Credit Card Debt

Please help me, I'm deeply in debt with credit card.

As I discussed in WEALTH WITHIN YOUR REACH; PERA MO PALAGUIN MO!?, the highest in
terest rate charged for loans is the interest on credit cards. That is why you s
hould only use your credit card for emergencies and not for regular purchases. W
hen you are not able to pay the complete amount in your statement, the amount du
e becomes a loan.
Since you now need to pay off your credit card loan, I suggest that you put all
the money you can spare to paying your credit card bill. Just keep what you need
to eat, and to pay your rent and utilities, in other words, your basic needs. Y
ou will really have to tighten your belts until this is fully paid. You will be
in bigger trouble if you don't do that very quickly. You need to really work out
a program to reduce your credit card debt over a specific period of time.
The first thing you should do is to sit down and carefully talk about your finan
ces with your wife or husband, cut your expenses drastically, sell whatever you
can sell to get out of your credit card debt immediately.
Next, you should do is to negotiate with your credit card company for a lower in
terest rate. You can do this by surrendering your card and basically telling the
m that you cannot afford to continue with their high interest rates and that fro
m now on, you will just be paying down your balance. This way, your monthly paym
ent will be reduced greatly! It is best to always be open and straightforward wi
th your creditors.
Ang pinakamahal na utang ay ang credit card loan. Dapat mong sikapin na magtipid
hanggat maaari upang mabayaran ito sa lalong madaling panahon.
Una, dapat kausapin mo ang iyong asawa at gumawa kayo ng masusing plano na isusu
lat ninyo. Pagkakasunduan ninyo na sa takdang mga araw ay bayad na ang ilang por
siyento ng inyong credit card loan hanggang tuluyan na itong mawala. Kung kinaka
ilangan, ipagbili ninyo ang iba ninyong ari-arian upang bayaran ito.
Pangalawa, kausapin rin ninyo ang credit card na nagpapautang sa inyo upang bigy
an kayo ng palugid sa pagbabayad na bawas ang interes. Isauli ang credit card sa
kanila at sabihing hindi ninyo kaya ang mataas na interes at magbigay kayo ng pa
yment schedule? na mapapawi ang kabuoang utang. Ito ay dapat ibatay sa masmababa
ng interes. Natitiyak ko na papayang and credit card company sa ganitong paraan.

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Government Securities
Government securities are certificates of indebtedness issued by the national go
vernment with a promised yield that is backed up fully by the state. GS are clas
sified as the safest investment instrument because it is guaranteed by the natio
nal government. It is also the most liquid as you can sell it at any time and th
ere are always buyers. The most popular government securities are Treasury Bills
(T-Bills) and Treasury Bonds (T-Bonds).
T-bills are certificates of indebtedness that mature within one year or less. T-
bills come in the following tenures: 91-day, 182-day, and 364-day.
T-Bonds, on the other hand, are certificates of indebtedness that mature beyond
one year. T-Bonds come in the following tenures: 2, 5, 7, 10, 15, 20 and 25 year
s. There are different kinds of T-Bonds: Retail Treasury Bonds targeted for the
retail market; Dollar denominated T-Bonds; Progress Bonds, among others. During
the Erap administration, the government introduced the Small Investors Program (
SIP), which reduced the minimum amounts for T-Bills and Bonds to as low as PhP 5
,000 per investor. This gave rise to what is known as the Small Denominated T-Bi
lls, T-Bonds and T-Notes.
If you want to invest in GS you can go to any of the 47 GS eligible dealers accr
edited by the Bureau of Treasury. These are mostly banks. The rates offered for
these securities, once they are already in the secondary market vary. Banks will
always buy back your GS whenever you need to sell them. You must also remember
that there is a 20% tax on income on GS.
T-bills and T-bonds usually come in denominations of PhP100,000 and over. Once i
n a while, Retail Treasury Bills/Bonds become available but are very quickly ove
r-subscribed.
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How to Compute
What is the formula to compute future value in the examples given in WEALTH WITHI
N YOUR REACH ; PERA MO PALAGUIN MO!? or during the TV programs?
The formula for computing future value on ordinary annuities (i.e. a set of equa
l payments made at equal interval of time) is:
FVn = [R ( 1 + i )nt - 1] / i
where:
FV = Future Value
R = (Monthly Payment x 12)
i = interest rate per annum
n = number of compounding per year. The effective annual interest rate varies on
the number of times you compound per year. For example an annual rate of 10% ha
s an effective rate of 10.47% p.a. if compounded monthly. If compounding is mont
hly the effective interest rate is 10.47% p.a.
t = number of years
A simpler way of doing this is as follows:
Principal x (1 + interest rate) = Total Amount at the end of the year (Future Va
lue)
If you leave your interest with the Principal (Future Value of the formula above
) and again compute using this formula for end of the second year, your interest
is compounded.
Again you leave the interest of the second year with the new Future Value and ag
ain compute using this formula for the end of the third year etc. etc.
Of course, I use a financial calculator that computes all of these very quickly.

Mahirap magtuos ng walang financial calculator. Ang dapat lang intindihin ay ang
interes na kikitain mo ay dapat ilagak muli upang kumita ng interes at ang inte
res ng iyong interes ay ilagak muli at ipagpatuloy ito ng walang patid. Hindi da
pat ilalabas o gagastusin ang interes hanggang naabot mo na ang iyong layunin.
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Investing in Pesos or Dollars
Your decision on whether to convert into US Dollars or place in Peso bonds depen
ds on your financial status and goals. These will become clearer when you make y
our Statement of Asset and Liabilities (SAL) and Personal Income-Expense Stateme
nt (PIES) and write your financial plan.
