A Summary on the Things I have Learned in my Lasallian Business Leadership Class

         The past 13 weeks have gone so fast without realizing that my 1^st term as an MBA student is almost coming to an end. My Lasallian Business Leadership Class has been a truly memorable one where life and business lessons were both learned. I believed that I have learned and grew over the last 13 weeks of taking up the course.

            LBL started with learning and studying the life of St. John Baptist de Lasalle and will be concluded on the presentation of our CSR activity. All throughout the course, I have learned more about work life balance, financial planning, family code, business ethics and corporate social responsibility. I have become more aware on what is happening around me and became sensitive to others.

            In concluding everything I learned this term, I would like to start by thanking my dear Professor Ms. Marissa Marasigan, for her guidance to us all throughout the course. I would also like to thank my dear classmates whom have shared their insights on every case analysis.

            Reflecting on my overall journey in my LBL course, I can humbly say that I have acquired several skills which will help me become a better Lasallian Business Leader in the future. I also believe that I have acquired the necessary learning outcomes and have met the Expected Lasallian Graduate Attribute which is to be a critical and creative thinker, to be an effective communicator and to become a reflective lifelong learner.

            I truly believe that I would be able to bring everything I have learned in this course and apply it my personal life and hopefully in my own business in the future. 

On Sustainable Development and Marcopper Mining Corporation

           In today’s discussion, we discussed the importance of sustainable development and why companies should aim to promote this. Also, in today’s case analysis, we discussed Marcopper Mining Corporation’s environmental devastation in the island of Marinduque. Throughout the course, we discussed several ethical frameworks that affect a business. Today, I would like to link my blog reflection on sustainable development with Marcopper’s case.

            It was quite evident that Marcopper was only after profits and did not care for the environment despite being the largest employer in the island of Marinduque. It is also a fact that Marcopper generates a large portion of their revenues through the island. However, Marcopper failed to realize that if they neglect to care for the environment; the negative effects would soon come back haunting them. I have made my research and found out that Marcopper Mining Corporation went bankrupt in the 90’s because it failed to secure an environmental certificate of compliance from the government after with what has happened in the Tapian River.

            Thinking about what happened with Marcopper, I can say that it is truly worthwhile to be an ethical company. As discussed in class, companies should aim to promote the 3P’s which are Profit, People and Planet which consist of the framework to sustainable development. If all companies would aim to be environmentally sustainable, I believe that the community would be a better place to live in.

On Human Rights and the Rights of Each Individual

Today’s discussion deals with Human Rights and the rights of each individual. We started with a case analysis on Royal Dutch Shell’s persisting issue in Nigeria on environmental devastation which includes gas flaring and oil spills. Related to our case analysis is the topic on human rights. We have discussed the different rights of individuals starting when we were young, in the workplace and until the time we grow old.

Despite the different laws being enacted to protect human rights and the different movement of groups throughout the country, can we truly say that each of us enjoy our rights? Looking at the situation in the impoverished areas of the countries, it is hard to say that we all enjoy our rights of being human. This brings me to my next question which is “who dictates the rights of every individual?”. Thinking about it, each country has their own way to measure and define human rights. Take the Muslim countries for example where males and females are not treated equally and where slavery is legal.

As I reflect through our discussion, I realized that each one of us has the responsibility to protect and to promote human rights. We need not join protests or to be in the power to enact laws against human rights but we have the power to respect the rights of other individuals and help promote their rights in the way we can.

To end my blog for today, I would like to take the example of Royal Dutch Shell in Nigeria which we can consider a violation of the human rights. Having said that, Shell as a large and ethical company should take a proactive approach in its oil production in Nigeria by setting up a fund for the rehabilitation of the environment where it extracts oil along with taking proactive measures in addressing risk related to the business such as oil spills and gas flaring. Also, Shell should partner with the government and local regulatory bodies to help local communities especially where their oil business is concentrated.

           We, as Lasallian Business Leaders, should promote and respect the right of every individual and also protect to keep this right freely available to everyone. I urge each and every one of us to strive to become better business leaders in the future and lead companies where individual rights are regarded as the most important thing of all.

Why Should Corporations be Socially Responsible?

