The 3 types of Retirements

Retirement is a crucial issue that anyone should be planning out for, no matter how busy life becomes. By definition, this is what the merriam-webster dictionary defines retirement:

Definition of retirement

1. 1a :  an act of retiring :  the state of being retired 
   b :  withdrawal from one's position or occupation or from active working life 
   c :  the age at which one normally retires "reaches retirement in May"
2. 2 :  a place of seclusion or privacy

From my own study on business & investments, it seems that there are at least 3 types of RETIREMENTS:

1. Minimal or No retirement
- most have not thought about retirement at all, until it is too late
- after "retirement age", they get their ''retirement" from the company or institution they work from, but then they still NEED & HAVE to get more income so they have no recourse but to CONTINUE to work [or depend on their children, which may be OK in the eyes of some people, but may look like be a burden to others]
- you are forced to work or look for other sources of income, because we dont have enough funds, and we are burdened with everyday expenses called "living"; thus, you will need to have recurring income for monthly expenses dependent on the quality of life that you want (whether simple or extravagant)
- unknowingly to some, this is what we need to be prepared for as early as college graduation

2. Retirement at age 60 or 65
- the most common age of retirement
- some Filipinos build proactively for this, but most dont understand that "retirement is not a function of age, but of income"
- they build for this, through different ways: SSS, pension plans, insurance, real estate, asset  accumulation, investments, royalties, stocks, dividends, profit-sharing ventures, and other options
- it is good to retire at the ripe retirement age, at least they have planned for it, and have enjoyed most of their working life (assuming they have a good secure/stable profession or good corporate life)
- the only REAL question now is how much they will be getting from their retirement plan: will it be enough to sustain their everyday living, or their current lifestyle? To know the answer to this, simply ask people who is on the verge of  retirement, or past that, then ask educated/intelligent questions. YOU WILL LEARN A LOT BY ASKING THOSE WHO HAS GONE THRU MOST OF THEIR LIFE YEARS BEFORE YOU.

3. Early retirement
- these are CHOICES made by proactive, very resourceful people; people who investigate, diversify and research ways to build their portfolio or their assets, or at least make a conscious effort to get to their retirement as early as possible
- "daig ng maaga ang maagap"
- some are able to retire as early as their 40's, or even earlier
- a well-known businessman Robert Kiyosaki retired at age 47
- what does it mean by early retirement? You can continue to not do anything, sleep or do anything you want, but still earn enough income to sustain your needs (and wants), depending on the quality of life you CHOSE, not the life you are FORCED TO DEAL WITH
- these are people who prefer this choice than the usual 60 or 65 retirement age, and are very wise to do so

Now, the million-dollar question:
- when you retire, how much earnings do you want to have? how much monthly income?
- do you have children or some circumstances making it hard for you (health challenges, other priorities, etc) which limits you, or requires you to suspend your retirement plans so that your immediate needs must be prioritized first before your lifetime goals or longer term plans?
If yes, the question now is: when do we start putting it off (retirement), and start planning & building for it?

RETIREMENT is important but not urgent (which is classified as a QII activity by Stephen Covey on his time management quadrant, from the book "The 7 habits of highly effective people"),  if you are still planning it out. Probably 80% of Filipinos does not have any plans for it until it becomes too late. Most have not found a real purpose.

The real question really is not HOW, but WHY?

If you have a boss who is retiring soon, it is best to work closely with him/her. Not because you want to replace them at their position, but because you want to learn what kind of life you might have once you get to their age, and start planning ahead. You need to have a plan - your current plan at your current work/profession, and your "Plan B".

Ask your life's biggest questions NOW, so you won't have to regret later.

Good luck on your business / investment ventures & adventures - and your future plans for retirement!



