When is the best time to invest?

Time is your friend when it comes to investing. The earlier you invest on assets, the better because they will have more time to grow and give you a profit. While it is true that the best time to invest was yesterday and the right time to invest is now, it may not always be practical (in my opinion).

To answer the question “When is the best time to invest?”

Here are some pointers to help us out

Investments  Risks

The first time I went to Cebu, we had an activity called canyoneering at Badian. Basically, the activity is a trek from Badian to Kawasan Falls which includes a lot of cliff diving, sliding and swimming. The first part of the trek was a cliff jump which maybe around 20feet high. At first I was quite nervous and excited at the same time  because I haven’t done that before. I also didn’t volunteer to jump first and waited for someone to. The moment I saw my friend jump first and survived, it has given me more confidence to jump because I realized that I will be okay. And so I jump my first cliff jump and it was amazing. The next cliff jumps were a mixed of low and high jumps but because of the confidence I had on my first jump, all of them was enjoyable.

Why am I sharing you this?

All types of investments have risks incorporated in them whether it is low or high risk. Having that said it would be riskier if you jump straight to investing ‘now’ without understanding these kinds of risks.

Same with the canyoneering experience, I felt nervous and excited at the same time when I was just starting to invest. I didn’t invest straight away and asked people first who have experience in investing. While different people have different experiences and opinions, I wasn’t getting anywhere near investing in my very first asset because I was still anxious about it until I have talked to a professional. She was experienced and patient enough to explain to me in detail how different investment vehicles work and how could I profit or lose in them. Finally after our sessions I was confident enough to invest and I bought that UITF as my very first investment and it was amazing (I am finally investing!). After some time, I learned also to invest directly in the stock market and have made investing enjoyable(just like the cliff jumps).

My tip for you (if you are not acquainted yet with investment risks) is to consult a professional first and understand these investments you are eyeing to before you invest ‘NOW’ simply because there is a big difference between “confidently investing” and “anxiously investing”. Investing should be stress free and it shouldn’t give you sleepless nights. Investing is always scary but the more we understand them the lesser we get scared and stressed.

Enjoying Canyoneering!
Enjoying Canyoneering!

Cash flow

I have heard people saying that we have to invest so that we would have more money. While this is true in context some people interpret it the wrong way. People have gone to that path where they put more weight in having ‘more money’ and jump straight into investing without checking their cash flows whether it is positive or negative. They were blinded by the thought of ‘having more money’ thinking it would better their cash flow.

It should be the other way around because investing is not guaranteed, your income is!(as long as you work).

We have to put more priority in our cash flows specifically our income because it would better our investing.

Cash flow is the life blood of our personal finance. Without it, we won’t have anything to spend, save nor invest and it is very important that it is a positive cash flow, meaning we should spend less than what we earn. So before we jump straight to investing ‘now’ we should first have a positive and steady cash flow.

#GentleReminder : Instead of focusing on investing put more weight in creating more income 🙂

Risk Management

The type of money we need in investing is ‘long-term money’ meaning, whatever happens to us, that ‘long-term money’ should stay invested for it to grow and reach its goal. If an emergency happens to us without having an insurance, healthcare and emergency fund the tendency is for us to withdraw our investments either at a profit or at a loss.

We are blessed enough if we have withdrawn at a profit but what if we have withdrawn at a loss?

Instead of earning, we ended up losing money.

So before we invest I believe that it is a great idea to protect ourselves first with insurance, healthcare and emergency fund in order for us to fully enjoy investing and earn from it.

Summarizing it.

1. We have to fully understand what we are going into before jumping off the cliff.

2. We should have a positive and steady cash flow.

3. It is advisable to protect ourselves with insurance, healthcare and emergency fund to fully enjoy investing.

I hope that these pointers made sense and to answer the question “When is the best time to invest?”.


Photo Credits : VirtualEyeSee

5 practical tips before you start investing

Investing is one of the ways you can grow your money and help you achieve financial independence. It can offer growth and capital preservation that can help you achieve your financial goals. But before you dive into any investment vehicle out there, you must remember that there are things you need to consider and study first to avoid headache and trouble in the future.

in this article, you’ll going to learn 5 practical tips you need to know before you start investing your hard-earned money. By knowing and implementing these tips, it can save you from trouble that might happen in the future.

Here we go.

5 Practical tips you need to know before you start investing

1.Do not invest on the things you don’t understand

“High returns in short period of time” or “double your money in a number of days” are some of the lines caused other people lose their hard-earned money in just a short period of time. They blindly gave it all without knowing what and how that investment offer works.  After a couple of months/years, the investment partner, person or company is immediately gone with the hard-earned money. Sad but true, right?

This is not new, we always read and see the news with new scam victims crying for help to get their money back. Year after year it happens and most Filipinos never learned. They got tempted to “get rich quick schemes” only to know it will lead to a trap in the future. How do we avoid this?

Simple. Do not invest on the things you don’t understand. That’s always been the rule of thumb!

Doing your due diligence is always a critical step to a successful and profitable investment. Know the investment first. Study how it works. Attend seminars, read books, read blogs, watch videos. Ask professionals with good track record. These are just some of the things you can do to avoid being trapped by scammers. Always remember that investing in yourself is the best investment of all time.

