Friday, October 9, 2009

my favorite warren buffett quotes

As an investor, I look up to Warren Buffett and value his insights. For those who don't know him, he is an american investor and businessman, the CEO of Berkshire Hathaway. He is also the 2nd richest person in the world, with a net worth of $37 billion. Here are my favorite quotes from the Oracle of Omaha:

1. I always knew I was going to be rich. I don’t think I ever doubted it for a minute.
2. I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.
3. If you’re in the luckiest 1 per cent of humanity, you owe it to the rest of humanity to think about the other 99 per cent.
4. It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.
5. Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well.
6. Of the billionaires I have known, money just brings out the basic traits in them. If they were jerks before they had money, they are simply jerks with a billion dollars.
7. Time is the friend of the wonderful company, the enemy of the mediocre.
8. A public-opinion poll is no substitute for thought.
9. Why not invest your assets in the companies you really like? As Mae West said, “Too much of a good thing can be wonderful”.
10. Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.
11. Never invest in a business you cannot understand.
12. All there is to investing is picking good stocks at good times and staying with them as long as they remain good companies.
13. You should invest in a business that even a fool can run, because someday a fool will.
14. The best business returns are usually achieved by companies that are doing something quite similar today to what they were doing five or ten years ago.
15. Diversification may preserve wealth, but concentration builds wealth.

Tuesday, October 6, 2009

The 5 investment pillars

A good investor limits his exposure to risk by diversifying in investments. It is like placing you money on a table with 5 legs. If in case a leg gets damaged, the table won't fall because it stands on the remaining four legs. You can even diversify further from each main investment pillar. Its like having pegs on each of the 5 legs making your investment portfolio truly dependable to whether any financial storm. You need not invest in all 5 immediately, work through each of them slowly using a determined savings plan (10% or more if you are comfortable)and before you know it, you have an enviable investment house resting on the 5 pillars.

1. Paper investments
This would include investments in mutual funds, unit investment trust funds, stocks, bonds, money market funds, treasury bills, certificates of deposit and more. These are called paper investments because well, you have a piece of paper or document as proof of your investment. These are offered by banks, asset management companies, and brokerage houses. These are liquid investments, meaning they can be converted to cash easily. Remember that these are as just as good as the institutions that offer them, so make sure you have done your research and it would be best to deal with well known, established companies.

2. Real estate
A must for any investor is to have his own house. Strive for this early since procrastination will not place a roof over your head. As soon as you have saved enough for downpayment, get a mortgage to secure your first home as real estate prices go up every year. In real estate, remember location, location, location. if you already own your home, then invest in rental properties. It could be a single family house, an apartment building, a warehouse, a strip mall or a piece of land. Location is still the foremost consideration. A neighbor of ours rents out a 2x1 meter space for P10000 a month to a barbecue vendor. Now that's a great rental property.

3. Business venture
Being an entrepreneur is also a must for any investor. Invest in a business that you are passionate about. Start small and do not quit from your day job. Do this later when you have an established business and earn profits regularly. You can sell cakes on a made to order basis; offer consultancy for a fee if you have specialized knowledge or skill; join a multi-level marketing company that sells everyday products; buy and sell farm products, cars or houses. There are so many that you can get into, some do not even require capital, just pure determination. I know a lady who buys clothes in bulk and sells them on installment to her friends and neighbors. She earns a 30% return on her capital in 4 months, not bad right?

4. Valuables
This would include jewelry like gold, silver, diamond and others; antique, paintings, coins, luxury bags and watches and many more that increases in value over time. Not all expensive stuff are considered valuables. If they depreciate over time, then they are not considered investments. Take cars, designer clothes and your flat screen TV.

5. Insurance and Pre-need plans
Educational plans, pension plans and the like offers a guaranteed return on your money at some time in the future. These are important parts of your investment strategy. Remember to deal only with established institutions. A good strategy would be to buy the least expensive policy from 3 different institutions for your pension plan. If you will be retiring 30 years from now, there is a strong chance that at least one of the three institutions would still exist.

Always do your research BEFORE placing your money in any of these 5 investment pillars. Trust your instincts, if you are not comfortable with a particular company or a particular investment type, then don't invest in it. There is no price for sleepless nights. If you are not yet ready to invest, then keep your money in a regular deposit account until you find a good area to invest in. Do not rush. After all, cash is king.

