Why would I Invest my Savings?

The Philippines has a very low savings rate compare to our neighboring Asian countries. Actually there's no "saving culture" in our country,only a culture of consumption. Savings are very important to our country's development since these are the  main source of investments that can generate more production and employment.

Philippines has Billions of dollars.

In December 2012, The Bangko Sentral ng Pilipinas (BSP) says that Overseas Filipinos Worker (OFW) send US $23.8 billion to their relatives back home each year. Where did all these money go? Most of these remittances went into goods and services. Only a small amount went into savings, which could have been invested.

Source: http://www.bsp.gov.ph/

One of the reasons why Filipinos do not invest their money is they do not know where to put their savings. They don't know how and where to invest. The few who call themselves as wise who actually save end up putting their money in "get-rich -quick schemes," which turn out to be pyramid scams and swindling operations. And that is also one of the reasons why most of us Filipinos is apprehensive to invest our hard earn savings.

Why would I invest?

There are so many reasons why we need to invest our hard earn savings. By its definition alone investment are made to generate future purchasing power that will keep ahead of inflation and provide investors a sense of financial security. Investing is the ability o make your savings grow or appreciate to achieve your long-term financial goals. Investing is the most effective way to build your personal wealth and secure your financial future.

There are various of investment instrument that we can choose from depending on our needs, these are Stock market, Bonds, Pension plan, Insurance policies, Real estate, Pension plan and so on. If you have a bigger savings and want to avail yourself to more complex options, your bank or your financial planner can help you.

Philippine economic growth.

If you have noticed in our news lately that the Philippines has posted better-than-expected economic growth, boosted by the strong performance of the country's services sector. Its economy grew 6.6% in 2012, the statistical bureau said, beating the government's target of 5 to 6% growth. The bureau added that a "substantial improvement" in manufacturing and construction sectors also aided growth. Strong domestic demand has helped cushion the impact of a global slowdown on the Philippines' economic growth.

Source: http://www.bbc.co.uk/news/business

What does this mean to you?

Most of us are just watching and reading this very good news. We have no idea what this means in an INVESTOR'S point of view. We just let this opportunity passes by as if nothing happens. Most of us say that I don't care because I don't  know how to invest, but the irony is we never invest to our financial literacy or education. Imagine this my dear friends, if my parents did not invest for my formal education until college, what kind of life would I be having right now? Do you know how much is my parents total investment for my formal education from kinder to college? Ask your parents how much they invested for your formal education. Then, tell me how much does it cost for your education and why it is so expensive? Financial education is so valuable, we can even pass on to our children's children. Friends let's fight against poverty. Enough is enough. It's time to start investing.

My personal journey.

My dear friends allow me to share to you my personal journey. Last 2010, I joined the TRULY RICH CLUB. It was one of the best decisions of my life. Founded by Bo Sanchez , its purpose is to "help good people become rich". Because of the guidance I get from the club, I'm now investing in the stock market each month! Shocking, right? But it's amazing how I'm personally growing in my finances. I'm inviting you all to join the CLUB too. If you are interested, please watch and listen to this video how Bo explain what it is all about or you can click the link below. Thanks and God bless us all!

To go to our club website please click this Link TRULY RICH CLUB .  

To Join Truly Rich Club please sign up here for Philippine Resident .

To Join Truly Rich Club please sign up here for International Resident.

You can also download the Book My Maid Invest in the stock Market  in this Download link.

Investing: It's Every Juan's Game

The Philippine investment environment has significantly changed over the last decade. Investing is no longer a sport that only the bourgeois alone can play like polo or golf.  As people realize the need to seek returns that would, at least, beat the rate of inflation, more and more investors seek to finance their medium to long-term goals with investments in bonds and stocks. In addition,  minimum investment amounts, that previously served as barriers to the new and modest investor, were brought down to more affordable levels. 

Today, investment products are taking on the innovative micro-selling approach of "Sachet Marketing" that was proven effective in developing countries like the Philippines. It is now, more than any other time, that investing should be taken on by "every Juan". 

Why Is It Easier to Invest Nowadays? 

When asked why some people shy away from investing, the top three responses include: 

1) investments are not affordable;

2) investments are too complex to understand; and,

3) investments are difficult to manage. 

On Affordability 

New investment avenues and products are being developed to capture the success of the "sachet" concept, where funds are offered at smaller and more affordable amounts. Products such as BPI's Unit Investment Trust Funds (UITFs), with minimum investment of PhP10,000.00 for peso-denominated funds and USD 1,000.00 for US Dollar denominated funds, make investing easier and viable for starters. 

