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Being a member of the International Marketing Group, I am so blessed to have learned the concepts of financial management at this early stage of my life. I may still be starting out, but at least I’ve got the fundamentals of financial management correct now.
I’ve always believed that God wants me to be responsible for my time, treasures and my talents. I have worked hard to manage my time and talents but it is my treasures that I have no idea of managing.
My best friend in high school introduced me to IMG just this year 2007 and I am glad I became a part of the company. My blog schedule for today is on financial management so I want to share with you IMG’s 6 steps to Financial Freedom and how it has applied to me:
1.) Increase cash flow
a.) Earn Additional income
b.) Manage expenses
- I have strived to follow the first step by earning both active and passive income through IMG’s system. I have also managed to teach part time and at the same time explore the possibilities of earning income online. With regards to the expenses, it is important that I list down all my expenses and work within a budget. That is what I had been doing now for months.
2.) Manage debt
a.) Consolidate Debt
b.) Strive to eliminate debt
- I’ve managed debt by resorting to lower interest rates. I have availed of balance transfer features. The regular interest charged by credit card companies is 3.5 % per month. But if you avail of balance transfer features by “transferring” your debt to other credit cards then you can avail of 0.99 % interest per month. I have discussed this extensively in my post entitled “Getting out of the credit card debt mess.”
3.) Create emergency fund
a.) Save at least six months income
b.) Prepare for emergency expenses
- This is something I have not done yet, but will be planning to do in the months or years to come. Once debt is eliminated I can now start to save at least 6 months income. This is just to ensure that you are liquid enough in case there are some things that must be bought with in cash. This could also be used for emergency expenses.
4.) Ensure proper protection
a.) Protect against loss of income
b.) Protect Family assets
- I have achieved this through availing of insurance. Insurance policies protect loss of income by compensating the person insured and his loved ones if ever the person insured losses the capacity to produce active income because of death or accident. Protecting family assets is also achieved by availing of non-life insurance such as fire insurance etc.
5.) Build long-term asset accumulation
a.) Outpace inflation
b.) Reduce taxation
- This is normally what is known as the “investment” stage. If you are “investing” in something that is less than the inflation rate then you loose in the long run. Always make sure that you are investing above the inflation rate. For some who still does not understand what inflation rate means and how it could affect you I will probably discuss it in a future post. Most experts suggest that if you are in the Philippines you should invest in something that is above 7 % (Even if now the inflation rate is below 2 % +) Currently you cannot put your money in the bank an expect a return of above 7 % since interest for savings is way below 2 % and interest for time deposit accounts is from 3 to 5 %
Clearly, the only way to achieve this is through the stock market, mutual funds investments and other types of investments giving you a return of more than 7 % per annum.
With regards to taxes, remember that the government taxes income, not wealth.
6.) Preserve your estate
a.) Help Reduce estate taxes
b.) Build a family legacy
This is something that I plan to do probably 20 years from now. There are a lot of ways to achieve this. I would probably tackle this in another post since this is a somewhat complicated topic.
This is the overview of IMG’s financial strategy which I have strived to religiously follow. The steps must be followed sequentially. It is advisable that you should go through them one step at a time. However since I have learned about this just lately, I have managed to invest without first eliminating my debt. I should have eliminated my debt first and investe later. But I believe that it still worked out for my advantage since the year 2005 to 2010 is considered by many experts as “a window of investment opportunities” considering that the stock market is at it’s highest and the fundamentals of the Philippine economy are in place. I will discuss more on financial strategies on my future posts.
Tuesday, December 9, 2008
Want to get wealthy ? Think like the bank
Once upon a time an Overseas Filipino Worker (OFW) started working abroad. At the age of 29 he had already saved a total of P 100,000.00 (Philippine peso)
Since the only investment vehicle he knew about was putting his money at the bank he went to the bank and deposited his P 100,000.00. The bank manager gladly accepted the money and even recommended that he put it at a time deposit account so that it would yield a higher interest rate at 4 % per annum.
So he placed his money in the time deposit account and waited until he reached the age of 65. At the age of 65 he went back to the bank and asked to withdraw the P 100,000.00 in his time deposit account. Lo and behold his P100,000.00 already became P 400,000.00 because of the interest. So he withdrew his money from the bank and lived happily ever after.
Is this a “live happily ever after” story or not? Do you consider this OFW as somebody who has “wisely” handled his money? Is he really earning the maximum potential for his money or is he making somebody else rich.
Consider the following table:
Under the rule of 72, in order to determine how many years it takes for your money to double you only need to follow this very simple equation:
72 / interest = No. of years it takes for your money to double
(Note: If you want to know more about the Rule of 72, read my post entitled “The magic of the Rule of 72”)
In the case of this Filipino OFW, every 18 years his money will double. 72 divided 4 % per annum = 18 years. So if he deposited his P 100,000.00 at age 29, his money will become P 200,000.00 at age 47. Add another 18 years then he reaches the age of 65. This time his money becomes P 400,000.00.
The bank on the other hand takes that P 100,000.00 and invests it at mutual funds, the stock market, the money market, government bonds, corporate bonds etc. averaging a 12 % return on the P 100,000.00 that the OFW placed under time deposit. Under the rule of 72, that same amount of money will double every 6 years. (72 divided by 12 % interest = 6 years)
So when the OFW went back to the bank after 36 years and claimed his P 100,000.00 the bank manager gladly gave him back his P 100,000.00 plus the interest of P 300,000 amounting to P 400,000.00. After all they already made P 6 million pesos out of the OFW’s P 100,000.00. (Now isn’t that hi-way robbery?)
