The Focal Point

This is the third post on my books I have read and been reading. 

If you miss the other posts, here they are

The Science of Getting Rich

Secrets of the Millionaire Mind

The Focal Point by Brian Tracy

From the book

Once upon a time, there was a major technical problem at a nuclear power plant. This
malfunction was slowing energy generation and reducing the efficiency of the entire
operation.

As much as they tried, the plant's engineers could not identify and solve the problem. So
they brought in one of the nation's top consultants on nuclear power plant construction and
engineering to see whether he could determine what was wrong. The consultant arrived, put
on a white coat, took his clipboard, and went to work. For the next two days, he walked
around, studying the hundreds of dials and gauges in the control room, taking notes, and
making calculations.

At the end of the second day, he took a black felt marker out of his pocket, climbed up on a
ladder, and put a large black "X" on one of the gauges.

"This is the problem," he explained. "Repair and replace the apparatus connected to this
meter, and the problem will be solved."

He then took off his white smock, drove back to the airport, and flew home. The engineers
disassembled the apparatus and discovered that, sure enough, this was the cause of the
problem. It was soon repaired, and the plant was back up to full capacity.

About a week later the plant manager received a bill from the consultant for $10,000 for
"services rendered."

The plant manager was surprised at the size of the bill, even though this was a multibillion-
dollar facility and the problem had been costing an enormous amount of money in lost
generating capacity. After all, he reasoned, the consultant had come in, stood around for a
couple of days, written a black "X" on one of the gauges, and then returned home. Ten
thousand dollars seemed like a high fee for such a simple job.

The plant manager wrote back to the consultant, "We have received your bill. Could you
please break down and itemize your charges? It seems that all you did was to write one 'X'
on a single gauge. Ten thousand dollars appears to be excessive for this amount of work."

Some days later, the plant manager received a new invoice from the consultant. It said, "For
placing 'X' on gauge: $1.00. For knowing which gauge to place 'X' on: $9,999."

This simple story illustrates the most important single principle of success, achievement, and
happiness in life. Knowing where to put the "X" in each part of your life is the critical
determinant of everything you accomplish.

This "X" is your focal point. This is the one thing you can do in that area, at any given
moment, to get the best result possible. Your ability to choose the correct time, place, and
activity to place your "X" on has a greater impact on your life than any other factor.

Booksale

How i came across this book is a result of one of the random things in life I do. I was wasting time in National Bookstore and was going through a pile of books on sale. If you are familiar with this bookstore, you know that occasionally they have these set of old books dumped together in a box. They don't have a listing of books included in that sale and you just got to go over the books one by one and pick something that interests you. Randomly, i saw this blue book and bought it. It was just around P100 so there's no harm in buying a cheap and an unknown book (at  least for me).

After reading it, it turns out to be a gem. There are couple of life lessons one can pick from the book.

Accepting Responsibility

The book reminds us that everything that we are and everything that we will be is our own responsibility. A cliche for some but a good reminder nonetheless. The book reiterates the back that accepting responsibility for our lives means that we refuse to make excuses or blame others for anything in our life that we are not happy about. It tells us to refuse to criticize others for any reason, refusing to complain about our situation or what has happened in the past. Lastly, it tells us to eliminate our if-onlys and what-ifs and focus instead on what we really want, where we are going and taking action.

What it means to me

Same with the other books, life does not get better by knowing and learning things, it is about taking action. What i like about this book, it suggests revisiting different aspects of our lives, identify goals on it and take action. A bit tedious exercise but it is really a good thing to do as it provides a new point of view on how we deal with life.

If you are interested, the book is available in amazon.

Focal Point: A Proven System to Simplify Your Life, Double Your Productivity, and Achieve All Your Goals

Secrets of the millionaire mind - another book about secrets

This is the second post of my book I'm reading series. If you miss the first book, here's the link.

