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Be The Master Of Your Financial Fate

"Time is our greatest ally in investing", that has always been the advice that we always get from finance professionals and experts. Though there is some significant truth in it, time alone is not efficient enough for us to get the most out from our investments. Market timing is important as time itself. Both time and right timing, if done and made right, can give us maximum results from our investments. 

But why do we often hear about "time" and rarely hear about "market timing" from these professionals and experts?

The answer is relatively simple. These professionals and experts know how to time the market and they are using our money to earn profit as well. Here are the reasons why these people give "time" as an advice for investments.

1.) These professionals and experts handle our money differently. While we let it "sleep and grow", these people are actively trading, buying low and selling high, and earning profit on a consistent basis. The end result? They earn more than us and even without letting any penny out of their pockets. Thus, it makes sense why some financial institutions have this so called "lock in" period because it can give them an ample amount of time to earn significantly and at the same time minimizing their risk because of the longer duration of having our money on their hands.

2.) Because of the market volatility and unpredictability, we may hand your money over to them when the market is not doing good. By heeding to the advice that "time" is our greatest ally in investment, such professionals and experts get more room to patiently wait for the right entry in the market to buy low. Buying low means more upside or growth potential.

3.) Time has not just been associated but has been exclusively linked to investments. Let's take a look at how an investor and how a trader is defined. An investor is defined as somebody who looks long term while a trader is somebody who buys and sells in a short period of time. Worse, traders are often associated as gamblers because of the unpredictability of the market. Investors are traders. Anybody who buys and/or sells trades irregardless of time. This erroneous definition of an investor and a trader gives the negative notion to our minds that an investor is way better and less risky than a trader.

This is not to put down the reputation of finance professionals and experts and even agents and brokers but the point of this one is just for us to further enhance our financial IQ and correct our distorted mindset about being a trader and an investor. These people know how to handle money in a much more effective way than we do. If we want to be more efficient with our money, it makes some real sense for us to learn the things that they do.

Its quite ironic that most of us went to school, have a career, and earn money yet we weren't taught of how to handle and value money. We may never know everything that these people do (its their profession and career in the first place) but at least improving our financial knowledge will make us more efficient in handling our finances. The worst thing that we can do with our money is to hand it over to other people without even knowing how they are handling it.

Mathematically, individual traders outdo mutual fund firms (individual traders handle mutual funds in the first place). An average good and logical trader could earn a conservative 20% in a month to as high as 50% or even more. Some stocks even go more than 100% in just a matter of days or weeks so we see the potential that these people have. Mutual funds conservatively grow by 12% in a year or as high as 40%-50% in a year. What individual traders earn in months is earned by mutual fund firms in a year. See the difference if we handle our investments correctly or at least know where to put our money and how they are managed?

Invest in knowledge before putting money on the table. Knowledge reduces risk significantly and increases the potential of growth. Its just like earning a degree. If you do well in school, you will acquire the necessary knowledge and skills which will give you a good pay later on. Increasing your financial knowledge will make money work for you.

Financial Literacy Articles

Writing has become a passion lately. Other than writing my interpretation of the chart analysis of several companies listed in the Philippine Stock Exchange, I've written a number of articles in line to financial planning.

Here are some of my articles:

How To Be Smarter in Spending Your Money

Top 10 Financial Planning Tips

Is it a Good Idea for You and Your Spouse to Try Marriage Financial Planning?

Mutual Funds: Good Days Around The Corner

During the last quarter of 2010, we have seen some very significant gains in the stock market, mutual funds, and probably in all financial channels. In the stock exchange for example, SMC went up from around 80 to as high as 180 in just 2 months, around 125% growth in just 2 months. The NAVPS (net asset value per share) in mutual funds also went up as well.

However, as soon as the market started to go bearish early in 2011, the NAVPS in mutual funds also went down as well. I firmly believe that a bulk of investments made by professional fund managers in mutual funds are placed in stocks (and FOREX as well) so the performance of mutual fund companies are strongly affected by the performance of the market thus if the PHISIX signifies something bearish, NAVPS goes down with it.

For more than a month (January to mid-February 2011), PHISIX went down from around 4200 points to as low as 3700, even threatening to go down and challenge the 3600 support level. PHISIX has found support at 3700 and was considered to be in the consolidation stage.