You want to be wealthy and a better steward of your money? Think like the bank!!!
Since the only investment vehicle he knew about was putting his money at the bank he went to the bank and deposited his P 100,000.00. The bank manager gladly accepted the money and even recommended that he put it at a time deposit account so that it would yield a higher interest rate at 4 % per annum.
So he placed his money in the time deposit account and waited until he reached the age of 65. At the age of 65 he went back to the bank and asked to withdraw the P 100,000.00 in his time deposit account. Lo and behold his P100,000.00 already became P 400,000.00 because of the interest. So he withdrew his money from the bank and lived happily ever after.
Is this a “live happily ever after” story or not? Do you consider this OFW as somebody who has “wisely” handled his money? Is he really earning the maximum potential for his money or is he making somebody else rich.
Consider the following table:
Under the rule of 72, in order to determine how many years it takes for your money to double you only need to follow this very simple equation:
72 / interest = No. of years it takes for your money to double
(Note: If you want to know more about the Rule of 72, read my post entitled “The magic of the Rule of 72”)
In the case of this Filipino OFW, every 18 years his money will double. 72 divided 4 % per annum = 18 years. So if he deposited his P 100,000.00 at age 29, his money will become P 200,000.00 at age 47. Add another 18 years then he reaches the age of 65. This time his money becomes P 400,000.00.
The bank on the other hand takes that P 100,000.00 and invests it at mutual funds, the stock market, the money market, government bonds, corporate bonds etc. averaging a 12 % return on the P 100,000.00 that the OFW placed under time deposit. Under the rule of 72, that same amount of money will double every 6 years. (72 divided by 12 % interest = 6 years)
So when the OFW went back to the bank after 36 years and claimed his P 100,000.00 the bank manager gladly gave him back his P 100,000.00 plus the interest of P 300,000 amounting to P 400,000.00. After all they already made P 6 million pesos out of the OFW’s P 100,000.00. (Now isn’t that hi-way robbery?)
You want to be wealthy and a better steward of your money? Think like the bank!!!
The answer to the poverty problem
I found out about Blog Action Day just today while I was blog hopping. I find the concept unique, creative and something that’s worth joining. Earning income is not my only passion for blogging. I also want to contribute to the good of society through my blogging and joining Blog Action Day is just one of those avenues wherein I can somehow contribute back to society.
According to their blogsite Blog Action Day is “an annual nonprofit event that aims to unite the world’s bloggers, podcasters and videocasters, to post about the same issue on the same day.” Their aim is to raise awareness and trigger a global discussion. Again, I say that this is a really cool idea. (But the name is not so cool because “Blog Action Day” spells B.A.D and we don’t want to be BAD, we want to be GOOD hehehehe)
This year’s Blog Action Day topic is “Poverty.” No specific topic in poverty is given. I would surmise that most articles would be about a solution to the “poverty problem.”. Last year (2007) it was about the environment.
Somehow circumstances have been arranged by God to make me blog about poverty, in particular to write about an “answer to the poverty problem” because of the following reasons. First of all I had been exposed in my reading to how non governmental organization help provide an answer to the poverty problem. Secondly, two days ago I just read an article on the Time Magazine entitled “Creative Capitalism” by Bill Gates. Today, I learned about Blog Action Day and that the topic is all about poverty.
Poverty is present everywhere and has been a pressing and growing problem as the world’s population continues to grow. There are several factors that contribute to the poverty problem and each expert have a different answer to the poverty problem. Since the beginnings of the existence of governments, leaders are trying to come up with their own answer to the poverty problem. In fact an answer to the poverty problem is found in one of the 8 international development goals of the United Nations that is to “reduce in half extreme poverty by the year 2015.”
Poverty is a problem that mankind has been facing since the beginning of human civilization. In 1862 Victor Hugo wrote in his magnum opus, Les Misérables, “Seeing so much poverty everywhere makes me think that God is not rich. He gives the appearance of it, but I suspect some financial difficulties.”
Perhaps Victor Hugo did not bother to search the Holy Scriptures. God himself gave us an answer to the poverty problem. The Bible contains the answer to the poverty problem. The book of Proverbs is filled with down to earth wise sayings that will serve as the answer to the poverty problem. The wisdom found in the book helps a person handle his finances properly in order that he might he might find an answer to the poverty problem that he is facing. Proverbs and the rest of the Bible are also filled with instructions on how the rich will help provide an answer to the poverty problem. A worthy example is Proverbs 19:7 wherein it says that ““When you help the poor you are lending to the Lord–and he pays wonderful interest on your loan!” In fact I wrote a post on this entitled “The world’s best investment”
For decades traditional bankers always taught that the people you lend to must have the 5 “Cs” of credit. Those or Character, Capacity to Pay, Collateral, Capital and Conditions. So how can you lend to poor people when they only have one of the five or none at all?
The traditional bankers were proven to be wrong. In 1976 Professor Muhammad Yunus of the University of Chittagong in Bangladesh started to design a credit delivery system to provide banking services targeted at the rural poor. This later led to the establishment of Grameen Bank whose main objective is “banking for the poor.” As of September 2008, Grameen Bank has 7.58 million borrowers, 97 percent of whom are women. Grameen bank has 2,530 branches, and provides services in 83,178 villages, covering more than 99 percent of the total villages in Bangladesh. Total amount of loan disbursed since inception was US $ 7.28 billion. Out of this, US $ 6.50 billion has been repaid. Total revenue generated by 2007 amounted to US $ 155.05 million The Bank operated so successfully that in 1995, they decided not to receive any more donor funds. The growing amount of deposits is more than enough to run and expand its credit program and repay its existing loans. The bank even declared 20% dividend for the year 2007. Borrowers of Grameen Bank at present own 95 per cent of the total equity of the bank. The remaining 5 per cent is owned by the government.