  Secrets of the Millionaire Mind by T. Harv Ecker

Coincidentally, the second book also has a secret in its title. A bit ironic to think that I should be rich by now having read and learned the secrets. But i am not. Not just yet! and I am on my way. The book tells us that being successful in something is two part. First is the thinking or the desire of having that goal. Next is the execution. They are the two things that are needed to accomplish something. If we spend our day thinking about good stuff and all the desires that we have, it just ends there. It will not happen. We have to move and do something. 

Key points i got from the book are the concept of giving back and measuring net worth.

• Giving back
• Measuring net worth

On Giving Back

Prior to reading the book, I would say I am not a selfish guy. I give back to the Church, occasionally give money to my parents and siblings. Other than that, that's all i can say i do in terms of giving back. I guess there was something in the book that struck a chord in me telling me the importance of giving back. Giving back is showing gratitude for all the blessings that God has given me. 

This year, I started working on giving back regularly a portion of my income. It is still a small amount but I am working on giving back higher. The books suggests giving back 10% and i know that was also written in the old testament. I haven't reached that goal yet but I am working on it. Actually, this one is what fuels me to find additional sources of money. If i want to give back higher, then i must earn higher. I've chosen Unicef because i like their cause (If you want to help them, check their site http://www.unicef.org/philippines/). Or you can begin with your family. We all heard the word "Charity begins at home".  or give your money to me. hehehe. just kidding. I will never ask money. I want to earn it. 

On Measuring Net Worth

After reading about the difference between income and net worth, i started measuring my assets and liabilities last February. A bit awkward for me actually. I took up accountancy in college and worked as an external auditor and general accountant. I spent so many years preparing income statement and balance sheet of companies but I have not really tried working on my personal income statement and balance sheet. I don't know. It feels weird. Or maybe because i don't have much assets to write down. 

But thankfully, i have read the book and it motivated me to do it. A bit tedious process actually but doable. I started listing down all my savings account, checking account. Then i worked on my obligations such as credit card dues. My first draft was just that. Then i worked on improving the list by adding on assets i forgot to add such as value of mutual fund and other investment. My wife actually had done it easily as she don't have other investments when she started. It was as simple as writing down the bank accounts their value less the credit card dues. 

Income is like a faucet while net worth is the bucket. The exercise reminded me that though i am enjoying the steady flow of income from my job as a faucet, i should also think about how much water i already have in the bucket. Because one day, the faucet might stop giving me water and when that time comes, i should have enough water in my bucket to use while i am looking for a new faucet. 

The book is available at Amazon if you want to read it  (Note: affiliate link) Secrets of the Millionaire Mind

