List of Philippine Group Buying Sites

The craze has begun in the Philippines. I believe this started mid year last year and finally took off the first quarter of 2011. What it is? Group Buying Phenomena.

So what is group buying? These are sites that encourages group buying and once certain number of purchasers are met, the deal will be on and everybody who purchased receives vouchers that is basically 80 - 40% of an item.

Here are the sites that i know so far. If you know more, feel free to add

1. Buyanihan
2. Pakyaw
3. Deal Grocer
4. MetroDeal
5. Kuponan
6. Groupon (Beeconomic)
7. CashCashPinoy
8. Salamat
9. Plejee
10. AtCrazy
11. Tipidto
12. Ensogo

Among all the sites, i like Deal Grocer's interface. The site is clean, formal and classy. Among the group buying sites, Deal Grocer's website is formal while the others are crowded. It feels like the site is a mall while the other's are divisoria stalls peddling their coupons. Anyhow, for the actual deals, all deals looks good and inviting. I haven't tried all sites but i already had previous transactions with Ensogo, CashCashPinoy and Deal Grocer. I'll write up my experience once i used up the voucher.

What are the Charges in Mutual Funds

This is an update on my ongoing posts about mutual fund. 

You might be interested to read my previous posts on the series

• Why You Should Invest in Mutual Fund
• How to Get Started in Mutual Funds
• Different Types of Mutual Funds

Now that i have explained how to get started investing in mutual funds and the different type of mutual funds, the next question to answer is how to get out? Meaning, what are the charges if i want to get back the money i invested in the mutual fund.

To answer the question, you should know about front-end load sales and back end load sales.

Front End Load Sales

With front end load sales, sales commission are deducted to the amount the investor will invest in the mutual fund. For example, if you invest P5,000, that amount will be reduced by the amount of sales commission and the remaining balance will be used to purchase shares in the mutual fund based on the net asset value. The advantage of this is that you can pull out your funds free of charge any time. 

Back End Load Sales
With back end load sales no initial commission is deducted from the amount you invest. So for the P5,000 example that we have, all of that amount will be used to purchase shares in the mutual fund. You will only be charged sales commission when you decide to pull out your investment. The sales charge rate decreases over time. So if you put funds in year one then pull it out on year 3, the sales commission charge is lower compared if you have pulled it out in year 2. After five years, the sales commission rate is 0% or free.

In Numbers

So, let's set an example. You have P5,000 and you invested it in January 1, 2011 and the net asset value assumptions are as follows

Jan 1, 2011 - 1.5

Jan 1, 2012 - 1.6

Jan 1, 2013 - 1.7

Jan 1, 2014 - 1.8

Jan 1, 2015 - 1.9

Jan 1, 2016 - 2.0

In Summary

Investing in Mutual Fund entails costs. Same with other time of investment, you should begin your decision on your investment objective. Choosing between front end sales load or back end sales load should be based on whether you might need to pull out the investment or not. If you are in for the long term (which you should be) aim for the back end sales load so after five years, you benefit from free sales commission charge.

So that's it for now, if you have questions let me know.

Different Types of Philippine Mutual Funds

In my past entries, i have been talking why investing in mutual fund might be good for you as an investment strategy. In addition, to those new in the mutual funds, i have explained here how to get started in mutual funds. In this post, i'll be discussing three types of mutual funds.

If you are new to this site, please visit my welcome page as a guide or feel free to select one of the most read posts in the side bar.

To continue, mutual fund companies normally invest your money in either debt securities or equity securities. Bonds fall under debt securities while stocks fall under equity securities. Depending on your goal, you should weigh and determine what type of mutual fund is good for you.

Bond Fund

This type of mutual fund invests your money in government and high quality corporate debt securities. A bond is a debt investment in which an investor loans a certain amount of money, for a certain amount of time, with a certain interest rate, to a company or country. In simpler words, bonds are promise to pay made by governments or corporations. In exchange for a loan, they promise to pay the holder of the bond fixed interest rate plus return of capital over a period of time.

Since interests are paid regularly, bonds are suited for individuals whose goals are capital preservation and regular income. Bonds are usually considered safe (especially Government Issued Bonds) because they are paid first before stockholders in case the company goes bankrupt and undergoes liquidation. 

Equity Fund

This type of mutual fund invests your money in Philippine equity securities which may include common stock, preferred stock and other securities exchangeable for common/preferred stock. Unlike bonds, you will increase your money if the prices of the stock goes up. Similarly, you will lose if the prices of stocks goes down. Equity fund is more risky compared to bond fund but the rewards are also higher. 

Balanced Fund

This type of mutual fund is a mix of bond and equity fund. The mutual fund company invests certain portion in bonds and certain portion in stocks. This fund offers less volatility due to investment in bonds but provides avenue of long-term capital appreciation through equities.

In addition, there are also other type of funds such as dollar fund or funds that invests in other currency. To sum it up, the important thing to consider is your goal in investing and your risk strategy. If you want to risk it, go for equities. If you want to be safe but still earn money, go for bonds. If you want the average, go for balanced fund.