For providing his own unique answer to the poverty problem, Professor Muhammad Yunus received the Nobel Price in 2006.
I doubt if Professor Muhammad Yunus knows Proverbs 19:7, nor do I think that this certain verse became his inspiration for the establishment of Grameen Bank. However Proverbs 19:7 just proves that the answer to poverty problem provided in the Bible is true. If only bankers read that verse and took it to heart, they would have been the one reaping the “wonderful interest” on the loan made to poor people.
But you might ask, what about those people who are really born so poor and those who lack opportunity to even uplift their own selves is there an answer to the poverty problem for them ?. Interestingly enough, God has a solution for long term poverty. He has mandated the Israelites to make this part of their national law. Leviticus 25:8-31 talks about “a year of Jubilee.”
The year of the Jubilee was God’s answer to the poverty problem especially when dealing with long term poverty. The year of the Jubilee was celebrated every 50 years. It gave hope and new opportunities for people who are caught in the cycle of poverty. During the year of the Jubilee, land was restored to its original owners. Debts were cancelled and slaves set free. The value of Land, slaves and loans were based on their nearness to the Jubilee year. This allowed for a new beginning in every generation. This radical idea when implemented in our modern democratic, capitalistic driven society might somehow help provide an answer to the poverty problem.
Ironically when people are caught up in the cycle of poverty they immediately blame God. They fail to realize that God gave the answer to the poverty problem in the Bible already. Perhaps instead of blaming him, they might consider getting to know Him more through his Word instead of trying to find an answer to the poverty problem themselves.
According to their blogsite Blog Action Day is “an annual nonprofit event that aims to unite the world’s bloggers, podcasters and videocasters, to post about the same issue on the same day.” Their aim is to raise awareness and trigger a global discussion. Again, I say that this is a really cool idea. (But the name is not so cool because “Blog Action Day” spells B.A.D and we don’t want to be BAD, we want to be GOOD hehehehe)
This year’s Blog Action Day topic is “Poverty.” No specific topic in poverty is given. I would surmise that most articles would be about a solution to the “poverty problem.”. Last year (2007) it was about the environment.
Somehow circumstances have been arranged by God to make me blog about poverty, in particular to write about an “answer to the poverty problem” because of the following reasons. First of all I had been exposed in my reading to how non governmental organization help provide an answer to the poverty problem. Secondly, two days ago I just read an article on the Time Magazine entitled “Creative Capitalism” by Bill Gates. Today, I learned about Blog Action Day and that the topic is all about poverty.
Poverty is present everywhere and has been a pressing and growing problem as the world’s population continues to grow. There are several factors that contribute to the poverty problem and each expert have a different answer to the poverty problem. Since the beginnings of the existence of governments, leaders are trying to come up with their own answer to the poverty problem. In fact an answer to the poverty problem is found in one of the 8 international development goals of the United Nations that is to “reduce in half extreme poverty by the year 2015.”
Poverty is a problem that mankind has been facing since the beginning of human civilization. In 1862 Victor Hugo wrote in his magnum opus, Les Misérables, “Seeing so much poverty everywhere makes me think that God is not rich. He gives the appearance of it, but I suspect some financial difficulties.”
Perhaps Victor Hugo did not bother to search the Holy Scriptures. God himself gave us an answer to the poverty problem. The Bible contains the answer to the poverty problem. The book of Proverbs is filled with down to earth wise sayings that will serve as the answer to the poverty problem. The wisdom found in the book helps a person handle his finances properly in order that he might he might find an answer to the poverty problem that he is facing. Proverbs and the rest of the Bible are also filled with instructions on how the rich will help provide an answer to the poverty problem. A worthy example is Proverbs 19:7 wherein it says that ““When you help the poor you are lending to the Lord–and he pays wonderful interest on your loan!” In fact I wrote a post on this entitled “The world’s best investment”
For decades traditional bankers always taught that the people you lend to must have the 5 “Cs” of credit. Those or Character, Capacity to Pay, Collateral, Capital and Conditions. So how can you lend to poor people when they only have one of the five or none at all?
The traditional bankers were proven to be wrong. In 1976 Professor Muhammad Yunus of the University of Chittagong in Bangladesh started to design a credit delivery system to provide banking services targeted at the rural poor. This later led to the establishment of Grameen Bank whose main objective is “banking for the poor.” As of September 2008, Grameen Bank has 7.58 million borrowers, 97 percent of whom are women. Grameen bank has 2,530 branches, and provides services in 83,178 villages, covering more than 99 percent of the total villages in Bangladesh. Total amount of loan disbursed since inception was US $ 7.28 billion. Out of this, US $ 6.50 billion has been repaid. Total revenue generated by 2007 amounted to US $ 155.05 million The Bank operated so successfully that in 1995, they decided not to receive any more donor funds. The growing amount of deposits is more than enough to run and expand its credit program and repay its existing loans. The bank even declared 20% dividend for the year 2007. Borrowers of Grameen Bank at present own 95 per cent of the total equity of the bank. The remaining 5 per cent is owned by the government.
For providing his own unique answer to the poverty problem, Professor Muhammad Yunus received the Nobel Price in 2006.
I doubt if Professor Muhammad Yunus knows Proverbs 19:7, nor do I think that this certain verse became his inspiration for the establishment of Grameen Bank. However Proverbs 19:7 just proves that the answer to poverty problem provided in the Bible is true. If only bankers read that verse and took it to heart, they would have been the one reaping the “wonderful interest” on the loan made to poor people.
