Is a House a Liability or an Asset?

Nov, 26, 2o08

If we are going to be strict about the definition of liability as "something that takes money out of your pocket every month, wether you work or not", then life itself would be a liability.

But then again, if asset is, "something that puts money into your pocket each month, regardless if you work or not", life can only be an asset if you work or you make money from your mere “existence” (ansarap nun!). Otherwise, you are worthless. Papayag ba kayo?

Unfortunately, life is not the issue here, otherwise, I think I've settled the score already. Hehe. I'ts the house that we are trying to qualify as an asset or a liability.

Now the reason, I'm giving the above analogy for, is to support what neo just said. It doesn't mean that just because we are spending some money for owning a house, it becomes an accountability.

Besides, when we talk about income, it is the “net” proceeds that matters more. Clearly having your own house increases net returns as it decreases expenditure compared to renting an apartment. Unless of course, you prefer to stay in the streets.

“Revenues and expenses” will always be part of any aspect of life, literally and figuratively. Unless of course we return to prehistoric times. When everything (I think) is neither an asset nor a liability.

Or a liability! Try living during those times.

Will the Philippine Stock Market Be Dissolved?

Nov 15, 2008

As far as I know (which by the way, can’t take us that far), the answer to your question lies in understanding what is the stock market and its history. So that would explain the long answer.

Simply put, it dates back to a time when man realizes that a way to raise funds without creating debt (through bank loans) to expand business is to sell stocks or partial ownership of the company in an agreement to divide the company’s profit to whoever buys the shares through dividends. So what our ancestors did, was to put up an organization (stock exchange) to bring the buyers and sellers to a listing of stocks and securities where trade can occur.

But that’s not the only way by which we can profit through the stock market. Man being man (smart but greedy), soon realizes, that profits could be made by re-selling the stock to a much higher price to others who saw value in a company. In short, a share is sold to a much higher price that is partly (if not purely) speculated on as it is based on partly (if not purely) predicting the company’s future revenues. The role of speculation itself explains the volatility of the share prices as shareholders may hold different views over the company’s future earnings.

Now, partly because of economic factors (that lead to companies closing down) and partly to fear and panic, share prices may experience a sharp dip (including those other companies who are fundamentally sound, as again, anxiety is one of the market’s driving factors). This is what we call a stock market crash. The possibility of some share prices as being undervalued is there during a crash.

So, in short, a crash is different from dissolution, in as much as the latter is different from re-organization and reinvention. IN AS MUCH AS a stock market dissolution is different from individual company’s liquidation. When you buy shares in a company, they have the obligation of paying you dividends, that is as long they are making profit (except of course when it's making negative revenues or stops operation). Concurrent closures of these listed companies is rather impossible, if not ridiculous.

Unless of course, it’s the end of the world.

A Matter of Perspective II

Nov 13, 2008

Sabi nga nila, the only time politicians tell the truth is when they call each other liars (Hehe, sorry, can’t think of a better analogy).

No, the answer to that is because investing/saving is a personal issue and responsibility. For any loss or gain, we are the only one accountable.

Rather hard (and pointless) if everybody agrees on something about money because there are always 2 sides to the coin. Not to mention, economics is the only field by which two people can share a nobel prize for saying opposing things. But of course, arguments need to be laid out properly. If inaptly put, see beyond the drama. There’s more to it (sana) trust me. We listen, and examine who is more sensible. But as is always the case, everybody will have a point. The decision is ours to make.

Don’t worry, if there’s something we are in total agreement, yun ang YUMAMAN!

A Matter of Perspective

Nov 10, 2008

When our ideas are put to the test, it is hard to be receptive . Moreso if it is our pride. And that is the truth.

With forums like this, we get to meet a lot of people who has different intentions, opinions, personalities, not to mention sense of humor. The problem is we only get to read the message. Believe it or not, it is easier to get the idea across in a conversation. I think because, the emoticon is not enough. Hehe. Or probably because in person, we can assault the other instead.