You can use the sample SAL and PIES (Chapter 7) as well as the financial plans (
Chapter 9) in WEALTH WITHIN YOU REACH: PERA MO, PALAGUIN MO? as guides for this v
ery important step.
Ang iyong desisyon kung dapat mag-convert sa US Dollars o mag-invest sa Peso bon
ds ay nakasalalay sa iyong kalagayan at mithiing pinansyal. Magiging maliwanag a
ng mga ito kung gagawa ka ng iyong Statement of Asset and Liabilities (SAL) at P
ersonal Income-Expense Statement (PIES) at susulat ng iyong planong pinansyal.
Maaari mong gamitin ang mga halimbawa ng SAL at PIES (Chapter 7) gayundin and pl
anong pinansyal (Chapter 9) na nakapaloob sa WEALTH WITHIN YOU REACH: PERA MO, PA
LAGUIN MO? bilang gabay sa importanteng hakbang na ito.
An important thing to consider in converting to US Dollars is how the exchange r
ate moves. Unfortunately, no one can tell how the exchange rate will move in the
future. Aside from this, dollar placements have lower interest rates compared t
o the Philippine inflation rate.
Because of this, you will only gain from investing in dollar placements IF the P
eso-Dollar rate continues to decline at a rate that will more than make up for t
he low dollar interest rates. For the last two years, this has NOT been the case
. For example, if your dollar earning rate is 3%, the Peso must decrease by at l
east 5% per year for you to beat the Philippine inflation rate. This is just lik
e earning 8% on any Philippine instrument.
Ang pinakamahalagang bagay na dapat isaalang-alang sa pag-convert sa US Dollars
ay kung paano nagbabago ang exchange rate. Sa kasamaang palad, walang makapagsas
abi kung paano tatakbo ang exchange rate. Bukod ditto, mas mababa ang interest r
ate ng dollar placements kaysa inflation rate ng Pilipinas.
Dahil dito, magiging lamang ka lang KUNG ang palitan ng Piso sa Dolyar ay patulo
y na bababa para makabawi sa mababang interes ng Dolyar. Sa nakaraang dalwang ta
on, HINDI ganito ang nangyari. Halimbawa, kung ang earning rate ng Dolyar ay 3 %
, ang Piso ay kailangang sumadsad ng 5 % bawat taon para makapantay ka sa inflat
ion rate ng Pilipinas. Katulad din ito ng pagkita ng 8% gamit ang isang investme
nt sa Pilipinas.
Having said these, if you want to convert to dollars and if you are still young,
I would advise that you build up your dollar savings partly through the dollar
mutual fund of PhilEquity with an initial minimum amount of $2,000. Since your g
oal is long term, you should not worry about the daily changes of the Dollar-Pes
o exchange rate. The Peso, after all, is pegged to the Dollar and Dollar inflati
on is low compared to the Peso inflation rate.
Kung nais mo talagang mag-convert sa dolyar at ikaw ay bata pa, ang payo ko ay p
alaguin ang iyong dollar savings sa tulong ng dollar mutual fund ng PhilEquity n
a may initial minimum amount na $2,000. Dahil matagalan ang iyong pananaw, hindi
ka dapat mag-alala sa araw-araw na pagbabago sa palitan ng Dolyar sa Piso. Tand
aan na ang halaga ng Piso ay nakabase naman sa Dolyar at ang inflation ng Dolyar
ay mas mababa sa inflation ng Piso.
You can also invest your dollars in other Dollar mutual funds. Names of these fu
nds are in the list daily printed in the Philippine Daily Inquirer and Business
World. Fixed income and balanced mutual funds have less risk than the pure equit
y funds.
Maari mo ring i-invest ang iyong dolyar sa ibang dollar mutual funds na nakalist
a sa Philippine Daily Inquirer at Business World. Mas mababa ang risk ng fixed i
ncome at balanced mutual funds kaysa pure equity funds.
Foreign exchange is a tricky subject. A word of advice, as in any investment, sp
read your risk. You should not put all your savings in foreign exchange unless p
erhaps you plan to live abroad. You must be very clear on what you want to achie
ve every time you invest. Pay close attention to the amount you expect to earn a
nd the period of time you expect to achieve this.
Hindi madaling paksa ang foreign exchange. Isang payo lamang - tulad ng lahat ng
investment, huwag ilagay lahat ng ang ipon sa foreign exchange maliban kung may
balak kang manirahan sa ibang bayan. Dapat maging maliwanag ang mithiin kapag n
ag-i-invest. Pag-aralan mabuti ang halaga na gusto mong kitain pati na rin ang p
anahon kung kalian mo gustong kitain ito.
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All About Mutual Funds
Mutual funds take the stress away from small investors who want to invest in the
financial markets. This is because mutual funds are handled by competent and pr
ofessional fund managers who choose the right investment for them. It is importa
nt to choose the better managed mutual funds since there is no guaranteed return
on your investment.
Ang mga mutual funds ay ang pinakamadaling paraan ng pag-invest sa financial mar
kets dahil sa mutual funds, nakakasiguro ang mga maliliit na investor na mahuhus
ay at propesyonal ang pumipili ng tamang investment para sa kanila. Importanteng
piliin ang mutual funds na magaling ang palakad sapagkat walang pangakong kita
sa mga naglagak ng kanilang naipon.
A mutual fund is simply a company that sells its shares to investors. Money pool
ed from selling these shares are used by experienced fund managers to buy carefu
lly selected securities, stocks or other assets, which are in line with the obje
ctives of the fund. Mutual funds allow small investors to raise enough money to
take advantage of higher yielding investment opportunities and enable them to bu
y more types or units of investment, instead of being limited to only one or a f
ew.