Quotable Quotes

Just like with my first post, I wanted to share key ideas worth considering

1. My income can grow only to the extent that i do!
2. If I want to change the fruits, i will first have to change the roots. If i want to change the visible, i must first change the invisible
3. Money is a result, wealth is a result, health is a result, illness is a result, my weight is a result. I live in a world of cause and effect
4. Give me five minutes and I can predict the financial future for the rest of my life
5. Thoughts lead to feelings. Feelings lead to actions. Action lead to results
6. When the subconscious mind must choose between deeply rooted emotions and logic, emotions will always win.
7. If my motivation for acquiring money or success comes from a non supportive rout such as fear, anger, or the need to "prove" myself, my money will never bring me happiness.
8. The only way to permanently change the temperature in the room is to reset the thermostat. In the same way, the only way to change my level of financial success "permanently" is to reset my financial thermostat
9. Consciousness is observing my thoughts and actions so that I can live from true choice in the present moment rather than being run by programming from the past.
10. I can choose to think in ways that will support me in my happiness and success instead of ways that don't.
11. Money is extremely important in the areas in which it works and extremely unimportant in areas in which it doesn't.
12. When i complain, i become a living, breathing "crap magnet"
13. There is no such thing as a really rich victim
14. If my goal is to be comfortable, chances are I'll never get rich. But if my goal is to be rich, chances are I'll end up mighty comfortable.
15. The number one reason most people don't get what they want is that they don't know what they want
16. If I am not fully, totally and truly committed to creating wealth, changes are I won't
17. The law of income; I will be paid in direct proportion to the value I deliver according to the market place
18. Bless that which i want
19. Leaders earn a heck of a lot more money than followers
20. The secret to success is not to try to avoid or get rid of or shrink from your problems. The secret is to grow myself so that I am bigger than any problem
21. If i have a big problem in my life, all that means is that I am being a small person
22. If I say I am worthy, I am. If I say I'm not worthy, I am not. Either way, I will live into my story.
23. If a hundred-foot oak tree had the mind of a human, it would only grow to be ten feet tall. 
24. For every giver there must be a receiver, and for every receiver there must be a giver
25. Money will only make me more of what I already am
26. How you do anything is how you do everything
27. There's nothing wrong with getting a steady paycheck unless it interferes with your ability to earn what you're worth. There's the rub. It usually does
28. Never have a ceiling on your income
29. Rich People believe "you can have your cake and eat it too". 
30. The true measure of wealth is net worth, not working income
31. Where attention goes, energy flows and results show
32. Until you show you can handle what you've got, you won't get anymore
33. The habit of managing your money is more important than the amount
34. Either you control money or it will control you
35. Action is the bridge between the inner world and the outer world
36. A true warrior can tame the cobra of fear
37. It is not necessary to try to get rid of fear in order to succeed
38. If you are willing to do only what's easy, life will be hard. But if you are willing to do what's hard, life will be easy
39. The only time you are actually growing is when you are uncomfortable
40. Training and managing your own mind is the most important skill you could ever own in terms of both happiness and success
41. You can be right or you can be rich, but you can't be both
42. Every master was once a disaster
43. To get paid the best, you must be the best

The Science of Getting Rich - is there?

This is the first post of the "book review" series I will be posting in the following weeks. I can't exactly call them review but rather me trying to summarize what the book is all about and the learnings i picked up from the book. This is more about what the book suggests we do rather than if you should read it or not.

When I started reading

I started reading books when I was in elementary. I studied in a public elementary school and you know how public schools here in the Philippines operate. They work with a small budget and to augment the small budget, they teach pupils manual labor. It is a win-win situation really. Students learn how to garden, fix stuff and the school gets its needed maintenance for free.

Continuing on my story, i got exposed in reading books when one of my teachers asked me to help move books in the library. I vaguely remember the even except that at that time there are tons of books donated in our small library. Together with three of my friends, I was asked to help arrange them and put them in the shelves. I guess one of the reason i was asked to do that because of the my built. I was heavy even as a child and with that built, carrying heavy sacks of books will be an ease.

So there we were, carrying books and putting them on the shelves. During breaks, i got to read stories which are very entertaining. I think i was so much engrossed in reading books that i missed some of my classes. I can't help it. I think that was the first time i learned that there are books other than the prescribed books for a grade level. 

My teacher noticed it too that I was way spending too much time. She reprimanded me for missing my classes armed with a reason "I am helping in the library". She told me that I should know my priorities; studying and not reading books in the library. She even instructed the librarian that beginning that day i am no longer allowed to help in the library. I guess she hates it when one of her good performing students is always absent in her class.

Moving on with a long backgrounder, let's talk about the book The Science of Getting Rich

The Science of Getting Rich

Getting hold of the book, i was expecting a detailed step by step about getting rich. After all that's what science is. A systematized process. Alas, the books does not exactly do that. (Blame me for expecting that. LOL) The key point of the book as i get is to develop a vision and focus all your efforts towards that vision.