As what Sir Aya Laraya said, “aral muna bago invest”.

2.Have an emergency fund

Knowing how the investment works is still not enough to save you from future trouble and headaches. Another important thing you need to consider is to have a solid emergency fund. Emergency fund is a savings that you can pull out any time in case of “real life emergencies”.

We all know that all investments carry risks. And the higher the return of an investment, the higher the risks. It is wise and advisable to have something you can pull out and use in case unexpected happen. Why? Because you cannot just pull out or liquidate your investment if emergency arises. What if the current value of investment is down? What if it is holiday? What if it is midnight? These things are extremely important to consider.

A safe and good emergency fund is at least 6 months equivalent of your monthly expenses. This way, you can peacefully live and not worry in case something happen. And in case something happened, you have 6-months buffer to live and continue your standard of living while finding and building new income.

3.Have a clear and smart investment goals

So you have built your emergency fund and somehow understand the investment, what’s next? One of the most important, you need to have a clear and smart investment goals. A smart investment goal should be Specific, Measurable, Attainable, Realistic and Time-bound (S.M.A.R.T goals).

Having a clear investment target will serve as your destination in your investment journey. Will it be for your wedding? Retirement? Education? When? How much? How will you do it? These are some of the basic questions you need to answer in order to set a clear and smart investment goals. By having this, you have a clear roadmap where you’re heading.

Of course, clear goals and plans are not enough. You have to take action and work your way through those goals. Focus, discipline and commitment are the keys!

4.Invest only what you can afford to lose

This tip particularly warns you to manage risks. It is advisable to only invest money you can afford to lose. Why? Because as we always said, every investment carries risks.

Make sure you know yourself well and how much risks you can tolerate. Invest according to your risk tolerance in accordance to your investment goals. That’s called smart investing!

It is not advisable to invest in high risks investment only to realize you cannot sleep well at night thinking about losing that investment. Make sense?


When the time comes that you’re going to reap what you saw and have achieved your investment goals, one thing to consider is to re-invest. Yes, invest again.

What does it mean? It simply means re-investing the remaining or allocating new budget for investing again. Setting new investment goals and timeline. Creating new plans. And then executing it again. This will keep growing your hard-earned money. Sooner than later you’ll be financially free.

These are just 5 of many tips you need to know before you start investing. If you have something to add, share them in the comment below.

By knowing these 5 practical investment tips, you now have the idea how you can create your investment plans and start working on them.

Investing is a journey. A long-life journey. By carefully taking one step at a time, you’ll moving closer to your goals.


This article was written by Billy Ramirez. He’s an I.T, a dad, blogger and aspiring entrepreneur. He blogs at Personal Finance Tips and shares basic and fundamentals of financial literacy to every Filipinos.

5 life lessons I’ve learned from trading

Personally, I define trading as a process of learning how to make wise decisions. One must hone his decision-making skills in order for him to be successful in the markets. While this is true in trading, it is true as well in our day to day lives. Our decisions today will greatly affect the outcome of our tomorrow.

We have different perspectives in decision-making, one may say that he made a good decision while another may argue that it is a bad decision. So who is saying the right answer? I believe this is where ‘Experience’ comes in the picture. Either first hand experience(personal experience) or second hand experience(experience of others) it helps us validate and strengthen our decision making.

Saying all these, I believe that I had made a lot of bad decisions in my trading(based on experience), to become profitable was a challenge. Learning the technicals are but mere tools to improve trading but it is in the execution where it really matters, weigh in pressure and emotions, and surely you’ll understand how challenging it is.

With all these losses I’ve incurred here are 5 lessons I’ve learned from trading that relates to life.

Never Make The Same Mistakes

There is no perfect trading system out there, all has its flaws and losing is normal but I believe every trade has a story to tell. Did the loss occurred because of your trading system or did the loss occurred because of your decision making? I like what Einstein said about insanity


If you dont’t do something about your losing trade and try to learn from it then don’t expect that your chances of winning on your next trade would be high, more likely it will still be a losing trade.

Same thing in life, We all do mistakes and if we don’t do something about it and try to learn from it then let us not expect a different result in life.

If you are overspending and you see that your savings is getting lesser don’t expect that you will still have savings in the future unless you do something about your overspending.

If you are eating fatty food and you noticed that you’re stamina gets weaker don’t expect that you will still have the same stamina in the future unless you do something about your eating.

Either firsthand mistake or secondhand mistake, let us learn from those mistakes and never make the same mistakes in the future.

Never Dwell on the Past

I experienced losses in trading and one of them was around  -40% losses. When that happened to me, I was disturbed all week because I can’t stop thinking about it. It made me question my capability and got a hard time to accept it. As I came back to my senses, I realized that i have to fully move on with that trade and continue to thrive in learning.


Same thing in life, we had bad experiences that made us question ourselves, we’re afraid that when someone finds out those bad things in our past they might judge us. It makes us paralyzed. It makes us lose focus and delay us in achieving our goals in life.

