Some Terminology:Asset – anything that puts money into your pocket.Liability – anything that takes money out of your pocket.Interest – the profit gained in goods or money that is made on invested capitalProfit – the amount gained after selling goods at above the cost of production.Investment – anything that you share with the goal of gaining interest in the future.Capital – the amount of investment in a business activity.Capital gain – the increase in value of asset between the time it was bought and the time it was sold.ROI (return on investment) – time it takes for your invested money to return and then start generating income for you.Income – money generated by business or employment activity.Amortization – payment made for a loaned product or services equally distributed over a period of time.Loan – products or services acquired in advance with interest, promising to pay at some future time.Liquid – a financial state wherein you have lots of cash and no loans.Risk – the possibility of loosing your investmentFinancial Freedom – a state in life where in your investment and money works for you and not the other way around.Some TipsDon’t buy depreciating items on credit (cellphones, cars, appliances, clothes, shoes, etc.) buy them in cash , save and wait till such time you can afford them. Settle for items you can only afford. At current market interest, your total payment is almost 3 times the selling price by the time you finished paying your amortization if you buy on credit, while the market value of your purchased item already went down to near 50% or more of the original price.Beware of marketing promos . There is no such thing as a “0” interest loan amortization . Sellers actually included the interest in your monthly amortization but advertise 6 or 12 months “0” interest. If you want to buy a “0” interest item in cash, you should ask the seller to give you the “interest free” price or tell them to remove the “hidden interest” in exchange for cash purchase. Or ask for discounts for cash payments.Compare prices for the same item in different stores if you have time before actually buying .If the item has no price tag, you should ask for discounts on the asking price of the seller.Avoid impulse buying especially expensive items. Think it over for a day or two then decide if you really need it “now”. Control your spending habit. If you don’t , you will always complain your income is not enough.Keep only ONE credit card, use it for convenience NOT for credit. Always pay the full amount once you get the bill. Choose a reliable credit card company . Sometimes you will encounter malfunctioning Point of Sale systems, tell the establishment to call the credit card company directly and then ask for approval via phone. As much as possible, always have cash on hand or in your ATM card and use it as the Credit card backup.Don’t get a Gold Credit Card if you are after the “being rich” perception. You will pay 2x the membership fee as the regular card . And your spending temptation will be 2x as powerful as well.Always save at least 20% of your income. Opportunity always comes, and usually those with “cash on hand” gets it.Invest a percentage of your savings to generate more income. There is no harm in not investing and just playing safe on bank savings accounts, but your money will earn more if you invest. (stocks, bonds, mutual funds, real estates , start a business etc.) There are risks involved in investing money and sometimes you loose your investment. But the lesson learned in that failed investment is usually worth a lot more. Knowledge and experience gained is priceless in this information age. Start your investment activities while you are employed , it will prepare you in your retirement years.Be aware of “Get Rich-Quick” Investment scams. If the promised interest rate return on investment is “unusually large” compared to the actual market rate, most probably it is an investment scam. No legal business will pay you double or triple the current market interest rate . If somebody promised an interest rate of 5% or more per month, that will be a 60% interest rate per annum. No business can generate that big profit for their investors. It is usually a scam and they will use your investment money to pay the interest of the other investors . This is commonly called as “pyramiding” it will crumble at some point in time only the pyramid owner will be rich and ran off with your money.Conduct garage sales at least every 2 years to dispose of your old-unwanted items and generate additional income. You will also learn a lot in the “garage sales process”. Your “garbage” is usually a precious item to others. Sell low and sell only those you think are worth buying. Donate those that are not . You will get a good reputation as seller and will be usually successful in your other future “selling activities”. Donate or give for free all unsold items at the end of your garage sale. You will feel great happiness – and that is priceless.Work hard and be a responsible employee. You will be financially rewarded accordingly when your business grows as a result of your collective hard work. A good work attitude is contagious and will always bring harmony in the work place.Live within your means. Never mind if you have old clothes, old shoes, old cars, old and in-expensive cellphones/appliances , small house in a non-exclusive area, etc. because it is what you can afford for now. It is much better than having all the new luxuries that you can’t afford and then crack your brains every pay day thinking how to pay all your bills and loans. This is called “pay-check to pay-check” living. A lot of people have fallen to this “trap” mostly brought about by credit companies and bank loans (credit cards, loan sharks, etc.) We all make mistakes and had experienced this lifestyle brought about by modern living one time or another. The more important this is to learn from our mistakes