Ang mutual fund ay isang kompanya na nagbebenta ng shares sa mga investor. Ang p
era mula sa mga pinagbiling shares ay ginagamit ng mga batikang fund managers pa
ra pumili at bumili ng mga securities, stocks at iba pang assets na ayon sa layu
nin ng fund. Dahil dito, makakayanan ng mga maliliit na investor na magsama-sama
upang bumuo ng sapat na pera upang makibahagi sa investments na mas mataas ang
tubo at makabili ng mas maraming uri o maglagak ng mas malaking investment, sa h
alip na matali sa iisa o iilan lamang.
For example, if you had PhP50,000 to invest and wanted to invest in the stock ma
rket, you would probably be able to buy only a few shares of one or two companie
s. However, if you invested the PhP50,000 in a well managed mutual fund, your in
vestment will be spread over numerous companies in which the fund is invested. A
good assortment or mix of investments, or what is called a diversified portfoli
o (think of putting your eggs in many different baskets), is an effective way to
 lessen your risk.
Halimbawa, kung mayroon kang Php50,000 at gusto mong mag-invest sa stock market,
ikaw ay makakabili lang ng kakaunting shares ng isa o dalawang kumpanya. Pero k
ung mag-i-invest ka sa isang mahusay na mutual fund, ang iyong investment ay mai
lalagak sa maraming kumpanya kung saan nai-invest ang fund. Ang isang maayos na
kumbinasyon o mix ng investments, o yung tinatawag na diversified portfolio (isi
pin mo na inilalagay mo ang iyong mga itlog sa iba't-ibang basket), ay isang mab
isang paraan ng pagpapababa ng risk.
Investing directly in stock markets is better left to the experts. By investing
in mutual funds, you can be assured that qualified fund managers are actively an
d constantly monitoring the stocks and bonds in the fund's portfolio. Compared t
o an inexperienced individual investor, fund managers have highly-developed expe
rtise needed to select quality investments.
Ang direktang pag-i-invest sa stock market ay mas mainam na iwan sa mga eksperto
. Sa pamamagitan ng mutual funds, makakasiguro ka na may mga kwalipikadong fund
managers na aktibo at patuloy na magmo-monitor ng mga stocks at bonds sa portfol
io ng fund. Kumpara sa isang bagong investor, ang mga fund managers ay may kasan
ayan sa pagpili ng investment na mataas ang kalidad.
Earnings of mutual funds grow more because it follows KSK Commandment # 6 - the
principle of compounding. Gains from the sale of equity or fixed income securiti
es of the mutual fund are REINVESTED into the purchase of new equity or fixed in
come securities for the same mutual fund. Therefore, when you finally sell your
shares in the mutual fund, you already reap the benefits of compounding the earn
ings of your investment.
Ang kinikita ng mutual funds ay lumalago dahil sa Commandment # 6 ng Kalayaan Sa
Kakapusan (KSK) ang compounding. Ang kinikita o tinutubo sa pagbebenta ng equit
y o fixed income securities ng mutual fund ay INI-INVEST ULI at ipinambibili ng
bagong equity o fixed income security para sa nasabing fund. Kaya naman pag ipin
agbili mo na ang iyong shares, sigurado kang nag-compound na ang kita ng iyong i
nvestment.
In addition, mutual funds invest in stocks and securities that are subject to fi
nal withholding tax. Investors in mutual funds are no longer subject to this tax
. Last and certainly not least, mutual funds can be turned into cash at any time
at the current market price.
Bukod pa rito, ang mga mutual funds ay ini-invest sa stocks at securities na pin
apatawan ng final withholding tax. Ang mga investor sa mutual funds ay hindi na
pinapatawan ng ganitong buwis. Sa pagtatapos, ang mutual funds ay maaring gawing
cash sa anumang oras sa umiiral na market price.
Please note that each mutual fund has its own terms and conditions. We suggest t
hat you talk with the managers of the mutual fund you are considering to invest
with to determine if their product fits your own financial objectives.
Dapat isaisip na bawat isang mutual fund ay may kani-kaniyang terms and conditio
ns. Iminumungkahi naming makipag-ugnayan sa mga fund managers ng mutual fund na
iyong napipisil na pag-invest-an para malaman kung ang kanilang mga produkto ay
ayon sa iyong mga financial objectives.
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Comparison of Mutual Funds and UITF
In addition to MFs, there are now UITFs, which is a new type of investment in th
e Philippines. It is managed by a Trust institution which is usually a bank with
a trust license. Not all banks have a trust license. UITF replaced the Common T
rust Funds (CTF) to follow international best practices. Wala na ngayong CTFs.
Trust institutions are not part of banking operations. Therefore, UITF, is not a
"deposit product". It does not carry a guarantee and it is not insured by Phil.
Deposit Insurance. Corp (PDIC).
Trust institutions earn only thru management fees and it is the obligation of th
e trust institution to give to the client everything that has been earned by the
fund. This is why trust funds usually perform better than bank investments such
as savings and time deposits.
May mga nagsasabi na ang trust fund manager ng isang bangko ay baka piliin lang
ang mga produkto ng sariling bangko para paglagakan ng pera ng UITF at hindi ang
iba't ibang produktong maaari pang paglagakan. Kung totoo man ito, kung ang ban
gko ay kilala at mahusay ang palakad, malamang magaling naman ang mga produktong
iniaalok nila. Ang mahusay na bangko ay laging mag-iingat sa reputasyon nila.
There are some differences in the management policies of MFs and UITFs but as a
general rule, these do not really affect the possible earnings of the investor.
