a forgotten savings account with Pag-Ibig

I've always thought of myself as a diligent record keeper, particularly investment records. It turns out that I have totally forgotten about one particular investment account, that is with the Home Development Mutual Fund or also known as the Pag-Ibig Fund. I remember that the contribution to this fund was a mandatory deduction when I was working in the Philippines. A rough estimate would mean  that I probably have 10k pesos with them. It turns out that it's a pretty good place to invest as well. For starters, all contributions are guaranteed by the Government of the Philippines. They have also paid dividends of 4.13% and 4.17%, tax free, in the past two years. Their housing loan program looks interesting as well, perhaps for future real estate investments. I quickly registered with their online services. However, it is still in the process of being fully implemented, hence there isn't a way of checking my existing account balance with them. They have also started accepting online contributions through Visa and Mastercard. I will be keeping an eye on the developments with Pag-Ibig Fund and whether it will be worthwhile to continue investing with them. As of now, I'm just happy to be 10k richer as the fund will continue to keep your account even if you've stopped making contributions. Happy investing!

find your balance

Do you remember learning to ride a bicycle as a kid and people will say, "Oh it's easy, just find your balance". Do you also recall that feeling of serenity and accomplishment when you finally did? It turns out that investors need to do the same as well. If riding a bike is about balancing your body between left and right, then investing is  seeking to find the balance between risk and return. Being too aggressive and taking on excessive risk could cause your portfolio to go down the drain. On the other hand, being too conservative and taking minimal risk could cause inflation to beat your portfolio and you end up not reaching your investment goal. Finding this balance is a journey all investors undertake. Some may find it earlier than others. As for me, I still haven't found my balance, although I feel close to it.  Happy investing!

Investment Style Series: 5) bringing it all together

Investing is a skill. Something that you get better at with knowledge and experience. It is also dynamic as markets change. We as investors also continue to adjust and fine tune our own particular investment style to reflect our goals, attitudes and again, experience. Each time we come accross disposable, ahem! I mean investable income, we need to decide on what to make of it. Do you buy an asset and just sit on it? Should you be contrarian or do you position for a promising growth area? What about investing for income? I find it somewhat amusing when opening an investment account and then being asked to fill out an assessment form and end up being classified into an aggressive or a conservative investor. Financial advisors will also only see what their clients want them to see. A few pages of forms and several minutes of interview is inadequate to determine how you should invest. The point I'm trying to make is that your investment style is your own and no one else's. You cannot assign blame on mistakes you make as well. Instead, admit them and learn and modify your investment style. To repeat the most famous of Greek aphorisms: know thyself. I truly believe that spending time on self reflection will do more for your investments than analyzing the investment itself. Happy investing!

Investment Style Series: 4) investing for income

An acquaintance of mine has a very simple asset allocation, that is 80% rental apartments and 20% cash. He is clearly investing for income. To recall one of our conversations, he said that he knows the construction industry well being a civil engineer by profession. He is also quite suspicious of paper investments so he has no exposure to stocks and bonds. Most importantly, he says that his goal as an investor is to earn an income without him working all the time. We may have different views but I totally respect his investment style. If you prefer investing for income, it doesn't have to be limited to rental properties. Interest from bonds were made for this, so are blue chip companies who regularly pay dividends. Be warned though of seeking the highest yields. The investor I described earlier lost a significant amount in the scam that was Legacy Group banks. Bonds that pay higher interest would also mean higher risk of default. For most investors, its a matter of preference but for retirees, its a necessity to have most of your assets in conservative, income producing investments. This group, which includes my dear parents, simply do not have the time to recover from a bad investment  decision, nor need to worry unnecessarily. They also need to live off the income from their investments. Happy investing!

Investment Style Series: 3) chasing growth

Human beings love to go after something. Whether it is modern day hunters out in the forest, or young boys chasing girls or investors chasing the next growth area, we thrive in the thrill and rewards of actively pursuing something. To succeed in this investing style, one needs the ability to foresee the future based on the data available today. Real estate would be a good example for this one. An old family friend of my father once told us that Makati, the Philippines' financial capital, was once a swampland. Over the years, the price of land in this city has grown many times over and he has always expressed regret on not buying a piece of it way back when the price was cheap. We all have the benefit of hindsight but the majority of us will not invest in a swampland if we were in his place then. As an investor, you invest in the next growth area; before the majority of people get into the bandwagon and drive up the price. Identifying the "next big thing" requires one to be a keen observer and have an optimist's heart. Another example I would like to share is the mobile phone and the internet. Back in the 90's, they were exciting and new but few would have anticipated their explosion and even fewer would have invested in Globe Telecom or PLDT stocks that stood to profit from this. As always, I would like to caution investors not to get carried away with their predictions. For one, the future is always uncertain. There are also plenty of promising investments that turn out to be duds in the end. So let us be on the lookout for growth opportunities and if you see one, do let me know :)  Happy investing!

Investment Style Series: 2) being contrarian

Another investment style one may use is to be contrarian, it means doing the exact opposite of what the mainstream fad currently is. One needs a lot of chutzpah to pull this off since it's not easy to be standing against the prevailing wisdom and doubts about your decision would surface from time to time. Would you have invested in real estate during the asian financial crisis of 1997 when there were plenty of unfinished buildings in the city? Would you be buying stocks during the global financial crisis of 2008 when the price was dropping of a cliff? Consequently, would you be selling Philippine stocks today when they are making record highs? If the answer is yes then you may be a contrarian investor. The rationale is pretty simple but the psychological and emotional  toll can be overwhelming for most investors. Buying when everyone else is selling would ensure that you get a lot more for your investment money, whatever the asset class. The opposite is also true, selling when everyone is into a particular asset would ensure that you get the highest returns. The catch is that you need to be invested long term since it takes a lot of time for an asset's price to recover. Patience is essential as some recovery may even take decades to be realized. The good news is that the returns are exceptionally high. So if you've got nerves of steel with the patience of a saint, contrarian investing may just be your ticket to wealth.

Investment Style Series: 1) set, forget, and do nothing

Let me kick off this series on various investment styles with the easiest of them all. That is to set, forget, and do nothing. We will use a twenty year old urban professional named Ben as our example. Let's say that Ben is absolutely convinced that the company he works for, Ayala Corp., has a bright future. He does his research, reads the annual reports, talks to people who have been with the company for a long time. He believes that it is an excellent company to own so he buys its stock. Recessions came and went, the 2nd and 3rd global financial crises passed, management and ownership of the company has moved on to the next generation, the stock price has moved to new lows and new highs. All these time, Ben did not sell his AC stock. Only when he retired at 65 years of age did he finally decide to sell. Holding on to a stock for 45 years would epitomize this investment style of set, forget and do nothing. We can also use other asset classes to illustrate this. Buying  a gold bar and locking it in a safe; a bank term deposit that rolls over automatically; that piece of real estate left by your grandmother. A do nothing else approach is simple, you believe in the long term  prospect of your investment and therefore feel comfortable with holding it forever. But bear in mind that this level of trust must stem from reason and not from emotions. Only by thoroughly analyzing a particular investment and having a good grasp of your own personality as an investor will this technique work. As Ben has shown above, he held unto his AC stocks for 45 years because he knows the company very well and is comfortable doing so even during a stock market crash. A warning though that this investment style is not to be equated with being lazy. Lazy people don't succeed. To sum it up: know thyself as an investor, thoroughly research and analyze a particular investment, put your money where your conviction is and stick with it come hell or high water. Happy investing!