Consolidation normally signifies a change in trend thus after a bearish (values declining) start, PHISIX will pick up some bullish (values increasing) momentum real soon. Personally, I think that the consolidation stage is already long overdue and an uptrend is just waiting around the corner. So knowing where the market will most probably head next, this is a great opportunity to buy shares in either stocks or mutual funds.

For the last 2 years, the performance of mutual funds were superb coming off from the so called economic meltdown. First Metro Asset gained 53% in 2009 and 62.51% in 2010, PhilEquity gained 65.05% in 2009 and 54.18% in 2010 and both are continuing to do well.

Aside from the fact that the value of NAVPS will start to go back up again, here are some reasons why today is the right time to invest in mutual funds.

1.) Bargain prices of NAVPS. First Metro Asset Management's (FAMI) NAVPS is currently only at P3.33 per share while PhilEquity's NAVPS is at 19.18. The good thing about cheap NAVPS is that they've got a bigger room to grow considering their past performances. Also take note that PHISIX is projected to reach a high of 4600 before 2011 ends so expect mutual funds NAVPS to follow suit as well. My bold prediction of FAMI is that it will break the P4 and probably even reach P4.50. PhilEquity will make it past 25.

2.) Cheap means more. Since the NAVPS are cheap, we could buy more shares and more shares means bigger gains. To further explain the point, here's an example. Assuming you invested P5000 at P5 per share, you get 1000 shares. On the other hand, assuming that you invested the same amount but at NAVPS of only P4.50, you get 1111 shares. After a year, the NAVPS went up to P7 thus at NAVPS of P5 you only gain P2,000 while at NAVPS of P4.5 you gain P2,777. What if you invested P100,000 at the same NAVPS prices? After a year, you'll gain P40,000 at NAVPS of P5 while you gain P55,554 at NAVPS of P4.50. Cheaper NAVPS doesn't really matter much for small investments but for bigger investments or bigger gains, the difference really shows. Timing is crucial.

3.) Economic recovery still hasn't peaked. Economists are saying that the Philippine economy still has a long way to go so that means that PHISIX also has a very long way to go. Knowing that mutual funds are strongly affected by PHISIX, that also means that there is a very big room for growth in mutual funds. Since mutual funds are highly advised for long term, right now is the right time because values are cheap and indicators are telling that it is heading in the right direction.

Financial experts are saying that March is the right time to buy shares either in stocks and mutual funds. Their forecast held true as the downtrend stopped and the market consolidated. However, the consolidation seems to take so long (probably because of the problems in Libya and Japan) and the uptrend is already impatiently waiting at the corner.

IMG: The Total Financial Solution

IMG is one of the most unique companies in the industry today. It is a company that is dedicated to serve the financial needs of the people particularly those in the middle and lower range earning population.

The company recognizes the need of financial literacy and firmly believes that financial literacy is one of the keys in nation building. IMG is driven by it's mission to help and educate Filipinos financially both here in the Philippines and abroad and sees a very financially literate Filipino society in the near future.

What does IMG offer?

1.) Financial literacy. IMG associates get access to regular and several training presentations. Some of the topics tackled are how to build the right and a solid financial foundation, debt elimination, introduction to different investment channels, personal assessment of one's finances through the help of professional financial planners and experienced individuals in the money market.

Just think of it as going back to school. In school we were taught of the skills necessary to earn a living. Unfortunately, we weren't taught much about money management and IMG recognizes such deficit and fills it. The good part? As an IMG associate, you can get such trainings for free and at your own time.

2.) Access to different financial institutions. IMG is a marketing arm of several leading financial institutions in the Philippines such as health care, life and non-life insurance, mutual funds, and real estate. The company aims to provide all the financial needs of its associates and clients.

Because these financial sectors recognize and applaud IMG's mission, IMG's associates and clients get several privileges from these companies such as lower minimum investment rates and special training programs exclusive for IMG associates.

3.) A very lucrative and convenient earning opportunity. In line to its mission to help Filipinos earn a good income, IMG offers several business and investment opportunities through their partner companies. With IMG, you can become your own financial adviser and assess your financial needs and become your own financial broker to provide yourself what you need.

IMG shares the secrets of the wealthy and financially secure people to the common ones. With a huge number of very experienced individuals in the financial industry, rest assured that you can get the help that you need through IMG.