But you might ask, what about those people who are really born so poor and those who lack opportunity to even uplift their own selves is there an answer to the poverty problem for them ?. Interestingly enough, God has a solution for long term poverty. He has mandated the Israelites to make this part of their national law. Leviticus 25:8-31 talks about “a year of Jubilee.”
The year of the Jubilee was God’s answer to the poverty problem especially when dealing with long term poverty. The year of the Jubilee was celebrated every 50 years. It gave hope and new opportunities for people who are caught in the cycle of poverty. During the year of the Jubilee, land was restored to its original owners. Debts were cancelled and slaves set free. The value of Land, slaves and loans were based on their nearness to the Jubilee year. This allowed for a new beginning in every generation. This radical idea when implemented in our modern democratic, capitalistic driven society might somehow help provide an answer to the poverty problem.
Ironically when people are caught up in the cycle of poverty they immediately blame God. They fail to realize that God gave the answer to the poverty problem in the Bible already. Perhaps instead of blaming him, they might consider getting to know Him more through his Word instead of trying to find an answer to the poverty problem themselves.
How Warren Buffett made me poor
Warren Buffett made headlines the other week when he announced to invest $ 5 Billion into Goldman Sachs. Buffet’s company Berkshire Hathaway has also been seen increasing its stock positions in several companies.
Warren Buffett’s theme song right now might probably be “Oops I did it again.” As one investor advisor said, Warren Buffett has been “. . . waiting for this for 10 years” that is that he has been waiting for the stock market to go down to it’s lowest level so that he can buy wonderful companies at dirt cheap prices.
I have invested in the stock market since 2005. Since that time I was searching for a system I could follow in stock market investments. I was attending seminars, reading materials, but I still have not seen “The light.”
Finally last April 2008, I bought a book entitled Rule# 1 by Phil Town. The book opened my eyes to “Value investing.” Town quoted heavily from Warren Buffett. I read Rule #1 three times and started to apply it in my stock market investments. Although some people argue that Town’s investment strategy is not strictly Buffett but it is what they call as “momentum investing”, it cannot be denied that the foundation of Town’s strategy definitely belongs to the Graham-Dodesville-Fisher-Buffett school of thought.
Now I’ve decided to learn from the master himself. When I went to Manila last September I bought 5 Warren Buffett books. I’ve noticed that books on Warren Buffett are so scarce, so whenever I see one, I buy it immediately. I saw one in National bookstore, Mango Avenue Cebu so I bought it immediately. So far I have not seen any other books on Warren Buffett here in Cebu. Take note that Warren Buffett did not write a book, however numerous books were written by different authors on his investing styles.
I just finished my 4th Warren Buffett book and I will be consuming my 5th one. So far I have read “How to pick stocks like Warren Buffett” by Timothy Vicks, “The Tao of Warren Buffett” by Mary Buffett and David Clark and “Buffett, the making of an American Capitalist” by Roger Lowenstein. The last one I read was “Even Buffett isn’t perfect” by Vahan Janjigian. Before I will go through another Buffett book, I have decided to take a break on Buffett and read another financial management book. After that, I will be reading the other two Buffett books left. Those are “Essential Buffett – Timeless principles for the new economy” by Roger G. Hagstrom and “The essays of Warren Buffett - Lessons for investors and managers” by Lawrence A. Cunnigham. I plan to buy more books on Warren Buffett in the near future. You can say that I have just become a Warren Buffett fanatic.
I’ve followed his cue and I am buying stocks right now. My favorite Warren Buffet quote is “We must be fearful when everybody is greedy and we must be greedy when everyone else is fearful.” Rightly so! Since everybody is so fearful right now to invest in stocks, then as value investors we must be greedy to buy more and more!
Using his investing strategy, I found out that if I had invested in certain stocks in 1997 and sold them at their highest in 2007 it would yield 20 to 30 % return per annum. How much more if I held on to those stocks for the next 20 to 30 years?
I’ve crunched the numbers and hopefully the stocks I bought will give me a good return when I will retire. Using Warren Buffet’s investing strategies and techniques on investing I may not make me become the “Warren Buffett of the Philippines” but I believe it will make me become more investment savvy and allow me to retire at a young age.
By now, you must be very surprised why this post is entitled “How Warren Buffett made me poor.” Well, reading and following Warren Buffett really made me poor. I am now poor when it comes to financial and investments ignorance because I have become very rich when it comes to financial and investing knowledge :-)
I sure hope I had more money to invest; unfortunately, my money for investment is also limited. Just like Warren Buffett, I won’t be giving any stock tips. However I will be posting several articles on value investing and perhaps do some book reviews. So subscribe to my full feeds now, never miss a posts and become poor like me :-)
Warren Buffett’s theme song right now might probably be “Oops I did it again.” As one investor advisor said, Warren Buffett has been “. . . waiting for this for 10 years” that is that he has been waiting for the stock market to go down to it’s lowest level so that he can buy wonderful companies at dirt cheap prices.
I have invested in the stock market since 2005. Since that time I was searching for a system I could follow in stock market investments. I was attending seminars, reading materials, but I still have not seen “The light.”
Finally last April 2008, I bought a book entitled Rule# 1 by Phil Town. The book opened my eyes to “Value investing.” Town quoted heavily from Warren Buffett. I read Rule #1 three times and started to apply it in my stock market investments. Although some people argue that Town’s investment strategy is not strictly Buffett but it is what they call as “momentum investing”, it cannot be denied that the foundation of Town’s strategy definitely belongs to the Graham-Dodesville-Fisher-Buffett school of thought.