Friday, October 2, 2009

a financial mistake most business owners make

What could offer the biggest potential returns of your investment? A profitable business. It can turn P1000 into millions but it can also turn into 000. Putting some money into a business is a must for any investor. Aside from the possibility of raking in profits, having a business actually helps you understand investments better. To quote Warren Buffett, "I am a better investor because I am a businessman and a better businessman because I am an investor". When it comes to learning about finance, running a business is the best teacher. We also need to apply investing principles in our business and what I would like to emphasize is the concept of diversification. A financial mistake most business owners make is the lack of diversification. This is especially true to small business owners. Let us illustrate with the typical lechon manok business. A young entrepreneur decides to start a lechon manok stall. He has great tasting chicken, has good location and people buy it. Needless to say, the business became profitable. He then invested in another lechon manok stall and it also became profitable. After a few years, he had many stalls, some are profitable, some are not. He kept on investing his profits into more stalls selling his delicious chicken. Then came the news of a new disease that comes from poultry. Suddenly, people stopped buying his product and slowly, his business dried up. Since all of his cash comes from that particular business, he lost almost all income. Here are some points to consider. First, understand that all businesses undergo cycles. No matter how successful your business is now, there will come a time that it will undergo setbacks and experience the bottom part of a cycle. Next, never assume that your business will last forever. It is better to assume that at some point in the future, your business will go bankrupt, therefore you need to prepare when that time comes. Lastly, never put all of your eggs in one basket. This is true in business as well as in investing. A good strategy when you run a profitable business is to regularly set aside a percentage of your profits into investments like mutual funds, special deposit accounts and real estate. Do this regularly and stick to the percentage you have set. For example, if you get a net profit of P20000 for a particular month from your business. You set aside P4000 and place it in a mutual fund, set aside another P4000 and use it to expand your existing business and set P2000 to venture into another business. You then pocket the remaining P10000. Proper allocation will ensure that you have something to rely on should your business face problems later. To summarize, never pour all of your profits back into your business.

Thursday, October 1, 2009

Investing in your own home

Having a place you can call your own is one of life's great accomplishments. It is also one of the best investments you could have and for most people, their largest investment. Whether its a condo, townhouse or a single family house, possessing our own shelter should be an investor's primary investment goal. There are so many reasons why we need to aim for this. First, rent money is dead money. You pay the landlord and poof, money is gone. Whereas mortgage payments increase the equity in your property, thereby increasing the value of your investment. Next, there is a powerful psychological boost that comes with being a homeowner and this will radiate in your workplace, in your business and your life in general. Real estate prices go up in value over time. My parents invested P200,000 for a 3 bedroom house 20 years ago. A family friend recently offered 3 million pesos for it. Doubling your money every 5 years is not a bad investment, isn't it? What is very good about investing in your own home is that financial institutions are happy to lend you money to do it. Try asking for a bank loan to purchase stocks and bonds and you could get a "Is this guy crazy?" look from the loan officer. But they are all smiles when you ask for a housing loan.

I also know someone who has moved more than 20 times in a span of 8 years. He is not a wanted criminal, he just happens to be very good in selling his own home. He has pockets at least P300,000 each time he sells his place of residence. You may not want the hassle of moving that frequently but still, there's money in it. There are so many more reasons why it is a must to invest in our own home. Invest in a dwelling you can afford, it could be a good sized house and lot far from the city or a small townhouse closer to the city or a studio pad right smack in the CBD. What is important is setting your goal of having your very own place. Once you have enough savings for a downpayment; there are many options for financing your home purchase, there are banks, Pag-ibig fund and in-house financing from developers. Now let's go house shopping.

Monday, September 28, 2009

5 stocks I would own for life

I always advocate investing in the stock market indirectly through mutual funds and UITFs. However I would not advice against investing in the stock market directly also. It is easy to do this, just contact any of the licensed brokers of the Philippine Stock Exchange. You might prefer the online brokers like BPI Trade or Citiseconline or go with the traditional ones. As a reminder, investing in stocks means that you are buying a part of the ownership of the company, thereby receiving part of its profit and partaking in its future growth. This goes both ways too as you also suffer its losses and the decline of its value. Be sure you understand how it works before putting your money in it. Don't forget to diversify, never put all your money in stocks, even if it will post amazing returns.