Reasons to Invest in 2011: Pot of Gold at the End of the 2011 Rainbow

PHISIX seemed to have started the wrong way for 2011. Instead of following where it left off in 2010, it started to go down and is threatening to hit a low support of 3600 (in reference to its high in 2010 at 4200ish). PHISIX's drop brought with it other financial institutions, after all, PHISIX has one of the greater influences in the Philippine economy.

Despite the sluggish start, 2011 is still a very optimistic year. In fact, 2011 is said to be a great year for investments. Many people get scared (some even panic) seeing the values go down and as soon as the market starts to go up they miss a great opportunity by staying in the sidelines thinking that the market will go down once again. The fluctuations are inevitable in the stock market, it cannot be avoided. Money is also in fluctuations.

Here are some reasons why 2011 is a great year to invest:

1.) Sell off is temporary. As I have mentioned, PHISIX strongly influences the Philippine economy and the financial institutions within it. The bearish behavior of PHISIX is a result of firms and individuals cashing out their gains after the steep 2010 climb. The sell offs are projected to end as early as late February or maybe the month of March. PHISIX is in a consolidation state as of the moment and a reversal might happen real soon (from going down to going up).

As soon as PHISIX starts to pick up the pace, expect other financial institutions to do as well. The sell off is an opportunity to buy cheap.

2.) Strong fundamentals of the Philippines. Statistics show that Philippines has a lesser Debt to GDP and Deficit to GDP than United States and the European area. In 2009, Philippines has 56.0% Debt to GDP while United States has 83.0% and the Euro area have 74.0%.

Philippines also has the higher growth forecasts in 2011 up to 2015 compared to United States and the Euro area. Philippines is projected to grow by 5.4% in 2011 in comparison to USA's 2.3% and Europe's 1.5%. In 2015, Philippines is expected to grow by 6.0% (in reference to 2010) while USA and Europe will have 2.6% and 1.7% growths respectively.

3.) Philippines is in the midst of an investment boom. Well developed countries have an investments in GDP rate of at least 30% to as high as 50%. Since 1991, the highest that the Philippines have gone was approximately 26% and went on a downtrend since then.

Right now, Philippines is resting on a 16% investment in GDP rate, almost half than the minimum number in well developed countries. What this rate tells us is that there is still a lot of room for growth.

From 2011-2016, (US) $17 Billion worth of public-private partnerships (PPP) are projected. In 2011 alone, 11 PPP projects are scheduled namely NAIA Expressway ($235 Million), LRT Line 1 Expansion ($170 Million), MRT-3 Expansion (P140 Million), LRT-1 South Extension ($700 Million), LRT Line 2 East Extension ($120 Million), Laguindingan Airport Construction ($28 Million), Cavite-Laguna Expressway ($262 Million), NLEX-SLEX Link ($467 Million), Panglao Airport ($120 Million), Puerto Princesa Airport ($97 Million), and Daraga Airport ($71 Million) all worth $2.41 Billion.

The economic recovery is not yet over in fact it said that it still hasn't reached its midpoint.

4.) Valuations are not expensive. Because the prices of stocks in the Philippine Stock Exchange are falling, people could invest in bargain price. The current price values of stocks doesn't reflect the real value of the company or the stocks themselves and most of them are undervalued right now. They are cheap and they've got a lot of room to grow.

Investments carry risk with it but risk could be minimized. The greatest risk in investing is not doing anything at all and playing safe thinking that you might lose your money. The financial industry is projected to do very well as soon as PHISIX resumes an uptrend so shop around for mutual funds, UITFs, bonds, and stocks because they will definitely do good in the next few months. Though other sectors are expected to do good as well, these investment opportunities in the financial industry are way simpler and convenient compared to other investment opportunities. Quite ideal for a typical Juan.

Banks vs Mutual Funds

The money market isn't as complicated as we think it is. Unfortunately, our very limited knowledge results to pessimism towards finances and investments making it complicated and blocks us from great opportunities that would make our money grow. Among the very common reasons that keeps a person from investing are the effort and knowledge required, the capital needed, and simply the fact that trust is very hard to give these days.

Banks are the most popular financial institutions. Talk about money and most people would think about banks. Why is it popular? Because it directly answers all concerns. Banks are easy, somebody who doesn't know how the financial industry works could put up an account, the amount needed to open an account is minimal, and banks have very good credibility.