            Let me start this journal with my own definition of Corporate Social Responsibility. Corporate Social Responsibility, for me, is the way how companies can give back to the community. In our today’s session, we discussed how Mr. Cecilio Pedro Kwok, the founder of Lamoiyan Corporation, employed hearing impaired individuals and gave them the equal opportunity to work in his company as part of his CSR campaign.

            Corporate Social Responsibility is increasingly becoming popular among large corporations. We have seen several large companies implementing different CSR projects to help the community however, it also raises a question among many individuals and that is “Does the company do this to help sincerely or does they have a hidden agenda in implementing all these CSR campaigns” and thus brings me to my topic of the day which is “Why Should Corporations be Socially Responsible?”

            In today’s discussion on the introduction to CSR, we have discussed several reasons why companies should be socially responsible. Taking the example of our case analysis today, Mr. Pedro, the owner of Lamoiyan Corporation, took the risk of engaging in a CSR for his company and that is to hire hearing impaired individuals and make them part of the company. It is well stated in the case that there are a lot of adjustments that have to be made in order to accommodate the hearing impaired workers but it is not impossible. By doing this, Lamoiyan’s CSR has been well regarded by the community and even brought fame to Lamoiyan Corporation. The question now is does its CSR implementation affect the overall business of the company? In a nutshell, yes, I believe it has affected the image of the company but when we look at it thoroughly, it is not the business that is being changed by its CSR implementations rather its leaders and its stakeholders.

            By taking on CSR initiatives, business leaders are inspired to be better in order to serve more people which then lead to the business looking beyond profits rather looking more on how it can help the community. Reflecting on our today’s discussion, I realized that Corporate Social Responsibility should not only be for corporations rather it should be implemented even by ordinary individuals like us. We should not wait until we are business leaders before we start to implement large projects rather we should start looking at something we can do for the community. Reason is that if we act socially responsible today, it would change us to be socially responsible business leaders in the future.

On the Philippine Constitution and Gap’s Labor Problems

In our today’s class, we have discussed the Philippine Constitution and analyzed the case on Gap’s Labor Problems. Gap as we all know, is one of the largest brand in the clothing industry however, Gap was not free of any labor problems. Gap, an international company, was found to be having factories with poor working conditions and minors being employed. Gap immediately answered the problem and cleared its image and reputation stating that its third party contractor was the one who were responsible for the issues.

Having stated the above, this brings me to my current blog topic today which is on the Philippine Constitution however I would particularly like to dwell on two things to relate to our case analysis which is the labor situation in the country and the continuous rise of outsourcing.

The Philippine constitution has some concrete laws written on labor and outsourcing but I would like to highlight both the benefits and disadvantages of outsourcing labor. It is true that countries such as ours are the main target of foreign companies to outsource their services especially given that we are an English speaking county and that labor is cheap compared to developed countries. However, we must also protect our fellow Filipinos so that what happened in Gap would not be experienced by our own country as well.

It is good to note that Gap, being an ethically responsible company, had took measures to address the problem however, if the above was not the case, then the poor labourers would be left hanging with nothing to fight for. Outsourcing is good for both the company and the country where it outsources it services but we should not discount the fact that companies should provide fair and equal opportunities wherever they are situated.

Why Businesses should be Ethical?

Today, I will continue on with the second part of my blog topic on business ethics. My goal toward the end of this journal is to answer the question why businesses should be ethical? As mentioned in my previous blog post, it pays a business well when it acts ethically. Throughout history, we have seen the rise and fall of several huge companies who have gone unethical. Again, take Enron or WorldCom and more recently Lehman Brothers in 2008. As I continue to study and learn about business ethics, I realize that ethics is the one that sets a long and lasting company from those that don’t. Take our case study for today which is the Ford and Firestone controversy. The case is very close to my heart as I drive my own automobile and it is very alarming to know that there can be conspiracies or connivance behind manufacturing companies which can be hazardous to the consumers.

            Ford and Firestone were both aware of the flaw in the suspension system of the Ford Explorers but they did nothing to address this rather when the accidents happen, both companies started blaming each other and ended up in the breaking the long lasting relationship of both companies.

            When companies act unethically, it does not only hurt the business but it also has an impact on all its stakeholders. As the saying goes, there is nothing in the world that can be left hidden forever. I hope that business leaders take this principle in their day to day decision making and to start looking beyond profits rather look on how their decision can have an impact to all its stakeholders.