I consider myself a value investor, not a stock trader. This means that I do not really care much of the stock prices on a day to day basis. I believe in the fundamentals of the companies whose stocks I will purchase, I personally use their products and services and believe that they will continue to make profits well into the future. I would be proud to tell people that I own these companies, even if it means that I only own 0.000001% of it. To quote Warren Buffet, "Our favorite holding period is forever."

So here they are:

1. Jollibee Foods Corporation
price: P50 per share
2008 sales: P44 billion
Do I really need to describe Jollibee, I mean is there a pinoy out there who does not recognize its omnipresent brand. They also own Chowking, Red Ribbon, Greenwich and more. They are actively expanding overseas and besides, I love chickenjoy.

2. San Miguel Corporation
price: P67 per share
2008 sales: P168 billion
I love companies involved in food, I believe they will always make a profit. When it comes to food, San Miguel is a giant, with interests in poultry, processed meat, dairy, animal feeds, alcoholic and non-alcoholic beverage flour and many more. They also do business overseas and truly, San Miguel Beer is the best in the world for me.

3. JG Summit Holdings Inc.
price: P6 per share
2008 sales: P97 billion
This is another food company with businesses in coffee, snacks, chocolates, instant noodles, ice cream and more through Universal Robina. Not only that, it owns Cebu Pacific, Sun Cellular, Digitel, Robinsons and United Industrial Corporation ( a major real estate devloper in Singapore, Hong Kong and China.)

4. SM Investments Corporation
price: P325 per share
2008 sales: P118 billion
You only need to visit one of their malls and know that it is making tons of money. This company has interests in retail, banking and real estate. It is also expanding in Asia and I don't think the malling habits of pinoys will change anytime soon.

5. Ayala Corporation
price: P305 per share
2008 sales: 64 billion
Talk about Ayala Land, BPI, Globe Telecom and Manila Water and you've got a great mix of companies in one stock. They have been in business for 175 years, I think it would be safe to assume that they will survive the next century.

So there you have it, the 5 stocks I would own for 10, 20 or 30 years and the only stocks I would invest in directly. I do not plan to take them to grave. They will be sold piece by piece slowly as the need arise. Happy investing!

Friday, September 25, 2009

10 reasons I will keep investing in the Philippines

I will keep investing in the Philippines. Here's why:

1. The Philippines has a strong potential for growth. We have a young population and a dynamic democracy. I still see a bright future ahead and decent returns on my investment.

2. I plan to retire here, so it makes sense to have half of my investments here also.

3. Risk, what risk? Investors who placed their money on the US stock mark lost 50%. Risk is always present even in developed countries. I believe in diversification and what could be better than diversifying globally.

4. Reports show that Philippine real estate is undervalued. Would love to buy properties here and sell it later when it reaches its full value. Besides, I would not let the privilege of owning land pass me by (foreigners aren't allowed to own land under the present Constitution).

5. I sincerely want to help improve the Philippine economy. There is $30 billion stashed abroad, mostly by wealthy Filipinos. That would be a great boost to the economy if they pour it back here.

6. I believe the peso will appreciate in the long term beacause this century will be the Asian century and most growth will occur in this region.

7. My investments here will grow with the country. There is still so much room for the economy to grow and I want my investments to go with it.

8. I get more bang for each buck here. Money used to purchase a simple condo abroad could buy a stunning seaside villa here. Stocks and most other investments here are undervalued. They look cheap compared with those offered abroad.

Thursday, September 24, 2009

investing in bonds

Lending money and charging interest is a sure way of growing your money. But if you feel guilty about doing this to people you personally know, then investing in bonds might be the right thing for you. Basically, bonds are debt instruments where you, the investor, will receive interest on the money you lend at a specified time. Bonds are issued by large corporations and governments to raise much needed capital. They issue bonds that are worth billions of pesos and these are snapped up by investors looking for ways to grow their money. Well, you don't just go the the CEOs and tell them, "Hey, I'm willing to lend you 10000 pesos at 5% interest." A better way would be to invest in bonds through mutual funds or UITFs. These companies pool the investments of many investors and then purchase the bonds worth millions. They then distribute the interest earned back to their investors. Investing in bonds through mutual funds or UITFs would offer diversification since they invest in bonds issued by many corporations. You would not want to lend all your money to a single company and lose all of it should it decide to default on its obligations, as in bankruptcy. Bonds are also less risky than stocks. Take note that in case of bankruptcy, corporations are obliged to pay the bondholders first before the stockholders.

