If They Can, Why Can’t You?

This post is inspired by Bro Bo Sanchez’s book My Maid Invests in the Stock Market. 

I read the book many times already and it always struck me why a simple kasambahay (house maid) can invest in a sophisticated manner while other employees who earn more has nothing to put aside?

This one is a true story. I know a kasambahay who is very young but knows how to handle her money. Her monthly income is below the minimum wage bracket. She takes care of the laundry of the family as well as maintaining the cleanliness of the house. She lives simply, spends simply, eats simply and maintains a very simple life style. A part of her salary goes to the family in the province and is used for their business. The other part she saves for her future studies. 

Although this kasambahay is not yet investing in the stock market, she knows and defines what part of her salary stays and what part goes to the business. She can compute how much her money has grown over a period of time given that the circumstances favor her. Likewise, she knows how much she will lose if fortune is not on her side.

The maid in the book and the maid in my story are alike in many ways. 

1. They both send money to their families.
2. They have the discipline to save a constant amount each month.
3. They are both business minded.
4. They have a vision in life.

How many of us send money to our families? Almost all I guess.

But how many of us are saving a constant amount each month?

How many of us are business minded?

And how many of us have a vision in life?

Our only difference from the two maids are our mindset. They want to get out of the lower class that’s why they strive hard to earn and invest (in their own simple ways.)

I hope we all do what the two maids are doing. And I hope we can all have a vision in life, before it’s too late.

~Till then.

How Investing should be Done

If you ask a group of persons who are dealing with the stock market why he is investing or trading, many would tell you that they invest because they want to gain or profit from the market. Only a few would actually tell you they have a specific goal with their money.

Making a profit is not a goal. It is just a phase where one outperforms the other. The thing is, many players are simply playing in the feild wanting to win but do not know what to do after they win.

A great adviser once told me that a person should NOT invest to make profit, rather, one should invest to meet a specific goal.

If your goal is for your retirement plan then always put that in mind when placing money in the stock market. Do not be disturbed by media, nay-sayers and negative thinkers. As long as you know what you are doing and is surrounded by supportive friends and good decision making then surely you will hit your goal.

~Till then.

How to Pick Investment Facilities

Before finally deciding to invest your hard-earned money, make time to reflect about your risk tolerance. Are you more of a risk-taker? Will you not get nervous if the prices go 50% lower than your purchase price?

My discussion will all be about mutual funds. They are the easiest investment facilities I know where in a normal person like you and me can go into.

Mutual funds are like banks. They both collect money from people and invest it. Banks invest their money through credit. That’s why a lot of banks are promoting credit cards. Unlike banks, mutual fund companies invest a chunk of the money in stock market. They have an array of researchers to do the math and they have a captain, whom they call the fund manager, who decides where to put the fund. You pay these researchers and the fund manager with least possible cost approximately 2-3% of your investment capital. Not bad if you as an investor can gain 12% from them.

I’ll be introducing 3 kinds of mutual funds in this article.

Bond Fund

Bond funds are what they call the “safest” among the three. Approximately 90% of the fund are invested in government bonds and only 10% are in stocks. Since this is the “safest” among the three it also has the smallest earning capability. Around 3 to 6% per annum. Use this fund if you don’t like volatility and if you want to maintain the value of your money.

Balance Fund

Balance funds invest 50% in government bonds and 50% in stocks. If you want more risk at the same time a good security then this is the way to go. It gives an average return of 6 to 10% per annum. Most of the times people who invest in balance funds are those who don’t know what their risk tolerance is. So they go midway.

Equity Fund/Stock Fund

If you are a risk-taker and can take volatility then equity fund is a great vehicle to achieve your long-term financial goals. In a long-term basis this fund can reach 12% (or more) interest per annum. Equity funds invest 90% of the money on stock market and 10% on government facilities.

If you want to know more about mutual funds just drop me a note so I can give you the contact number of an organization that discusses mutual funds.