Experiencing that trade made me learn the next lesson in this post, it is to

Have a quality ‘ME’ time every now and then

When I incurred that -40% loss, I was pushing myself of  finding what I called a revenge trade, it is a trade to atleast cope up with my losses. I got some stocks for the revenge trade and was lucky enough to pull it off but didn’t manage to breakeven. Later on I just realized that it was only because of emotions. I was wrong of thinking a revenge trade because I am emotional that time. It will only affect my bias and decisions. When I realized that, I know that I have to do something about it.


I decided to stay away from the market for some time just for me to get out of all the noise and thoughts about it. I needed some quality ‘ME’ time to get back to my senses and start anew.

In life we also get emotional and being emotional makes us do things without thinking twice only for us to realize that it is the most stupid(sorry for the term) thing we’ve ever done.

Having a quality ‘ME’ time every now and then pacifies us. Whether it be a jog in the park, a jam with your friends, playing games and etc. it helps us release the stress and emotions so that we can get back to our senses and continue to keep moving forward

Embrace the Process

Before, I thought that trading is all about winning and losing, it is all about ‘buying low and selling high’ with the use of technicals. I was wrong, trading is not always about winning and losing and what sets great traders and new traders apart? I guess it’s because great traders know that trading is a continuing process of mastering their system, success is about mastering the process of their trading style to be sustainable and profitable rather than determining success by keeping a scorecard of winning trades and losing trades where if you win more than you lose, you are successful.


We have victories and defeats at some points in our lives, and there will be cases that we may define our success based on those things. For example a person who has a great career, fame, a fully paid house, a nice car, and a beautiful wife may be the definition of success. But I learned that it’s not about those thing(those are just bonuses), I believe that success is a continuing process of life that whatever it throws upon us may it be good or bad, we are ready to accept.

So yeah, embrace the process.

Come with a Plan

“Never enter a trade without a plan”, that’s what most people say.

No one can be always correct in predicting the price of a stock, that is why we should have a plan because in trading, the charts has no specific results but only possibilities. These possibilities may or may not align with your plan. The only 2 outcomes are it’s either you are correct or you are wrong. If you are correct then congrats but if your wrong, having a trading plan will reduce the risks of losing more money in your trades and lets you test your system.

Every trade should be accompanied with a trading plan because the outcome is not always right.

What amazes me in life is that God’s plan is always right for us, so in coming up with a plan

I’ll just leave this here.

Commit to the Lord whatever you do,

and he will establish your plans.

Proverbs 16:3 
Wrap up
I hope you enjoyed my sharing for today. Let me know what you think about it in the comments section. If you haven’t subscribed yet to my blog, just put your email address below this post for you to receive free updates whenever I post a new article.
So yeah, until my next post!

A simple guide in managing your investments portfolio

A lot of new investors doesn’t have any clue about managing their investment portfolio. Often times, many of them are not really aware of the risks they are exposed into. They know the word ‘diversification’ but doesn’t really understand how diversification works and how it is applied. If you are an investor who wants to learn the basic of portfolio management then let me share to you this quick guide of mine.

There are many advantages of this strategy in investing but here are the two most important to me:

  • Doing this would mean balancing the risks against the performance of your investments in order for you to protect your capital while minimizing your losses.
  • Doing this would align your investments according to your risk tolerance and goals in investing as you age.

A little disclaimer : this is for the financial markets, I didn’t include real estate investments.

Okay so lets start , first is you have to…

Know your risk tolerance

Here are 10 questions to know your risk tolerance in investments. Click here to know.

Now that you know of what type of an investor you are, here are the guidelines in partitioning your portfolio.

If you fell into the conservative investor profileyour portfolio would be 90% liquidity and 10% growth.

If you fell into the cautious investor profileyour portfolio would be 80% liquidity and 20% growth.

If you fell into the prudent investor profileyour portfolio would be 40% liquidity and 60% growth.

If you fell into the assertive investor profileyour portfolio would be 20% liquidity and 80% growth.

If you fell into the aggressive investor profileyour portfolio would be 10% liquidity and 90% growth.

Let me define two terms Liquidity and Growth:

  • Liquidity – this means that the investments you would be participating in should be easy to withdrawearns you fixed interests, and preserve your capital.Examples are time deposits, treasury bills, bonds, notes, uitf/mutual funds that are invested in money market funds or bond funds, and the like.
  • Growth – this type of  investments earns you by capital appreciation, and multiply your capital in the long term. They may be more riskier and more volatile but the returns would be higher as well.Examples are stocks, uitf/mutual funds that are invested in equities, forex, or derivatives.

Again, these are just guidelines in partitioning your portfolio, these guidelines are based on your answers in the questionnaire that may best align to your perspectives/personality towards risks.

If you are not comfortable with your results and with the partitioning you can always adjust it depending on your conviction on what really suits you.

Allot accordingly

Lets have an example, let us say that you fell into the prudent investor profile.

Your budget for investments is 10,000 pesos a month. Since the partitioning will be 40% liquidity and 60% growth, you now divide your 10,000 into 4,000 and 6,000 respectively.

We will invest the 4,000 in a bonds fund and 6,000 in stocks.

