominated Treasury Bonds (SDT-Bonds) - The SDT Bonds are long-term and relatively risk-free debt securities issued by the Bureau of Treasury (BTr) of the Republic of the Philippines. The bond is a certificate of indebtedness of the Republic of the Philippines to the owner of the SDT-Bonds.

Where can i buy or sell shares of stocks and/or bonds?

In the Philippines, the only operating stock exchange is the Philippine Stock Exchange (PSE). Its main function is to facilitate the buying and selling of stocks and other securities through its accredited trading participants.

The PSE has two trading floors - PSE Centre in Ortigas, Pasig City and PSE Plaza in Ayala, Makati City - where trading participants trade daily - from 9:30 a.m. to 12:10 p.m. except Saturdays, Sundays, legal holidays and days when the Central Bank Clearing Office is closed.

You can purchase shares of stock either through IPO (Initial Public Offering) or through the open market. Shares sold through IPOs are offered for the first time to the public by the company (primary market) whereby proceeds of the sale go directly to the company. Shares of listed or publicly traded companies are bought during trading (open market). These shares have since been transferred from one owner to another (secondary market) and proceeds of the sales do not go directly to the company but to the owners of the shares.

The Trading Cycle

All equity transactions, whether buying or selling has a settlement period of T+3 (trading day + 3 working days). This means that a seller should be able to deliver the stock certificate, if any, to his broker and the buyer must have paid the cost of transaction to his broker within 3 working days after the trade was done. Historically, settlement was done manually (27-day cycle). With the advent of scripless trading wherein settlement is done via the book-entry-system (thru Philippine Central Depository or PCD), transactions are settled on the third day after trade date. Under this system, the investor has the option to hold on to his certificate (uplift) or deposit (lodge) this certificate in PCD through his broker-participant account.

SDT-Bonds transactions, however, are settled on the same day when the trade is transacted (T+0). There shall be no physical transfer of bond certificates. The transfer of securities shall be conducted electronically by the BTr's Registry of Scripless Securities (RoSS). On the other hand, cash settlement will be coursed through the PSE's two settlement banks namely, Equitable-PCI Bank and Rizal Commercial Banking Corporation.

Part II: Minimum Amount Needed to Invest in the Stock Market

Source: http://www.pse.com.ph; photo from freeimages.co.uk

Credit Card Tips

I applied for a secured credit card at BPI last year. I find it very convenient because I don't have to carry cash all the time. When me and my friends go shopping, I ask them to give me their cash and use my card instead. By doing that, I get more reward points and use that cash in short-term sidelines/investments/rackets. I am given 20 days to pay my bills..so I use that time to earn some money.

There are other promos included, like for example, if I use my card within that promo period for a minimum single transaction of P1,000, I get a free food item from Chowking. I was able to take out 2 pork siomai and 2 siopao asado last Wednesday. It's really nice to get freebies! I don't like having credit cards before but seeing as I can be creative with it, why not ;)

Just remember to always use your credit card wisely and pay your bills on time.

The Benefits of Mutual Fund Investing

The power of a mutual fund lies in its ability to pool together funds from so many different investors. Imagine a thousand investors each with P5,000 to invest who decide to pool their funds together. That’s already a pool of P5 million! Now imagine that instead of just investing P5,000 each, some investors put in P10,000, P100,000 or even P1,000,000. The size of the collective pool would even be bigger. And when it comes to investing, there is strength in numbers. P5,000,000 can gain better access to more diversified investment instruments than P5,000.

A mutual fund is a vehicle that allows investors to combine their resources. Because of this, you don’t need a large amount of money to gain access to a well-diversified portfolio of top-performing investments. A mutual fund makes this possible. Here are some of the key benefits of investing in mutual funds.

Professional Management

A mutual fund is managed by an experienced, full-time fund manager who is focused solely on analyzing the financial markets and seizing market opportunities as they present themselves. By investing in a mutual fund, you benefit from the fund manager’s experience and market insight.

Potentially Higher Returns

By pooling together the funds of thousands of investors, a mutual fund is able to access potentially higher yielding investments that require large minimum investment amounts. Thus, investors are able to access potentially higher yields that may not normally be available to them due to the size of their individual funds. Moreover, the fund manager ensures that the mutual fund generates the best possible returns for the given level of risk of the mutual fund.

Diversification

Simply put, diversification means not putting all your eggs in one basket. This is especially important in investing. Through proper diversification, losses in one investment can be off-set by gains in another. In the process, overall risk is minimized. Investing in a mutual fund provides you with immediate access to a diversified portfolio of funds. By virtue of the size of the pool of funds, the mutual fund is able to purchase many different investment securities and diversify.

Liquidity

You may have your shares in a mutual fund redeemed at any time and just need to wait a maximum of seven (7) banking days to gain access to your funds.

Safety

Mutual fund operations are governed by the Investment Company Act whose implementing rules and regulations specify particular limits and constraints in the investment activities of all mutual funds. The Securities and Exchange Commission (SEC) sees to it that all mutual funds comply with these statutory regulations. Moreover, mutual fund companies are regularly audited by an independent auditor. The assets of the mutual fund are held by a third-party custodian bank.

source: http://www.philequity.net

What is a Mutual Fund?

A mutual fund is an investment vehicle that pools together the funds of various investors---both individuals and corporations. The pool of funds is managed by a professional fund manager who uses the funds to create a diversified investment portfolio consisting of various investment instruments such as stocks and bonds.