However, banks isn't what we think it really is. Don't get me wrong, I'm not saying that banks are bad but in this generation, banks are no longer the best places to put money in. Money doesn't technically grow in banks because inflation rates are higher than bank rates and the rates of loans are higher than interest rates. Isn't it ironic that if you deposit to a bank you earn just a max of 1% and when you loan you'll pay at least 4% interest rate? You're borrowing your own money and pay even more. Banks are smart, they know how to make money. (I said smart, not evil)

A lot of people failed to see this picture thus they think that by putting money in the bank they are saving, and tragically, some even think that they are investing (yeah, tragic).

In order to save and invest efficiently, there are some things to consider but everything boils to just one thing: make the value of your money grow. Be aware that increasing the value of your investment is not letting your money merely earn any interest. Here's an illustration:

Let's say you have a hundred pesos right now and you deposit it to a bank earning an interest rate of 1% annually and the inflation rate is 4%. After depositing money in the bank, you ate at a restaurant a meal worth P100. A year after, your money earned 1% interest and becomes P101. You withdrew it and you went to the same restaurant to eat the same meal. To your surprise, the meal now costs P104!

How did such meal become P104? Because of the inflation rate your money lost roughly 3% of it's value. See? Your money earned an interest but it's value never went up, in fact, it lost some of it's value because of inflation.

In order to increase the value of your money or in order for it to earn a real growing interest, it should beat inflation and other liabilities that could pull it's value down.

One of the best ways to invest is through mutual funds. Mutual funds are pool of money coming for different investors/savers that are invested in different securities such as stocks and bonds and are handled by professional fund managers.

Just like banks, mutual funds answers the same concerns. It is easy, it doesn't require much to open an account, and it is credible as well. Opening a mutual fund account is basically just the same as opening a bank account. You fill up the necessary forms, provide the requirements and amount required to open an account, and you can let your money/investment sleep for 10 years.

Mutual funds could give annual returns of at least 12% (conservative estimation) annually, leading bank interest rates by tenfold. Actually in reality, mutual funds could give returns like 30% or as high as 50% annually which is more than enough to outdo inflation and banks.

But what's the catch in mutual funds? Mutual funds are considered as investments and not savings and they aren't insured by PDIC. The risks are higher in mutual funds in comparison to banks but the potential gains are far greater. Another thing is that mutual funds doesn't have a fixed interest rate or gain. Mutual funds depend on the market behavior thus if the market is down, mutual funds goes down as well and vice versa.

How good could mutual funds really be? PhilEquity, recognized as the oldest mutual fund company in the Philippines, started in 1995 with a net asset value per share (NAVPS) or price per share of P1. By the end of 2010, PhilEquity's NAVPS rose above P20. In 15 years, PhilEquity's value went up by 2000%. No bank could give a gain like that in less than 2 decades.

Mutual funds are starting to gain popularity among the people. Experts suggest that mutual funds are an ideal replacement for retirement plans, educational plans, and savings. Some of the companies that are offering mutual funds in the Philippines are PhilEquity, First Metro Asset Management (subsidiary of Metrobank), United Fund (Cocolife), PhilAm Asset Management, and SunLife Financial.

Both still serve different purposes. Banks are best for emergency funds because they are very accessible. But should you go for some serious gains, take mutual funds into consideration.

The financial industry is a very vast topic to consider. There are other investment vehicles that could also really give great gains (in fact, even more than mutual funds) but considering it's simplicity, mutual funds is definitely worth the nod. It is basically an effort free investment. That's "easy" money so to speak.

Patience is Money

In contrary to what most people would suggest that this is the best time to invest in mutual funds because the NAVPS is going down, obviously, the facts say other things. The chart below shows that PHISIX continues to sink and today it was worse than most people could think. PHISIX dropped by 105.06 points or -2.73% to 3,738.31. PHISIX is projected to drop down to as low as 3,600 before it bounces back and 138.31 points is still a long way to go. If PHISIX will drop approximately 140 points, that is a significant drop in mutual funds NAVPS.

Though mutual fund companies invest in other securities such as bonds, a large chunk of their portfolio belongs to the stock market (maybe even more than FOREX). Mutual fund companies invest/trade millions in a particular stock and by millions I mean tens or even hundreds of millions. So if the market goes down, a large part of the mutual funds' portfolio goes down as well, thus it makes some perfect sense as to why the NAVPS goes down with the PHISIX.