After 2 years, the total amount of money we invested is 240,000 pesos (10,000 x 24 months)

Our total investments in the bonds fund would be 96,000 pesos (4,000 x 24 months) and 144,000 pesos (6000 x 24 months) in our stocks.

Within that 2 years, the market has moved.

And now, our investments in bonds fund values at 104,025 pesos (+8.36%) and our investments in stocks values at 120,250 pesos(-16.49%).

We paper gained in our bond fund and we paper lost in our stocks.

So how did our total portfolio performed?

Total current value after 2 years is 224,275(-6.55%) pesos over total invested money of 240,000 pesos.

Since we have diversified our portfolio, our losses in the stocks haven’t affected our capital that much because of the gains that we had in our bonds fund. We have spread the risks and minimized our losses.

good job


Diversification works this way and it is applied by investing in different asset classes. A bond fund is an interest type(fixed) of investment and stocks is a capital appreciation(variable) type of investment.

The essence of diversification is to invest in asset classes that don’t rise and fall together.

There will be instances that they will but not on most cases.

It doesn’t make sense when someone invests in let say BPI equity uitf, BDO equity uitf, PNB equity uitf. Technically, it is diversifying because these banks have different fund managers but practically speaking, this is not what diversification really means because once that a global crisis hit the investments, all of them will lose their value together and there is no asset class to negate the losses.

Continuing with our example..

Let us say that after 2 years we had a different scenario.

Our investments in the bonds fund still values at 104,025 pesos(+8.36%) but this time our stocks value at 182,120 pesos(+26.47%).

This time the market has favored our stocks to the upside.

We paper gained in our bond fund and we paper gained in our stocks as well.

So how did our total portfolio performed?

Total current value after 2 years is 286,145 pesos (+17.27%) pesos over total invested money of 240,000 pesos.

Since we have diversified our portfolio, our gains in stocks has been minimized as well because the gains in our bonds fund is lesser.


Diversification minimizes our losses and in the same effect minimizes our gains as well.

But here’s the thing,

If you would ask me, it is really a win-win because minimizing the losses is a great thing and even if the gains are also minimized, it is still a GAIN!

As long as it grows I’m good with it.

Now the next step is to…

Rebalance your portfolio on a regular basis

In our last example.

Our investments in the bonds fund valued at 104,025 pesos(+8.36%) and our stocks valued at 182,120 pesos(+26.47%).

If you would notice the 60/40 partitioning doesn’t apply here.

The total value of our portfolio is 286,145 pesos and 104,025 pesos isn’t 40% of the portfolio anymore same with the 182,120 pesos.

The 40% of 286,145 pesos is 114,458 pesos and the 60% is 171,687 pesos.

This means that our exposure to the risks of stocks is higher. There is a need to re-balance so that you will maintain only a 60% exposure to the risks of stocks. There is a need to lock-in the profit of our stocks and transfer it to our bonds fund.

We can withdraw(profit lock) 10,433 pesos from our stocks investment and transfer it to our bonds fund to maintain the 60% exposure to the risks of stocks(keep it safe).

By re-balancing our portfolio, we protect our gains and minimize our exposure to risks.

If the scenario would be that the stocks investment is negative and the bonds fund is positive, then re-balancing it would compensate the stocks which is the laggard in that scenario. Over the long run…

Even if the markets are volatile, doing re-balancing will protect our portfolio and make it perform better over time.

Re-balancing can be done once or twice a year.

Wrap up

The last step in this guide to portfolio management is going back to step one which is to know your risk tolerance. As we age in life our risk tolerances change.

In our 20’s, the aggressive type of investor may work for us because we don’t have much responsibilities yet and we have a lot of time to grow our money but as we age and reach our 30’s or 40’s, the responsibilities come and that affects our decision making.

The most common practice is; as we age, we should incline our investments to the more conservative type because..

You will retire depending on the markets if you haven’t put it in the safer investments. If the market is down by the time you retire, then pick another year of retiring(joke).

We should also be wise to protect the money we’ve grown when we were young so that we can fully enjoy it when we get old.

I hope that this guide will help you better your investments because at the end of the day we just wanted to pursue happiness(and use the money we’ve grown haha). Kidding aside, if you want more of these then go and subscribe to my blog The Frugal Worker by entering your email below this post. Don’t worry your details are safe and confidential, this is for the sake of updating you when I have a new post in my blog.

Let me know your thoughts in the comments section.

Also, please share it with your investment buddies on facebook.

To your success,

The Frugal Worker

Photo Credits : Seth Sawyers


Is investing a luxury or a necessity?

Many filipinos say that investing is only for the rich and the reason I think why is that, is because investments are not that accessible before as it is today. The capital needed in a business venture, real estate or in investment instruments like bonds and stocks is a huge amount for the average guy to afford.

I want to answer the question straight

Investing is a necessity

But back in the days, even if it is a necessity, it is also a LUXURY due to the fact I mentioned above.

I learned from our teacher in class who is an executive for an asset management company that the inflation in his time was really high(about 32%) and the mindset of people is that; why would I invest my money with the risk of losing more of its value if I already know that it will lose its value by next week or next month considering that the returns can hardly beat inflation?

Somehow, people just want to spend than to invest and only the rich who has extra can afford to risk their money and fight inflation.