            After our class, I reflected on the things I have learned and realized that being ethical should not start in the business rather it should start on every individual. Also, I have realized that being ethical should be a lifelong principle that each of us should practice every day. Thinking about it, all these corporations who collapsed due to ethical reasons are led by individuals with good scholastic records, with MBA degrees or even PHD’s however, one unethical act led to the fall of their large and powerful organizations and some of them even going to jail.

            I would like to end this post with my simple reflection and that is ethics is not only good for business but it is good for the whole world as well. If each and every one of us would act ethically, this world will be a better place to live in for us and for the future generations. 

A Reflection on Life's Stages of Work

On our 3rd meeting in my Lasallian Business Leadership and Ethics class, we talked about the different stages of work and was given the chance to discuss among ourselves on where we think we are currently in the matrix provided. 

On the matrix, there are 3 stages of work with the highest being a work of service to others and the lowest as seeing work as work. I have personally shared that I am still at stage 1 where I still see work as work and still haven't really found the meaning in my chosen career. 

While driving  home, I started to reflect about our class discussion and thought about the reasons on what can help me reach the highest level of work and service. I realized that in order to achieve that level, I have to do and to change a number of things in my life. First, I have to find something which I truly love to do. Having said this, in order to find my highest purpose in life, I should be able to find and identify that one thing that I really love to do. I have to find the work which I would be willing to do even without getting paid. Second realization is that when I find that one thing then I should do everything I can to excel in that field and to enhance my skills and capabilities to be the best in my chosen field and lastly, I should continue learning everything I can until such time comes as the saying goes, luck is when opportunity meets preparation.

Also, while doing my life plan and financial planning worksheet, I realized that still want to achieve a lot of things in life. When I think of myself 10 years from now, I see myself as a successful entrepreneur living a happily married life. Thinking about my current situation, I believe that I am in the right path in pursuing my goals. I also believe that by the MBA program which I am currently taking up will help me reach my goals.

Is Good Ethics good on Business?

Modern businesses are increasingly becoming aware on the importance of ethics in their dealings. We can note from history that all the major failures and bankruptcy in businesses are caused by unethical practices by some greedy and crooked individuals. Starting from Enron and Worldcom and more recently the global financial crisis on 2008 where financial institutions pursued profits over practicing prudence and even breaching ethical standards. So the major question today is that "Is Good Ethics good on Business". As a young professional, I can definitely say that it is a big YES.

As we all know, businesses are made in pursuit of profit but it should be stated that businesses should consider moral and ethical standards in their pursuit of profits. I don't believe that ethics and profits are two separate and contradicting statements rather profits and ethics should be working hand in hand in order to build a lasting business. I believe that the one thing that separates a long and lasting business from those that don't are not their products nor their profits but the moral and ethical standards of their leaders.

I believe that being ethical has its long term rewards. All companies are being faced with ethical concerns every day and it is up to the senior management of the business to decide on how to deal with this. Having said this, I believe that being ethical should start not only when we are already senior executives but it should start as early as now. It should not only be a standard on the senior management and executives rather it should be a standard for the whole company from the lowest rank until the highest. 

One thing I would also like to emphasize is my belief that profits follow over good ethics. As a noteworthy example, I have remembered a speech from Mr. Manny Pangilinan which I have also cited in my previous blog which he emphasized the importance of ethics and good governance in business. He noted that these two things are what separates a good business from a bad one.

In closing, I would like to apply the concept of good ethics in good business in my own life. I believe that as individuals, we should be having our own set of ethical and moral standards to adhere to. These should be embedded in us and learned at home and at school. These ethical standards are the things that will set us apart from others and which will also propel us to higher success. Being ethical is not contradictory to being successfully rather these two things should be complimentary of each other.

On Career, Personal Finance and Family Life

During our Fourth session on our Lasallian Business Leadership and Ethics class, we discussed about career, personal finance and family life. This session was really close to my heart given that I am a very career oriented person and a financial planner. It is also interesting to learn about the family code in the Philippines and the legal duties and responsibilities of parents in the society.