I would still recommend the 3 mutual funds when it comes to investing in bonds: They are Philequity Peso Bond Fund, Philam Bond Fund and SunLife Prosperity Bond Fund. For the last 5 years, they have offered 9.4%, 7.9% and 6.7% returns to their investors respectively. UITFs (bond funds) by the big banks of BDO, BPI and Metrobank also offer similar returns. BPI and Metrobank though have higher initial investment requiremnts at 50000 pesos. As always, past performance does not guarantee future results and bonds can also decrease in value. So always remember to spread out your investments and don't transfer all of it to the best performing fund for the year.

Monday, September 21, 2009

Investing in UITFs

UITFs or Unit Investment Trust Funds are offered by banks and work very much like mutual funds. The bank's trust department pool the investments and place it in stocks, bonds, money markets or a combination of these. They also provide diversification of investments, exemption from the witholding tax upon redemption and some have a low investment requirement of 10000 pesos. In choosing the right UITF, consider the stability of the bank offering it and the returns it has achieved. I have done some research on UITFs and am leaning towards BDO. It is currently the country's largest bank and their funds have performed well compared to other banks. They also have low investment requirements.

Please remember that UITFs are not deposit products, hence they are not guaranteed by PDIC. As with most investments, they also move up, down and sideways. As I always say, spreading our investments will offer the best protection. You can visit to compare the various funds available. Happy investing!

Saturday, September 19, 2009

investing in jewelry

Jewelry is an important part of an investor's basket. Its value increases with time, just like other investments. Gold, in particular, rises in value especially in times where investors become concerned with paper assets and prefer to invest in real assets. Jewelry could also be a very good "pamana" or heirloom that will be treasured by your descendants. It is a tangible investment; you can see it, hold it, wear it (try wearing a stock certificate around your neck) and appreciate its beauty over and over again. Jewelry can be pawned in times of fiscal emergencies. It is readily convertible to anything and it has inherent value in itself. I have read somewhere that during the war, when paper money became nearly worthless, you can still exchange bits of gold for bread, fish or meat. It is good for the investor's psyche that should banks collapse, stock market plunges and all hell breaks loose, he still has this type of investment to rely on

Just remember to purchase jewelry from reputable sources. Have it appraised so you know how much its worth. Keep it in a safe place too. Investing in jewelry with aesthetic value is a plus, since this would add value to your investment. Rare pieces become collector's item in the long run and become more valuable should you plan to sell them. So if you have spare cash, why not consider paying your friendly jeweler a visit.

Thursday, September 17, 2009

how to avoid falling into investment schemes

People sell anything these days but what catches our attention are opportunities to make money. But we must be careful in placing our hard earned money. They might be offering incredible returns but at what cost. Such high returns at regular intervals could probably be what is called a Ponzi scheme. According to the wikipedia: A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors from their own money or money paid by subsequent investors, rather than from any actual profit earned. This is also called pyramid scheme, since what is paid to the top investors of the pyramid are the investments of those at the bottom and so on until the pyramid becomes too large and without new investors, it collapses. The title of this post is quite misleading because it is very difficult to spot these schemes. These are perpetuated by professionals, they have beautiful offices and your friends are also investing their money with them. It only becomes clear if we look at it in retrospect, when our investments with them have vanished.

Here are some ways to protect our investments:
1. Diversify, diversify, diversify. Even if an investment offers excellent returns, you should never place more than 20% of your money in it. So that if it crumbles, you will still have 80% left. This is hard because, human as we are, we have a strong tendency to be greedy. There are many stories of couples who place their entire retirement fund into a ponzi scheme. It gave them returns of 4% a month and this went on for 5 years before the operations collapsed and wiped out their money. These schemes feed on greed, giving investors regular returns and enticing them to place more money. It leads investors to feel that this could go on forever.