Points raised in the book

• Getting rich is not dependent upon your engaging in some particular business but upon your learning to do things in Certain Way
•  Begin in your present business and in your present location to do things in certain Way which causes success

 The books says the everyone has the opportunity to become rich. It is not about being in a certain business. It is about being in a business or activity where you can deliver the most value by using what you know. If you know something, then that's good. If not, everything can be studied and learned. The book also adds that we should be in the activity that we love. Maybe that's a no-brainer or even a cliche for some but it feels good to be reminded of that.

Quotable Quotes

• To think what you want to think is to think TRUTH, regardless of appearances
• It is necessary then to cultivate the habit of being grateful for every good thing that comes to you; and to give thanks continuously
• To get rich, I only need to use my will power upon myself
• When i know what to think and do, then I must use my will to compel myself to think and do the right things. That is the legitimate use if the will in getting what i want - to use it in holding myself to the right course. Use my will to keep myself thinking and acting in the certain way
• If i want to help the poor, i need to demonstrate to them that they can become rich; prove it by getting rich myself
• Thought is the creative power ir the impelling force which causes the creative power to act; thinking in a certain way will bringriches to you but you must not rely upon thought alone paying no attention to personal action
• All i have to do is to retain my vision, stick to my purpose and maintain my faith and gratitude
• I cannot act where i am not, i cannot act where i have been and i cannot act where i am going to be, i can only act where i am
• I can only advance by being larger than my present place
• I will get rich most satisfactorily if i do that which i want to do
• Never allow yourself to feel disappointed. You may expect to have a certain thing at a certain time and not get it at that time; and this will appear to you like failure but if i hold to my faith i will find that my failure is only apparent.  

Ratio Analysis on Property Firms

For someone who spent more or less two-three years studying accounting concepts, applying lessons learned inside the classroom to real life is a a real challenge. Knowing is one thing and applying that knowledge is another.

For this post, i have decided to do ratio analysis using selected Philippine Stock Firms engaged in the property business. According to investopedia, Ratio analysis a tool used by individuals to conduct a quantitative analysis of information in a company's financial statements. Ratios are calculated from current year numbers and are then compared to previous years, other companies, the industry, or even the economy to judge the performance of the company. Ratio analysis is predominately used by proponents of fundamental analysis.

Anyway, i downloaded the quarterly report filing for the period ended June 2011 for selected property firms. The numbers are below and here's my take.

Profitability Ratios

Profit Margin on Sales tells us how much per Peso of Sales is converted to profit. Clearly, FLI is the winner here. For every peso of sales, they convert it to 30 centavos profit. SMDC trails closely with 28.14%. The advantage of FLI probably stems from the fact that it has the highest gross profit margin at 61.06%. Disclaimer: My computation may be wrong but i tried my best to make sure they are correct. Nevertheless, do check and have your own analysis as well. 

Return on Assets and Return on Equity tells us how efficiently management is using the assets/equity of the company in generating profit. SMDC reported the highest ROA while reporting the highest ROE as well.  FLI did well in reporting profits but comparing that profits with the total assets of the company, I'd say the other companies are more efficient.

So for profitability ratios the choice is SMDC

Other Ratios

The only thing that concerns me here is the level of debt. Debt can be a friend or an enemy. It provides capital to fund expansion and operations but it also brings expense in the form of interest. Debt Equity ratio tells us the percentage of capital owed to creditors compared with the capital owed to the owners of the company. 100% means debt and equity are equal. Any percentage above 100% means more debt and less than 100% means more capital infused by owners. FLI has the lowest debt with ALI reporting the highest debt. Now, this may or may not be good. Currently, we have low interest rates in the Philippines and low interest rates means lower interest expense. We must also remember that if interest rates are low, people generally don't put their money in the bank but search for higher yielding returns. This means that capital in the form of shareholder infusion might me the better option in the market.