Picture credits:
http://pioneerinstitute.org/wp-content/uploads/retirement-next-exit-1024x567.jpg
http://s2.evcdn.com/images/edpborder500/I0-001/038/123/981-4.jpeg_/opsrp-oregon-public-service-retirement-plan-81.jpeg
http://www.ihatedroz.com/wp-content/uploads/2008/12/out-of-toilet-paper-plan-b-300x225.jpg
http://www.tellus360.com/wp-content/uploads/2012/08/what-would-macgyver-do-on-empty-toilet-paper-roll.jpg

Search for an Asset that has Zero Liabilities

On my very 1^st post in this blog  – I posted something about the Billionaire Wealth Building Formula. This formula was actually something I heard from a real estate seminar, which, now that I’ve really thought about it – actually originated from a simple idea from a simple book that til now has really stuck in my mind and which I still learn / apply and try to follow until this day. I’m talking about Robert Kiyosaki and his ground-breaking books on the Cashflow Quadrant. Particularly in the book Rich Dad Poor Dad, he talked about the SINGLE, MOST IMPORTANT secret of the wealthy, the one which he says we should remember out of all the principles he was teaching in his books – and that is: “the secret of the rich is to build and build ASSETS, and minimize liabilities”. It’s simple, yet insightful – and true to the core, even in real life. It’s not just some superficial marketing slogan. This is what he stated:

Rule One. You must know the difference between an asset and a liability, and buy assets. If you want to be rich, this is all you need to know. It is Rule No. 1. It is the only rule. This may sound absurdly simple, but most people have no idea how profound this rule is. Most people struggle financially because they do not know the difference between an asset and a liability. "Rich people acquire assets. The poor and middle class acquire liabilities, but they think they are assets".

Build and acquire assets. That is “all you need to know”, he says. If there are assets that you can build which does not give out negative returns or liabilities – the better. One asset which a normal person would usually think of is land or property, which you can define as a very good asset, especially when you talk with a bank and ask for loans or get more capital for your business. It serves as a collateral. But it does have liabilities – or taxes, which you should pay sooner or later.

The fact is: there are assets out there that give out minimal liabilities. I know of people who has rental property – it’s a very good asset, although usually there are risks (what business doesn’t have any risk?). Depending on how you control and manage the risks – the idea of this “real estate” asset is what I would not hesitate sharing and recommending to my closest friends. Because it’s proven to generate real income to the investor / business owner.

Another one good asset is a stock portfolio that you fully understand, and where you have a very sound strategy. I’m part of a group that recommends sound analysis (fundamental and technical analysis) on current trends and stocks today.  I still follow them this day from time to time, but this investment vehicle is something you really need to study – or else, you WILL get risks (or losses – meaning: MONEY), if you don’t know what you are doing. It’s something you also need to commit to and be devoted on, watching your stocks and your money grow, everyday, if you can. Yes - there is money here  (see link: http://investinggeek.blogspot.com/2012/07/jackpot-on-eei.html). It’s proven to be real, and people in the Philippines are having phenomenal unprecedented growth especially NOW, in the young history of our stock market. But with this financial vehicle, it will depend on how you manage and embrace risk. It depends on what market analysts usually state as your “RISK APPETITE”. Because in stocks – you will have to understand and fully accept – you will have to lose money, short-term, mid-term, long-term: you will need to learn how to accept it INTENTIONALLY, in order for your money grow to where you want it to be.

These are just some samples of good assets that you can look out for. Although.. I have not even began talking about some other real ASSETS that some real wealthy people have, from what I’ve found out, that DOESN’T HAVE ANY liabilities. Some people even have an asset, that grows exponentially so that their money will never dry up – and some are in financial vehicles that are over-capitalized that their business are bigger and even more stable than the banks.

I’m talking about assets that people really work hard for – they build their businesses and build a foundation, so that soon they will reap the benefits after a certain time (sometimes, even in just 2,5, 10  years). And when the time comes or when the asset is “ripe”, you would have setup a system which gives you stable wealth (enough money, enough time for yourself or your family, travel, fulfilled dreams, etc.) – so that you will just earn the benefits of your hard work day in and day out, even when you sleep. Leave it 6 months, 1 year – go on vacation, and you will still reap the rewards of that asset. Yes, you can call it early retirement.