That's it. If you still have questions, it is to call any mutual fund companies and their agent are more willing to help you. In fact, they will even visit you to discuss more about investment opportunities.

If you want to learn more, you can follow me in twitter and send me a message. http://www.twitter.com/accabiao

Happy managing your money!

How To Get Started in Mutual Fund

In my previous post, i have explained that a Mutual Fund is an investment company that pools the funds of many individual and institutional investors to form a massive asset base.  Think of mutual fund similar to group buying sites. A fund manager pools or collects money from different individual and invests them in various companies. In group buying sites, the site gathers individual buyers to form a group and have to power to bargain for lower cost. Similarly, investing mutual fund allows you to have exposure in various companies and industries otherwise you cannot purchase by your own.

Let's take for example Sunlife's Balanced Fund. As of February 28, 2011, the fund has the following companies as part of its Top 5 Equity Holdings. If you want to buy all of these companies on your own, you'll have to have P23,518 on the minimum.

However, with Mutual Fund, you can gain exposure for the same set of companies for just P5,000 pesos.

How does Mutual Fund work? 

Assuming you are interested to invest your P5,000 in Sunlife Mutual Fund, you'll get 1,986 shares based on the fund's Net Asset Value Per Share (NAVPS) of 2.5165 as of March 23, 2011. This means you own that number of shares of the Mutual Fund Company. Remember, you will not directly own the five companies listed above. Instead, you'll get shares of the Mutual Fund Company who in turns owns the shares of the listed companies.

How will you earn or (lose) in Mutual Fund?

NAVPS fluctuate daily depending on the performance of the Mutual Fund which is related to the performance of the companies that the Mutual Fund Owns. You will earn when NAVPS increase and you will lose when NAVPS decrease. For example, if you joined MF last February 3, 2011, the NAVPS was 2.4845. Using the March 23, 2011 NAVPS, you could have earned P64.40 or 1%. 

On the other hand, if you joined last January, you will lose P226.13 or 5%. 

The numbers might not appear to interesting but if you think longer horizon, the numbers are more attractive. Back in January 4, 2010, the NAVPS was 1.9888 so you could have earned 27% return in one year.

One advice that i got was peso cost averaging. Read it here

Summary

Mutual Fund's is a good way to have investment tool because your money will be managed by fund managers (who does that as a career) and will not require too much money.

Track Your Expenses, Discover A Story

Back in August 2010, i said i started tracking my daily expenses. It was difficult but fun. 

Tracking daily expenses and summarizing them told me stories about who i am and what my priorities are.

By tracking expenses and summarizing them, i realized that i was spending too much on unplanned expenses such as gifts, dine outs and unscheduled vacation. In my mind, my priority was saving money and investing but my actual actions tells me that my priority was destressing and relaxation.

The information i got from tracking me expenses, opened my eyes to the reality so i took action. Beginning that time, i started monitoring and watching where i spend my money. I followed money making tips and think of ways how to save money.

If you are interested in tracking your expenses, there are various ways you can do it. 

1. Manual paper listing
2. Phone Apps
3. Excel Trackers

I never really did manual tracking but based on other materials that i have read you can list down at the end of your day all your expenses in a notebook and summarize it. 

What really got me going was using Handy Expense. Since i carry my phone everywhere, i can easily record expenses as soon as i made the purchase. The application also allows me to export the file in CSV format which i then use to import in excel.

Another tool that i have tried is the iphone app Money Journal. The iphone app costs $2.99 but that cost is compensating with ready made charts and budget comparison tool. The added bonus is that you can upload the data inputted in the app directly to Google Docs. The only hassle is that the apps takes so much key presses that i really sticked to Handy Expense. Less key presses works better for me.

Lastly, you may use excel. The spreadsheet is a great tracking tool. Also, if you are interested, there are seven free excel budget/expense tracking tool here

Why you should invest in Philippine Mutual Funds?

It's January 3, 2010 and you are ask to choose between

a) Invest P50,000 in a BPI Savings Deposit

b) Invest P50,000 in Sunlife's Mutual Fund

what would you choose?

If you choose a, you will end up with P50,687.50 on January 3, 2011 while choosing b will net to having P64,909. (using BPI Savings annual rate of 1.375% and Sun Life's Balanced Fund Net Asset Value as 1.9888 and 2.6357)

It appears that choice b is the better option. However, the decision is easier since we have not considered the risks. With choice a, you are guaranteed on the returns while the returns on mutual fund is not guaranteed.

However, will all the positive outlook in the country, i bet option B is less risky.

What is a Mutual Fund?

A Mutual Fund is an investment company that pools the funds of many individual and institutional investors to form a massive asset base.   The assets are then entrusted to a full time professional fund manager who develops and maintains a diversified portfolio of security investments.  People who buy shares of a mutual fund are its owners or shareholders.  Their purchases provide the money for a mutual fund to buy securities such as stocks and bonds.  A mutual can make money from its securities investments in two ways: a security can pay dividends and interest to the fund, or a security  can rise in value.  The fund passes any dividends, interest or profits on the sale of its portfolio securities, less fund expenses, to shareholders in the form of distributions. 