Another reason I could think of is because many of us are taught to get a job when we finish our schooling, once you are working for a big company then you are already fine with a stable income and all of the benefits given. Investing is not a common topic to talk about and explore before.


But as years passed considering inflation, people start to feel the weight of it . Prices of goods and commodities have changed significantly but the income didn’t. More and more people started to find different ways to earn money even those who earn big salaries. Since there is a big demand for investing, the investment scams became rampant as well and a lot of people got burned, up to now there are still scams out there and the mindset of many people when they hear about investment opportunities; “Naku scam yan”

I guess that is why today, there is still only a little percentage of our population who invests even if investment instruments are more accessible and much affordable already.

Did you know that you can already start investing with as little as 5,000 pesos and add to it for as low as 1,000 pesos only? With our situation today, if you only save money in the bank, your money will only be eaten by inflation because the prices of everything rises.

That is why today it is not a luxury anymore and our perspective should be more inclined to it as a necessity.


Let me tell you a bit about inflation to strengthen the fact that investing is a necessity.

The Philippine Statistics Authority is the one responsible for computing the inflation rate of the Philippines by gathering data in the markets in different regions. I talked to the local office of PSA in our area and here’s what I found out.

The PSA gathers data from the markets on what products are available, salable and preferential to most households. After gathering data from different parts of the PH, they will come up of what they called the Consumer Price Index(CPI). This CPI varies from time to time and the PSA compares these CPI values and calculate for the Inflation rate(how much have the prices changed over time).

Now, the point here is the gathered data. Most of the people buy cheap products which are readily available and most likely they are preferred by many. Knowing that, the CPI is somehow computed with these data and also the inflation rate that you are seeing in the news papers. If you patronize these products then the inflation rate you are reading in the news might be relevant to you.

In example, If the rice you eat is NFA rice, then the inflation rate applies to you but if you eat rice that is more costly, then your inflation rate is higher than what is said in the news. If you buy normal clothes then the inflation rate applies to you but if you buy branded clothes then you have a higher inflation rate, simple as that.


Inflation rate is really based on a person’s lifestyle.

If you’re lifestyle is a bit high then the more reason for you to see investing as a necessity.

If the news says that the average inflation rate for the last 10 years was 7%  and your lifestyle is high then your inflation rate estimate could be around 9%.

The higher your lifestyle is, the higher your personal inflation rate will be, and the higher responsibility as well for you to invest your money in order for you to cope up with the coming years in your life where you will have more responsibilities(family, education, healthcare etc.).

In the example above if your inflation rate is 9% then you have to find an investment instrument that could cope up with that in order for you to preserve your capital or earn you good returns.

I hope that I explained that point clearly.

So now what’s the take home? You might be saying right now

Okay Abe, I now realized that investing is a necessity and I want to act on it, how do I start?

Wrap up

I’ve been blogging for just less than a year, and I haven’t wrote a lot yet about investing because I want to focus more on sharing about money behaviors and mindset, sharing practical ways on how to solve common problems we face regarding our personal finance, and also topics that can benefit our personal development.

But, I don’t want to leave you hanging. If you want to start then my advice for you is to seek knowledge first because investments goes with risks(as in risks of losing money) and if you are not knowledgeable enough then you might get burned as well. Know these risks and invest on instruments that has risks you’re comfortable with.

If you have questions feel free to contact me.

BTW here are some articles I wrote about investing. I look forward to write more about it or maybe review investment products to share with you so we could decide on where to invest better, or maybe talk about investing in the stock market, managing portfolio’s etc. There’s actually a lot to write about.

So if you want to know more about investing, I invite you to subscribe to my blog by entering you’re email below this post, don’t worry your details are secured and confidential, the purpose is just for you to get updates when I have a new article in my blog. Also please do share this on your facebook/twitter because there might be people in your circle of friends who needs it.

See you on the next post!

– The Frugal Worker

Sources: https://psa.gov.ph/ Photo Credits :  Alessandro BaffaSimon CunninghamChris Potter


Calculate how much you need to save and invest for you to achieve your goals

Do you know how much you need to save and invest for your dream travel? What about for your dream car? A dream house? For your future child’s education? or even for your retirement. Let me share to you this simple calculator of mine and see the numbers.

Below is a simple calculator (in excel format) I made to show you how much can a 1000 peso monthly saving and investing grow in years. As you can see at the 20th year, by just saving and investing 1000 pesos monthly on an investment instrument that has an average annual rate of 12% your money have grown from 240,000 pesos (total money invested) to 968,385 pesos(ending balance).

(If you’re viewing this on your mobile, the embedded calculator might not show properly. You can view it better on a bigger screen.)

Now it’s your turn to use the calculator above. Let me just walk you through on how to use it (personally).

You can only change the values of the colored numbers, do not change the numbers that are not colored because it is the calculated data. (if you do, just reload the browser).