For other ratios the choice is FLI

Summary

SMDC and FLI are my choice. I have exposure in FLI but no money is invested in SMDC. I still have P8k in my portfolio. The market is still red and I am waiting for the perfect entry point. Nevertheless, i guess it would not hurt me if i follow my own analysis. Let's see how far a P4k investment in these companies will bring me. I am not even sure if that money is enough to buy the minimum lot. Let's see

Altman Z-score & Piotroski Score

      

If you are still reading this blog, then welcome me back. I just realized i have no blog post for September 2011. It worries me. No post means I haven't tried reading or learning anything new for September. 

So before the remaining three months of year 2011 is over, I'll try to post as much as I can and learn new things or reinforce learnings in the process.

For October, i want to apply Altman Z-score in companies i am currently invested in for analysis. If you have been following the Philippine Stock Market, you know that most of the stocks are in red. The stock market has been going up and down that most of us don't know whether we are in bear market or bull market. Personally, i think we are still in the bull market given the good financial performance reported by Philippine Companies for the first half of 2011. Nevertheless, my portfolio is also in red so don't trust me too much.

Having said that, we should never forget how important to look at solid companies in investing. Using the fiscal fitness analysis or more known as Altman Z-Score, let's see how my favorite companies fare. Hopefully, through this process, I will learn and convince myself more of being a good investor.

Altman Z-Score

My first encounter with Altman Z-Score was back in 2009 during my refresher course in Finance Subjects. The professor was a believer of this formula and informs us that it is a good basis for predicting bankruptcy of companies. Here's what wikipedia has to say about this formula

From wikipedia The Z-score formula for predicting bankruptcy was published in 1968 by Edward I. Altman, who was, at the time, an Assistant Professor of Finance at New York University. The formula may be used to predict the probability that a firm will go into bankruptcy within two years. Z-scores are used to predict corporate defaults and an easy-to-calculate control measure for the financial distress status of companies in academic studies. The Z-score uses multiple corporate income and balance sheet values to measure the financial health of a company.

This post will not be about whether Altman Z-Score works but rather how Semirara Mining Company (SCC) fares in this formula

Using the 2011 PSE Quarterly filing, SCC scores 3.51 which is above the safe zone. In other words, SCC is a safe company to invest in.

Piotroski Score

From GrahamInvestor.com University of Chicago Accounting Professor, Joseph Piotroski reasoned that because value stocks are by definition often troubled companies, many will not possess the financial resources to recover. Consequently, Piotroski wondered if it was possible to improve the performance of a value stock portfolio by eliminating stocks that were the weakest financially.

Piotroski devised a simple nine-criteria stock-scoring system for evaluating a stock's financial strength that could be determined using data solely from financial statements.

One point was awarded for each test that a stock passed. Piotroski classed any stocks that scored eight or nine points as being the strongest stocks. His findings were that these strong stocks as a group outperformed a portfolio of all value stocks by 7.5% annually over a 20-year test period. Piotroski also found that weak stocks, scoring two points or fewer, were five times more likely to either go bankrupt or delist due to financial problems.

Using the 2011 PSE Quarterly filing, SCC scores 9 points using Piotroski Score

Conclusion

SCC passes both the Altman Z-Score and Pioroski Score. Nevertheless, these numbers are not enough. I wanted to apply industry analysis on SCC only that I am not yet familiar with the competitors. I'll read last year's annual filing and see if I can learn more about the company and its industry. Once i know the competitors, I'll do industry wide analysis.

Quotes Part III

Stop making excuses & start making progress. What you imagine, you can begin. Want you begin, you can finish


Worrying that there's not enough time leaves you with even less time.
The only difference between a Good Day And a Bad Day Is your Attitude ~Dennis S Brown


Try not to become a man of success, but rather try to become a man of value." - Albert Einstein


Try not to wait for others to motivate you....be the motivation


A man is what he thinks about all day long." - Ralph Waldo Emerson


The only limits are the ones you place on yourself


Nothing can sabotage winning, except for fear of losing. Success usually lies just beyond failure." Cortes 


You never achieve success unless you like what you are doing. ~ Dale Carnegie

Life is what we make it, always has been, always will be.Life is what we make it, always has been, always will be.Life is what we make it, always has been, always will be.