Now I’ve decided to learn from the master himself. When I went to Manila last September I bought 5 Warren Buffett books. I’ve noticed that books on Warren Buffett are so scarce, so whenever I see one, I buy it immediately. I saw one in National bookstore, Mango Avenue Cebu so I bought it immediately. So far I have not seen any other books on Warren Buffett here in Cebu. Take note that Warren Buffett did not write a book, however numerous books were written by different authors on his investing styles.
I just finished my 4th Warren Buffett book and I will be consuming my 5th one. So far I have read “How to pick stocks like Warren Buffett” by Timothy Vicks, “The Tao of Warren Buffett” by Mary Buffett and David Clark and “Buffett, the making of an American Capitalist” by Roger Lowenstein. The last one I read was “Even Buffett isn’t perfect” by Vahan Janjigian. Before I will go through another Buffett book, I have decided to take a break on Buffett and read another financial management book. After that, I will be reading the other two Buffett books left. Those are “Essential Buffett – Timeless principles for the new economy” by Roger G. Hagstrom and “The essays of Warren Buffett - Lessons for investors and managers” by Lawrence A. Cunnigham. I plan to buy more books on Warren Buffett in the near future. You can say that I have just become a Warren Buffett fanatic.
I’ve followed his cue and I am buying stocks right now. My favorite Warren Buffet quote is “We must be fearful when everybody is greedy and we must be greedy when everyone else is fearful.” Rightly so! Since everybody is so fearful right now to invest in stocks, then as value investors we must be greedy to buy more and more!
Using his investing strategy, I found out that if I had invested in certain stocks in 1997 and sold them at their highest in 2007 it would yield 20 to 30 % return per annum. How much more if I held on to those stocks for the next 20 to 30 years?
I’ve crunched the numbers and hopefully the stocks I bought will give me a good return when I will retire. Using Warren Buffet’s investing strategies and techniques on investing I may not make me become the “Warren Buffett of the Philippines” but I believe it will make me become more investment savvy and allow me to retire at a young age.
By now, you must be very surprised why this post is entitled “How Warren Buffett made me poor.” Well, reading and following Warren Buffett really made me poor. I am now poor when it comes to financial and investments ignorance because I have become very rich when it comes to financial and investing knowledge :-)
I sure hope I had more money to invest; unfortunately, my money for investment is also limited. Just like Warren Buffett, I won’t be giving any stock tips. However I will be posting several articles on value investing and perhaps do some book reviews. So subscribe to my full feeds now, never miss a posts and become poor like me :-)
The best time to invest – your lifetime
Some people say that investing is a game of timing. No matter what type of investor you are, timing is very important. Right timing will tell you when to get into a certain time of investment and when to get out. The question of timing also answers when it is best time to invest in a certain type of investment vehicle. Simply put, proper timing will tell you the best time to invest.
Most experts agree that nobody can predict with certainty what the pattern of the markets will be, hence it can be concluded that nobody can know for certain when is the best time to invest. However we can always make an educated guess on when is the best time to invest. This is much better than just leaving everything to fate.
I mentioned in my pervious post “How Warren Buffett made me poor” that I was taking a “Buffett break” and that before proceeding with my 5th Buffett book, I will be reading another financial management book. The book that I just read is entitled “Lifespan Investing” by Clifford Pistolese.
Pistolese may not be Warren Buffett but he is the author of several investment books, a successful investor and has held several executive posts in well known corporations.
As the title implies, Lifespan investing shows the reader the best time to invest in what age bracket a person is in his life.
According to Pistolese, “Wise investors don’t try to waste time trying to capitalize on current market trends for short-term gains; rather they focus on making their wealth grow over a lifetime” I certainly agree.
No book on knowing the best time to invest would be complete without discussing the fundamentals of investment namely fundamental analysis and technical analysis which are the subject of the first two chapters. Fundamental analysis simply tells you what securities to buy whereas technical analysis tells you when to buy and sell your investments.
The third chapter gives you a glimpse on what is portfolio management. Chapters 4 to 13 deals with Portofolio management as divided in 5 year periods. (Ages 20 to 25, 26 to 30 and so on.) In these chapters you can find the different portfolio management strategy you should adopt depending on your age bracket and depending on the market type existing during that time. For example if you are aged 20 to 25, the book will show you what investing strategy to adopt during a bull market, a bear market or a range bound market. In short it shows you when the best time to invest is, when the best time to take a defensive stand and when is the best time to preserve capital.
The last two chapters deal with portfolio management age 60 up and retirement. The book ends with an overview on Life Span Investing. The glossary provides a definition of common investment terms. A section is also devoted to useful internet resources that will assist you in your investing choices.
I would recommend Life Span investing to be a good reading most especially to those who are still in their early 20s or their teenage years as these are the best time to invest. . However the books advices are still valuable to whatever age bracket a person is in as it shows you the best time to invest no matter what the age bracket.
Unfortunately most of the examples, stock recommendations and vehicles of investments suggested in the book are based in the United States setting. It is not very useful to us here in the Philippines since most of the investment vehicles suggested in the book are only available in the United States. For example one of the vehicles of investment being discussed frequently in the book is the Real Estate Investment funds (REIT). We still do not have it here in the Philippines. However I read in the news the other day that a bill is being passed in Congress concerning this matter. I will make this the subject of another post. I do hope that someday somebody will come up with “Life Span investing: Philippine edition” (Or perhaps I shall write one someday who knows? hehehehe?)