Apparently, this is a situation where "time" is not your ally in investing but rather "timing". Why timing? Here's an illustration about time vs timing:

Person A and person B both have P50,000 to invest. Person A thinks that the earlier he invests, the greater his gains is going to be so he didn't care about the market status and went on to invest on a mutual fund company for a NAVPS worth P5 per share. Person B on the other hand thinks that both time and timing are essential thus he studied the market behavior and waited patiently for his entry. Person B knows that PHISIX is sinking and all technical analysis, fundamentals, and sentiments aren't looking good so he kept his hard earned money at hand and timed his opportunity. A month later, PHISIX showed some signs of life and Person B invested on the same mutual fund as Person A did but for NAVPS that is now worth P4.50.

So who got more? Person A invested P50,000 at P5 per share and got 10,000 shares, person B who timed his entry invested the same amount but at P4.50 per share and got 11,111 shares. Assuming that the NAVPS went up to P10 per share after 10 years and both never added any amount to their investments, Person A will get P100,000 or doubled his money. Person B on the other hand gets P111,110 after 10 years.

Why did investing without timing work against Person A? Because during the time that the market went down his investments never grew and in fact it lost some of it's value. Of course optimism and conventional knowledge will tell that it will recover and grow in time but in comparison to Person B, Person A got lesser shares for the same amount (you want more shares at cheaper price don't you?). Realize what difference timing could make?

Be a little patient. You don't have to be an expert in reading/interpreting/analyzing charts or know each and every news there is. A little diligence and effort is more than enough. Give the market some of your time, effort, and attention and it will become your friend. It will significantly increase your odds.

PHISIX: Good Times Ahead?

From an Elliott Wave Theory analysis point of view, the Philippine Stock Exchange Index (PHISIX) is wave 5 bound sooner or later. Elliott Wave Theory says that it takes five waves for the market to reverse it's trend, three waves going the direction of the trend while two going reverse.

The chart below shows that PHISIX is already in wave 4 (from 2009 reference) and should the trend continue, wave five is just around the corner. The two boxes are the two uptrends (value of PHISIX going up) and those that are encircled are reversal points where the value of PHISIX stopped going down and resumed an uptrend.

The second circle (right side) signifies that PHISIX is already on a downtrend (value of PHISIX going down) and according to Elliott Wave Theory, this is the fourth wave.

How significant is wave 4? Wave 4 signifies that a corrective wave is coming sooner or later thus PHISIX will once again start to go up. This is a time for traders and investors alike to keep a very close eye on the market because PHISIX will start to go up once again in no time.

However, be a little bit cautious as some bad news are looming around the corner. London based Barclays Capital reported that RP's inflation rate might exceed 4.5% by 2011, not a really good value if you ask me. It might make investors cover because it will make the value of their investments smaller.

Summing it up, PHISIX looks promising technically but it will take a matter of time to see if bad news could shake it fundamentally. Be a little more patient and vigilant. Good times could just be around the corner and it brings with it some serious growth and by serious, that means somewhere around 40% to as far as 100% for the year.

Common Financial Misconceptions in the Philippines

Financial literacy is still in it's infancy in the Philippines. The mindset of most Filipinos towards finances are bent towards the opposite way, a way going against building a solid financial foundation. Here are some of the most common misconceptions towards finances of most Filipinos:

1.) The meaning of assets.

What most people think: What they own are assets. Ownership.

What an asset really means: An asset is something that brings money into the pocket.

Two of the most common examples of this is owning a car and a house. A car and a house draws money out fast: fuel, maintenance, repairs, estate taxes, etc.. If you get caught up in the idea that owning these are turning them into assets, you'll be financially drained faster than you could ever think of. What turns these into assets depends on how you use them, not by merely owning them.

Knowing what asset really is could spell the difference in building a strong financial foundation and going down the drain.

2.) The concept of saving.

What most people think: Save to spend

What saving should be: Save to invest

How many people have you heard say that they are going to save up for a vacation, a gadget, or just clothes? Probably a lot. But have you ever heard somebody say that he's going to save up for emergency fund, insurance, and investment? Not that many. Ironic as it may seem but people save just to spend it later on.

Saving is not about accumulating money for something but rather either accumulating money for the rainy days or make money grow.

3.) Spending and ego.

What most people think: Who spends more is richer.

How should it be: Who saves more is richer.

Everybody wants to be rich or at least have more than enough to live a comfortable life. For many people, having more than enough is not enough. They want to show it off and feed their egos buy spending to show everybody that they have money. Spending is a habit and once it goes unchecked, it is stronger than controlling it.