Read More......Saturday, February 17, 2007
Investing in stocks, securities and bonds
STOCKS 101(from the book Learn to Earn by Peter Lynch)Stocks – are shares sold by a company that goes public. A “public”company is owned by the shareholders while a “private” company is usually owned by a small number of individuals or a family owned company. Stocks are used to increase the company capitalization to be able to produce more services and products . You don’t have to be millionaires to invest in one. Anybody can be a shareholder as long as you have the money to buy the stocks: teachers, bus drivers, doctors, carpenters, students etc. They don’t care about your religion, race, nationality , social status, academic achievements , etc. The playing field is levelled here for all those who have the capacity to buy.Stocks are likely to be the best investment you’ll ever make, outside of a house. You don’t have to feed stock, the way you do if you invest in horses or prize cats. It does not break down the way a car does, nor does it leak the way a house can. You don’t have to keep it moved the way you do it with real state. You can lose a baseball card collection to fire or theft but you can’t lose a stock. You can lose the certificate that proves you own a stock but the company will send you another one.When you buy a bond, you are making a loan, but if you invest in a stock, you are buying a piece of the company. If the company prospers, you will share in the prosperity. If it pays dividends, you will receive it and if it raises the dividends, you will reap the benefits.Buying stocks is not similar to gambling . When people consistently lose money in stocks, it’s not the fault of the stocks. You just need to do your homework and have a plan if you want to invest in stocks. Due diligence is needed, to study the financial status of the company you want to invest in and because they are a public company, financial records are publicly available , in the internet in publications, in company offices. You don’t need to be a math wiz to be a successful investor in stocks. You don’t need to be an accountant although the basics of accounting may help.If you want to have a better financial future , long term stock investment is the best thing to do. Ten, fifteen or twenty years is a good time frame. Buy shares in solid companies with earning power and don’t let go of them without a good reason. The stock market usually goes up and down , but stocks in general goes up in value over time. You would be surprised to know that your P10,000 stocks investment now will have multiplied in a much higher value 10,15, 20 years from now. source: 2TradeAsiaWHAT ARE STOCKS? SECURITIES?Stocks are shares of ownership in a corporation. When you become a stockholder or shareholder of a company, you become part-owner of that company. Securities, on the other hand, are proof of one's ownership or indebtedness in a company. Examples of securities are treasury bills and commercial papers, which are considered as short-term and are traded in the money market; and stocks and bonds, which are long-term and traded in the capital market. Securities are easily bought and sold in the stock market.WHAT ARE THE TYPES OF SECURITIES THAT I CAN BUY IN THE STOCK MARKET?Most of the issues listed in the PSE are common stocks. Other types of securities such as preferred stocks, warrants, PDRs and bonds are also traded.
Common Stocks - These are usually purchased for participation in the profits and control of ownership and management of the company. Holders of common stocks have voting rights. They are also entitled to an equal pro rata division of profits without preference or advantage over another stockholder. However, they have the last claim on dividends and are the last to collect in case of corporate liquidation.
Preferred Stocks - Its name is derived from preference given to the holders of these stocks over holders of common stocks. Holders of preferred stocks are entitled to receive dividends, to the extent agreed upon, before any dividends are paid to the holders of common stocks. However, preferred stocks usually have a specified limited rate of return or dividend and a specified limited redemption and liquidation price.
Warrants - A corporation can also raise additional capital by issuing warrants. A warrant, normally issued on a detachable basis, allows its holders the right, but not the obligation, to subscribe to new shares at a set price during a specified period of time. It is usually provided free of charge and traded separately in the securities market.
Philippine Deposit Receipts (PDRs) - A PDR is a security which grants the holder the right to the delivery or sale of the underlying share, and to certain other rights including additional PDR or adjustments to the terms or upon the occurrence of certain events in respect of rights issues, capital reorganizations, offers and analogous events or the distribution of cash in the event of a cash dividend on the shares. PDRs are evidences or statements nor certificates of ownership of a foreign/foreign-based corporation. For as long as the PDRs arenot exercised, the shares underlying the PDRs are and will continue to be registered in the name of and owned by and all rights pertaining to the shares shall be exercised by the issuer.