As a young professional, I always think about what I want to do and what I want to become. I always foresee myself in the future as a business person or a corporate executive but on top of all of this, I foresee myself as a loving husband and father to my future family. In order to achieve all these, I am fully committed to do everything I can to reach these goals. One of which is by taking up my MBA in De la Salle University. I believe that the knowledge and skills which I will acquire will equip me to become a better business leader. Other than that, I keep on building up my interpersonal and business skills as I believe that luck happens when opportunity meets preparation.

Another area discussed in our class is about personal finance. As a financial planner, this area is the closest to my heart. I believe that our country lacks the financial knowledge in terms of personal finance. We have been brainwashed as children that buying branded and expensive items are good when in fact it is not really practical. I have been an advocate of financial literacy ever since I was in college.  I learned about the importance of financial literacy early on and I teach my fellow students the importance and benefits of being financial literate.

Last area which we have discussed is about the Family Code of the Philippines. I was intrigued by the topic which prompted me to do a research about the article on Family Code. While reading through the article, I realized a lot of things which were written down that are not being practiced in our society today. I realized that if every Filipino family would adhere to the guidelines of the Family code, our society will be better and we will have a better quality of life here in our country.

Because of modern technology, families are increasingly becoming further apart. The demands of work to the husband and wife requires them to work long hours in the office leaving their children to the care of their nannies. It is written in the Family code that the father and mother should furnish them with good and wholesome educational materials, supervise their activities, recreation and association with others, protect them from bad company, and prevent them from acquiring habits detrimental to their health, studies and morals.

I believe that our society lacks this supervision today which leads young children to be easily influence by false advertisement of the social media. In closing, I hope and pray that Filipinos will live and practice the family code wholeheartedly and be responsible and loving parents to their children thereby helping society to bring up future worthy and responsible leaders.

As the saying goes, "Ang Kabataan ay ang kinabukasan ng Bayan"

The Importance of Work Life Balance

I always believed that achieving work life balance is the most important thing of all. As the saying goes, "too much of something is never good". In our class discussion, we have talked about how important and how to achieve work life balance. We have also evaluated ourselves on where we currently at in terms of achieving our full potential in life. In my own personal opinion, I believe that having a balanced life is the most important thing of all. If we fail to balance the different aspect of our life, we are doomed to despair. We may be successful in one aspect but failing in another which I believe most people are suffering from. In order for us to say that we are truly successful in our lives, then we should have achieved balance in all aspects of our life.

Listening to the talk of Pat Gelsinger about work life balance, it made me realize a lot of things which I must admit I am guilty of. It had also opened my eyes to a new paradigm of thinking and handling my priorities in life. I believe that above work, the most important aspect of our lives is our families. I believe that they are the reason why we are working and striving hard everyday. However, apart from our families, we also have other aspects of our lives such as our social life, spiritual life, financial life and career. All these things should be in balance in order to achieve full satisfaction and happiness in life. 

In his talk, Pat Gelsinger suggested a few things on how to improve our work life balance. One of which is putting priorities in each of them. We have to accept that we are given a limited number of time and resources and it is up to us on how to allocate our time and resources to the different aspect of our lives. Also, in his talk, he mentioned about looking beyond career and work and taking into consideration other aspects of our life.

Taking my own life as an example, I see to it to live and practice work life balance. Every weekends, I see to it to keep my relationships healthy by spending enough time with my loved ones and to keep my spiritual life healthy as well by going to church and worshiping God every Sundays. Despite my very hectic daily schedule, I make sure to take time to improve myself and that is also one of the reasons why I enrolled in the MBA program. Apart from that, I studied financial planning in order to keep my financial life in order. I also work hard during weekdays so as to prepare myself for a brighter future.

I believe that all of us have an obligation to keep our work and life at balance. I believe that this is essential in finding happiness at work and meaning in life.  

On Being a Lasallian Business Leader

In today's discussion, we have discussed the role of a Lasallian business leader. As future managers, presidents and CEO of various organization, we should not forget our roots and values when it comes into making decisions specially during times when there are ethical concerns at hand. I have read an article about a talk of one of the most influential business person in the country, Mr. Manny Pangilinan. In his talk, he emphasizes the importance of ethics and good governance in business. He said that these two things differentiate a world class firm from those that are not. 

