investing in an asian fund

Over the course of several years and having traveled to China, Vietnam, Malaysia, Thailand, Singapore and Indonesia, I think I'm now comfortable at investing in a mutual fund or ETF with a regional focus on this part of the world. The cities of these countries are buzzing with activity and you can just feel the momentum going forward. Many have written about the Asian century and the impressive GDP growth in this region, including the Philippines. However, as an investor, I seek to fully understand what I'm investing in and it is only by seeing for yourself what is happening on the ground and talking to its people would you get an understanding of its economic growth. I will not invest in one country's stock market index because my knowledge of one specific country is sorely deficient. Instead, I would want to put money in an asian equity fund with exposure to the all of the countries mentioned above. I was looking forward for the PSE to join the ASEAN trading link but come to think of it, I really would not be comfortable in investing in a particular Thai or Singaporean company since I do not know them that well. A good compromise would thus be to invest in a fund that invests broadly in  the equities of these exciting countries. The timing may be a bit off since stock prices are expensive but this is irrelevant since I strive for an equal asset allocation to stocks, bonds, gold, cash and real estate. Time to research and read fund prospectuses. Happy investing!

starting small

Most people have the next big business idea in their head but very few actually act on them. Maybe because a business enterprise is the most risky of all investments. However, it also offers the highest returns. One way of reducing the risk is to start small and who knows, it may grow big enough to become a multinational in the future One can come up with many reasons not to invest in his own or another person's business enterprise but these three  might just inspire you to do so:

1. Harley Davidson - its first bike was made in a small wooden shed

2. Nike - initially sold sports shoes from the trunk of Phil Knight's car

3. Apple - started in a garage in Cupertino, California


Don't forget to allocate some of your capital towards a small business enterprise. It may just be your best investment yet. Happy investing!

investing or trading

Some may confuse the terms investing and trading. From wikipedia, investing is putting money into something with the expectation of gain, usually over a longer term. But hey, that sounds like trading except for the time qualifier, that is, "over the long term". I guess that is where the difference lies. Which is better? I go for investing, that's what this blog is all about. I must admit though that I have tried trading stocks and currencies before. Did I make money? Yes. Did I lose money? Yes as well. In fact, that would pretty much summarize why I prefer investing. The 2 steps forward, one step back approach does not fit with my personality. Even the best traders in the world will experience a loss. What makes them better is not that they make the correct trade all the time, its simply that their winning trades outweigh their losing ones so overall, they make money.  If you enjoy analyzing charts and data, and have the attitude of a trader, then go for it. But before you dive in, educate yourself first and try demo accounts. Also, put only money you can afford to lose. A special warning goes out to those who may be getting too confident with their trading abilities in the Philippine stock market, do not confuse your "exemplary" trading abilities with a general rise of the market. I see an increase in the number of blogs and forum touting stock and currency trading as an easy way to be rich. If you are not prepared to put in the hard work, then you will certainly lose money in trading and may just as well gamble your money in a casino. Remember that a trader's goal is to make money in the short term, whether in a rising or falling market. An investor, on the other hand, expects to make money in the long term and his goal is to buy investments when they are cheap and sell them when the price is right after several years. Happy investing!

I have 100 trillion dollars

You read the title correctly, I have just received 100 trillion dollars. Here's a photo to prove it:

If only it weren't Zimbabwe dollars. Its hard to believe that the currency went way downhill from having a 1:1 exchange rate with the US dollar in the early 1980s to having a 100 trillion : 1 rate thirty years later. This is wealth destruction on a massive scale and you can't help but feel sorry for the citizens of that country. The prudent Zimbabwean investors probably moved on to hard assets and foreign currency way before hyperinflation really took off and there is a lesson in this for all of us: be vigilant with what the government is doing and re-balance your portfolio accordingly.

This note is a reminder that some governments cannot be trusted with the economy; that they can print as many zeroes on a banknote as they would see fit; that it is up to us to educate ourselves on how best to preserve and grow wealth to provide for our family's future. Fortunately, foreign currency is now being used to transact in Zimbabwe such as the US dollar or the euro and no longer this joke of a currency. Happy investing!