There are assets that have very minimal risk (and even some with ZERO CAPITAL to start up), and doesn’t have liabilities. Some assets doesn’t even need more capitalization, doesn’t need your money / capital / investment because it’s already over-capitalized (I just recently heard that term, and really liked it). 

Yes, sounds too good to be true. But it is true. I’ve seen people do it. I’ve met, or sometimes consult, associate, and even work on some projects with people who has done it. I ask for advice and for their point-of-views, or simply ask everyday life questions, when I get the chance. And even in our everyday lives - you see people do it, it’s all in the news. Business section.

There are people who become self-made millionaires just with a dream and a passion. Just think about it, and observe your environment now - Henry Sy did it when he established his system of chain stores and malls. He risked a lot in the beginning, and dreamed. From what I know, the story was that he usually goes to some trips to Tagaytay, up the hills / viewing decks overlooking the mountains and the lake, and was amazed at the vast lands below him (read the wall on Taal Vista). That is where he formed and dreamed about his vision. And now, he has buildings and malls all over the place (where he once was looking at). And it’s not just in Batangas or Laguna, or the area below Tagaytay. He has establishments all over the archipelago. Now, he is the richest person in the Philippines. What did he do in the beginning? He was in the distribution business. He moved shoes. 

And now, most importantly, he has an asset that he has built, and a legacy that he gives out to his children and grandchildren. Who doesn’t want a life where he can give the best options for his kids, his sons/daughters and grandchildren? Yes, he paid dearly in the beginning, worked hard, and worked smart. Now he is reaping the benefits from his hard work, even when he sleeps all day. Because he has built an asset. 

From what I have found out on my own and continually see on my ongoing search for good and sound businesses / investments (yeah - you could say I’m an investing geek --better call me an ASSETS geek now), that dream life you have dreamed of is really not impossible. You just have to educate and open up your mind to the possibilities, start with educating yourself financially, and start with reading books about money, businesses and investing. Instead of looking at the Headlines page, where you will usually see grim and negative broadcasts, go straight to the business page. Yeah – stock A and B soared. Real Estate is booming. Inflation rate is going steady. If you don’t know these yet - ask why: research reliable sources, look for and associate with reliable people.

Search for that asset. That ultimate asset, the asset that will work for you – and most especially, continually look for an asset that will give zero liabilities so you can fast track to your financial freedom. You will find yourself educated and gaining more knowledge, and believing even more that you will get to your dream life even while being in that process of searching. Sometimes you will fall, but the important thing is to move back up and continue on your journey.

Just be educated yourself, and take a little risk by looking, examining and searching for that asset. Be open with any opportunities that come your way. Who knows? You just might suddenly stumble into a real good one – but when you see it, don’t just step on it, don’t leave any stone (or opportunity) unturned. Pick it up, and investigate. If it’s a franchise, talk to the franchisee. Check and talk directly with people who are doing it (and have succeeded in it) to see if it’s a real deal. You just need a proper investigation, to observe and learn – and most especially, always check your risk appetite. Is this something you can really do? Is it worth the risk, going out of your way - out of your comfort zones? What does the people who succeeded in that business or has gotten results in their investments say? What would have “rich dad” said? 

If your dream is bigger than your fears – there is NO risk you can never overcome. You can find, you can search, and you can build those assets. You just need to figure it out yourself… don’t just say “I can’t (afford) it.” Ask: “how can I (afford) it?” 

The fact of the matter is: whether your goal is simply to get by, to bring food to the table, to bring your kid to the most prestigious school, or to become a paragon of real positive change – then you will need money. Bro. Bo Sanchez once said – if you are to serve in your church, you need money to help your church in their outreach projects (and also to help ensure that church or religious organization continues to operate and “support the supporters”). The current reality is: even priests or pastors need money to be able to serve and effectively do their duty. Everybody eats, everybody drinks, and everybody sleeps. Bo Sanchez aptly stated it: money is not really the root of all evil – love of money is.

