PinoyMoneyTalk.com

So you’ve managed to earn money online? Good for you!

What did you do with it? Bought a car? Got a laptop computer? Or treated your family and friends to Jollibee? In my case, I used my $1,000+ Google Adsense earnings in October to buy an LCD TV.

Nothing wrong with that, but do you know that if you defer gratifying yourself with luxuries, you’ll end up with something more?

I’ll show you how I used the money I earned online to make more money offline.

$4,500 Adsense check

In the article How to track Adsense checks sent via DHL, I wrote about using DHL to receive my Google Adsense’s Secured Express Delivery check sent in October.

Here’s a copy of that check, if you’re interested.

The total peso amount of P204,311.30 represents the $4,500+ earnings from Adsense (converted using P44.97 exchange rate) that I accumulated in 3 months.

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Markets worldwide are on a slide due to subprime lending concerns in the US. Even the Philippine stock market is not spared. After experiencing a series of all-time highs during past months, Philippine equities are currently on a downtrend. 

So if you have stocks, mutual funds, or unit investment trust funds (UITF) holdings, is it time to dispose of them, hold on to them, or buy more?

Click "Read More" to see a few PMT members' opinions.

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Do you intend to be scammed and lose money online? Read on because we have prepared a list of seven easy steps that you can follow to surely lose your hard-earned money to scammers on the internet.

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(Second of a two-part series)

Learning

Your portfolio isn't just for making money - at this stage in your life, it's also an educational tool. Believe it or not, a classroom isn't the best way to learn about the principles of investing. Often, learning by doing is the most effective way to becoming a knowledgeable investor. When you make a decision about your portfolio, always think about what you're doing and look back on it when assessing your results. If you can make connections between your actions and your returns, you're more likely to replicate the good returns and avoid the bad ones.

Stepping into investing isn't often easy. There's a learning curve involved in the stock market, and it's steeper for some than others. If you're having a hard time understanding the investing world, remember that it's not supposed to be easy - that's why the Wall Street wizards make the big bucks. There are resources around to help you, online and in the real world. And if something really has you stumped, ask your broker for help - it's part of his or her job to make sure that you understand what's happening to your money.

It may take you a while to get the hang of it, but there are advantages to being a young investor, too. This generation is probably more financially savvy than the ones that preceded it, and with all of the investing education resources now available (online, in books and magazines, on TV), today's young investors have a substantial edge over their predecessors.

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(First of a two-part series)

Face it, as an individual under 30, you're not the average investor, and modeling your portfolio after that of your parents isn't always a good idea. In fact, doing so can cause you to miss out on some valuable learning opportunities and, in the long run, even cost you money. If you want to make the most of your money, every decision you make about your portfolio is as important as the last. In this article we look at the unique set of challenges involved in portfolio management for young investors and provide some advice to help you succeed.

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What’s a good investment program? Where should I invest?

You probably are one of the many who keep on asking the same questions. Dr. Noet Ravalo, former Chief Economist of the Bankers Association of the Philippines, says: “It depends.” That is, it all depends on what you have and what you need.

It’s a trite response but he says that really is the answer. How and where you invest is determined by:

how much you are investing;

how big a loss you can afford to accept just in case;

how often you wish to generate returns;

how long you want to keep your investments;

how you react to uncertainties; and

how much access you have to information that you would need to monitor and manage your investments.

“Investment gurus may impress you with their so-called secret methods,” Ravalo writes in an article published in the Philippine Daily Inquirer, “but the truth is, it’s all a question of how much you have and what it is for.”

Here are some references to guide you find your investment strategy:

• Test: What type of investor are you?
• Before investing, find out your investment objectives first
• Time deposits, stocks, bonds, mutual funds, real estate: Where to invest my money?

Original article by Dr. Noet E. Ravalo, former Chief Economist of the Bankers Association of the Philippines, published on Philippine Daily Inquirer’s Business section:

If you are asking yourself how to invest your modest family savings, while generating, at the same time, some return without much risk while also keeping liquidity, here’s what you can do.

Maximizing bank deposits

Maximize savings deposits by letting it do the work of your wallet. Put enough funds in it for your recurring family expenses. If you already have other investments, you can arrange their maturity with your savings deposit. If your shortest investment is a three-month placement, try to have three-months worth of family funding needs in your savings deposit as well.

Time deposits

Time deposits give better rates but you must be willing to keep the funds with the bank for three, six, 12 months, sometimes even longer. You can still withdraw the funds before the pre-determined maturity date if you really have to, but if you do this, the interest often reverts to the lower savings deposit rate. In such a case, simply inquire if your bank offers a “special savings account.” That is much better than a time deposit because your funds won’t be tied up for a long time or won’t even be tied up at all.

Government securities

Next to bank deposits, government securities (GS) would be ideal investments for majority of Filipinos. The government has embarked on the Retail Treasury Bond (RTB) program which allows investors to buy a GS-like instrument in units of 5,000 pesos.

What do you get for this investment? A fixed amount (called a coupon) is paid every three months. In actual practice, the actual coupon which individual holders of RTBs get will be slightly lower that the amounts just mentioned. The reason for this is that the public cannot buy RTBs directly from the government.

There is a list of accredited institutions that buy these RTBs from the government and these institutions then sell the RTBs to the public. In principle you can always sell your RTBs in the open market if you need back your funds but you must do so at prevailing market prices. This means you are faced with the possibility of selling your RTB at a price lower than the price at which you had bought them thus generating a loss.

From the Philippine Daily Inquirer’s “Take Charge of your Money Series”:

When making investment decisions, do you ask your spouse, parents, or friends? The truth of the matter is we all need professional advice when it comes to investments and personal finance. There are many things happening in the world of finance and investment, and we could all use the wisdom and expertise of experienced advisers.

What an adviser can give you

An experienced financial adviser can help you identify your financial goals and map out a plan to ensure your family’s financial security. He will help you spot costly mistakes you’ve been making without knowing it. An adviser can give you tips on how to make your money work by pointing out good investment deals that would suit your appetite for risk. He will also help you to minimize tax liabilities.

Full Story

You've taken the Type of Investor quiz, determined your investment objectives, and learned different investment options available to you. Now it's time to take a refresher course on some fundamental concepts related to investing.

Diversification 

No matter how trite this saying is, it still applies to you: Don't put all your eggs in one basket. Diversify your portfolio to ensure that funds are distributed among several different investments or instruments in order to spread out the risk. The more diversified a portfolio is, the less vulnerable the investor will be to the poor performance of a single investment.

Risk and Return

Risk refers to the uncertainty of the outcome of an investment. Typically, the higher the potential return of an investment, the less predictable is the return. In short, higher returns are accompanied by higher risks. It is therefore important for an investor to match his risk appetite with his chosen investment.

Long-term vs. Short-term investing (Investment Horizon)

Before making an investment, an investor should first assess for how long he intends to hold on to the investment. Generally, holding an investment over a long period of time works in favor of the investor because risk and uncertainty tend to reduce over time. If one prefers to invest only in the short run, he should place his funds in less risky and highly liquid investment products such as time deposits, treasury bills, and money market funds, among others. But if the investor is willing to accept a certain degree of risk and wish to invest for a long period of time, he may feel comfortable investing in relatively high yield but also high risk products such as equity mutual funds, Unit Investment Trust Funds (UITF), forex trading pool, etc. 

You probably know by now the different types of investment products. Before deciding whether to go for time deposits or mutual funds or UITF or savings accounts, assess your objectives for investment first.

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