2. Be extra careful when you hear the words: GUARANTEED RETURNS. Legitimate investments move up, down and sideways. When someone offers consistently high returns, investigate the company, their prospectus, financial statements and ask the simple question: How do you make money? For all you know, the returns you are receiving are from other unsuspecting investors.

3. It does not mean that if your friends and associates invested their money with a certain person or company, you should also follow blindly. Always do your due diligence and get to know the company and the person before placing your money with them. If the investment fails, you can never put the blame on anyone else but yourself.

Wednesday, September 16, 2009

bank deposit accounts as investments?

For majority of Filipinos, bank deposit accounts are the only form of investment that they have. This could be because of the fact that these are insured with PDIC, thus offering safety. It could also be that this is the only form of investment that they know of. But bank deposit accounts offer very minimal returns on your money. If you factor inflation, you are actually losing money the longer it stays with the bank. Plus, it is the banks that garner the most from your money, not the depositor (that is why they have very nice offices). It is not that banks are useless, I use them for my everyday needs like ATM, credit cards, personal loans and many more. But I would not even consider 1% per annum as a decent return on investment. The rule that I follow is: IF YOU WILL USE THE MONEY WITHIN A YEAR, PLACE IT IN A DEPOSIT ACCOUNT. Otherwise, there are many forms of investment available that give more than 5% returns. Banks themselves offer these through UITF or unit investment trust funds. Most people seek the safety of bank deposits because of the lack of information on other forms of investments. As they say, you fear what you don't understand. This is sad because you are losing so much potential returns on your money. In my opinion, DIVERSIFICATION offers the best safety net for investments.

Monday, September 14, 2009

Investing in stocks through mutual funds

Imagine being the owner of PLDT, BPI, Globe, SM, ABS-CBN and other top corporations. Well you need not imagine anymore because it is possible to own a small part in these corporations by buying their shares of stock. As owner, you will also receive part of their earnings and as the company grows, the value of your shares also increases. However, for simple investors like me, I would not recommend buying their stocks directly. You will not be able to diversify your investments because of limited capital. If you have 5000 pesos, you could buy shares of a single company but should the value of that company's stock decrease, your investment will also decrease. I would prefer buying shares of a mutual fund company that invests in Philippine stocks. For the same 5000 pesos, you will then indirectly own shares of more than 30 corporations offering instant diversification, thus protecting your investment. Another advantage with using mutual funds is the availability of professional managers who have the time and knowledge in choosing the best stocks to purchase. Lastly, it is not subject to the 20% witholding tax unlike bank deposits. A list of these funds are available from the Investment Company Association of the Philippines website:

Among the 9 listed equity mutual fund companies, I would recommend the following:
1. Sun Life Prosperity Philippine Equity Fund
2. Philequity Fund Inc.
3. Philam Strategic Growth Fund

These mutual fund companies have been around for a long time, have delivered reasonable returns, have great customer service (with regards to service, I can only vouch for Sun Life since I do not yet own shares of the other two) and have low investment requirements.

Make sure you have studied the funds' prospectus carefully before placing your hard earned money with them. I first started with mutual funds when I was 21. The agent was really amazed because I was the youngest he had so far and the one with the smallest investment. I learned later on that their average investment was 200,000 pesos per investor. Anyway, I still received great service from him and the same returns as the other investors. I do plan to invest with the other 2 funds I recommended once I have saved enough.

Start now with 10% rule in saving and place it in a mutual fund. I hope more Filipinos will discover mutual funds as a vehicle to invest in the stock market. You do not need to be very rich to avail of this type of investment.

richest man in babylon

One of the best investments is to increase our knowledge. Let me share an excerpt from the book "The Richest Man in Babylon" by George Samuel Clason. A very good book on finance.

He stated the five laws of gold:
1. Gold cometh gladly and in increasing quantity to any man who will put by not less than one-tenth of his earnings to create an estate for his future and that of his family.
2. Gold laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multiplying even as the flocks of the field.
3. Gold clingeth to the protection of the cautious owner who invests it under the advice of men wise in its handling.
4. Gold slippeth away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those skilled in its keep.
5. Gold flees the man who would force it to impossible earning or who followeth the alluring advice of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment.