Small-Demominated Treasury Bonds (SDT-Bonds) - The SDT Bonds are long-term and relatively risk-free debt securities issued by the Bureau of Treasury (BTr) of the Republic of the Philippines. The bond is a certificate of indebtedness of the Republic of the Philippines to the owner of the SDT-Bonds.
WHERE CAN I BUY OR SELL SHARES OF STOCKS AND/OR BONDS?In the Philippines, the only operating stock exchange is the Philippine Stock Exchange (PSE). Its main function is to facilitate the buying and selling of stocks and other securities through its accredited trading participants.The PSE has two trading floors - PSE Centre in Ortigas, Pasig City and PSE Plaza in Ayala, Makati City - where trading participants trade daily - from 9:30 a.m. to 12:10 p.m. except Saturdays, Sundays, legal holidays and days when the Central Bank Clearing Office is closed.HOW ARE SHARES AND SDT-BONDS BOUGHT OR SOLD?If you wish to buy shares of stocks or SDT-Bonds, you must have a stockbroker who will do this for you. A stockbroker is a person or a corporation authorized and licensed by the Securities and Exchange Commission (SEC) and PSE to trade securities.Investing Procedures:
Choose a stockbroker. The PSE has a complete list and information about all its trading participants who are authorized and qualified to trade either equity or debt securities for you. This list is also available on the Exchange's website and the PLDT directory's Government and Business listings yellow pages under the category of stock and bond brokers.
You shall be required to open an account and fill-out a Reference Card and to submit identification papers for verification. The stockbroker will then assign a trader or agent to assist you in either buying or selling any listed security. Discuss with the trader what stocks to buy or sell.
Give the order to your broker/trader, and then get the acknowledgement receipt.
For equity transactions: Deliver the Stock Certificate if you are selling or pay within the settlement date (3 days from date of transaction) if you are buying. Some brokers may require you to pay with post-dated checks upon ordering.
For SDT-Bonds transactions: Selling investors must open a RoSS account under his broker's sub-account and instruct his bank-underwriter to transfer the share to this account. Buying investors must also open an account with a BTr accredited bank and pay the appropriate amount of transaction to the settlement bank on the trade date.
You shall receive from your broker either the proceeds of sale your stocks (after 3 days for equities and on the date of trade for SDT-Bonds) or proof of ownership of stocks you bought (confirmation receipt and invoice). If you wish to have a physical certificate of the equities you bought, just give instructions to your broker and pay the required upliftment fee. Buyers of SDT-Bonds will only be given a confirmation slip in lieu of the bond certificates.For table illustrations and other info, continue reading here
POINTS TO CONSIDER BEFORE INVESTINGInvestors should only invest extra money. Avoid borrowing money to purchase more shares. Stock market investment carries a certain amount of risk and stock prices vary day to day.Identify the purpose of your investment. Determine whether you plan to be a short-term or long-term investor.Be realistic about the returns of the stock market. Don't expect extraordinary gains.Each individual should set a "limit loss" and be prepared to liquidate stock position when the limit is reached.TIPS FOR INVESTING Investigate before investingSpend time and effort in studying investment opportunities for selecting stocks. Market share and sectoral weighting, financial performance of the company (via financial/ annual reports), management's development plans as well as growth opportunities, are some of the issues that need to be considered before investing.Diversify your portfolioDiversification means investing in different issues. In theory, diversification should offer less risk and protection for the investor. In short, "Don't put all your eggs in one basket."Don't rely on rumors, check the factsRumors circulate in the stock market everyday. Consider the source and the motive behind the information and never act on the basis of a rumor that cannot be verified.Monitor your investmentsKeep track of the stock price and the company developments on a regular basis. Be up-to-date with that particular industry as well as the economy.Don't be greedyThe principle of making a profit in the stock market is BUY LOW, SELL HIGH. Set objectives in terms of expected return and act accordingly.Limit your riskA maximum level of loss should be set and liquidate stock position when this level has been reached. Further loss of capital is prevented, which can be used for other investment opportunities.Stay ahead of the information curveThe experience begins when one can stay ahead of the information curve and devote time to learn appropriate financial and technical analysis tools to stretch their hard-earned savings.