Quotes Part II

• Be proactive. Do what must be done long before it must be done & have much more time to do what you love to do

• To be a great champion you must believe you are the best. If you're not, pretend you are. -Muhammad Ali
  

• If it's important to you, you will find a way. If it's not important to you, you will find an excuse
  

• Vision really boils down to learning, and learning really boils down to passion
  

• What you do speaks so loud, I cannot hear what you say - Ralph Emerson
  

• WHAT WINNERS KNOW: Many people just do the minimum. Every extra step you take puts you that far ahead of the crowd
  

• There are those who talk endlessly about what they're going to do. Then there are those who get busy and do it
  

• Habit is a cable; we weave a thread of it each day, and at last we cannot break it
  

• You have to expect things of yourself before you can do them — Michael Jordan
  

• Success lives in the effort, in the experience, in the learning, in the growing, not in the rewards
  

Quotes Part I

The best motivation is to constantly keep yourself in contact with your reasons

Be brave and steadfast; have no fear or dread of them, for it is the LORD, your God, who marches with you; He will never never fail you or forsake you Dt 31:1-8

We need to stop listening to our excuses and realize that the only thing stopping us is us

Whatever happens, take responsibility. ~ Tony Robbins

Remind yourself again & again of why you must. Hold your head high & keep your eyes on the goal

Motivation is what gets you started. Habit is what keeps you going.~ Jim Ryun

Improvement begins with I —Arnold Glasow 

Diligently and effectively put forth your best effort, without concern for the result. It will be worth your while

Once you know what's causing the result you don't want, you'll have a strategy for creating what you do want

The secret of getting ahead is getting started." ~ Sally Berger

Review of Banking Firms

Industry:Banking and Financial

Stock Pick: China Bank Corporation

This is the second part of my take in applying my skill of reading numbers and ratios to my stock trading. 

If you haven't read the first part, read it here. You need to read the first part for quick explanation for the basis of the analysis.

Using the same process, the stock pick is CHIB or China Bank Corporation. The stock has figures above industry averages. 

Again, without following the point system, i'll go for SECB for posting 47% net profit margin coupled with 20.93% sales growth. 

The only thing that worries me is the negative cash flow from operations.

I don't own any stocks from the banking sector. I use to hold MBT but i have sold it and took profits. I bought it when it was still trading at 67 and took profits after reaching P76.

Right now, i don't have excess funds to invest but if I have additional cash, I'll probably put it in SECB then CHIB.

Review of Property Firms

Industry: Property

Stock Pick: Robinson Land Corporation

I have never really tried applying my knowledge about financial ratios or accounting skills in trading stocks. In the past, i relied on news, stock tips on forums and gut feel. So this is the first time I am doing this and by tomorrow, I'll post my first buy order for RLC. Just want to write it down here so I'll remember and determine after six months, if making an analysis is worth it.

First, let me explain the table above and each of the column,

STOCK - This column pertain to the ticker symbol of each of the public corporation engaged in the property business listed in Philippine Stock Exchange.

Price - This column is the closing price of the stock as of August 1, 2011.

COL Rating - This column pertain to my stock broker recommendation for the stock as of August 1, 2011.

Target Price - This column is the target price for the stock. The stock may or may not reach this price.

Upside - This is the potential return of the stock. The difference between the target price and stock price over the closing price. 

Sales Growth - This column pertain to sales growth forecast for 2011. This is important because we want to get in the company that is getting the big chunk of the industry's revenues. Sales is the starting figure and it is important that a company continue to increase its sales. 

Net Profit Growth - The company not only need to earn revenues but must also exhibit improving margins. It is not favorable to us investors if the company is increasing its sales and with it goes the expenses. A good company should be able to control costs.