On Complexity 

Investment jargons, that often alienate would-be investors, have been brought down to layman terms. At BPI, we make sure that each client undergoes a Client Suitability Test to determine his/her investment objective, risk profile and investment horizon which are used in recommending a portfolio allocation and the types of products suited to each client's profile. Like instant coffee in sachets, an investor is presented with choices on the type of funds they wish to have in their cup of investments, whether it would be pure black coffee, with cream, or 3-in-1. 

On Managing Investments 

Advances in information technology and the internet provided investors, not only with the means to find out more information about investments,  but also made it easier to manage their portfolio of investments with a click of a mouse through on-line platforms. Presently, BPI clients can monitor their investment funds through the BPI Expressonline and soon contribution and redemption transactions will also be made available to provide our clients more convenient means of managing their investments. 

Its always a good idea to invest your money for the purpose of helping you achieve your financial goals and there has never been a better or easier time to start investing than now. Open an investment account TODAY and start building your TOMORROW with us. 

Bas M. Cadeliña

BPI Senior manager.

Not all returns are created equal.

The market is flooded with all sort of Investments like Mutual Funds offered by banks and mutual fund companies with almost everyone offering the same asset class investments.  Between different banks offering similar investment funds, you may wonder why one bank offers higher return over its peers.  Naturally, you will be enticed and even persuaded to invest in a product which offers the “highest” absolute returns.  Be warned though!  Be very alert that by itself, the historical absolute return of an investment can be quite misleading when used as an indicator of future performance.

www.flickr.comphotos

Chasing after the return only tells half of the story.  You cannot simply rank investments from highest to lowest by using the return figures.  It is more important to get good risk-adjusted return as this is a much better barometer.

ABSOLUTE RETURN
In simple terms, absolute return is the gain or loss of a fund in a particular period, quoted as a percentage.  This is what you see published in broadsheets and disseminated across different media forms.  These figures are what entice ordinary investors.

RISK-ADJUSTED RETURN
On the other hand, risk-adjusted return refines return by measuring how much risk is involved in producing that return.  When comparing two or more potential investments, an investor should always compare the same risk measures between different investments in order to get a relative performance perspective.

SO WHAT?
You may then wonder, what’s in it for me?  Absolute return is the more obvious measurement of a fund’s performance.  How do I know what is my risk-adjusted return?  How do I know how much risk is involved for the return I’m getting?
In basic terms, risk-adjusted return is computed as:

Risk-adjusted return = Absolute return over Volatility  

In layman’s term, volatility refers to the fluctuations in the fund’s Net Asset Value (NAV) per unit or NAV per share.  The rule of thumb is the higher the volatility, the riskier the investment

GOLDEN RULE

www.flickr.comphotos26373139

When comparing two funds with the same absolute return, a fund with a higher-risk adjusted return is actually a better option than another fund with a lower risk-adjusted return because a higher ratio means higher reward per unit of risk taken.

To illustrate, take the story of Jane who needs to go to another town.  She has two options: a.) take a rough road with a shorter route, or b.) take a paved road which will mean a longer travel time for Jane.  At first look, both alternatives might come across as equals, providing the same absolute return, which is to reach the other side of town.  However, taking into consideration the risks involved in taking the rough road, option B can actually provide a greater risk-adjusted return.

YOU CHOOSE
In choosing a fund, remember to not just focus on the financial reward.  It is also important to consider the risks involved in achieving your desired return.  Don’t be blinded by RETURNS ALONE.  Remember to ask yourself, “How much risk am I willing to take to reach my desired reward?”

(Sources: BPI Asset Management Research, BPI Asset Management Weekly Market Update and Outlook, BPI Investment Funds Daily Monitor, Bloomberg, Investopedia.com)
Disclaimer: Investing involves substantial risk. Neither the author, the publisher, nor any of their respective affiliates make any guarantee or other promise as to any results that may be obtained from using this blog. No subscriber should make any investment decision without first consulting his or her own personal financial advisor and conducting his or her own research and due diligence, including carefully reviewing the prospectus and other public filings of the issuer. To the maximum extent permitted by law, the author, the publisher and their respective affiliates disclaim any and all liability in the event any information, commentary, analysis, opinions, advice and/or recommendations in this blog prove to be inaccurate, incomplete or unreliable, or result in any investment or other losses.