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Tuesday, November 21, 2017

Understanding Risk thru Adventure Learning

Tuesday, November 21, 2017 0

Last week, I joined a Media Synergy activity through Ramon Aboitiz Foundation’s Kool Adventure Camp. There I Un-learned, learned and re-learned a lot of things about myself as well. This includes risk and adventure learning.

The things we learned did not come easy. We got to know each other – even deep dived into our biggest fears and insecurities, crossed a hanging rope/cord that wobbled while suspended 30 feet(?) above ground, or fall into empty air as we failed to cross a challenge. The Team including our facilitator take “stretch targets” very seriously.

Learning can come in all shapes and sizes, but I think the most powerful form of learning is through experience. Under experiential learning is adventure education, which is the promotion of learning through adventure centered experiences: Outdoor exploration, challenge courses, and even indoor activities.

Risk management on the other hand is a strategic approach to planning which aims to focus attention and action where it is most needed (things likely to go wrong, its consequences, & minimizing it).

Adventure learning helps people to develop the ability to cope with and experience a wide variety of challenges. Exposure to risks and teaching them to manage risks and take sensible decisions makes them safer.

As a financial education advocate, we all know what ‘risk’ means in terms of money management, but here, I was literally confronted by it –face-to-face.

This made me recall the “secret of sound investment” that Benjamin Graham (Mentor of Warren Buffet) revealed – “Margin of Safety”. SAFETY in the Kool Camp is the top most priority. They provide a safe environment to not only surpass our limits (Physically, mentally or even emotionally), but also to fail, learn fast and build resilience.

“An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory return.” – Investment Definition by Benjamin Graham and David Dodd

Managing Financial Risk

Here’s a reality check about risk: All investments carry some degree of risk. By better understanding the nature of risk, and taking steps to manage it, you put yourself in a better position to meet your financial goals; just as we learned to develop awareness and skills to use the ropes course equipment, we also needed to execute it flawlessly as our colleagues’ life was literally in our hands.

“Rule #1: Don’t lose money. Rule #2: Never forget rule #1.” – Warren Buffet

Diversified Asset Allocation – Basically, don’t put all your investment-eggs in one basket. By including different asset-classes in your portfolio (e.g. stocks, bonds, real estate, cash), you increase the probability of satisfactory returns (while others are flat or negative). This can be achieved via an Index Fund (UITF, MF, ETF).

Hedging (buying securities to offset potential losses on another investment) and Insurance – can provide additional ways to manage risk. Both strategies typically add cost, which reduces potential returns, but it’s a small price to pay for safety.

A VUL (Variable Life Insurance with an Investment component) can be an example of this depending on one’s goals/perspective.

Risks comes from not knowing what you’re doing. The Adventure learning experience made me relearn to listen through the fear; At some point, we were scared & got caught up in what if’s, complaining and being fearful that we weren’t listening to the very instructions for the safety of our lives.

You cannot just “intend” your way towards your (financial) goals, you need to implement and DO.
Not Investing is riskier these days!!

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Originally Published in Philstar - The Freeman Newspaper last November 21, 2017.

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Wednesday, November 15, 2017

Lazy Real Estate Investment - Condotels

Wednesday, November 15, 2017 0


The Philippines’ booming economy and thriving tourism has made it one of the hotbeds for rental property income. As compared to mutual funds, stocks and other facilities which are intangible, volatile and has no capital protection, owning a condotel unit is a titled hard asset which is sure to dramatically rise in value in the coming years apart from providing a recurring income.

The way to earn in real estate is through either asset price appreciation and/or rental income.

However, if you built your own apartment or compound complex, or bought a condo unit that you want to rent out, then you may have to do everything yourself.

  • Collections - This includes doing background checks on prospective renters to minimize the risk of bad/runaway tenants.
  • Marketing - Depending on the location, you can market it to students, professionals, through traditional means or AirBNB.
  • Maintenance – Building and interior maintenance (plumbing, lights, paint, furniture..etc..)


While a condotel on the other hand is more straight forward. Research the company, location and then invest. Let the management take care of the rest, while you wait and collect your share of the profits. This is why I consider Condo-Hotels as a form of Lazy Real Estate Investment.

Like any other investment, pros and cons should always be considered.
PROs

  • Condotels are managed like a standard hotel. Owners are getting their earnings hassle-free from the property investment because it is the hotel operator that manages the maintenance of the unit and the rental deals.
  • Perks, rewards - unit owners will get various perks and rewards, which will include a fixed-number-of-days free use every year (This may vary per property development). 
  • Passive Income – The profit sharing may vary: it could be a 40-60 or 30-70 gross sales split after taxes, equally divided among unit owners and will be paid on an agreed frequency (monthly/quarterly), which is credited directly to the unit-owners’ bank account.

CONs

  • The earnings may not be as high as the forecasts since hotels are subject to market factors such as: natural disasters, travel advisory on the area, terrorist threats, and so on.. which will affect occupancy rates.
  • The maintenance fees are higher than most condominiums due to the built-in management and other fees that can be imposed later --that is beyond your control as well.
  • Like all other investments, there’s risk involved. Not all condotel developments can keep their forecasted incomes and promises. Knowing the tourism market, location, and property management firm will help mitigate such risks.