I would like to connect the link in Mr. Pangilinan's talk, our class discussion and our reading material which is the Vocation of the Business leader into my writing. First, as mentioned in the Vocation of the Business Leader, the critical part of a person's formation of beliefs, values and purpose of business is his or her education which I believe is true. As mentioned by Mr. Pangilinan, a person's values should be embedded from his childhood. I also remembered that our Professor also mentioned that there was a study made on students who came from sectarian and non-sectarian schools and the results showed that those students who took up religion, values and catholic church teachings proved to be more successful in their careers and on businesses.

The second point I would like to highlight is the importance of ethical and spiritual formation compared to our technical skills which was boldly highlighted in the article. We have also discussed the implications of people who have led large companies based on technical skills but later on had to fall due to ethical reasons. One such company is Enron and more recent is Lehman Brothers. Mr. Pangilinan also pointed out the importance of ethics and good governance in his talk. He said that "Present-day financial markets determine which companies are good, and which are not – equity markets will price your shares impartially. Debt markets will price your loans objectively. if you want market acceptance, then you must perform well, and do it honestly. It’s as simple as that." He cited samples where he and his company had to make ethical choices and in the end had paid off.

Lastly, I would like to emphasize that business leaders should be encouraged to see their work as a vocation and a response to God's call for service. Also, these leaders should act as leaders who are serving God, looking after the welfare of the whole organization and not only on the bottom line. 

In closing, as Lasallian Business Leaders, we should do our part and act as agents of change in the current business environment. I always believe that by embedding ethical and spiritual values in business, it will pay off in ways where money cannot compensate. I believe that Lasallian Business Leaders should exemplify a business with a heart. 

St John Baptist de Lasalle - Leading by Example

I have always heard of St. John Baptist de Lasalle but it is only until today after I have read and watched a film about his works and history that I have truly understood his life, his works and his significance in the past and until the present time.

St Lasalle can be characterized as a true risk taker, innovator, servant leader and mentor all throughout his life. Despite coming from an affluent family, he took the risk and gave up all his riches for the sake of his desire to help and to educate the poor. He also took risk in opening up schools despite the limited resources and obstacles which he faces at that time. However, his boldness bore fruit when he was able to pass on the vision to his fellow educators and to the people during his time who has the heart to help others. His exemplary works were never forgotten and served as an inspiration and model for a lot of educational institution until the present time.

He is also an innovator in the sense that he looked for a way to standardize his system of education and by training people from all walks of life to be educators like him. Personally, I admire his courage and boldness to think outside of the box and introduce a non conventional method of teaching during his time. He might have been criticized a lot a first but his dream, vision and passion has kept him in pursuing his goals.

Lastly, he is truly a servant leader as he does not only lead others by giving out orders rather he leads them by his example. For me, this is the most admirable trait of St. Lasalle as he lived not only by doctrines but by examples. I believe that he was able to inspire a lot of people to join his cause through his examples. He has won the heart of other educators by walking his talk.

In my personal opinion, I believe that all of us should not only be inspired by the life of St.Lasalle but rather it should also serve as our guide on our journey in becoming future business leaders. I believe that in order for us to claim that we are Lasallians, we must be able to exemplify St.Lasalle's example in our personal and business lives.

Thinking about it, the life of St. Lasalle may have been fruitful but in order for its fruitfulness to continue throughout generations and generations, we, as Lasallian business leaders, must do our part by living and following the example of our patron saint in our everyday life.

Growing Your Money with Stock Market Investments

The stock market is one the vehicles that is available for an ordinary investor to grow his wealth. Investing in stocks is basically purchasing shares of publicly listed companies thereby giving the investor the right to participate in the earnings of the company as well as to affect the company’s operations by participating in the stockholders meeting.

There are two ways on how an investor grows his money through the stock market. One is by receiving interest in the form of dividends and the other one is through the appreciation in value of his shares of stocks.

Dividends are simply the distributed portion of a company’s earnings to its shareholders. It can be in the form of cash which is called cash dividends or it can be in the form of additional shares which is called stock dividends. Dividends unlike interest are not fixed. It is at the discretion of the Board of Directors of the company whether they will declare dividends or not.