So read on. Come with me and let’s look at our options. Let’s do a search for that ultimate asset, so that one day we’ll be able to have more, do more, and be more.

What will you really do for your dreams? Will you change something, or remain where you are - hoping that your dream will come right at your door? Have you really thought about it, or have you already given up on your dreams and just gone on living the way you are now?

Photo credits: http://www.mergersandinquisitions.com/hedge-funds-institutional-asset-management/

Cost Averaging? or Market Timing? (a Question on Stocks Investing)

EEI stock on PSE - back when it was still about to trend higher up

A friend of mine recently asked me this question via FB:

may tanong ako sa stock investing. i'm following bo sanchez's stock updates. i buy when low. then napansin ko nawala ang gains ko because i kept on buying at buy below prices pero dahil tumataas na ang price per share, tumataas din ang average prices ko. for ex. MBT. dati ang average price ko was 69. i noticed na may gain nako na almost 50% when MBT price per share went up to over 100. but i held on to my stocks. i kept on buying and the ave price went up to 72 na and my gains were now barely 30%, also because share prices pulled back from 100 to 92. sana pala nagbenta nako nung nag 100 ang price. but i haven't sold any MBT stocks.

so i experimented today. i observed na tumaas ang FPH up to 80/share and i noticed na may gains nako na 23%. 80 is still below the buy-below price of 102. what i did was i sold all of my FPH shares and i plan to buy again when it pulls back a bit so i can start from 0, so to speak. i plan to do range trading pero guided by bo sanchez's recommendations pa din. am i doing the right strategy? i'm thinking kasi na as long as i see positive gains, that means i'm earning di ba?

that's what i did with ICT. nag experiment ako. a few months ago, i read in COL research that ICT shares are at market values at 71-75/share. so they recommended to buy when prices pull back to 67. and it did! well i bought at 67.50 and it went up to 71 kanina lang. so good move. pero i only bought up to 250 shares lang coz i was scared to lose my money so ang kinita ko was barely 600 bucks hehehe. better than negative.

Here is my answer:

Hi (friend), nice read !

I think for MBT, what you were doing was Peso Cost averaging right? That's actually normal, as you accumulate per month or per same period of time at the same amount, the average goes up as the price that you get to buy them also goes up. If you really want long term for MBT, then you can continue to buy and be consistent on the Cost Ave Method. Although 50% is already a very good one. But if MBT continues to go up in the long term, who knows? Your gains may go up 50% again.

For FPH, I think you are doing just right. Although if you plan to range trade, yes follow Bo's recommendation. Try to understand the reason why -- the reasoning is: BUY in DIPS. If it dips down low, you buy. If it goes up and reaches a peak you set as your target, you can sell. Take NOTE though -- this kind of market timing is hard, you will need in-depth knowledge or experience and application of technical analysis. YOu have to be careful -- make sure that the mid-term or long-term outlook is UPTREND (range trading is generally used for stocks on a consolidating trend). You will see it through the charts. You will really have to apply what you learn in tech analysis to get proper timing. To be extra safe, make sure you are riding on a fundamentally-sound stock. I haven't been following FPH, but from what I've heard ever since, from COL fundamental outlook, they've been consistently grading it naman as a fundamentally good company.

For your ICT -- that's good! Any positive gain is good. I've heard somebody term themselves"chupitero". But any gain in the stock market is a good gain - kahit gano pa kababa (or kaunti). Kahit pa binteng lang! So I agree with them. A chupitero is a chupitero -- he is still.... panalo! hehe

We may be getting gains now, but gaining in stocks is not really that easy. Once you get losses, you'll know how it feels like. But -- no pain, no gain. You may loss some, but if you know how to handle it well, and know how to use that pain to really learn something -- you will gain in experience. That is, to me, what will give you the golden eggs.