I would prefer though that the author did not give any stock recommendation or even any particular fund recommendation. I presume that when he wrote this, the world financial crises have not yet affected major financial institutions because he has recommended investing in some of the funds of some major financial institutions. Now that the global crises have hit these institutions, I believe the “credibility” of the advices given in the book has somehow been affected.
Nevertheless the book is still very useful when it comes to portfolio management and knowing the best time to invest and what to invest in a certain age bracket and at a given market type.
Most experts agree that nobody can predict with certainty what the pattern of the markets will be, hence it can be concluded that nobody can know for certain when is the best time to invest. However we can always make an educated guess on when is the best time to invest. This is much better than just leaving everything to fate.
I mentioned in my pervious post “How Warren Buffett made me poor” that I was taking a “Buffett break” and that before proceeding with my 5th Buffett book, I will be reading another financial management book. The book that I just read is entitled “Lifespan Investing” by Clifford Pistolese.
Pistolese may not be Warren Buffett but he is the author of several investment books, a successful investor and has held several executive posts in well known corporations.
As the title implies, Lifespan investing shows the reader the best time to invest in what age bracket a person is in his life.
According to Pistolese, “Wise investors don’t try to waste time trying to capitalize on current market trends for short-term gains; rather they focus on making their wealth grow over a lifetime” I certainly agree.
No book on knowing the best time to invest would be complete without discussing the fundamentals of investment namely fundamental analysis and technical analysis which are the subject of the first two chapters. Fundamental analysis simply tells you what securities to buy whereas technical analysis tells you when to buy and sell your investments.
The third chapter gives you a glimpse on what is portfolio management. Chapters 4 to 13 deals with Portofolio management as divided in 5 year periods. (Ages 20 to 25, 26 to 30 and so on.) In these chapters you can find the different portfolio management strategy you should adopt depending on your age bracket and depending on the market type existing during that time. For example if you are aged 20 to 25, the book will show you what investing strategy to adopt during a bull market, a bear market or a range bound market. In short it shows you when the best time to invest is, when the best time to take a defensive stand and when is the best time to preserve capital.
The last two chapters deal with portfolio management age 60 up and retirement. The book ends with an overview on Life Span Investing. The glossary provides a definition of common investment terms. A section is also devoted to useful internet resources that will assist you in your investing choices.
I would recommend Life Span investing to be a good reading most especially to those who are still in their early 20s or their teenage years as these are the best time to invest. . However the books advices are still valuable to whatever age bracket a person is in as it shows you the best time to invest no matter what the age bracket.
Unfortunately most of the examples, stock recommendations and vehicles of investments suggested in the book are based in the United States setting. It is not very useful to us here in the Philippines since most of the investment vehicles suggested in the book are only available in the United States. For example one of the vehicles of investment being discussed frequently in the book is the Real Estate Investment funds (REIT). We still do not have it here in the Philippines. However I read in the news the other day that a bill is being passed in Congress concerning this matter. I will make this the subject of another post. I do hope that someday somebody will come up with “Life Span investing: Philippine edition” (Or perhaps I shall write one someday who knows? hehehehe?)
I would prefer though that the author did not give any stock recommendation or even any particular fund recommendation. I presume that when he wrote this, the world financial crises have not yet affected major financial institutions because he has recommended investing in some of the funds of some major financial institutions. Now that the global crises have hit these institutions, I believe the “credibility” of the advices given in the book has somehow been affected.
Nevertheless the book is still very useful when it comes to portfolio management and knowing the best time to invest and what to invest in a certain age bracket and at a given market type.
Monday, December 8, 2008
Intelligent Quotes
41. The person who reads too much and uses his brain too little will fall into lazy habits of thinking.
—Albert Einstein
42. Believe those who are seeking the truth. Doubt those who find it.
—André Gide
43. It is the mark of an educated mind to be able to entertain a thought without accepting it.
—Aristotle
44. I’d rather live with a good question than a bad answer.
—Aryeh Frimer
45. We learn something every day, and lots of times it’s that what we learned the day before was wrong.
—Bill Vaughan
46. I have made this letter longer than usual because I lack the time to make it shorter.
—Blaise Pascal
47. Don’t ever wrestle with a pig. You’ll both get dirty, but the pig will enjoy it.
—Cale Yarborough
48. An inventor is simply a fellow who doesn’t take his education too seriously.
—Charles F. Kettering
49. Asking a working writer what he thinks about critics is like asking a lamppost how it feels about dogs.
—Christopher Hampton
50. Better to write for yourself and have no public, than to write for the public and have no self.
—Cyril Connolly
51. Never be afraid to laugh at yourself, after all, you could be missing out on the joke of the century.
—Dame Edna Everage
52. I am patient with stupidity but not with those who are proud of it.
—Edith Sitwell
53. Normal is getting dressed in clothes that you buy for work and driving through traffic in a car that you are still paying for - in order to get to the job you need to pay for the clothes and the car, and the house you leave vacant all day so you can afford to live in it.
—Ellen Goodman
54. The cure for boredom is curiosity. There is no cure for curiosity.
—Ellen Parr
55. Advice is what we ask for when we already know the answer but wish we didn’t.
—Erica Jong
56. Some people like my advice so much that they frame it upon the wall instead of using it.
—Gordon R. Dickson
57. The trouble with the rat race is that even if you win, you’re still a rat.
—Lily Tomlin
58. Never ascribe to malice, that which can be explained by incompetence.
—Napoleon (Hanlon’s Razor)
59. Imagination was given to man to compensate him for what he is not, and a sense of humor was provided to console him for what he is.