Net Profit Margin - This ratio shows what percentage of sales is eventually reported as a profit after deducting the company's expenses. The industry's average is 29%. This means that for every peso of sales, the company has to spend 71% for expenses. We want to choose higher profit margin as much as possible. 

Cash Flow Operating - This shows how much cash the operations of the company generates. It is important to look into this number to gauge the liquidity of the company. This is not a hard and fast rule but negative cash flows from operations means that the company might need to obtain cash from creditors or investors to continue its operation. The number above will differ due to the size of the company's operation. For the meantime, just assume that any positive number is good. 

P/E Ratio - Price Earnings ratio means how much an investor is paying for the earnings of a stock. This number shows us how expensive a stock is relative to its competitors. 

Dividend Yield - I would not explain this much but this ratio just shows how much is the yield of a company's dividend relative to its current price. The higher the number, the better.

Now, assuming we consider all the criteria as equal and we give 1 point each time a company statistic is well above the industry's average. We'll get the following points

Based on the analysis, we want to get RLC for exhibiting above average numbers among the industry.

Of course, you can also decide on a single factor alone. Using the potential rewards, SMPH will be the stock choice given its 29% potential upside.

Using P/E ratio, we'll see that VLL is the cheapest among the industry players. 

Using Profit Margin, FLI ranks highest with its 40% margin.

I'm actually half-decided. Without assigning points, I'll go for FLI or MEG. FLI because it is cheap, has the fastest sales growth and high profit margin. 

MEG because it is the cheapest and has 25% upside potential. 

Right now, i own VLL, MEG and ALI. I don't own FLI and RLC and based on the ranking above, i should get these two. I only have P14k free cash in my bpi account. Let's see. I'll try to buy RLC and FLI.

Update: Bought 700 RLC and 6,000 of FLI today, August 3, 2011. Let's see what happens after six months. 

Update on My Mutual Fund

I've been busy thus was not able to post new articles to this blog.

If you happen to read this, then thank you. Most of the time i wonder and I ask myself "Is anyone out there reading my blog beside me, my wife and my brothers)". Truth be told, this blog is aimed at employees like me. Someone who aims to save, earn more and learn. Plus, my entries serves as a reminder to myself.

Like a written contract, this blog serves as a reminder to my forgetful mind; about what i said i'll do, what i have been doing and what i will do next to make sure i reach what i have intended to do.

Without a topic in my mind, i decided to give you an update on my mutual fund.

If you remember, I started putting in a regular amount in a mutual fund. To recap for those who haven't read my previous posts, investing in mutual fund is similar to buying a public company's stock. You  own a certain number of shares based on the amount of your investment. Share price fluctuates depending on the performance of the fund. Performance of the funds depends on the performance of the companies that comprises on the fund. It is becoming an co owner of publicly traded companies indirectly by owning shares of mutual funds. 

I decided to invest following the belief that stock prices increase through time supported by a good company performance. I also invest in the stock market but i don't really have the time and expertise of mutual fund managers so i have decided to try mutual fund.

The table above shows that I've put in P5,000 every month to purchase shares of mutual fund. You'll notice that my P5,000 purchased fluctuating number of shares. That's because share price of mutual fund fluctuates. My P5,000 bought more shares when prices are down and less shares when prices are up. It is worth noting that from Jan - June, the general price trend is upward.  As of this post, the share price (called Net Asset Value per share or NAVPS) is P2.8319 per share. Assuming that today I no longer want to invest, the company who manages the mutual fund will pay me P2.8319 per share (excluding charges). Overall, my money earned 8.5%. Not much but definitely way above what bank deposits offer.

What's Next

I plan to continue putting in P5,000 plus I really need to find another source of income to increase that my monthly investment. If you look at it, my total investment is just enough to buy me an ipad. Not much and definitely low to sustain a living. But it is a start. If you are interested to learn and invest too, comment on this post or follow me on twitter (@accabiao). I don't earn from sharing what I know but more than willing to help.