In as much as it is important to think what we’re going to post, it is equally imperative to consider how others would take it. If we have to think twice before posting, we also have to think as much (if not more) while reading others’ messages.

It’s hard you see, given the complexity of man, to decode each other’s persona, moreso in a forum where we are defined only by some of our thoughts. And I think you can’t fault some people on how they put up their message in as much as they can’t fault us in how we would respond.

The best thing would be to try our best to keep an open mind. Trust me, it takes a lot of effort. It’s hard to be opposed. But it’s harder to accept defeat. (and I admit my guilt, hehe)

Sabi nga nila, pag binato ka ng bato, batuhin mo ng tinapay. Easier said than done. Hehe. But then in forums, it would always boil down to the matter of perspective. Malay mo tinapay pala iyong binato.

Investing in Mutual Funds

Is it wise to invest while still in debt?
Nov 7, 2008

One, I think it's not wise to save and invest when you are still in debt. I think it's more prudent if you clear yourself off of any liability first. Baka kasi yung interest ng investment mo e katumbas lang ng interest ng utang mo, nagwoworry ka pa. Or worse, mas mababa pa ang interest ng investment mo, nadagdagan pa utang mo.

Second, again it’s more sensible to have some bank savings that would cover at least a few months of your needs. Just in case you lose your job hehe. Besides a bank account is a form of investment, easily accessible (in case of immediate money need), low risk with a predictable return. This should form the foundation of your money-making strategy. But if your question is if you can buy shares from banks offering MFs or UITFs even if you don't have an account with them yet, the answer is yes (at least with some banks, not really sure though, just ask). But better if you have, so you can buy and redeem by simply transfering funds from and to your account.

Third, aside from checking and savings account, there are other forms of investment products, such as what you mentioned – bonds, balanced funds, stocks, real estate etc. But before you go into that, do 1 and 2 first. Then read (books, this forum) to learn more about these other products while doing just that.

I understand the excitement. But don't succumb to it just yet. It's not as easy as you think it is.
It's never too late. As to why financial literacy not included in curriculum, well, personally because I think there are other important things to learn aside from money matters. Not to mention, the latter would need some discipline and a lot of maturity.

How Much Have you Lost in this Bear Market?

Nov 1, 2o08

Manipulation in the Stock Market

Whooaah! I was planning to just check out this forum, before I go to bed. Just didn’t realize that it would make me awake for another couple of hours!

Much has been said. And more is bound to be thrown at each other’s face. But let’s try to be nice, and civil, and...nice. For whatever difference in conviction, let’s just account that to difference in perspective. Or generation gap. Hehe. The latter by the way is figurative.

Now, that manipulation thing, we have to admit, could be part of the stock market. And what just have been pointed out in another thread, it even exists in the international scene. I guess, it really is part of any money-making scheme. Let’s just leave some benefit of the doubt. Afterall, the presence of intention is something that’s difficult to prove.

But I don’t think it would be reason enough to stop trading in the PSE. But the grounds as to why ordinary investors like us need to understand the dynamics and commit to a strategy that again, would best suit our goals and psyche. And okay, values.

In fact, investors are partly to blame. Most (if not all) regard stocks only as a trading vehicle. The reason they gain or lose is because they take advantage of the volatility (especially true for those who trade for the short term). Which is by the way dictated by man’s reaction to market volume (okay, manipulated or not). Dicounting in toto, the intrinsic value. But can we really do something about this? Besides, most of the conflicts we are talking about here, is but man’s innate nature, unfortunately.

Funny, but the previous post, I was planning to edit. Dapat pala ginawa ko na. Kasi I was about to change it into:

But in the end, each one of us will realize, that it’s actually a matter of perspective (not to mention plan). For some, a lost opportunity is as good as money loss. For me, actualizing a loss by redeeming it, is. For some, this is the end, for others this is the beginning.

But which provides us the best ground to present all our arguments. And all the reason to kill one another. Hahahaha!