Sunday, September 13, 2009

investment risks

With the financial crisis, most people's investments have decreased in value and a good number will get discouraged because of this. In the Philippines, we also have the collapse of several rural banks and pre-need firms. Some might decide to forego investing after all of this. Let us clarify RISK - IT IS ALWAYS PRESENT. If you keep your money as it is by hiding it under your pillow, there is the risk of theft, of your house burning or termites destroying the crisp P1000 bills. If you keep the money in a bank deposit account earning less than 4%, inflation will lessen its value year after year. Inflation is not just risk, it is a certainty. Thus, a prudent investor will not strive to avoid risk at the expense of losing to inflation, rather, he will strive to beat inflation while MINIMIZING risks. Here are some tips to protect your investment while making it grow:

1. Stay away from firms that offer unbelievable returns.
Be very wary of companies that offer unbelievably high returns. If it's too good to be true, it probably is. Don't be greedy, remember that our goal is to let our investment grow steadily.

2. Spread your investments.
Diversification is the name of the game. Do not put all your money into one investment vehicle or one particular company. Spread it out so you can be protected even if a particular investment does not work out well.

3. Invest only with reputable companies who have shown consistent performance over the years. If these companies survive the 1997 and 2008 financial crisis, they will most likely survive upcoming ones.

4. Learn all you can about the types of investments available. The internet has made it easier to acquire such knowledge. Place your hard earned money in those that you thoroughly understand. Investing is not synonymous with gambling.

5. Be proactive. Investing will involve decision making. Use your head and not your emotions. Analyze and think through your decisions. Remember that no one in this world will have more concern for your money than you, not even the investment companies.

why invest?

There are many reasons why people invest. It could be to buy a house or car or other big ticket items. It could be for the college education of your child. But my favorite reason for investing is to someday, stop working yet live the same lifestyle I have through my investment earnings. And I intend this to happen before the age of 60. Overseas filipino workers would want to do this even earlier. No one likes to be away from their families for 30 years or more. Investing allows you to earn more without working more. It's like having a slave that gives you money and you don't have to give anything back . Investments will allow you to retire comfortably. it will shield you and your family from financial emergencies like medical bills or the loss of a job. It will help our country since you are contributing your money to be circulated in the economy instead of hoarding it under the pillow. It allows you to beat inflation. Remember that 100 pesos today will only buy 96 pesos worth of goods next year and lesser as the years pass by. Your reason for investing must be very clear to you because it is the inspiration you will need to stick to the 10% rule month after month. It will prevent you from squandering your investments at times of weakness ( we all have that at some point) and it will motivate you to learn how to make your money grow. We all work hard for money, its about time we let money work hard for us

Saturday, September 12, 2009

my investment in mutual funds

Let me start with one investment I have, a mutual fund account. I have always associated investing with people who have tons of money but as you will know, people can invest as little as 5000 pesos. Think about it, if you earn 15000 pesos a month and follow the 10% rule on saving, you will have 6000 pesos in 4 months for your initial investment. In the Philippines, we now have several options. I would recommend you visit the link on the right for a list of mutual funds. Basically, mutual funds pool the investments of small investors like us, hire a professional manager and have access to investments that used to be for corporations or high net worth individuals only. So for as little as 5000 pesos, we now have the option of investing in stocks, bonds or the money markets through mutual funds. I first purchased mutual fund shares last 2004 for 1.12 pesos per share and today it is worth 1.78 pesos per share or a return of 12% a year and to think we are in a global financial crisis!. I chose Sun Life Philippine Equity Fund which invests in stocks of Philippine corporations. You certainly will not get 12% per year on a bank deposit account.

The 10% rule to attaining wealth

One must have money to invest but where do you get it if you are living paycheck to paycheck. The answer is to pay yourself first. When you receive your salary, get 10% right away and set it aside. Do this before paying the bills, before paying your loans, before doing the groceries, before spending it. This is the only way to ensure that you will have the funds to invest. It is difficult at first but it can be done with practice and determination. You work everyday but come 5, 10 years you may have nothing to show for all your hard work. Who is more important, you? the credit card companies? the utilities? the telcos?. You should be paid first before any of them. It is said that if you do things repeatedly then it becomes a habit and becomes easy to do. I hope all of us will have this habit of saving 10% of our income. This should be done first, then spend the rest.