In the final analysis, the important concerns are:
1) Reputation of the fund manager,
2) Entrance and exit fees,
3) Minimum investment required for those whose funds are limited,
4) Type of fund fixed income, equity, balanced or money market, and
5) Customer service
May kaunti pang kaibahan ang pamamalakad ng MFs at UITFs ngunit wala naman itong
malaking kaibahan sa kikitain ng namumuhunan. Ang dapat intindihin ay:
1) Ang reputasyon ng fund manager. Para sa MF, ang fund manager ay isang korpora
syon at para sa UITF, trust division ng isang bangko. Dapat tingnan ang mga pang
alan ng Board of Directors sapagkat hindi magpapagamit ng pangalan nila sa mga h
indi kanais-nais na fund manager o bangko ang mga respetadong tao.
2) Ang entrance at exit fees ng bawat klase ng MF at UITF ay naiiba. Kayat kaila
ngang intindihin itong mabuti upang hindi malugi at madagdagan ang kita.
3) May dalawang MFs (Philequity at Kabuhayan Fund) na tumatanggap ng PhP5,000 na
initial investment at PhP1,000 sa mga sumusunod. Ngunit ang ibang MF ay mas mat
aas ang kailangang unang investment.
4) Sa UITF, ang pinakamababang initial investment ay PhP10,000 sa Banco de Oro.
5) Ang bawat MF at UITF ay may iba't ibang uri ng paglalagakan. Maaring pagpilia
n ang fixed income, equity, balanced at money market. Mayroon ding pesos o dolla
rs. Iba't iba rin ang patakaran sa bawat uri ng paglalagakan kayat kailangang ta
nungin sila nang maigi.
6) Ang customer service rin ng bawat MF at UITF ay magkakaiba. Ang mga binabangg
it ko ay ang mga sumusuporta sa aming adhikain. Ngunit obligasyon ng namumuhunan
na kausapin sila upang maintindihan ang kani-kaniyang palakad.
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What is your advise regarding pre-need plans?
Pre-need Plans are investments and are good options. Pre-need plans force you to
save plus automatically provide you with a low-cost insurance coverage. However
, it is important to check out the company you intend to buy a plan from and the
people behind it. You can check their status with the Securities and Exchange C
ommission telephone number 63-2-721-5058.
During January 1997- December 1998, Mr. Colayco was President of the Philippine
Federation of Pre-Need Companies, Inc., of which he is currently a Director. For
delicadeza, he would prefer not to comment on specific Pre-need companies.
However, he wrote a recent article in the Hong Kong Sun and the Cebu Daily News
that may be helpful to all pre-need planholders.
THE PRE-NEED INDUSTRY IN PERSPECTIVE
Napakaraming tanong ngayon tungkol sa Pre-need kaya't naisip kong ipaliwanag ang
mga nangyayari..
The Pre-need industry is composed of Pre-need companies that have sold:
1) Education plans made up of two types: Open-Ended (or Traditional) and Fixed-V
alue
2) Fixed-Value pension plans, and
3) Fixed-Value life plans.
Kahit iba't-iba ang mga plano, dalawang klase ang uri ng Pre-need kung ang pagba
basihan ay ang tipo ng obligasyon ng Pre-need company. Ito ang Fixed-Value at an
g Open-Ended. Sa Fixed-Value, alam na ng plan holder at ng Pre-need company kung
magkano ang eksaktong halaga na makukuha ng plan holder sa takdang petsa.
Fixed-Value means that both the plan holder and the Pre-need company already kno
w how much the plan holder will get when the plan matures.
Sa Open-Ended naman, ang matatanggap ng plan holder ay base sa sisingilin ng paa
ralan sa paggamit ng plan holder. Ang halaga ay hindi malalaman hanggang gamitin
na ang plano at sumingil na ang paaralan.
Ang 80% ng Pre-need ay nasa Fixed-Value plans. Kung tutuusin, kung hindi mawala
ang kompyansa ng plan holders sa buong industriya at magpatuloy na magbayad ng k
anilang hulugan, ang mga kumpanyang mahusay ang patakbo ay kayang bayaran ang mg
a Fixed-Value plan holders sa takdang petsa.
Fixed-Value education plans, Fixed-Value pension, and Fixed-Value life plans mak
e up about 80% of the entire business of the Pre-need industry in terms of contr
act price. Based on today's conditions, the millions of plan holders holding the
se Fixed-Value types of plans can be serviced by their Pre-need companies when t
heir plans mature
Ang may problema ay ang Open-Ended educational plans (Traditional plans). Ang mg
a ito ay 20% lang ng buong Pre-need industry. Ngunit may solusyon kung magkakais
a ang mga kumpanyang Pre-need at ang mga plan holders na magkamayroon ng hanggan
an ang halagang pangbayad sa matrikula at ipatupad ito sa maaring ilang taon hab
ang sinisiguro naman na ang mga benefisyo ng plan holders ay siyang makatarungan
.
WHAT WENT WRONG WITH TRADITIONAL PLANS?
Before 1992, tuition fee increases of schools were regulated with a government-m
andated ceiling on tuition fee hikes. Therefore, the traditional educational pla
ns were in reality, Fixed-Value plans. However, starting school year 1992, the g
overnment wanted schools to improve the quality of education. To be able to do t
his, the schools needed to improve its facilities and give better salaries to te
achers. The schools needed higher income to cover its higher expenses and the go
vernment allowed tuition fee increases, generally, with no limit. As expected, t
uition fees went up very quickly.
Bago mag-1992, lahat ng plano ay mayroong LIMIT sa halagang maaring ibayad sa ma
tricula. Noon, may batas na nagbabawal sa mga paaralang magtaas ng matrikula na
higit sa 10% taon taon. Ngunit noong ginusto ng pamahalaan na itaas ang antas ng
kalidad ng edukasyon, pinayagan na ang mga paaralan na magtaas ng matrikula. Da
li-dali naman itong ginawa ng mga paaralan. Mula noon, ang Traditional plans ay
naging Open-Ended plans na.