Capital Appreciation, on the other hand, is the increase in the market value of the stock over time. This happens during good economic conditions coupled with the company making announcements on developments and strong corporate earnings. Appreciation in value also involves market demand on a stock. The higher the demand for a certain stock, the higher the price will be.

There are a number of reasons why stocks rise and fall in value. If a company is doing well, most probably the stock will rise however there are other factors that affect rise and fall of the markets. Economic factors certainly play a big role. If the overall economy is good, the stock market would probably in an uptrend and the opposite happens when the economy is not performing. On the other hand, disasters, wars and commodity prices also affect and influence the movement of the markets.

Stocks can be purchased in the National Stock Exchanges through local brokers. Stocks that are available to local investors are the ones that are listed in the secondary markets and on over-the-counter markets. The New York Stock Exchange and the American Stock Exchange are two of the major exchanges in America. The Securities and Exchange Commission (SEC) protects investors and oversees all the corporations listed in the local stock exchange.

Before investing in stocks, it is important to know the investment objective and the risk appetite of an investor. This will determine the type of stock that will suit his investment style. Income stocks are those that provide revenue to the stock holders in the form of dividends. This type of stock is suitable for an investor that needs recurring cash flows from his investment. On the other hand, Growth stocks are companies that reinvest profits instead of paying out dividends to help sustain growth and increase the size of the company. This type of stock is for younger investors looking for long term capital growth. Moreover, there are also speculative or penny stocks which are usually companies at their start-up phase or companies that are small but have good future prospects. Speculative stocks as the name implies are the most risky of all stock investments but these investments can also give the highest potential return. These category of stocks are for investors looking for high returns in exchange for higher risk.

The next step in investing is for an investor to decide where to put his investment capital and to choose his investment style. This is a decision that needs to be made by the investor after considering the above factors. A style that works for many investors is the buy and hold strategy. This consists of purchasing high grade stocks that have attractive valuations, reinvesting dividends and holding on the position for a long period of time.

Stocks offer the potential for higher returns specially if taken as a long term investment. Because of the volatility in the markets, stocks are not appropriate to be a vehicle for short term investments. A well managed portfolio of stocks can give a return of as high as 18% per annum on a compounded basis.

Having said that, choosing the right companies that will comprise an investors portfolio is a crucial part in order to make money in the stock market. That is why seeking professional advice can certainly help an investor in making sound investment decisions and thereby growing his wealth in the stock market.

The Simplest Financial Plan I Ever Learned pt.4

Spend 70%

Now, here is the last part of my 4 part financial plan. I sure hope you learned something from my past posts. Well today, I’ll be teaching you about spending. Hmm.. quite catchy huh? Because nobody needs to be taught on how to spend. But I believe that there is a right way to spend in order to survive with only 70% of your income and the first part of that is…

Mindset

Hmm. Mindset? Let me explain. Most people will tell me that it is impossible to live on 70% of their income because even with the 100% of their income they still need to borrow money, how much more with only 70%.

I believe that what we have is a problem with mindset. Ok, Suppose your earning P25,000 per month. Most probably you had a P25,000 lifestyle and of course you survive with P25,000 a month right? Of course you did or else you won’t be able to read this post. Now let’s put things in a different perspective. Let’s play with your mind. Why not think that you are only earning P17,500/month. That is actually 70% of P25,000. Would you survive? I bet you would. Even if you are only earning P5000 a month you would still manage to survive. Right? So what we need is just a shift in mindset. This will entail a lot of sacrifice but believe me, it’s worth it.

Wants and Needs

The other problem is the way we define our wants and needs. According to one of the books I have read, if you wanted something bad enough then it becomes a need. I believe that there is some truth to this and this is precisely the reason why most Filipinos are drowned on debt. We must learn to identify our wants against our needs. That’s the first step then you begin to think of ways on how you can earn more in order to augment your income so that you will be able to buy the things you want without compromising your 10% and 20% funds.

Money Management

I believe that this is as important as the other two as I believe in money management myself. Others call this budgeting but I prefer to call it as money management. Because I believe that the cause of lack and poverty is not because there is not enough resources but because of mismanaged money.