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Happy Investing to all! ;)

The 2 Stock Market Approaches that Most People don't know about [and how we can use one of them to evaluate a Solar Investment] - Part 1

A friend of mine once told me (I think this was late last year), "hey Jeng, nagsisi-taasan na ang prices ng stocks ah. Nakita mo ba?"

I thought, parang nasa consolidation pa rin tayo as far as I know [and the current bull run that we have today started just around January or Feb 2012]. So I asked her, "how did you know?"

She said, "nakita ko sa dyaryo.."

She said the price of this certain stock (I think she mentioned  SMDC) has hit the roof and is now approaching P20. She caught my attention because, as far as i know from my last check: SMDC is one of the stocks I was following, and it was playing at the P8-P12  range. It could have been nearly impossible that it hit P20 that fast. Plus, during that time, the Europe Crisis was still getting hot.

I asked her, "Are you sure about this?"

She said yes.

I asked again, "how would you know that the stock price has 'hit the roof'?"

She said, "thru the newspapers. She said, it's on the Philippine Daily Inquirer."

"Ok," I said, "so, how then would you know or verify if the  newspaper is indeed right."

She said the newspaper told so. The headlines says so. "Also, it's listed on a table were all stocks are in there and you will see the current stock price," she added.

I reiterated.. "Ok, from what I know, what's listed in there are the stock symbols, the current stock price, the 52-day hi and low." I  asked again, "so how'd you know if the stock 'hit the roof' & is trending up?"

"I guess, the 52-day hi & low?" She was getting a bit unsure of her answer.

I finally told her, you don't easily see that on the news. You have to dig in further. I told her, "All you see is a reporting of what's happened on the previous day of stock action. When you base solely on the news, you're gonna end up getting IN or OUT of a stock at the last moment."

"You've got to know when a stock is trending up or down, why a stock is a bit cheap, why we say it's going up or is reaching it's peak. Yes, you can easily see that on the news, but it's not the whole story. Because if you do, then all the other people who are reading it will jump in and get that stock."

Just imagine people basing on the news and acting on what they see on the news.

All sorts of people just reacting, investing with no solid knowledge or measurable strategy. They are following what has been stated by a newspaper reporter, who may not necessarily be a Market Analyst, Strategist, or maybe not even a stock market investor. People jump in on the stock, with all the craziness, people filled with emotion - with excitement. And then suddenly a smart institutional investor sees the moment and seizes it. It happens. Your hard-earned money: goodbye!

-----------------------


What my friend was seeing in the news is mostly a reflection of only 1 side of the coin. When we talk about the stock market, we could say we have 2 main schools of thought or approaches - 1) those who look at the  perceived value of a stock based on the company's earnings and performance, which we call the "fundamental" aspect; and 2) those who look primarily at the movements of the stock price (using stock charting) to outline the performance of a stock, which is the "technical" aspect.

Who am I to say this? Am I an authority or certified analyst? Well, no. I am not a big expert (yet) on stocks, I'll be honest: I did gain some &  lose some, but at least I know the basics. And I try everyday to learn and expand my knowledge on everything about business and investing, including the darling Stock Market.

That is why when investing in stocks (or in any kind of business and investing, in general), I say, we also need to educate ourselves, do our own study, do our own research & readings. There are a lot of guys out there who can help. Bo Sanchez, whom  I'm sure a lot of Filipinos know about, has a blog at  "BoSanchez.ph". He conducts seminars regularly.

Let me show you a free e-book from Brother Bo.... "My maid invests  in the Stock Market". 
My Maid Invests in the Stock Market…

He is one of my mentors and I check on his blogs and seminars from time to time.

Also, my stockbroker, CitisecOnLine (COL) gives out trainings and seminars on investing in the Stock Market (which covers both the Fundamental and the Technical Aspect).

If you want to start looking at more aggressive options like the Stock market, I suggest you start with those.