SAAN KINUKUHA NG PRE-NEED COMPANIES ANG PANGBAYAD SA PLAN HOLDERS SA TAKDANG PET
SA?
Pre-need companies have to invest the money that they receive from the plan hold
ers in good yielding investment instruments to be able to earn enough to pay for
the plans when these mature. Unfortunately, the schools began to increase tuiti
on fees at rates much higher than inflation and even higher than what could be e
arned by the investments of the Pre-need companies. To make matters worse, the A
sian financial crisis in 1997 brought interest rates and investment yields down
to historical lows.
Ang Pre-need company ay naglalagak ng mga installment payments ng plan holders s
a mabubuting instrumento na magbibigay ng mataas na interes o kita. Dito nila ma
kukuha ang pangbayad sa plan holder sa takdang petsa. Ngunit noong masyado nang
mataas ang matrikula ng mga paaralan, wala namang ganoong kataas na interes o ki
ta ang maaaring makapagbigay ng parehong taas ng interes o kita. Malulugi lang a
ng Pre-need company kung ipagpapatuloy ang Open-Ended plan.
Because of the tuition increases, in certain cases, Pre-need companies that sold
plans costing about PhP20,000 have to pay education benefits in excess of PhP12
0,000 per school year today or a total of about PhP500,000. This means that the
Pre-need company had to earn a return on their in excess of 30% p.a. compounded
annually. This is a fantastically high return for the plan holder but it is retu
rn that a Pre-need company cannot achieve for its investments. Therefore, a Pre-
need company loses money with each traditional plan sold.
This situation continues to worsen since individual schools increase their fees
based on market forces and the Pre-need company cannot predict the future paymen
ts to be made on the traditional plans.
POSITION OF THE PHILIPPINE FEDERATION OF PRE-NEED COMPANIES
In the middle of the present Pre-need crisis, the focus must remain with the PLA
N HOLDER. He is the reason why this industry exists and why it has continued to
grow over the last 38 years.
It is important that the solution to the crisis MUST ENSURE THAT THE PLAN HOLDER
IS GIVEN, AT THE VERY LEAST, AN EQUITABLE RETURN ON HIS INVESTMENT.
The basic problem lies in the unpredictable costs of servicing Open-Ended educat
ional plans. At the present rate, the indefinite availment of Open-Ended plans i
s no longer sustainable. The Pre-need industry and plan holders must agree on a
maximum amount for availments of the Open-Ended educational plans.
Walang makakatulong sa mga plan holders, kahit ang gobyerno, kung ipagpapatuloy
pa ang Open-Ended plans. Kinakailangan talagang mag-usap ng masinsinan ang mga p
lan holders, ang mga may ari ng Pre-need companies at ang SEC kung ano ang pinak
amabuting solusyon.
In these dialogues, Pre-need companies and plan holders have to find a fair way
acceptable to all. Everyone may have to make sacrifices so that all Traditional
educational plan holders can be served and given their benefits equitably. This
will also ensure the continued viability and operation of the Pre-need industry.
After all, this industry has already given benefits, far more than any financia
l investments, to the ordinary Filipino family. The great masses of Filipinos an
d the Pre-need industry need each other.
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Savings of At Least PhP 5,000
Where do I invest PhP 5,000 and increments of PhP1,000 to earn higher than bank
savings account interest?
The minimum bench mark for a good after tax investment return is that rate which i
s equal to or higher than the inflation rate prevailing at the time of the inves
tment period. In general, two to four points higher than inflation is a good rat
e of return.
Before anything else, you should have a clear idea of what your personal net wor
th should be at a specific time in the future. This amount is your basic investm
ent goal. This personal net worth target is also the value of your net assets th
at should be generating income. This will be one of your basic guides in decidin
g whether or not an investment opportunity is right for you.
Bago ang lahat, gumawa ka ng planong pinansyal. Alamin mo kung magkano ang iyong
kailangang ari-arian na kumikita sa naitakda mong panahon. Basahin ang Chapters
7 at 9 ng libro kong WEALTH WITHIN YOUR REACH; PERA MO PALAGUIN MO!? Ito ang bat
ayan mo kung tama ang iyong paglalagyan ng iyong naipon.
Secondly, you have to analyze what percentage is your PhP5,000 and Php1,000 to y
our total savings (your investible funds). The main principle is you should at a
ny time know how much of your total investible funds are at risk. As a matter of
principle, you should not put all your eggs in one basket.? Additionally, you ha
ve to understand that your own tolerance for risk taking. Generally, when you ar
e young, you can take more risk. Conversely, the older you are, the less risk yo
u can take.
Alamin mo kung ano ang porsiyento ng iyong PhP5,000 o PhP1,000 sa iyong naitabin
g pera na. nakalaan pang lagak o pang pamumuhunan. Kailangan alam mo rin kung ma
gkano ang perang maaari mong ipagsapalaran. Kung ikaw ay bata pa, maaari ka pang
magsapalaran sapagkat maaari ka pang makabawi kung sakasakaling magkamali ka. N
gunit kung may edad ka na, dapat kang mag-ingat at pumili ng instrumento na bawa
s ang panganib ng pagkalugi.
Kahit ano pa ang kalagayan mong pinansyal, hanggat maaari, hindi mo dapat ilagay
lahat ng iyong naipon sa iisa lamang instrumento.
After examining your financial condition, you have three basic options:
A. If you are not in a position to take risks, the most risk-free investments ar
e Treasury Bills and Treasury Bonds. Read Chapter 19 of the book WEALTH WITHIN YO
UR REACH; PERA MO PALAGUIN MO!? The longer the term, the higher the interest. Ho
wever, small denominated TBills or TBonds of PhP5,000 are easily taken and are n
ot always available. You could bring together your friends/relatives to pool you
r funds to buy the more available bigger denominations.
