Money-wise, not ‘money-faced’

By: Efren Ll. Cruz
Philippine Daily Inquirer

Question: What is the best way to help my child grow up to be money-wise and avoid the ruts that I fell into while I was growing up?—Concerned parent

Answer: How many new college graduates have entered the workforce with P100,000 in savings? Probably not a whole lot. Yet, you’d think that the many years of schooling would have prepared kids for the “real” world.  You see, here’s where the problem lies. There is too much reliance on schools when learning at home can be as easy and rewarding.

Try our 10-step approach to boosting savings among children. The approach is by no means comprehensive. You may even want to add your own steps or take out a few.

1.) Help set a goal. Children need to visualize things in order for them to comprehend complex concepts like savings and financial freedom.  Saving enough to buy a much sought after toy is one way to help children visualize their goal.

2.) Teach your child to give first. Money is but a tool to realize the more important and practical goals in life. By giving away some money first, like to the church and the needy, you are teaching your child to be free from the clutches of money. Besides, money given away first, cheerfully, faithfully, wisely and quietly will return in other forms of benefits pressed down, shaken together and running over.

3.) Collect loose change. By saving just P3.50 a day for five days in a week, four weeks in a month and 12 months in a year, your child would be able to save P840. That’s more than what somebody, who already has P100,000 to start with, will earn by keeping his money in a savings account in a bank for one year.

4.) Catapult your child’s savings. Tell your child that if he or she reaches a certain level of savings, you will triple those savings (i.e. add 200 percent of what he or she had saved). If you gave your child P50 a day starting at age 5 and told him or her to save at least 10 percent of his or her allowance and also promised to double his or her yearly savings, your child would accumulate P111,600 in savings (assuming the allowance goes up to P100/school day by age 10 and up again to P150/school day by age 15).

5.) Use the magic of compounding. To further grow your child’s savings, you could place your child’s money in a savings account or even a time deposit to make it earn faster. Given modest assumptions on the rate of interest, your child could end up with more than P136,000 by age 20.

6.) Allow your child to taste some of the rewards. Being able to reap some of the rewards from our hard work allows us to better recognize the value of all of that work. So let your child enjoy some of the fruits of his or her labor. Even if you let your child withdraw 5 percent annually, your catapulting his or her savings and using the magic of compounding will ensure that he or she enters the workforce with at least P102,000.

7.) Introduce the meaning of debt and risk. Your child will encounter debt and risk. It would be better that the teachings come from you rather than from just anybody out there. So when your child is already in his or her teens, teach your child the meaning and implications of debt and risk.

8.) Get your child’s feet wet in entrepreneurship. Being in business is a form of investing. Not all are cut out to be businessmen though.  Nonetheless, it would be ideal if your child realized his or her calling to being an entrepreneur when he or she is still young and able to quickly bounce back from any losses.

9.) Teach your child the value of insurance. Insurance is needed by everyone; all the more by young adults. Insurance is a way of managing risks in life and business, just like diversification is a way of managing risks in investing. Teach your child not to run away from a life insurance agent. To be prepared for such encounters, however, you must also teach him or her the right way of buying insurance.

10.) Be a shining example to your child. Perhaps the most important lesson that you can impart to your child is to be a shining example. All of the other nine steps would be lost if you don’t practice them yourself.

Applying these 10 steps in raising your child will definitely help him or her to be money-wise and not money-faced.

If you want to learn more about the foregoing computations as well as the foundation of effective personal cash, debt, risk and wealth management, attend the EnRich training scheduled on May 16, 2012. Visit www.personalfinance.ph, e-mail info@personalfinance.ph or call (632) 216-1541 for more details.

Take care of your child. Children are among our greatest treasures and blessings.

(Efren Ll. Cruz is a registered financial planner of RFP Philippines, personal finance coach, investment adviser and bestselling author. Questions about the article may be sent by SMS to 0917-505-0709 or e-mailed to efren@personalfinance.ph. To learn more about the RFP program, visit www.rfp.ph or e-mail info@rfp.ph.)