So how do you start your managing your money. First, is by writing down all your expenses each month. I believe that this is a vital part of financial planning because you have a good view on where each centavo goes. Next is plan on how you will spend your 70% to the last centavo of course. Well if you can spend less than your 70% then congratulations. It means you can increase your savings or you can use that money for anything you want (By the way, don’t forget to include your wants budget in planning for your expenses. We all need that).

Last Note: I would like to clear out something before I end. I am not writing all of these stuff to give you a hard life. Maybe your thinking  that what I’m suggesting will lead to a life that is full of sacrifices. No, that’s not it. That is why I want to leave you with something encouraging. I got this slogan from Millionaires Act. A popular blog on personal finance as well. It says Earn More, Desire Less. I believe that this is the key to prosperity and to financial freedom.

It has been my habit that if I want something bad enough then I would look for other ways to earn money without hurting my budget so that I can buy the stuff I want and still continue living within my financial plan.

That is something we should all strive for. To learn how to earn more and to desire less and with that I end my simple financial plan. I hope you learn something from me. I hope you can also share your thoughts by commenting below. J

How to Find Opportunity in a Bad Financial Market

Global Markets have been experiencing volatile movements in the past few months sparked by concerns in the Greek economic debt and the European economy. A lot of investors are now pulling money out from the markets on fears that another economic recession might occur. However, according to market experts, investing in the stock market presents a rare investment opportunity during times of recession and market volatility.

Ironically, this time of market uncertainty is generally the best time for an investor to be buying stocks. In fact, it is during the time of recession when some of the greatest investment opportunity presented itself to some of the world’s wealthiest investors. If an investor is smart enough to take advantage of the situation when they can buy stocks for less than what they are really worth then they will be handsomely rewarded once the market started to bounce back.

Remember that poor economic conditions can affect the market as a whole however as long as there is nothing wrong with the company where an investor puts his money i.e. the company has recurring earnings, strong balance sheet, great management team and huge growth potential then an investor can be confident and assured that the value of his investments will surely bounce back to its fair market value once the economy recovers.

It is perfectly normal for the economy as well as the markets to experience booms and busts along with the economic cycle. But as we all know, America is resilient and we know that America will keep growing over time which can be proved historically. Therefore, the economy will rebound and continue to reach new highs and those who took advantage of the great opportunities during tough times will end up with enormous wealth. 

 

Having said that, here are some tips an investor can use in picking stocks during times of economic turmoil and market volatility to take advantage of the rare investment opportunity present:

Look for companies that have double or triple digit growth.  In spite of other drawbacks, a company with massive growth will not be too much affected by the slowdown in economy.

Pick stocks that are undervalued relative to the company’s intrinsic value. Companies with low debt, steady growth and strong earnings are the ones to look out for. This can be seen through the company’s assets, liabilities and cash flow position.

Select companies that have economic independence and those that are not vulnerable to the swings of the U.S. economy. Examples are companies that derive most of their revenues from overseas.

Opt for defensive stocks that focus on food, healthcare and utilities. These companies thrive no matter how the economy is doing and these companies provide the necessaries that even in economic downturn will continue to earn revenues and make profits.

Choose companies that offer a high dividend yield. These companies will be like shelter in a storm and will provide income even in difficult times.

Another tip an investor can do during times of market volatility is to break up his purchasing throughout the year instead of investing money to buy as many shares possible all at once. Using this technique, an investor can buy more shares with his money rather than if he purchased them all at once. Many of the world’s wealthiest individuals made their money using this technique of buying bargained stocks and holding on to them until the markets recovered. 

  

Lastly, value investors are the ones that looks at the intrinsic value of a stock and buys a company that is significantly undervalued and those that are selling at a huge discount. They are the ones who start accumulating shares when everyone is selling and they believe that a fortune can be created when they take advantage of the buying opportunities present during times of market volatility and economic downturns.

The Simplest Financial Plan I Ever Learned pt.3

Invest 20%

Ok, today let’s talk about investing.. but before that I would like to talk about the concept of “PAYING YOURSELF FIRST” Maybe most of you had heard this statement quite a few times but let me ask you, are you practicing this habit?

So what is paying yourself first by the way? Simple. It simply means that you have to set aside some money for yourself first the moment you receive your paycheck or any income for that matter.