Tuesday, February 6, 2007
Franchising vs. Start-ups
The dream of putting up one’s own business has become more pervasive in recent years. And why not? Considering the hard economic times when monthly paychecks are unbelievably stretched, and retrenchment looms just around the corner, the idea of having one’s own enterprise to rely on has become more appealing, even one of the best options there is.Beyond the dream however, is the reality that most people do not know how to setp up a business, much less where to begin. What business will I get into? How much capital will I need? How do I attract customers? These are questions that are difficult to answer especially for a first-time entrepreneur. In these times of cutthroat business competition, the uninitiated businessman often loses before he even starts. One solutions to all these? FRANCHISING.In franchising, the Franchisor, or owner of the business, offers his tried and tested method of doing business, often called “business format or model” for others to use in exchange for franchise fees and royalties. The Franchisee, or the one borrowing the business model, pays these fees in exchange for the right to use the Franchisor’s trademark, operations manuals and the privilege of being trained by the Franchisor himself.A Franchised business has a better chance at success than an independent business because the Franchisee can learn from the years of experience of the Franchisor. Since there is less trial and error, it is almost like having no learning curve.Another unique feature of a Franchised business is its support system. Franchisees can have access to Franchisor services such as administrative assistance, bookkeeping, audit, quality assurance inspections, marketing support and even legal counsel. Through some may be charged separately by Franchisor, the extra services are nevertheless available and only at minimal fees.A Franchised business grows as the brand grows. Since a big part of having chosen the business is its name or trademark, the Franchisee has a better chance of growing together with the brand.A Franchised business has benchmarks or Standard Operational Expectations (SOE) by which franchisers can measure the performance. This means they can share and compare their experiences with business operators with similar problems or situations.Especially for those going into business for the first time, a franchise is most recommended for testing the business waters, to check if entrepreneurship is really for them. Some realize that it is not for them only after having invested a lot of time and money. By then it could be too late.Here’s a checklist for those deciding on whether to start on their own or to get a franchise:1. Can I follow rules? Or do I want to make my own rules?If you find it difficult following rules and regulations, be on your own.2. Can I just assign a manager or do I have to be there myself?A real entrepreneur is always “hands on”. You should not be afraid to get your hands dirty.3. What if I change my mind after six months? What if my family asks more time from me?Do not franchise if you have not asked the family’s consent. Most franchisors want you over the long haul, at least three years, and being fickle will complicate matters.4. Do I really like the product or I just want it because it is popular?Do not go into a business you do not enjoy. If you get a franchise, get it because you believe in the product5. Do you have a really good asset or skill you can capitalize on?If you do not want to depend only on your skills, get a franchise.To those who decide to go the franchising route, congratulations! You are about to embark on a safe and steady journey to entrepreneurship. However, choose your franchise business wisely.Be wary of “fake” franchisors who are after fees but do not have even one successful store to show for their offer. Legitimate franchisors, especially those who have been around for two years or more, can show you their operations and their performance. Check their track record. Visit their stores. Experience their service or prpduct. Talk to existing franchisees. Observe their employees. If you like what you see and believe in the brand, then pursue it.The Association of Filipino Franchisers, Inc. (AFFI) sponsors seminars to guide those who are interested in buying a franchise. Call the AFFI Secretariat at 892-9535 or 813-5836 or email AFFI at info@filfranchisers.com.
