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

The Frugal Worker : Travel or Invest?

I saw a quote the other day about traveling and it says, “Travel while you are young and able. Don’t worry about the money, just make it work. Experience is far more valuable than money will ever be.” It’s quite popular for young professionals so I just thought of writing a post about it.

While I couldn’t agree more that experience is far more valuable than money will ever be, I really couldn’t agree about “just making it work”.

So today I will be writing about a dilemma between travelling and investing. While both are great things to do at a young age, it is sometimes hard to think about which one should be on top of the other.

So If I were to choose between the two, I would choose investing first before travelling. I’m not saying you should too because I have my own reasons why I’m choosing that path but let me explain myself and I hope that it could be of help to you.

Here’s why,

I’m not a travel blogger and I haven’t traveled much but I can say that there are two kinds of travelers.

The Backpackers

The backpackers are adventurers, they want to travel because they are thrilled on what the world can offer to them. They don’t travel for relaxation but for finding their inner-self, they want to know what’s really out there and experience the world through other people’s eyes.

They usually don’t plan much like the tourists and anything could be an activity for them. They prefer to speak with locals, live with them and learn from them than getting on a tour with tourist guides(I guess that’s the reason how couchsurfing was born).

The Tourists

The tourists are also adventurers but their main goal is to relax and be separated from their work. They travel so that they can spend time with their family and loved ones to gratify themselves. It is like patting their own back for a job well done in their work.

They usually plan everything, they have itineraries and activities planned out already and they get information from guides.

For me, being a tourist is good enough to experience places and be separated from work while spending with loved ones.

My Path

I choose in investing first before travelling because I am a tourist kind of traveler. It suits my personality and my goals in life, yes experience is far more valuable than money but priorities in life makes the difference. My priority as a young professional guy is to prepare for my future family over travelling and I don’t want to sabotage that future by doing the other more and just making it work. Don’t get me wrong, I do love to travel but everything should be planned and budgeted, that’s why I do have a travelling fund.

Another reason I chose investing is this,

travel or invest

They say that we should travel while young and able right? Well, they got a point but I want to give two scenarios.

Let say I invested and worked really hard in my 20s and managed to retire in my 50s. Now in my 50s, I can travel now because I have all the funds that I need but I can’t do some of the activities because there might be some health reasons. Too bad I can’t travel and experience that much but I have the privilege not to work anymore. That’s the first scenario

Here’s the second

Let say I traveled while young and able and just make it worked, I manage to experience a lot of things and now that I’m 50, I want to settle but because I haven’t invested for my retirement then I have to work to make it work!

I would choose the first scenario rather than the second , it will be more okay for me to not travel and experience much in my 50s and enjoy my golden years than traveled and experienced a lot while young but will  be working in my 50s because I can’t retire. Does that makes sense?

That is just my analogy and I hope it made a point.

For risk takers that really want to travel and can live by making both ends meet, then just make sure you make it work as well when the time comes that you don’t want to travel anymore and wanted to settle.

If your goal is to find yourself out there and not just for any relaxation then it will be a different story, you are a backpacker type. Here’s some inspiration, let me share to you the story of Tomislav Perko, he just travelled with almost no money. Watch his story below

Nice isn’t it? Well, if your up to challenge and find yourself then go and hit the road.

My Conclusion

I guess my take in this dilemma is this

“Travel while young and able but make sure you won’t regret the bill. Experience is far more valuable than money so make more money and spend it for experiences.”

I hope that this post have helped you in a way. Let me know your thoughts in the comments below!

Photo Credits : Moyan Brenn


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


3 things you need to save for while in your 20s

There are lots of reasons why we need to save money, and today i would want to share to you my list of the top 3 things you need to start saving for while you are still in your 20s.

Being in our 20s is the best time to save because of the lack of responsibilities that we have, especially if we are still living with our parents who provides for us. Continue reading 3 things you need to save for while in your 20s