Starting Amount of savings = this is the amount you will save monthly

Startup Fund = if you have let say 10,000 pesos to start as an initial investment then put an amount in this cell

Annual return on investments = this is the rate you will use depending on where you will invest your savings. Just put your desired rate

  • Equity Fund (mutual fund/UITF) – In the last 10 years of the PSE index, the average returns is around 12-13%.
  • Bonds – If you want to invest in bonds, the average annual returns is around 5%
  • Time Deposits/Money market fund – this is around 1.25%

Example : For the first 10 years you want to put the money on equity then just assume a 12% rate and put it for year 1-5 and year 6-10. Then on the 11th year you transferred it to bonds, so now change the rate to 5% on the year 11-15 and so on

Annual Increase in Savings = this is the rate of increasing your savings. For example you wanted to save 1,000 pesos monthly if you put 50% in this. On the 2nd year, you will now save 1,500 pesos monthly then 2,250 pesos monthly on the 3rd and so on.

Now let’s apply it in your goals.

Let say you wanted to get married 5 years from now, and you wanted a nice wedding. Upon researching, you came up with and an estimated amount of 500,000 pesos for that wedding. By using the calculator you need to come up with a 500,000 pesos ending balance on the 5th year.

So how do you do that? Change the values on the colored numbers depending on your capability to follow it.


I’ll tell you how I can achieve that.(try to put the values in the calculator above)

  • Since this wedding would be in five years, it will be more risky to invest on equity funds, so I choose to invest in bonds and change the annual return on investments to 5%.
  • I happen to have 20,000 pesos extra so I used it as my starter fund in the investment.
  • I can save 6,000 pesos monthly for it, and increase it annually by 10%.
  • After changing the values, the 5th year ending balance is 530,879 pesos with an actual return of 71,312 pesos.
  • This means that if I do this, to save and invest for the next 5 years with these values, there is a very high chance that I would have 500,000 pesos for my wedding. Thus achieving a financial goal in my life.

Wrap Up

I hope that I have explained it clearly and precise on how to use this calculator of mine. The heart of this tool is to give a clear and realistic approach on what to do in achieving our financial goals.

When I used it in my financial plan, it helped me on how to divide my savings for my financial goals (short term and long term).

I hope that this will help you too. If you want the excel file itself, just go to my contact page and drop me a message.

If you have any questions, clarifications or suggestions, please do comment below this post. Please do subscribe as well to my blog by entering you email below this post. You can also find me on Facebook @thefrugalworker (don’t forget to like! thanks)

Alright see you on the next post 🙂

P.S. : There is a retirement fund calculator that you can play with as well in the excel file I embedded


Photo Credits : lincolnblues


Achieving a million peso with different kinds of investments

How much would it take for us to achieve a million peso? In this post, I would like to post  different kinds of investment instruments that are available to us and how much would it take for us to achieve that million peso.

Let us start with a formula

Compound interest formula


We would want to achieve a million peso as our future investment value so,

A = 1,000,000 pesos

Next to consider is Time which is the variable t, since I am a long term investor I would want to atleast invest for 20 years,

t = 20 years

The variable n would be usually equal to 1 since we would want to simplify the gains of our investments in a yearly basis. Hence,

n = 1

Now, the other variables P and r would be interesting because they will depend on the different kinds of investments. Our goal is to find out how much do we need to invest and hold for 20 years to be able to achieve a million peso.

Money in the bank (Savings account, Time Deposits, Special Deposit Accounts)

This is the usual place where we put our money, I remember when I was a kid, my mom made me a special deposit account and the interest rate that time were still high, mom told me it was around 4.5% yearly but today, the interest rates are really low! In a normal savings account, it would only be 0.25% up to 1.25% depending on the amount while some time deposit accounts offer up to 2.75% though they are not liquid until the maturity date.

So let us say that on an average the interest rate would only be 1% per year.

Applying it to our formula

P= 1,000,000 / (1+.01/1)^1(20)

P= 819,544.47 pesos

Fixed-income securities (Bonds, Bills, Notes, Debt Securities)

These investment instruments are bought and offered by banks and non-bank financial institutions that are licensed to deal in the market to us retail investors. They have a fixed rate of return and the risks are moderate. Bonds are usually issued by the government and different corporations, and they sell it to investors with a fixed interest rate, dates of payment and maturity date.

The easiest way to invest in these kinds of investment is through Unit Investment Trust Fund(UITF) and Mutual Funds(MF).  The UITFs are offered by banks and the MFs are offered by investment companies. The average rate of return with such investments is around 5% per year.

Now applying it to our formula,

P= 1,000,000 / (1+.05/1)^1(20)

P= 376,899.48  pesos

Stock Market (Equity funds, ETF, Index Funds, Stock shares)

The Philippine stock market is a market where listed companies approved by the PSE offer their public shares to the investing public. An investor could enter in investing in the stock market in different ways.

One way is through pooled funds such as UITF and MF (equity types). These funds are managed by fund managers who invest it in different companies and make a portfolio. They manage all the risks and make all the trading in the market for the fund.

Another way is through ETF or exchange-traded fund. As of this writing, only First Metro offers an ETF here in the Philippines. In simple terms ETF is like a package of different companies treated as one and traded as a stock in the stock market. Investing in an ETF could be of lesser risk depending on the companies included in that ETF. You can find more details of First Metro’s ETF in their website here.