P.S. A big thanks to my good friend Patrick, it's not often that you know someone who just gives away a hundred trillion dollars :)

a quick guide to the various asset class

Where to invest? Here's a quick guide:

CASH
-immediately available and value is universally recognized
-very low returns
-very low risk and insured up to a certain amount in banks

STOCKS
-earns dividends, a real passive income
-reduction of 50% is possible
-returns of 1000% is possible
-requires time for research
-you can hand over management to professionals in mutual funds or UITFs but in hindsight, my personally managed stock portfolio beats my equity mutual funds' returns two out of three times

BONDS
-earns interest
-low risk; governments and corporations have a better track record of paying debts than most people
-requires a high initial investment (unless you invest indirectly through mutual funds or UITFs)

PRECIOUS METALS
-gold is the "last man standing" during crises like the recent GFC
-if central banks hold gold and silver as reserves, it is prudent that you should hold them as well
-volatile, price goes up and down frequently and in a wide range
-does not earn income; exposed to theft

BUSINESS ENTERPRISE
-offers the greatest possible returns on investment if the business succeeds
-be prepared to lose 100% of the investment if the business fails

REAL ESTATE
-earns rental income
-not easily liquidated if you need the money
-it is a real, tangible asset one can enjoy; which is better? a stock certificate or this:

   (BTW, we do not own this island in Palawan but I wish we did!)

Happy investing!

Philippine Stock Exchange Tower

Above is the future PSE Tower in Taguig (photo from handelarchitects.com). Not a bad marketplace for those who participate in the stock and bond exchanges in 2016. Although all trades are conducted electronically, it is still nice to have some physical reminder of the simple fact that WE ARE THE MARKET, that the rise and fall of our investments is the result of the decisions of millions of people around the world who buy and sell. Happy investing!

readers' email - part 1

1. The first email is from Lance, he is weighing where to invest among three funds namely:

PhilEquity Philippine Index Fund, ALFM Philippine Stock Index Fund and BPI ABF Bond Index Fund. One important factor in choosing a fund would be its annual management fee, lower is better. Secondly, which asset class are you investing in? two of the above invest in stocks and the other one invests in bonds. Currently I am not investing in Philippine stocks because it has performed exceptionally well over the past 2 years and starting to cause imbalance in my portfolio. I strive for an equal asset allocation to stocks, bonds, cash, real estate and precious metals for optimum diversification. How easy is it for you to make subsequent investments in those funds and how easy is it to monitor them? You mentioned living outside the Philippines so this is an important factor too. There really is no such thing as "the best fund" but there is a right fund for the right investor at the right time. Also, investing is not a race. Read the prospectus of the funds you are considering 2-3 times and consider each one's strong and weak points. If you really can't decide, keep your cash and continue to research on the myriad of investments available to us until you find the one that suits you. Let me know when you have made the decision.

2. The second email is from Donna and she is intrigued that I plan to retire in the Philippines. Retirement is many years away but yes, I do plan to spend majority of the time in the motherland. I hope my investments will be able to provide a descent retirement income in the future. If so, that would free up time that was previously used to earn a living. I do not intend to spend such free time sitting around. Perhaps I can volunteer or run a foundation or teach finance in public schools or mentor microentrepreneurs.  The Philippines would be the best place to do these things because it is where the returns are greatest. 

To Lance and Donna, thank you for the mail and happy investing! 

investing in precious metal coins

Above is my gold-gilded koala silver coin collection from the Perth mint. Coin collecting has been around for a long time. In fact, it used to be the hobby of kings! Fortunately for us, you don't have to be one to start your own collection. For those who also view their collection as an investment, start with coins made of precious metals like gold, platinum and silver as they will hold their value per ounce over the long term. Note however, that the price of precious metals is volatile and may go down in the short term - perfect opportunity to buy more. Coins also have a numismatic value. Very rare and in-demand coins can fetch thousands, even millions of dollars. Lastly, build a coin collection that you will enjoy. Happy investing!