Happy Father's Day!

Fathers Are Wonderful People


Fathers are wonderful people
Too little understood,
And we do not sing their praises
As often as we should...

For, somehow, Father seems to be
The man who pays the bills,
While Mother binds up little hurts
And nurses all our ills...

And Father struggles daily
To live up to "his image"
As protector and provider
And "hero of the scrimmage"...

And perhaps that is the reason
We sometimes get the notion,
That Fathers are not subject
To the thing we call emotion,

But if you look inside Dad's heart,
Where no one else can see
You'll find he's sentimental
And as "soft" as he can be...

But he's so busy every day
In the grueling race of life,
He leaves the sentimental stuff
To his partner and his wife...

But Fathers are just wonderful
In a million different ways,
And they merit loving compliments
And accolades of praise,

For the only reason Dad aspires
To fortune and success
Is to make the family proud of him
And to bring them happiness...

And like Our Heavenly Father,
He's a guardian and a guide,
Someone that we can count on,
To be always on our side.


~ Helen Steiner Rice ~

Prospectus Summary: San Miguel Corporation Pref. Series “1″ (SMCP1)

copied from jcmiras.net

This preferred shares of San Miguel Corporation (SMC) was quite controversial when it was  created because this is a conversion from 35% of SMC’s common stocks, which has a voting-right, and part of that converted common stocks to preferred stocks were the contested Coco Levy Funds of the coconut farmers. By converting the common shares attributed to the coco levy funds, the purported  owner of the levy funds losses part-ownership of SMC and its voting rights in exchange of a fixed dividend income.  Also, the Issuer (SMC) can anytime, three years after the issuance, redeem the preferred shares and totally strip all the remaining connection of the levy fund to San Miguel Corporation.

Below is the prospectus summary of SMCP1:

• Issue price: an exchange ratio of one (1) Series 1 Preferred Share for every one (1) Class “A” or Class “B” common share tendered, or Php75.00 per share.
• Dividend Rate: A fixed annual dividend rate of 8.0% which was based on 5-year PDST-F plus a spread determined by the SMC Board.  It is payable quarterly, beginning on the third month after the Issue Date.  If the company’s Board does not declare dividend for the dividend period, dividends on the Shares will be cumulative.
• Redemption: Shares are redeemable in whole or in part, at the sole option of the Corporation, at the end of three years from the Issue Date
• Other Features: The shares are perpetual, non-voting, non-convertible, and non-participating.
• Dividend Rate Step-up: If not redeemed at the end of the fifth year from the issue date thereof (the “Issue Date”), the Dividend Rate shall be adjusted to the higher of (i) the current Dividend Rate, and (ii) the 10-year PDST-F Rate (or such successor benchmark rate) as displayed under the heading “Bid Yield” as published on the PDEx Page (or such successor page) of Bloomberg (or such successor electronic service provider) at  approximately 11:30 a.m. Manila time on the date corresponding to the end of the fifth year from the Issue Date plus a spread of up to 300 basis points.
• Issue Date: Oct. 5, 2009 (??)

Prospectus Summary: Petron Corporation Preferred (PPREF)

copied from jcmiras.net

This preferred shares offered by Petron Corporation  is superior than other preferred shares like ACPR, ACPA, FPHP, SMCP1 and Pure Foods  because of its relatively high dividend rate and step-up rate, in case of non-redemption.  But the investors must be cautious because this high return might have high risk involved.
Below is the summary of PPREF prospectus;

• Offer Price: Php100 per share with a par value of Php1.0 per share

• Dividend Rate:  fixed rate of 9.5281% per annum. The declaration and payment of dividends on each Dividend Payment Date will be subject to the sole and absolute discretion of the Board of Directors to the extent permitted by law. If the Company‘s Board does not declare a dividend on the Shares for a dividend period, dividends on the Shares will be cumulative. Dividends on the Shares will be payable quarterly on March 5, June 5, September 5 and December 5 of each year.