We could also enter the market by investing through a broker. Buying shares of publicly listed companies cannot be done over the counter, we need to buy them through a middle man or should we say a broker. You can find the complete list of brokers in the PSE website here (online brokers included). Buying and selling of shares requires a broker and in simple logic we should buy a stock at a low price and sell it at a higher price to have a gain.

The gains in investing in the stock market has a really high range and has high risks as well. It can be a negative or a highly positive rate or return. If you are new in investing in the stock market I highly suggest that you go with the UITFs and MFs first and try to learn how the market really works because the risks  there are managed by experts already rather than you managing the risks as a newbie.

In my opinion, the average rate of return in investing in stocks is around 4% – 12% per year but it could be 20% per year, let us be conservative and assume that it is 12% per year.

P= 1,000,000 / (1+.12/1)^1(20)

P= 103,666.76  pesos

Wrap up

Summary of investments

So which way do you want to achieve a million peso? It solely depends on you because there are risks involved, the higher the risks the higher the gains. These numbers are based on a buy and hold strategy, meaning, you invest today and hold it for 20 years. The money in the bank and in fixed income securities are less risky than the stock market so more likely, if you invest those amount, it would turn a million in 20 years. While your money in the stock market could be lower or a lot higher in 20 years time.

Here is the story of Mr. Alfonso Gonzales who invested his winnings, amounting to 300,000 pesos  in the ever famous battle of the brains in 1998. In October 17 , 2012 , his 300k turned to almost 2.9 million pesos already, just by investing in the stock market through a mutual fund(equity type), that was at a rate of 17.4684% per year! And it is a real life story.

Something worth saying

The examples above are of an invest and hold strategy meaning you invest an amount once and hold it for 20 years before getting it. If you don’t have a capital of those amounts, it doesn’t mean you won’t hit the million or cannot invest, you can always start investing  even in tranches.

Like me, I don’t have a lumpsum of 300k but I can invest 15,000 monthly, I know some people invest 1,000 monthly and it doesn’t matter. Investments will grow, so just make it a habit, start saving and investing and I’m sure in due time you can achieve that million.

The Philippines is progressing and I believe in that, I have once attended a seminar for young professionals by RFP’s Randell Tiongson and he said there that the future of the Philippines is a bright one, there would be a surge in our economy for the next 10 to 15 years and it is the best time to invest in the Philippines now. If I haven’t mistaken, He said that our country is like America 50 years ago when they were starting to boom and we should participate in that boom by investing in our country.

I hope that this post was helpful to you and have encouraged you to invest. Please do subscribe to my blog by entering your email below this post to get free updates from the frugal worker

You can also catch me on facebook @thefrugalworker

Photo Credits : Ken Teegardin


How to pick winning stocks for peso cost averaging

Peso cost averaging is a common strategy for long term investors though a lot have benefited from it, still many are not successful with the strategy even if they’ve been doing it for 5 years already. In this article I’ll give some guidelines on how to pick the right stocks for peso cost averaging.

There are more than 300 companies listed in the Philippine Stock Exchange and it might be hard for someone to pick a company he would want to invest into. Though brokers have recommendations, I still believe on personal sentiment and having your own guidelines or checklist should be established.

stock market

Here are some of the guidelines or indicators on how to pick winning stocks for peso cost averaging.

1. Government Spending

The government plays a major role in the advancement of our country. They are one of the biggest sources of cash and we can follow on what sector the government would be focusing their spending. Well if you have noticed, the current administration is focused on infrastructure spending. Roads, highways, bridges, trains, and other civil works.

Because the government are focused in this sector they would have more funds to flow on these kind of projects, then those projects are being put for bidding. Once put into bidding, big companies and corporations bid for these huge projects and since almost all of them are listed in the PSE. We can have a view on these companies’ pipeline of projects that would mean earnings for them that adds value over time. Doing PCA on such companies that have a great pipeline of projects will tell you that those companies will grow.

You can check ppp.gov.ph if you want to know more on the pipeline of projects the government is focused on. You can also see there the winning bidders for their projects.

2. The Economy

The Philippines economy is surging, here is a bar graph of the Philippines’ GDP over the last decade (source: tradingeconomics.com)


For a quick reference

The gross domestic product (GDP) is one the primary indicators used to gauge the health of a country’s economy. It represents the total dollar value of all goods and services produced over a specific time period – you can think of it as the size of the economy. – investopedia

As you can see in the graph, our country is on a surge and the GDP is continuing to rise. So what do this tell me in my investing? Well if we dig deeper, our population has been growing steadily over the years, when I was a kid the population of the Philippines is only at 70million, now it is more than a 100million. Consumers are growing and so are the demands, and the big contributors to the rising GDP are consumer products.

In a sense the consumer industry is a good sector to invest into. Companies such as Jollibee, Universal Robina, and SM prime have grown a lot because of the continuing growth of consumers who are patronizing their products.

The real estate industry is also one good sector to consider because there are lots of companies now that are offering good housing deals. It is also a dream for every Filipino to own a house and with the growing population of the middle class, these  chunk of the population also have the spending power to drive this industry into growth.

3. Fundamentals

Knowing where the government spends and where the economy is going are great things to know but we should also filter the companies when picking our stocks.