Take care of the needs, put off the wants. Obviously your financial security is more important than feeding your ego.

4.) My grandpa's advice.

What most people think: What worked decades before still works now.

What works now: Information and adaptability

A very common example is putting money in the bank. Many people still think that by putting money in the bank it will grow, worse, some even think that putting money in the bank is investing. Banks work decades before because the interest rates are higher than the inflation rates. Inflation rates are higher tenfold than bank interest rates now.

Gone are the days where money grows in the bank. Several financial institutions are giving better returns than banks. Most of the people who made it big in this generation are people who were innovative and imaginative, not the kind of people who were stuck in the things of the past.

Financial literacy still has a very long way to go in the Philippines. Invest in knowledge, it is your greatest asset.

How Deep Will PHISIX Go?

Apparently the reported 7.3% GDP and 7.2% GNP of the Philippines didn't help. PHISIX continues to go down amidst the positive news. The series of bad news (Makati bus bombing, China's inflation rate at 3.3%, and the chaos at Egypt) have done more damage than the positive news of the Philippine economy.

The graph below shows that PHISIX has already broken its somewhat strong uptrend support at 4000.

Encircled is supposed to be PHISIX's uptrend support at 4000 which was broken early January. Several supports were pegged but to no avail, PHISIX continues to dive deep.

BDO projected that PHISIX might go down to as low as 3600 for the year. 3600 is a really deep dive but with the looks of it, there is a very strong chance.

Now what if PHISIX sinks down to 3600, is it a good thing or bad? It's good if you ask me. PHISIX being down means other stocks are down, their values are cheaper (the value of stocks brings PHISIX down in the first place). It cuts in all angles for everybody because:

[1] It gives the perfect entry to the stock market. Stocks are cheap hence more volume could be bought.

[2] It gives traders and investors an opportunity to cover their losses when PHISIX went down.

[3] It gives a better room for growth. The deeper the hole, the higher the climb. 3600 is deep and there's a long way to go up.

How far will PHISIX continue to go? Nobody knows. But as far as the market behavior is concerned, it will continue to go down. Now is not the right time to invest. Experienced traders and investors say that late February or the month of March is a very good time to invest or trade. It's wise to take such advise.

Mutual Funds: When is the Best Time to Invest?

"When is the best time to invest?". It is a question that I hear almost everyday mostly from people who either are investing in mutual funds or are planning to invest in one.

The idea of cost averaging have captivated many people and in fact it has fostered the mindset that "anytime" is the right time to invest. But for me, cost averaging is not enough.

In cost averaging, time is the most important part in investing. The earlier you start, the lesser the risk, and the greater the chances of the returns. However, cost averaging says nothing about entries and exits which in my opinion are very important. Time and timing are actually the keys in making a successful trade and investment if you want to maximize your profits.

Cost averaging is nothing more than speculation. It is no different in depositing in a savings account. Speculation if you ask me is not investing, it is investing blindly. Though it's true that mutual funds offer way better interests/gains than bank deposits, be aware that mutual funds are investments and investments needs investigation, not speculation.

So going back to the question "when is the best time to invest?", my answer is wait until PHISIX hits a low or in a technical lingo, a support. The Philippine Stock Exchange heavily influences financial institutions in the Philippines be it stocks, bonds, and other forms of securities. If the PHISIX (Philippine Stock Market Index) goes down, almost everything goes down as well.

As of this moment, PHISIX is going down and breaking supports. How low will it go, we still don't know. PHISIX have already broken the 4000 support and is heading down to 3800. The bombing incident in Makati, China's reported 3.3% inflation rate, and the turmoil in Egypt are not helping thus we could expect PHISIX to go further down.

In the graph below, the straight line shows the support that PHISIX is resting to as of the moment. It is inclining going down thus it is indeed going down. So is "anytime" the best time to invest? The chart says otherwise. Does it make sense to invest into something that is going down? I don't think so. Wait for it to hit it's lowest and reverse. You want a bargain don't you? A stock at it's cheapest and more volume?

The lines in the two boxes (next graph) is PHISIX's performance for the past two years. Elliot's Wave Theory says that before a major reversal, a stock goes through 5 waves. The boxed data shows that PHISIX have already gone through waves one to four and wave 5 is possibly coming. Is it good news? Yes indeed. Wave 5 is an uptrend but when will it happen? We don't know. The downtrend could continue and a reversal could happen anytime.