OPPORTUNITIES in tourism occupancy - Here in Cebu

  • The Provincial Tourism Office (PTO) reported an increase of 29% of tourist arrivals for Cebu.
  • Cebu is the hub for Central Visayas leading to: Bohol, Siquijor, Negros, Iloilo, ..etc..
  • Big events and MICE: for the past 3 years, Cebu has hosted various major international events such as: APEC ministerial & ASEANl meetings, International Eucharistic Congress, Miss Universe preliminary events, to name a few.
  • Visiting domestic and foreign travelers as well as IT-BPM industry corporate clients 


At the end of the day, it’s still about location(x3) and conduct due diligence & research. Additionally, invest in the company that is transparent in their income and is willing to give you the real picture.

“Landlords grow rich in their sleep.” – John Stuart Mill

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We have another leg of Ticker & Trends and CERTA’s “INVESTABAI” Easy Stock Market Investing workshop this coming November 25!  Register here: https://tinyurl.com/yabj8gx7
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Thursday, November 09, 2017

Lazada Online Revolution Begins!

Thursday, November 09, 2017 0

Lazada will be launching the Largest Online Sale in the Philippines! Get ready to Shop-the-Universe from now until December 12, 2017 as Lazada brings the biggest online sale this year across the country and in Southeast Asia!

The month-long mega celebration offers new items and new deals! Join the Online Revolution: Shop the Universe 2017 for more time and options to shop at the best prices through effortless online shopping this holiday season.

With more than 28 million products, online shoppers can enjoy up to 95% off in groceries, electronics, fashion, beauty, home and appliances, toys and many more. They have flash sales, discount vouchers and promo codes from their partners which you can use to win some real cool prizes.

Follow these links now for great deals and start to shop the universe:

Thanks to the Lazada team for informing of these offers during the Lazada Online Revolution Road Show earlier this week!
About Lazada

Lazada Ph is part of Lazada Group which operates Southeast Asia’s number one online shopping and selling destination in Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam. Pioneering eCommerce in the region, Lazada provides customers with an effortless shopping experience and retailers with simple and direct access to the largest customer base in Southeast Asia.

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Wednesday, November 08, 2017

Tax reform possibly delayed this year

Wednesday, November 08, 2017 0


The last update I wrote about the tax reform in the Philippines was around in May of this year talking about Tax amnesty and before that a three-part breakdown of the tax reform proposal. Since then, I was just on a wait and see mode for any major developments or changes.

The Tax Reform for Acceleration and Inclusion (TRAIN), has traveled from the halls of Department of Finance to Congress without any hitches, however, the ball now is in the Senate’s court with the target deadline to be signed into law by President Rodrigo Duterte by the end of the year.

The first of five tax reform packages, as embodied in House Bill No. 5636, was approved by the House of Representatives on its final reading last May 31. Meanwhile, the Senate has ended the period of interpellations of Senate Bill No. 1592 and will resume deliberations for possible amendments when session resumes in November.

Among the pertinent provisions of the tax reform are the increased level of taxes of primary consumer products such as petroleum and sugar-sweetened beverages. To summarize, the Senate favors a lower rate of tax on fuel and falls short of the House recommendations. The revision in revenue goals weakens the ability to support higher investment levels.

As a result, the forecasted revenue gains from the House version of Php70 billion falls to Php40 billion under the Senate bill.

Working against time

Legislation in a bicameral legislative assembly requires that ultimately a final version of the conference committee will have to be negotiated between the two houses. The senate plenary sessions on Nov. 13 to 15 is in conflict with our hosting of the Association of Southeast Asian Nations (ASEAN) Summit.

It is also not clear if the sessions planned for Nov. 16 and 17 would still push through. Although it is a priority bill, the 2018 national budget also needs to be tackled and passed. The budget measure would take priority because failure to approve this within the year would result in the country operating on a reenacted budget next year.

Congress is left with roughly four weeks to pass both the 2018 national budget and the TRAIN before it adjourns for the year.

Additional areas to look at

Another area of engagement that I think we should also look at is the overall efficiency and perhaps even the much needed ‘MODERNIZATION’ of Tax collections. Take for example the VAT (Value Added Tax), the efficiency of the tax in producing revenues is only at 35 percent compared to 60 percent for both Thailand and Vietnam.

Although the bills have tackled this as well (Congress removed 70 exemptions while Senate only 37), I’m more inclined to talk about the ‘actual’ collections with the use of technology across the tax collecting departments (BIR, Customs, SSS, Philhealth, Pagibig) to name a few examples.

Civil Service Salaries in tax collection departments may need to be updated and upgraded and perhaps even an incentive system to mitigate graft and corruption. Imagine you are a tax collector with a salary of 15-20k, tasked to collect millions. That sort of temptation is enormous and real (unless if you are a saint).

"Today, it takes more brains and effort to make out the income-tax form than it does to make the income." - Alfred E. Neuman

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Originally Published in Philstar - The Freeman Newspaper last November 07, 2017.

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