The next question is, by how much? Now, here’s where our topic focuses on. I say at least 20%, financial planners say at least 20% and the Bible says 20%. Huh? How did the scriptures get in here. I thought this is blog post is about investing? Well, you see, the Bible is one of the best sources  of financial planning. Really? Yes. And the concept of investing or saving 20% came from the story of Joseph the Dreamer. Do you still remember that story? I hope you do well if you don’t then let me summarize that for you.

Ok, here it goes “The King of Egypt had a peculiar dream that no one among his counselors could explain. Until God told Joseph to explain to the king what his dream meant. Joseph did explain to the king and told him that his dream foretells a 7 year of bountiful harvest to be followed by 7 years of famine that will strike upon Egypt. So what did he tell the king to do? Save 1/5 of the harvest during the season of abundance and they can survive the famine.”

Wow, 1/5 or 20%, isn’t that amazing that even the Bible taught us about investing. So now your asking, what happens next when I invest 20% of my income. Here’s what.

Do you know…

That if you will invest P5000/month(Well that means your earning at least P25,000 a month) in an investment vehicle that will yield at least 12% per month compounded then you’ll end up with…

P1,150,193 in 10 years

P4,946,277 in 20 years

P17,474,821 in 30 years

P56,667,739 in 40 years

Hmm.. not bad huh? Even if you consider inflation and the devaluation of the peso I bet you can still buy a lot of things with P56 million. Right? And I think you can already have a comfortable retirement with this amount.

Am I making this up? No, I don’t and if you’re skeptic with the figures then you can consult your financial advisor if you have one. By the way to add credibility to this you might want to check my older posts specially the one entitled Investments and Compounding Interest: Do they really work?

 

So that’s it for now, I sure do hope that you learned something from this and you will start practicing the habit of paying yourself first. Well I must say that it’s quite hard at first specially that you have to make some sacrifices and lifestyle adjustments. But every good thing in life entails some sacrifice right. So let me leave you with this question.

 

“Sacrifice now, enjoy later or Enjoy now then sacrifice later? Your Choice”

How to Retire in 3 Years or Less pt.2

Ok, I know you’ve been quite anxious waiting for this blog post so as promised here it is. Hmm… so how should I start telling you his secret. Well, as I mentioned in my previous post he only did three things. Let me explain each in detail.

            He used geometric progression and took a massive risk.

            He invested at the right time and at the right place.

           He was patient enough to wait for his investments to grow immensely. 

Before I expound on these things further let me give you some trivia on my friend. First is that he does not have any stock market experience or whatsoever. According to him, he is just the luckiest person alive and I can attest to that. Second, he does not even know and use technical analysis (by the way, technical analysis is the use of charts and patterns in trading markets) to time his trades. He just buy them on speculation and it always works for him. Lastly, he started investing with P3,000,000 and according to him that was his lifetime savings. Great story huh? And one thing I admire from him is that he didn’t change his lifestyle after making a lot of money.

Having said that let’s go over the things he did in order to make millions in the stock market.

First, he used geometric progression. What is geometric progression again, it means that after he doubles his money in a stock, he pulls it all out and then places it in another stock and doubles it again. That is geometric progression, in other words what he did was invested the P3M made it P6M pulled it out, invested it again and until it doubled to P12M then pull it out again and invested it again until it became P24M and eventually to P44M or “$1,ooo,ooo”.

Next, he invested in the right time at the right place. Well its quiet simple, he invested in October 2008 near the bottom of the recession and guess what? He was  able to get prices at a bargain. Well, you might be thinking how cheap stocks were at that time. Let’s just say that he was able to invest in JGS when it was a P1.00 a piece and where is JGS today… P25/share. WOW… just imagine if you invested P1M back then. It’ll be valued at P25M today…after two years, not bad for an investment huh?

Lastly, He was patient enough to wait for his investments to grow immensely. Well I know many investors who made money in the global economic recession back in 2008 but the problem is most of them reaped their gains early on. But that was not the case with my friend, he was able to hold on to his investments through the ups and downs of the market and eventually he was able to reap great rewards.

After hearing his story, I realized that there is really some truth behind the investing values of the legendary Warren Buffett and that is…

“Be fearful when others are greedy and be greedy when others are fearful”

It worked for my friend… maybe it will work for me and us too…in the future J