COLfinancial, an online broker have what they called premium growth stocks and they have a criteria called GEMSS in picking their stocks. To know more about it please watch this.

You can do the GEMSS by getting data and information from the PSE website. All the updated disclosures of companies can be found there. By reading annual reports and disclosures you can have a better view of what’s happening in the company and where it is going.

We should pick companies that are fundamentally sound and growing. Past performances of the companies will somehow tell us that they are stable companies.

4. Valuations

Valuations are important, if the price of the stock of a certain company is already at it’s fair value or higher than it’s fair value then I don’t think that it will be a good idea in investing in that company even if it is fundamentally sound. Why? because I believe that the true values of the stock will always reflect to its price and only time will tell, once the stock is over bought and the company cannot sustain it’s growth it will always correct to a certain value.

If the price of the stock hasn’t reach yet it’s fair value. Then as an investor who will do PCA, I would want to consider the upside of that stock. If my goal is to gain atleast 15% from that certain stock then the price should have an upside of 15% or greater than to its fair value. That is one criteria I consider because after all we would want to invest where we can gain the most.

I hope that these few guidelines have helped you filter the companies you are eyeing to invest in. Just remember, never invest in companies that you are not aware of or you don’t have full understanding. Understanding the companies you may want to invest in should be a top priority because if you understand them you’ll have a better perspective where the company is going.

If you liked this article and want to know more then subscribe to my blog by entering your email below for you to get free updates on investing.

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Thank you 🙂

Photo Credit : Scott Beale


How peso cost averaging works in investing in the stock market

Cost averaging is one of the most popular strategy in investing in the stock market especially for people who are busy enough to monitor their stocks. In the US it is called dollar cost averaging since their currency is in dollars, so here in the Philippines it is called peso cost averaging or PCA.


From the term itself it’s a technique or strategy of averaging the costs either up or down of what we buy. If you are too busy with your work but still want to invest in the stock market then this strategy is a good way to start with. You can apply PCA in buying stocks, mutual funds and UITF.

3 easy steps to do peso cost averaging

Here is an example :

I decided to buy 5,000 pesos worth of shares monthly of Ayala Land Inc for a year from January up to December of 2014 and then sell it on January 2015.

 2014 Investment Price of ALI per share in pesos No. of Shares bought
Jan 5000 26.1 191.57
Feb 5000 26.15 191.20
Mar 5000 29.4 170.07
Apr 5000 30.9 161.81
May 5000 30.95 161.55
Jun 5000 30.8 162.34
Jul 5000 31.4 159.24
Aug 5000 31.05 161.03
Sep 5000 33.55 149.03
Oct 5000 33.55 149.03
Nov 5000 34.7 144.09
Dec 5000 34.05 146.84

As you can see, I am regularly buying ALI shares with a fixed amount of 5,000 pesos monthly whether the stock price is higher or lower. The goal of PCA is to accumulate shares whether the price of the stock is higher or lower. When the price of the stock is higher then i will have less shares while when the price of the stock is lower then i will have more shares. After the buying is over i finally decided to sell all of my ALI shares on January of 2015.

This will be the conclusion of applying peso cost averaging.

Average price of all the shares I bought 31.05 pesos
Total accumulated shares 1,947.81
Price of ALI shares on Jan 2015 35.25 pesos/share
Total value of shares 68,660.24 pesos
Total money invested 60,000 pesos
Total gains +14.43%

As you can see my average price of all the shares i bought is 31.05 pesos and the price of ALI shares on January 2015 is 35.25 pesos/share. The difference between the prices is what I’ve gained per share. My total amount of money invested is 60,000 peso and the value of my shares in January 2015 is 68,660.24 pesos. I have gained +14.43% of my total invested money by simply saving and investing 5,000 pesos / month without monitoring the stock market on a daily or weekly basis.

*These values are actual stock prices of Ayala Land Inc. from January of 2014 to January of 2015.

**These are not rounded up values and transaction fees are excluded, actual gains may differ.

My personal take on PCA

Investing in the stock market is very risky as to what many people say and I totally agree with that but with peso cost averaging, it is an effective strategy in investing in the stock market to minimize the risks involved therein. It is a strategy i do recommend only if you don’t have the time to monitor your stocks.

There are some key points though that you need to consider when you’re already decided and ready to invest in the stock market using peso cost averaging.

  • The company you would want to invest in should be a fundamentally sound company.
  • Your emotions, because from time to time there is volatility in the price of the stock. You may sell when the stock price is going down because of  your fear of losing money.
  • PCA will only work if you follow it, do not let your emotions affect you, discipline in regularly investing a fixed amount in regular intervals is needed.
  • PCA is not a sure way of earning in the stock market, it is only a strategy to minimize risk. There are some cases where people who do PCA for 5 years are not yet earning from it. That is why you should have a goal meaning you should know when to sell your accumulated shares.

If you want to know more in applying peso cost averaging in your investments then please subscribe to my blog by entering your email below this post.

I will be writing on how to pick winning stocks for peso cost averaging so don’t miss that one. You can get the free updates by subscribing to my blog or liking it on facebook @thefrugalworker.

See you on the next post! 🙂