Types of Mutual Funds in the Philippines

• Stock or equity funds invest in shares of stock of Philippine corporations listed in the Philippine Stock Exchange. Equity funds offer the highest possibility of growth among all mutual fund types, but they also have a corresponding high amount or risk.

• Bond funds invest primarily in fixed-income securities such as bonds or treasury notes issued by the Philippine government and commercial papers issued by reputable Philippine companies. Because these bonds are normally guaranteed, the possibility of loss is very low. Investing in bond funds provide capital preservation while maintaining conservative asset growth.

• Balanced fund is a mixture of equity and bond funds. The high potential growth of equity investments is tempered by the conservative growth of fixed-income securities. Obviously, the return of a balanced fund is normally somewhere between the return of an equity fund and a bond fund.

• Money market funds are similar to bond funds because they also invest in fixed-income securities and the growth of the fund is conservative. The main difference lies, however, in the term of money market fund investments, which is usually short-term such as one year or less.

Choosing which mutual funds to invest in ultimately depends on the investor’s growth goal and risk tolerance. If the purpose is capital growth, equity funds are the way to go. Bond funds are chosen, on the other hand, if the investor prefers capital preservation over risky capital growth. For those who want medium risk and medium growth, balanced funds are the best option. Money market funds are for those who wish to earn a conservative amount of return in the short-term.

According to the Investment Company Association of the Philippines, a duly recognized association of investment companies in the country, there are currently a total of 22 mutual funds. Six (6) of these are bond funds, five (5) are equity funds, ten (10) are balanced funds, while one (1) is a money market fund.

What are the benefits of investing in a mutual fund?

For an affordable initial investment amount, you gain access to various potentially higher yielding investments normally available to investors with much larger funds to invest. A mutual fund makes this possible because it pools together the funds of hundreds or even thousands of small investors. The pool of funds is therefore large enough to access these potentially higher yielding investments.

Mutual fund investors also benefit from the investment management expertise and market knowledge of the team of professional fund managers that manages the pool of funds. These fund managers ensure that the funds are optimally invested and diversified at all times. Therefore, you don’t need to watch the markets yourself since there is a team that is already doing it for you.

How much will I earn if I invest?

Mutual funds are not time deposits and therefore do not pay out a fixed rate of return. Mutual funds invest in stocks listed on the stock exchange as well as bonds issued by the government and corporations. As a result, the value of your investment fluctuates daily depending on the performance of the underlying investments. Because of this, your return cannot be guaranteed. Your actual rate of return depends on many factors such as the performance of the underlying investments as well as general market and economic conditions. However, over the long-term, investments in mutual funds outperform traditional time deposit placements.

Is my principal secure? Can I lose money? What are the risks of investing?

As with all other investment instruments, investing in mutual funds involves a certain amount of risk. Stock and bond prices go up and down daily. So as the value of the underlying instruments in which the pool of funds was invested fluctuates, so does the value of your mutual fund investments. Depending on market conditions, there may be periods in which you may lose money. However, until you actually liquidate or withdraw your investment from the fund, these will simply remain “paper losses” which can be recovered when market conditions stabilize.

Moreover, the fund managers of the fund also do several things to control and minimize risk. First, they analyze all investments thoroughly before including any stock or bond in the portfolio. Second, they ensure that the fund is properly diversified, i.e., invested in many different stocks or bonds. As such, a drop in the price of one investment may be off-set by gains in another. Third, the fund managers are subject to regulatory and internal investment restrictions that prevent the fund from being invested from certain speculative investments and encourage proper diversification.

While there are risks in mutual fund investing, the returns can also be rewarding in the long-run. There is always a risk-return trade-off in any investment. What is important is to know how much risk you are willing and able to take and select an investment whose risk profile matches yours.

What is diversification? Why is it important?

Diversification simply means “not putting all your eggs in one basket”. This is especially important in investing. In a well-diversified portfolio, losses from some investments can be off-set by gains in other investments. This reduces the overall fluctuations or volatility of the value of the portfolio. By investing in a mutual fund, you gain instant access to a diversified portfolio of investments. It is, however, also important to realize that not all risk can be diversified away. There are certain economic, market and political factors which may affect all investments adversely.

How do I invest in a mutual fund?

You can participate by buying shares of the mutual fund. The price of these shares, also known as the Net Asset Value Per Share or NAVPS, changes daily depending on the performance of the underlying investment portfolio. As the NAVPS increases, the value of your investment also increases. The mechanics of investing in a mutual fund are very similar to buying shares in the stock market.

What is the net asset value per share, or NAVPS?

The net asset value per share (NAVPS) is the value of each share of a mutual fund. A fund's NAVPS is calculated daily and is the price used when purchasing or selling mutual fund shares. To determine the value of your shares, simply multiply the number of shares you own by the NAVPS.

How do I withdraw my money from the mutual fund?

You simply need to sell your shares in the mutual fund. The price at which you sell these shares is the NAVPS for the day.

What happens to my investment if something happens to me?

Your shares in the mutual fund will form a part of your estate and will be distributed to your heirs (usually surviving spouse and children) accordingly. Rest assured, your investment will not disappear, or be "taken back". To ease the transfer of the fund shares you may want to consider opening a joint account or trust account.

Is my investment covered by the PDIC?

No. A mutual fund is not a deposit product and is, therefore, not covered by the PDIC. However, when you invest in a mutual fund, you are considered a shareholder and in effect are entitled to your proportional share in the total assets of the fund. The PDIC, on the other hand, only insures up to P250,000 of your total deposits with a bank and not your entire investment amount.

source: http://www.philequity.net/