The third graph shows PHISIX's performance from 2002 to 2010. As far as the graph is concerned, PHISIX is still on it's long term uptrend on wave 3 meaning that there is still a lot more room to grow. Wave 2 (downtrend) happened during the so called economic crisis. What comes down always comes back up so after the big dip in 2008, that gave a lot of height to climb in the following years. PhilEquity rode PHISIX's wave 1 as well as the steep climb after the economic meltdown. It's NAVPS grew from barely a peso in 1995 to about P20 in 2010, roughly 2000% increase in 15 years.

Knowing the market behavior is essential in investing. It eliminates false hopes that the market is going up and much more, take away the idea that mutual funds are some sort of magic wand that could give instant riches long term. Knowing that PHISIX is bound to reach greater heights in the years to come is not much of our concern as of the moment. What we should know is when to time our entry to have a good chance of gaining more. Never trade/invest against the trend, you can never outsmart the market.

How to Build the Right Financial Foundation

The dilemma that most people are facing are related to finances. Financial literacy weren't taught in schools and most of the things that we know now when it comes to finances are things that are being brought down from our parent's grandparents, the information is outdated!

Just like building a strong house, building the right financial foundation requires the right steps and tools. A house whose base and foundation is poorly built will soon topple down, just like a financial foundation that is poorly implemented.

The key in building a good financial foundation is not earning more nor finding more sources of income but rather in knowing the essential steps in building wealth. Many people who are earning well end up either struggling to make ends meet, broke, or down in debt because they failed to establish the right financial foundation. Without a good financial plan, a person could set the wrong priorities for his/her finances.

Knowledge is what separates the wealthy from the middle class and the poor. Studies have shown that wealthy people have basically the same financial framework (same as a house's blueprint). They may be technically different in their approaches but they follow the same principles.

Want to know how the wealthy do their finances? Here are the six very basics steps on how to build a strong financial foundation:

1.) Health care - Getting sick is very costly and is one of the top reasons why people get financially drained. Health care gives reasonable premiums for huge amount of benefits when the policy holder gets sick thus protecting savings and investments from being used up to cover for the expenses.

2.) Insurance - Insurance provides a measure of financial support when the bread winner/policy holder gets incapacitated or dies. Like health care, insurance premiums comes in reasonable and gives huge sums to cover the income generating capacity of the insured. Though it is not enough to cover the emotional burden, at least it is good enough to give peace of mind that those who are left behind are in good hands financially.

3.) Debt Elimination - There are two types of debt: good debt and bad debt. Good debt is a debt that could generate better finances such as loans to start a business or for investments. Bad debts are income or asset pulling debts. Debts, be it good or bad, are borrowed money that should be repaid. At this point, both good and bad debts should be eliminated and avoided. Good debts are better off after step 5.

4.) Emergency Fund - Emergency funds are for, as the name suggests, emergency. It's an amount of money that should be liquid and accessible as it is the money you'll get and use when the need arises (key word is need, not wants). The suggested amount of emergency funds is equal to at least ten times one's salary or monthly income.

5.) Investments - Investments are intended for long term and should never be touched when sudden need arises (emergency funds will take care of that). Several investment channels are mutual funds, UITFs, real estate, stocks and other securities, and even starting a business (traditional or digital).

6.) Estate preservation - Estate preservation is a plan to create more wealth, make existing investments grow, or transfer wealth during your lifetime or after your death. Estate preservation keeps your investments and savings from falling down due to lack or poor planning.

Summing everything up, the flow should go like this:

1.) Health care and insurance should come first as it would serve as a coverage for somebody who builds his/her financial foundation. Just in case whatever may happen, at least a financial support is at hand.

2.) The habit of saving is very important in eliminating debt and/or building an emergency fund. Develop the habit of saving and never think of loans (debt) as a solution for debt. Without the habit of saving, eliminating debt and building up an emergency fund would be an enormous task. Debt elimination comes in first because emergency funds is not intended to pay off debt. Get rid of debt.

3.) Investments takes time to build so it should come last. Invest with spare money or money that you can afford to "lose", emergency funds are there just in case the endeavor turns sour. Start small and learn consistently. Mutual funds and UITF are ideal for those who are testing the waters of investments.

Building a strong financial foundation isn't that complicated but it takes time to build. Start now, start young, tomorrow is already too late.