Ang instrumentong pinakabawas sa panganib ay ang Treasury Bills at Treasury Bond
s. Basahin ang Chapter 19 ng libro kong: WEALTH WITHIN YOUR REACH; PERA MO PALAGU
IN MO!? Kalimitan naubusan na ang mga bangko ng mga PhP5,000 TBills. Kung ipagsa
ma-sama ninyong mga magkakamag-anak at magkakaibigan ang inyong naipon, baka maa
ari kayong bumili ng mas matataas na halaga ng TBills at TBonds. Pag-ingatan lan
g ninyo ang inyong kasunduan na dapat ay nakalagay sa pormal na kasulatan.
B. If you are young and can take risks, the growth investments that are relative
ly less risky than investing in the stock market are mutual funds. There are dif
ferent kinds of mutual funds. However, most mutual funds require a bigger initia
l capital (normally around PhP50,000 or more) There are, however, three that wil
l accept investments of Php5,000 as a start and Php1,000 increments after. These
are:
Philippine Equity Fund
http://www.ebizfinancialservices.com
Ms. Mayet Gozun - mgozun@e-businessphil.com
+632-634-8631 to 32 +63915-534-5876 Ms. Janice Fernando +632-638-9990
Kabuhayan Fund
http://www.mutualfund.com.ph
+632-890 -3827 or +632-890-1758 loc 403
OR
First Metro Asset Management, Inc.
http://www.fami.com.ph
Sallie Prudente +632-840-5751 loc 45
They can best explain their funds to you especially if you tell them that Colayc
o Foundation for Education referred you to them. You have the final decision to
choose where to invest your money. These entities are known to be good performin
g but we highly suggest that you directly talk with them so that you may gauge t
heir capabilities and decide where to finally put your money.
May ibat-ibang uri ng mutual funds. Ang equity mutual funds ay magaling kung ika
w ay bata pa at maaaring magsapalaran. O di kaya kung ang ilang porsiyento ng iy
ong naitabi ay maaari mong ipagsapalaran, ang mga equity mutual funds ang pinaka
mabilis sa pagpapalago ng iyong kapital. Ang equity mutual funds ay may risko sa
pagka't para kang naglalagay ng pera sa stock market. Ngunit sa mutual funds, an
g iyong investment ? ay nakalagak sa pag-aari ng maraming kumpanya. Kung kaya an
g risko na mababawasan ang halaga ng iyong nailagak ay hindi naman gaano. Bukod
dito, ang gumagawa o ang naglalagak ng mga salapi ng mutual fund para sa iyo ay
mga dalubhasang fund managers kaya malaki ang bawas sa risko kaysa kung ikaw mis
mo ang naglalagay ng pera sa stock market.
Importante na iiwan mo ang pera mo sa mutual fund ng hindi babawas sa dalawang t
aon upang may pagkakataon na lumago ang iyong kapital. Ngunit wala pa rin garant
iya o pangako na talagang lalago ang iyong kapital sapagkat ito ay may risko. An
g maganda ay ang Securities and Exchange Commission (SEC) ay ang nagreregulate o
nagsusubaybay ng mga mutual funds. Bagkus, ang halaga ng bawat share? sa mutual
funds ay nasa mga pahayagan araw-araw.
Mayroong ring mutual funds na fixed income at balanced na mas malaki pa ang bawa
s sa risko ngunit mas mababa naman ang kita o paglago. Tawagan mo ang mga taong
nakatukoy sa itaas at sabihing pinatawag ka namin para maipaliwanag nila ng mabu
ti sa iyo ang ginagawa nila. Tumatanggap sila ng PhP5,000 sa umpisa at PhP1,000
tuwing gusto mong magdagdag pa.
C. Investing in a cooperative like the KSK SMP Cooperative that will invest in T
Bills and TBonds and mutual funds, among others.
Kung gusto mong maglagak ng pera mo sa KSK SMP Coop, sasama ka sa ibang mga miye
mbro. Pag-iipunin natin ang pera ng lahat ng miyembro at ilalagak sa lahat ng na
banggit sa itaas.
--------------------------------------------------------------------------------
-------------------------
Savings of PhP 250,000
Where do I invest P250K, P500K? Or P1.0M?
Again, I have to qualify my answers based on the ability of the investor to take
risks, or what is called his risk tolerance; his liquidity requirements; or his
financial objectives in terms of growth, safety of capital or income stream. Mo
re important, what portion of his investible funds is PhP250K, PhP500K or PhP1.0
M?
Bago ang lahat, gumawa ka ng planong pinansyal. Alamin mo kung magkano ang iyong
kailangang ari-arian na kumikita sa naitakda mong panahon. Basahin ang Chapters
7 at 9 sa Wealth Within Your Reach?. Ito ang batayan mo kung tama ang iyong pagl
alagyan ng iyong naipon.
Alamin mo kung ano ang porsiyento ng iyong PhP250K, PhP500K or PhP1.0M sa iyong
naitabing pera na hindi kakailanganin sa medyo matagal na panahon. Kailangan ala
m mo rin kung magkano ang perang maaari mong ipagsapalaran. Kung ikaw ay bata pa
, maaari ka pang magsapalaran sapagkat maaari ka pang makabawi kung sakasakaling
magkamali ka. Ngunit kung may edad ka na, dapat kang mag-ingat at pumili ng ins
trumento na bawas ang panganib ng pagkalugi.
Kahit ano pa ang kalagayan mong pinansyal, hanggat maaari, hindi mo dapat ilagay
lahat ng iyong naipon sa iisa lamang instrumento.