Source: Business Line Vol. 1 No. 2 2003 Owning a business the safe way: Franchising vs. Start-ups
by Chit U. Juan
Friday, February 2, 2007
Investing in stocks, securities and bonds
STOCKS 101(from the book Learn to Earn by Peter Lynch)Stocks – are shares sold by a company that goes public. A “public”company is owned by the shareholders while a “private” company is usually owned by a small number of individuals or a family owned company. Stocks are used to increase the company capitalization to be able to produce more services and products . You don’t have to be millionaires to invest in one. Anybody can be a shareholder as long as you have the money to buy the stocks: teachers, bus drivers, doctors, carpenters, students etc. They don’t care about your religion, race, nationality , social status, academic achievements , etc. The playing field is levelled here for all those who have the capacity to buy.Stocks are likely to be the best investment you’ll ever make, outside of a house. You don’t have to feed stock, the way you do if you invest in horses or prize cats. It does not break down the way a car does, nor does it leak the way a house can. You don’t have to keep it moved the way you do it with real state. You can lose a baseball card collection to fire or theft but you can’t lose a stock. You can lose the certificate that proves you own a stock but the company will send you another one.When you buy a bond, you are making a loan, but if you invest in a stock, you are buying a piece of the company. If the company prospers, you will share in the prosperity. If it pays dividends, you will receive it and if it raises the dividends, you will reap the benefits.Buying stocks is not similar to gambling . When people consistently lose money in stocks, it’s not the fault of the stocks. You just need to do your homework and have a plan if you want to invest in stocks. Due diligence is needed, to study the financial status of the company you want to invest in and because they are a public company, financial records are publicly available , in the internet in publications, in company offices. You don’t need to be a math wiz to be a successful investor in stocks. You don’t need to be an accountant although the basics of accounting may help.If you want to have a better financial future , long term stock investment is the best thing to do. Ten, fifteen or twenty years is a good time frame. Buy shares in solid companies with earning power and don’t let go of them without a good reason. The stock market usually goes up and down , but stocks in general goes up in value over time. You would be surprised to know that your P10,000 stocks investment now will have multiplied in a much higher value 10,15, 20 years from now. source: 2TradeAsiaWHAT ARE STOCKS? SECURITIES?Stocks are shares of ownership in a corporation. When you become a stockholder or shareholder of a company, you become part-owner of that company. Securities, on the other hand, are proof of one's ownership or indebtedness in a company. Examples of securities are treasury bills and commercial papers, which are considered as short-term and are traded in the money market; and stocks and bonds, which are long-term and traded in the capital market. Securities are easily bought and sold in the stock market.WHAT ARE THE TYPES OF SECURITIES THAT I CAN BUY IN THE STOCK MARKET?Most of the issues listed in the PSE are common stocks. Other types of securities such as preferred stocks, warrants, PDRs and bonds are also traded.
Common Stocks - These are usually purchased for participation in the profits and control of ownership and management of the company. Holders of common stocks have voting rights. They are also entitled to an equal pro rata division of profits without preference or advantage over another stockholder. However, they have the last claim on dividends and are the last to collect in case of corporate liquidation.
Preferred Stocks - Its name is derived from preference given to the holders of these stocks over holders of common stocks. Holders of preferred stocks are entitled to receive dividends, to the extent agreed upon, before any dividends are paid to the holders of common stocks. However, preferred stocks usually have a specified limited rate of return or dividend and a specified limited redemption and liquidation price.
Warrants - A corporation can also raise additional capital by issuing warrants. A warrant, normally issued on a detachable basis, allows its holders the right, but not the obligation, to subscribe to new shares at a set price during a specified period of time. It is usually provided free of charge and traded separately in the securities market.
Philippine Deposit Receipts (PDRs) - A PDR is a security which grants the holder the right to the delivery or sale of the underlying share, and to certain other rights including additional PDR or adjustments to the terms or upon the occurrence of certain events in respect of rights issues, capital reorganizations, offers and analogous events or the distribution of cash in the event of a cash dividend on the shares. PDRs are evidences or statements nor certificates of ownership of a foreign/foreign-based corporation. For as long as the PDRs arenot exercised, the shares underlying the PDRs are and will continue to be registered in the name of and owned by and all rights pertaining to the shares shall be exercised by the issuer.
Small-Demominated Treasury Bonds (SDT-Bonds) - The SDT Bonds are long-term and relatively risk-free debt securities issued by the Bureau of Treasury (BTr) of the Republic of the Philippines. The bond is a certificate of indebtedness of the Republic of the Philippines to the owner of the SDT-Bonds.
WHERE CAN I BUY OR SELL SHARES OF STOCKS AND/OR BONDS?In the Philippines, the only operating stock exchange is the Philippine Stock Exchange (PSE). Its main function is to facilitate the buying and selling of stocks and other securities through its accredited trading participants.The PSE has two trading floors - PSE Centre in Ortigas, Pasig City and PSE Plaza in Ayala, Makati City - where trading participants trade daily - from 9:30 a.m. to 12:10 p.m. except Saturdays, Sundays, legal holidays and days when the Central Bank Clearing Office is closed.HOW ARE SHARES AND SDT-BONDS BOUGHT OR SOLD?If you wish to buy shares of stocks or SDT-Bonds, you must have a stockbroker who will do this for you. A stockbroker is a person or a corporation authorized and licensed by the Securities and Exchange Commission (SEC) and PSE to trade securities.Investing Procedures:
Choose a stockbroker. The PSE has a complete list and information about all its trading participants who are authorized and qualified to trade either equity or debt securities for you. This list is also available on the Exchange's website and the PLDT directory's Government and Business listings yellow pages under the category of stock and bond brokers.