—Oscar Wilde
60. When a person can no longer laugh at himself, it is time for others to laugh at him.
—Thomas Szasz
—Albert Einstein
42. Believe those who are seeking the truth. Doubt those who find it.
—André Gide
43. It is the mark of an educated mind to be able to entertain a thought without accepting it.
—Aristotle
44. I’d rather live with a good question than a bad answer.
—Aryeh Frimer
45. We learn something every day, and lots of times it’s that what we learned the day before was wrong.
—Bill Vaughan
46. I have made this letter longer than usual because I lack the time to make it shorter.
—Blaise Pascal
47. Don’t ever wrestle with a pig. You’ll both get dirty, but the pig will enjoy it.
—Cale Yarborough
48. An inventor is simply a fellow who doesn’t take his education too seriously.
—Charles F. Kettering
49. Asking a working writer what he thinks about critics is like asking a lamppost how it feels about dogs.
—Christopher Hampton
50. Better to write for yourself and have no public, than to write for the public and have no self.
—Cyril Connolly
51. Never be afraid to laugh at yourself, after all, you could be missing out on the joke of the century.
—Dame Edna Everage
52. I am patient with stupidity but not with those who are proud of it.
—Edith Sitwell
53. Normal is getting dressed in clothes that you buy for work and driving through traffic in a car that you are still paying for - in order to get to the job you need to pay for the clothes and the car, and the house you leave vacant all day so you can afford to live in it.
—Ellen Goodman
54. The cure for boredom is curiosity. There is no cure for curiosity.
—Ellen Parr
55. Advice is what we ask for when we already know the answer but wish we didn’t.
—Erica Jong
56. Some people like my advice so much that they frame it upon the wall instead of using it.
—Gordon R. Dickson
57. The trouble with the rat race is that even if you win, you’re still a rat.
—Lily Tomlin
58. Never ascribe to malice, that which can be explained by incompetence.
—Napoleon (Hanlon’s Razor)
59. Imagination was given to man to compensate him for what he is not, and a sense of humor was provided to console him for what he is.
—Oscar Wilde
60. When a person can no longer laugh at himself, it is time for others to laugh at him.
—Thomas Szasz
Funny Quotes
21. Before I got married I had six theories about bringing up children; now I have six children and no theories.
—John Wilmot
22. What the world needs is more geniuses with humility, there are so few of us left.
—Oscar Levant
23. Always forgive your enemies; nothing annoys them so much.
—Oscar Wilde
24. I’ve gone into hundreds of [fortune-teller's parlors], and have been told thousands of things, but nobody ever told me I was a policewoman getting ready to arrest her.
—New York City detective
25. When you go into court you are putting your fate into the hands of twelve people who weren’t smart enough to get out of jury duty.
—Norm Crosby
26. Those who believe in telekinetics, raise my hand.
—Kurt Vonnegut
27. Just the fact that some geniuses were laughed at does not imply that all who are laughed at are geniuses. They laughed at Columbus, they laughed at Fulton, they laughed at the Wright brothers. But they also laughed at Bozo the Clown.
—Carl Sagan
28. My pessimism extends to the point of even suspecting the sincerity of the pessimists.
—Jean Rostand
29. Sometimes I worry about being a success in a mediocre world.
—Lily Tomlin
30. I quit therapy because my analyst was trying to help me behind my back.
—Richard Lewis
31. We’ve heard that a million monkeys at a million keyboards could produce the complete works of Shakespeare; now, thanks to the Internet, we know that is not true.
—Robert Wilensky
32. If there are no stupid questions, then what kind of questions do stupid people ask? Do they get smart just in time to ask questions?
—Scott Adams
33. If the lessons of history teach us anything it is that nobody learns the lessons that history teaches us.
—Anon
34. When I was a boy I was told that anybody could become President. Now I’m beginning to believe it.
—Clarence Darrow
35. Laughing at our mistakes can lengthen our own life. Laughing at someone else’s can shorten it.
—Cullen Hightower
36. There are many who dare not kill themselves for fear of what the neighbors will say.
—Cyril Connolly
37. There’s so much comedy on television. Does that cause comedy in the streets?
—Dick Cavett
38. All men are frauds. The only difference between them is that some admit it. I myself deny it.
—H. L. Mencken
39. I don’t mind what Congress does, as long as they don’t do it in the streets and frighten the horses.
—Victor Hugo
40. I took a speed reading course and read ‘War and Peace’ in twenty minutes. It involves Russia.
—Woody Allen
—John Wilmot
22. What the world needs is more geniuses with humility, there are so few of us left.
—Oscar Levant
23. Always forgive your enemies; nothing annoys them so much.
—Oscar Wilde
24. I’ve gone into hundreds of [fortune-teller's parlors], and have been told thousands of things, but nobody ever told me I was a policewoman getting ready to arrest her.
—New York City detective
25. When you go into court you are putting your fate into the hands of twelve people who weren’t smart enough to get out of jury duty.
—Norm Crosby
26. Those who believe in telekinetics, raise my hand.
—Kurt Vonnegut
27. Just the fact that some geniuses were laughed at does not imply that all who are laughed at are geniuses. They laughed at Columbus, they laughed at Fulton, they laughed at the Wright brothers. But they also laughed at Bozo the Clown.
—Carl Sagan
28. My pessimism extends to the point of even suspecting the sincerity of the pessimists.
—Jean Rostand
29. Sometimes I worry about being a success in a mediocre world.
—Lily Tomlin
30. I quit therapy because my analyst was trying to help me behind my back.
—Richard Lewis
31. We’ve heard that a million monkeys at a million keyboards could produce the complete works of Shakespeare; now, thanks to the Internet, we know that is not true.