In simpler explanation, it is like everyone gives his/her share to a fund manager and that fund manager invests the money in security investments

Why Invest in a Mutual Fund?  

    

Interest rates can be volatile and passive short-term investing can erode investment values due to inflation.  On the other hand, the stock market has historically outperformed both short and long-term bank deposit rates.  Unfortunately, not so many people are familiar with active financial management and effective diversification. Through mutual funds, even investors with limited resources can participate in combinations of these high-yielding investment instruments without the headache of personally selecting and monitoring a portfolio.

Mutual funds are ideal vehicles for growing money over time.  It can be used as a savings medium for retirement, education for a child, or building up a long-term cash fund for some specific future financial objective.   While largely thought of as a retail financial product, mutual funds are also ideal instruments to augment the yields generated by organizational funds and enhance their level of diversification.  Mutual funds have been popular investments for pension and trust programs, other employee benefit funding objectives, and institutional asset-liability matching.

Mutual Funds are another way to build money over time. Personally, i only started last year where my P30,000 growing to P45,000 at the end of 2010. This year, i started to put small amount every month as part of peso cost averaging. Learn about peso cost averaging here.

The BDO Easy Investment Plan (EIP)

Hi! Thank you for dropping by.

If you have time and interested about investing in the stock market or learn more about personal finance, i suggest you start here

Also as a further learning, you may want to read my previous posts on mutual funds.

Why You Should Invest in Mutual Fund

How to Get Started in Mutual Funds

Different Types of Mutual Funds

Now, about the BDO Easy Investment Plan

The BDO Easy Investment Plan (EIP)

The BDO Easy Investment Plan is a "saving and investment" program whose objective is for an individual investor to attain his financial goals through the twin habits of regularly saving and investing.

(Keywords: regular savings and investing)

Under this arrangement, an investor enrolls his savings,checking or payroll account in a BDO automatic debit facility wherein a fixed amount/s (with a minimum of Php1,000.00) per month is/are deducted for the purpose of immediately investing in selected BDO UITFs. Every time the market value of his UITF investments reaches the minimum amount of Php 10,000.00 investment required for the selected UITFs, he is issued a Confirmation of Participation (COP) which converts his EIP contributions into regular UITF investments. As long as he is enrolled in the program, the process of saving, investing and issuance of COP continues automatically on the selected contribution dates.

(Before proceeding, would you consider investing in the Philippine Stock Market? It is similar with BDO EIP but you have more control on what companies to invest in. The concept is similar which is called peso cost averaging)

Unit Investment Trust Funds

Unit Investment Trust Funds (UITFs) are open-ended pooled trust funds made available to investors through units of participation which are valued on a marked-to-market basis. UITFs empower the retail investor since they require relatively small minimum participation amounts yet provide equal access to higher earning investments not readily available to small investors because of the sizeable lots required. BDO's wide selection of UITFs allows clients to choose a fund suitable for their particular stage in life, investment objectives, time horizon and risk profile. (read more)

For an enrollee in the program, the EIP has become a facility to help him to regularly set aside funds for investment to meet multi-purpose needs in the future, such as funding a wedding, children's education, construction of a home or retirement, etc. It also gives him an affordable access to the services of the BDO professional investment managers who keep constant watch over the BDO UITFs.

The EIP espouses the investment precept that the sooner an individual investor begins investing, the more time his money can grow. Investing even in small amounts when done on a regular basis and early on, can produce considerable rewards over the long term. Through the EIP, he can experience the power of "compound interest" which refers to interest earned on principal plus interest that was earned earlier.

Another advantage of the EIP is that it enables an individual investor to ride out market movements through "cost averaging." Investing fixed amounts of contributions at regular intervals over a long period of time will build his portfolio one step at a time, regardless of market conditions, effectively averaging costs over time. In short, through the EIP, he will be able to invest without worrying about monitoring market movements and timing his investments. This strategy also mitigates the risks associated with investing lump sums at a wrong time and bearing the consequence of the market losing value shortly after making the investment.

Currently, selected BDO UITFs, particularly those which are best for investors with a longer term investment horizon, are available for the EIP.

Here's how to join the EIP, in just three easy steps:

1. Fill out the EIP Application Form and enroll your BDO Savings/Checking/Payroll Account in the EIP at any BDO branch.

2. Decide on the following details of your contribution:

     • Amount: Minimum of Php1,000.00 per contribution

     • Frequency and schedule: Once a month (5th, 10th, 15th, 20th, 25th or the 30th)
        or Twice a month (every 5th & 20th, 10th and 25th, or 15th & 30th)

3. Choose what type of UITF is best for you: BDO Fixed Income Fund, BDO Peso Balanced Fund or the BDO Equity Fund

Rush to your nearest BDO branch today!

For inquiries, please call Trust and Investments Group at 840-7000 locals 4265, 4244, 4255 and 7032 or send an e-mail to investments@bdo.com.ph.