You shall be required to open an account and fill-out a Reference Card and to submit identification papers for verification. The stockbroker will then assign a trader or agent to assist you in either buying or selling any listed security. Discuss with the trader what stocks to buy or sell.
Give the order to your broker/trader, and then get the acknowledgement receipt.
For equity transactions: Deliver the Stock Certificate if you are selling or pay within the settlement date (3 days from date of transaction) if you are buying. Some brokers may require you to pay with post-dated checks upon ordering.
For SDT-Bonds transactions: Selling investors must open a RoSS account under his broker's sub-account and instruct his bank-underwriter to transfer the share to this account. Buying investors must also open an account with a BTr accredited bank and pay the appropriate amount of transaction to the settlement bank on the trade date.
You shall receive from your broker either the proceeds of sale your stocks (after 3 days for equities and on the date of trade for SDT-Bonds) or proof of ownership of stocks you bought (confirmation receipt and invoice). If you wish to have a physical certificate of the equities you bought, just give instructions to your broker and pay the required upliftment fee. Buyers of SDT-Bonds will only be given a confirmation slip in lieu of the bond certificates.For table illustrations and other info, continue reading here
POINTS TO CONSIDER BEFORE INVESTINGInvestors should only invest extra money. Avoid borrowing money to purchase more shares. Stock market investment carries a certain amount of risk and stock prices vary day to day.Identify the purpose of your investment. Determine whether you plan to be a short-term or long-term investor.Be realistic about the returns of the stock market. Don't expect extraordinary gains.Each individual should set a "limit loss" and be prepared to liquidate stock position when the limit is reached.TIPS FOR INVESTING Investigate before investingSpend time and effort in studying investment opportunities for selecting stocks. Market share and sectoral weighting, financial performance of the company (via financial/ annual reports), management's development plans as well as growth opportunities, are some of the issues that need to be considered before investing.Diversify your portfolioDiversification means investing in different issues. In theory, diversification should offer less risk and protection for the investor. In short, "Don't put all your eggs in one basket."Don't rely on rumors, check the factsRumors circulate in the stock market everyday. Consider the source and the motive behind the information and never act on the basis of a rumor that cannot be verified.Monitor your investmentsKeep track of the stock price and the company developments on a regular basis. Be up-to-date with that particular industry as well as the economy.Don't be greedyThe principle of making a profit in the stock market is BUY LOW, SELL HIGH. Set objectives in terms of expected return and act accordingly.Limit your riskA maximum level of loss should be set and liquidate stock position when this level has been reached. Further loss of capital is prevented, which can be used for other investment opportunities.Stay ahead of the information curveThe experience begins when one can stay ahead of the information curve and devote time to learn appropriate financial and technical analysis tools to stretch their hard-earned savings.
Thursday, February 1, 2007
Entrepreneur personality
Want to know how to become an entrepreneur? What exactly does it take to be an entrepreneur? Which personality traits make for success? Read this article to see if you have what it takes.Want to start a business? It's a good idea to first consider whether you are the type of person who will do well running your own business.It's not that certain people are predestined to be great entrepreneurs. We all can learn how to do it. But some personal characteristics will lead you to do better than others.FICTION: To be an entrepreneur you must be born that way.FACT: Anyone can learn to operate like an entrepreneur.What are the similarities of successful entrepreneurs? Research suggests that entrepreneurs often possess these traits:
persistence
desire for immediate feedback
inquisitiveness
strong drive to achieve
high energy level
goal oriented behavior
independent
demanding
self-confident
calculated risk taker
creative
innovative
vision
commitment
problem solving skills
tolerance for ambiguity
strong integrity
highly reliable
personal initiative
ability to consolidate resources
strong management and organizational skills
competitive
change agent
tolerance for failure
desire to work hard
luck
Many entrepreneurs also had:
A role model to influence them early on; and
parents who were entrepreneurs.
source: gaebler