—Robert Wilensky
32. If there are no stupid questions, then what kind of questions do stupid people ask? Do they get smart just in time to ask questions?
—Scott Adams
33. If the lessons of history teach us anything it is that nobody learns the lessons that history teaches us.
—Anon
34. When I was a boy I was told that anybody could become President. Now I’m beginning to believe it.
—Clarence Darrow
35. Laughing at our mistakes can lengthen our own life. Laughing at someone else’s can shorten it.
—Cullen Hightower
36. There are many who dare not kill themselves for fear of what the neighbors will say.
—Cyril Connolly
37. There’s so much comedy on television. Does that cause comedy in the streets?
—Dick Cavett
38. All men are frauds. The only difference between them is that some admit it. I myself deny it.
—H. L. Mencken
39. I don’t mind what Congress does, as long as they don’t do it in the streets and frighten the horses.
—Victor Hugo
40. I took a speed reading course and read ‘War and Peace’ in twenty minutes. It involves Russia.
—Woody Allen
Wisdom Quotes
1. You can do anything, but not everything.
—David Allen
2. Perfection is achieved, not when there is nothing more to add, but when there is nothing left to take away.
—Antoine de Saint-Exupéry
3. The richest man is not he who has the most, but he who needs the least.
—Unknown Author
4. You miss 100 percent of the shots you never take.
—Wayne Gretzky
5. Courage is not the absence of fear, but rather the judgement that something else is more important than fear.
—Ambrose Redmoon
6. You must be the change you wish to see in the world.
—Gandhi
7. When hungry, eat your rice; when tired, close your eyes. Fools may laugh at me, but wise men will know what I mean.
—Lin-Chi
8. The third-rate mind is only happy when it is thinking with the majority. The second-rate mind is only happy when it is thinking with the minority. The first-rate mind is only happy when it is thinking.
—A. A. Milne
9. To the man who only has a hammer, everything he encounters begins to look like a nail.
—Abraham Maslow
10. We are what we repeatedly do; excellence, then, is not an act but a habit.
—Aristotle
11. A wise man gets more use from his enemies than a fool from his friends.
—Baltasar Gracian
12. Do not seek to follow in the footsteps of the men of old; seek what they sought.
—Basho
13. Watch your thoughts; they become words.
Watch your words; they become actions.
Watch your actions; they become habits.
Watch your habits; they become character.
Watch your character; it becomes your destiny.
—Lao-Tze
14. Everyone is a genius at least once a year. The real geniuses simply have their bright ideas closer together.
—Georg Christoph Lichtenberg
15. What we think, or what we know, or what we believe is, in the end, of little consequence. The only consequence is what we do.
—John Ruskin
16. The real voyage of discovery consists not in seeking new lands but seeing with new eyes.
—Marcel Proust
17. Work like you don’t need money, love like you’ve never been hurt, and dance like no one’s watching
—Unknown Author
18. Try a thing you haven’t done three times. Once, to get over the fear of doing it. Twice, to learn how to do it. And a third time, to figure out whether you like it or not.
—Virgil Garnett Thomson
19. Even if you’re on the right track, you’ll get run over if you just sit there.
—Will Rogers
20. People often say that motivation doesn’t last. Well, neither does bathing - that’s why we recommend it daily.
—Zig Ziglar
—David Allen
2. Perfection is achieved, not when there is nothing more to add, but when there is nothing left to take away.
—Antoine de Saint-Exupéry
3. The richest man is not he who has the most, but he who needs the least.
—Unknown Author
4. You miss 100 percent of the shots you never take.
—Wayne Gretzky
5. Courage is not the absence of fear, but rather the judgement that something else is more important than fear.
—Ambrose Redmoon
6. You must be the change you wish to see in the world.
—Gandhi
7. When hungry, eat your rice; when tired, close your eyes. Fools may laugh at me, but wise men will know what I mean.
—Lin-Chi
8. The third-rate mind is only happy when it is thinking with the majority. The second-rate mind is only happy when it is thinking with the minority. The first-rate mind is only happy when it is thinking.
—A. A. Milne
9. To the man who only has a hammer, everything he encounters begins to look like a nail.
—Abraham Maslow
10. We are what we repeatedly do; excellence, then, is not an act but a habit.
—Aristotle
11. A wise man gets more use from his enemies than a fool from his friends.
—Baltasar Gracian
12. Do not seek to follow in the footsteps of the men of old; seek what they sought.
—Basho
13. Watch your thoughts; they become words.
Watch your words; they become actions.
Watch your actions; they become habits.
Watch your habits; they become character.
Watch your character; it becomes your destiny.
—Lao-Tze
14. Everyone is a genius at least once a year. The real geniuses simply have their bright ideas closer together.
—Georg Christoph Lichtenberg
15. What we think, or what we know, or what we believe is, in the end, of little consequence. The only consequence is what we do.
—John Ruskin
16. The real voyage of discovery consists not in seeking new lands but seeing with new eyes.
—Marcel Proust
17. Work like you don’t need money, love like you’ve never been hurt, and dance like no one’s watching
—Unknown Author
18. Try a thing you haven’t done three times. Once, to get over the fear of doing it. Twice, to learn how to do it. And a third time, to figure out whether you like it or not.
—Virgil Garnett Thomson
19. Even if you’re on the right track, you’ll get run over if you just sit there.
—Will Rogers
20. People often say that motivation doesn’t last. Well, neither does bathing - that’s why we recommend it daily.
—Zig Ziglar
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