Because I know, from learning from these mentors, that both the Fundamental and the Technical aspects are very important in determining stock price action, as well as in your decisions as to which stock or company you're gonna get invested in. How you could gain money on the stock market, or make it work for you so that you get earnings, or even passive income.

I'm not here to be very technical about this, and I'm also not gonna cover a lot about the Fundamental Analysis aspect.. but I will only show, again, the 'basics' of what they call Technical Analysis, or the scientific or organized study of stock price action.

The basics of Technical Analysis include:
- How to know if the current price that we see on the news is a good price (or, in terms of fundamental lingo, a "cheap" price) to get in
- How to know if the price is trending up, or down
- How to know if we are in a bull market, or a bear market (they say you are either bullish, or bearish - which is essentially the outlook or the risk appetite of the investor)

The topics in Technical Analysis is so wide-ranging, and I tell you -  it could be very dangerous if you only cover a few and not all of  the basics.

Just a disclaimer: what I'm gonna be showing you is just a few of  the basics, hopefully I can cover some others in later posts.

On the other hand, the "fundamental analysis" aspect, in it's purest form, is different in that it doesn't rely on charts and graphs. It relies on price-to-earnings ratio, the earnings of the company (say in the last 4 quarters, or the last quarter, or assessments in the 1st or 2nd half of the year), if a company is indeed earning something, does a company have debt or incurred some losses, do they have incoming big projects that could boost it's stock value, etc.

Here is a tool that fundamentalists use:

Yep. I know, it's a newspaper. It's a basic tool. But I'm not saying it's not important. All the data in there are very very valuable, if you know how to use it. I'm saying that sometimes, you don't get the whole story with a full-page listing of the current stock prices.

The main difference, now, is that Technical Analysis uses charts & graphs. It uses projections graphically, using charts to see and justify those projections. Some higher topics even use formulas, and Da Vinci codes (no, I'm just kidding; but it's a bit true because they have what they call Fibonacci retracements).

Here is a sample tool of what Technical Analysts use. This is what they call a "Stock Chart" (this picture is our current Philippine Stock Composites Index, or PCOMP, at the time I wrote this post):

Technical Analysis basically says the value of a stock (from what the Fundamentalists state as the perceived price or fair value) is already priced-in on the 'stock-price' which we can squarely see on the charts, meaning if the stock did not perform well fundamentally, say: it didn't earn last quarter or has incurred some losses, it will  show on the charts sooner or later. It will show that the stock price is gonna drop eventually.

That a movement on the price has some sort of a justification. Like for example, if a stock has suddenly moved up for no apparent reason, so that even fundamentalists can't explain it (say, a mining company just moved up so quick). Be careful because sooner or  later that price is gonna drop. Nothing can sustain a momentum if that momentum has no substance.


Wow. I didn't realize that it's gonna take that long for me to explain things. But I just wanted to let people know that I want to be careful in describing abstract or intangible things, because I don't want to be an  irresponsible writer who will get the ire of people. I want to explain the things I learn from my mentors as best as I can, and in the language that I know.

I consider myself still starting at business and investing, although I've been doing stocks for about 2 yrs already. I can be wrong at times (especially when I get to state some stocks which I  think would be good to pick - if that happens in the future), but it's important to point out the things that already have a foundation, or, like what Stephen Covey says "a map of the reality, not the territory" - those things that are based on  principles and are widely-considered as true, correct or objective. Just like the 2 schools of Stock Market Investing.

You can either be a pure fundamentalist, or a pure technical analyst. You can have balance between the two (which should be the correct way for most people, I should say - especially for those who are still starting & learning, or those who prefer less risks or those who have low-risk appetites or preferences), but these two are totally distinct and different approaches to Stock Market investing.

Sorry, I don't have anymore time for now. I will continue with this tomorrow, or as soon as possible, and try to evaluate the stock market (based on what COL has presented last night on their 2012 Stock Market Outlook), and how, like I said before, we will try to see Solar Systems as possibly a profitable investment - or may be a safer investment than most stocks, using charts analysis.