Ang mga sumusunod na payo ko ay mas kumplikado sapagkat malaki na ang halagang p
inag-uusapan. Kung gusto ninyo ng paliwanag, maaaring sagutin ninyo ang mga tano
ng sa ASK F.J.C. at ipadala sa amin.
If the investor wants MAXIMUM CAPITAL GROWTH over a period of at least five year
s, I would recommend that he invest this money into EQUITY MUTUAL FUNDS. This as
sumes that the investor is still about 40 years or younger and that he is able t
o take moderate to high risks. For the sake of financial prudence, a good portio
n of the investments could be allocated to the top performing mutual fund and th
e balance among the other good performing mutual funds. The best gauge for these
funds are their average yearly performance for the past Ten (10) years, or at l
east, the past Five (5) years. Based purely on this average returns, the expecte
d returns on equity mutual funds may average up to 15% after tax compounded annu
ally.
Kung ang hangad mo ay PALAGUIN HANGGANG MAARI ang inyong kapital, ang angkop na
pamamaraan ay maglagak ng salapi o bumili ng bahagi (shares)sa EQUITY MUTUAL FUN
DS. Ito ay bagay sa mga nangangpital na may edad na 40 at pababa. Sa ganitong ed
ad, maykakayahan pang pumasok sa mga may kataasang risko o sapalaran. Alinsunod
sa maingat na pamamahala ng pangangapital, maari na ang malaking bahagi ng puhun
an ay ilagak sa nangunugang equity mutual fund at ang natitirang puhunan ay ipan
gbili naman sa ibang maasyos ding mutual funds. Ang magandang basehan ng husay n
g mutual fund ay ang kanilang karaniwang pagganap o resultang pinansyal sa nakar
aang sampung taon o limang taon man lang. Batay dito, ang maaring asahang result
ang pinansyal maaring umabot sa 15% after tax taon taon.
My assumption in recommending the above is that the investor's investible funds
are not limited to PhP250K, the PhP500K and the PhP1.0M. The investor is assumed
willing to take maximum risk as well as he just wants to MAXIMIZE his gains and
hold the investments for at least FIVE years.
Ang mga tinagubili kong ito ay batay sa kalagayan na ang nangangapital ay marami
pang puhunan at hindi lang yaong Php 250,000,o Php 500,000 o Php 1,000,000. Dah
il dito, ang kakayahan niyang tumanggap ng risko ay malaki at kaya niyang hawaka
n ang kanyang pangangapital ng limang taon at higit pa!
If the investor's standing is that he wants only to take moderate risks but stil
l wants to maximize his potential gains, then I would recommend that he invest t
he bulk (maybe 70%) of his funds in two or three BALANCED MUTUAL FUNDS (i.e. com
bination of around 50% equity and 50% fixed income investments) Then, I would co
ntinue to recommend that he put at least 30% of his investible funds into the to
p performing Equity Mutual Fund and let it stay there for at least five years. I
n this regard, expected returns may average up to 12% after tax compounded annua
lly.
Kung ang gusto ng nangangapital ay di gaanaong taas na risko, pwede pa rin niyan
g ilagak ang mas marami sa ng kanyang puhunan sa BALANCED MUTUAL FUNDS. Ang mas
maliit na bahagi ay pwede pa rin ilagak sa EQUITY MUTUAL FUND at iwanan doon ng
mga limang taon. Ang posibleng ganansya sa ganitong paglagak ay maairng umabot s
a 12% after tax taon taon.
If the investor may need that cash in less than five years, mutual funds are sti
ll the best investment PROVIDED HE KEEPS HIS FUNDS FOR AT LEAST TWO YEARS. JUST
NOTE THAT IN EQUITIES, THE LONGER THE HOLDING PERIOD, THE BETTER.
In general, if the amount invested in mutual funds represents a substantial port
ion of an investor's investible funds, he could divide this investment between t
wo or even among three mutual funds. The important thing is not so much to pick
the best but to avoid the losers and at least be with the top two or three. This
way, his diversification will further reduce the downside risk but maintain the
same degree of profit potential. NOTE HOWEVER, THAT BY LAW, MUTUAL FUNDS DO NOT
GUARANTEE ANY RETURNS.
Kung ang puhunan ng nangangapital ay halos nakalaad sa mutual funds, dapat lang
na ibahagi niya ito sa dalawa o tatlong mutual funds. Ang pinaka mahalagang alit
untunin ay hindi yaong MAKATAYA SA PINAKAMAGALING kung hindi yaong MAKAIWAS sa T
ALUNAN. Dapat lang na ang personal na stratehiya sa pagpalago ay makasama sa mga
magagalling. Sa ganitong paraan, nababawasan natin ang panganib na maaring magp
atalo ng puhunan.habang nabibigyan naman ng malakas na posibilidad na kumita ng
maayos ang kapital. . ALAMIN NA ALINSUNOD SA BATAS, WALANG GARANTIYANG BINIBIGAY
ANG MUTUAL FUNDS.
If the investor simply wants ready cash without any risk, then his only option w
ould be to invest in Treasury Bills. If he can put his money on longer term and
not take any risk, then his option is to invest in Treasury Bonds or other Gover
nment-issued Bonds. Read Chapter 19 of the book WEALTH WITHIN YOUR REACH; PERA MO
PALAGUIN MO!?
Kung ang hangad ng nangangapital ay liquidty? o yaong magkamayroon ng daan sa dal
iang cash?, ang tanging hakbang ay maglagak sa Treasury Bills o Savings deposit n
a kumita ng mababang interes. Kung kaya namang mas mahabang panahon, pwede ring
ilagak sa Treasury Bonds o ibang uri ng Bonds ng Gobiyerno (Pag-Ibig;Land Bank ,
etc). na mas mataas ang interes. Ngunit dito and pinaka mababang halaga ay mga
Php 250,000 at ang kita batay sa haba ng panahon.
The investor can also join the KSK SMP Cooperative for a portion of his investib
le funds. The Coop will invest in TBills and TBonds and mutual funds, among othe
rs.
Kung gusto mong maglagak ng pera mo sa KSK SMP Coop, sasama ka sa ibang mga miye
mbro. Pag-iipunin natin ang pera ng lahat ng miyembro at ilalagak sa lahat ng na
banggit sa itaas.
If the investor wants to take active role in investing his funds, then I suggest
he look into small franchise businesses. IN NO CASE SHOULD HE PUT AT RISK 100%
OF HIS INVESTIBLE FUNDS IN SETTING UP HIS OWN BUSINESS EVEN IF THEY ARE FRANCHIS
E BUSINESSES. START-UP BUSINESSES OFFER THE HIGHEST POTENTIAL GAIN AS WELL AS TH
E HIGHEST RISK OF CAPITAL LOSS. IN SUCH CASES, THE INVESTOR MUST BE PREPARED TO
LOSE WHATEVER CAPITAL HE INVESTS IN SUCH VENTURES.
Generally, I would not recommend that an investor put more than 30% of his inves
tible funds in a start-up business. The exception might be for those in their ea
rly twenties whose capital is limited and thus still cannot afford to diversify
but can afford to lose their principal capital as they have still a great deal o
f time to recover. In setting up your own business, it is essential that you hav
e personal interest (better still, personal passion) in whatever type of busines
s you will engage in. In the end, businesses succeed or fail based on the owners
' ability to execute and manage his business plans well.
Sa mga gustong sila mismo ang magpatakbo ng kanilang puhunan, ang payo ko ay pag
-aralan ang FRANCHISE BUSINESSES. Seguraduhin lang na huwag na huwag ilagak ang
100% ng inyong puhunan sa sariling negosyo kahit na ito ay FRANCHISE. Bagamat an
g sariling negosyo ay ang pinakamataas ang potensyal na magbigay yaman, dito rin
naman ang pinakamalaking panganib na maubos ang kapital. Ang statistics dito ay
mahigit na 85% ng nagumpisa ng sariling negosyo ay nalugi!
Bukod dito, sa tingin ko, hind dapat maglagak ng higit ng 30% ng inyong kapital
sa isang pag-uumpisa na negosyo. Ang maaring maliban sa ganitong patakaran ay ya
ong mga batang negosyante na nasa edad bente o bente singko anyos pa lang dahil
kaya pa nilang tumanggap ng talo at malamang kulang pa rin naman ang kanilang pu
hunan. Sa lahat na ito, ang pinankamahalagang konsiderasyon ay ang inyong tunay
na MATINDING HILIG O PAGKAGUSTO sa isasagawa ninyong negosyo. Ang tagumpay ng is
ang negosyo ay ang kakayahan, pagmamalasakit at pananagutan ng may-ari sa pagpap
atakbo ng kanyang negosyo. Ito ay nasa Chapter 8 ng WEALTH WITHIN YOUR REACH; PER
A MO PALAGUIN MO!?
You may want to check BPI Asset Management, Trust Marketing Division at 8169053,
8169032, 8455080 or 8455022, or visit any BPI/BPI Family Bank Branch and let yo
ur Relationship Manager assist you through a Client Suitability Test. You may al
so inquire from Philippine Equity Fund, Inc. (Philequity), Mutual Fund Managemen
t Company of the Philippines or First Metro Asset Management, Inc.
--------------------------------------------------------------------------------
-------------------------
Starting a Business
I want to start a business. What do I do?
In setting up your own business, it is essential that you have personal interest
(better still, personal passion) in whatever type of business you will engage i
n. In the end, businesses succeed or fail based on the owners' ability to execut
e and manage his business plans well. It is best that you understand what your u
nique genius is as I discussed in Chapter 8 of WEALTH WITHIN YOUR REACH; PERA MO
PALAGUIN MO!?. You will be happiest in a business that you really like to do pro
vided you have made a thorough study and analysis that it has good chances of ma
king money.
I am biased in favor of Franchises as discussed in Chapter 19of WEALTH WITHIN YOU
R REACH; PERA MO PALAGUIN MO!? because you will have more support during the sta
rt-up stage, which is usually the most difficult. As in all cases, it is your re
sponsibility to INVESTIGATE before you invest any amount in a franchise business
. One of the good ways to investigate is to talk with EXISTING FRANCHISEES. They
can give you the correct information about the franchise.
Sa Chapter 19 ng WEALTH WITHIN YOUR REACH; PERA MO PALAGUIN MO!?, ay mayroong usa
pan hinggil sa FRANCHISE BUSINESSES. Ngunit ang dapat intindihin ay ang nanganga
pital ay tanging may responsibilidad sa pagsusuri ng isang Franchise. Ang isang
maasahang pagsusuri ay ang makipagusap sa mga FRANCHISEES at alamin ang kanilang
karanasan sa ilalim ng FRANCHISOR ng negosyong pinagaaraln.
You will surely learn a lot from the experiences of entrepreneurs in various bus
inesses so you may want to read: Entrepreneur magazine, published by Summit Publ
ishing Co. Their Offices are at Level 1 Robinson Galleria Tel Nos. +632-631-8971
to 85.
Kung gusto ninyo ng sariling bisnes na pag-uukulan mo ng iyong panahon, kinakail
angan na alam mo ang iyong tunay na kakayahan na tinalakay ko sa Chapter 8 ng : W
EALTH WITHIN YOUR REACH; PERA MO PALAGUIN MO!?. Mas gusto ko ang mga franchise n
a tinalakay ko sa Chapter 19 sapagkat may tutulong sa iyo sa umpisa.