• Dividend Rate Step-Up:  In case of non-redemption of the Issuer, the Dividend Rate shall be adjusted on the Optional Redemption Date to the higher of (a) the current Dividend Rate or (b) the 10-year Fixed Rate Treasury Note benchmark yield as displayed on the PDST-F screen of the PDEx page (or such successor page) of Bloomberg (or such successor electronic service provider) at approximately 11:30 a.m. for the date corresponding to the Optional Redemption Date plus a spread of 487.5 basis points.

• Other Features: the Preferred shares are non convertible, non-participating and non-voting

• Listing:  The shares were listed on the PSE on March 5, 2010.

Prospectus Summary: San Miguel Pure Foods Company Preferred Shares (PFP)

copied from jcmiras.net

Here’s another good source of dividend income for Filipino, and maybe also foreign, investors.  It’s the preferred shares that is being offered by San Miguel Pure Foods Company, the food business subsidiary of the San Miguel Corporation. The shares is scheduled to be listed and started to be traded in the Philippines Stocks and Exchange (PSE) on March 3, 2011. Below is the summary of the prospectus;

• Offered price: Php1000 per share with par value of Php10.00 per share
• Issue Date: March 3, 2011
• Dividend yield of 8.0% (based on the 5-year PDST-F rate of 5.7788% p.a. as of February 8, 2011 plus a spread of 2.2212%.) Dividends will be paid quarterly on March 3, June 3, September 3 and December 3.  The declaration and payment of dividends on the Preferred Shares will be subject to the sole and absolute discretion of the Issuer’s Board of Directors (the “Board”) to the extent permitted by law, however, dividends will be cumulative if the Issuer’s Board does not declared dividend for the dividend period.
• Shares are non-voting, non-participating, and non-convertible.
• Optional Redemption at 5 years after the issue date at offer price.  If not redeemed after 5 years, the dividend rate will be adjusted to whichever is higher of current dividend rate of 8.0% or  150bps on top of the 10yr PDST-F.

Note that the 8.0% per annum dividend rate is a gross amount and still subject to 10% withholding tax for Filipino investors.

Poor Man's Prophet Robert Kiyosaki, author of Rich Dad, Poor Dad says that everything you've been told about money is a lie. Is his vision setting us on the right track--or is it just more financial snake oil?

By Peter Carbonara with Joan Caplin

January 1, 2003

(MONEY Magazine) – The theater at Madison Square Garden, located beneath the famous New York arena, is a 5,600-seat venue that has played host to boxing matches, trade shows and numerous second-tier rock groups. One Tuesday night this past fall the attraction was Robert Kiyosaki, author of Rich Dad, Poor Dad, a financial self-help book now in its third year on the New York Times paperback bestseller list. For a solid three hours, standing in front of a table laden with purple and gold Rich Dad merchandise, the 55-year-old Kiyosaki told a full house of paying customers that most of what they thought they knew about money and finance was wrong.

A job with good benefits and a 401(k)? Strictly for suckers.

Continue reading.......

Prospectus Summary: Ayala Corporation Preffered Class “B” Shares (PSE:ACPR)

copied from jcmiras.net

Here’s another “hard-to-find” prospectus summary or description of one of the relatively actively traded preferred stocks in the Philippine Stock Market (PSE), ACPR.

•    Issue Price: Php100.00 per share
•    Issue Date:  21 July 2006
•    Dividend Rate: 9.4578% (of the Issue Price)
•    Dividends on the Shares will be payable on January, April, July, and October of each year.
•    The declaration and payments of dividends on each Dividend Payment Date will be subject to the sole and absolute discretion of the Board of Directors to the extent permitted by law. The dividends, however, is cumulative.
•    As and if declared by the Board, the Issuer may redeem the Preferred Shares on the fifth anniversary from the Listing Date (the Optional Redemption Date) or on any Dividend Payment Date thereafter in whole (but not in part only), at a redemption price equal to the Issue Price of the Shares plus accrued and unpaid dividend periods up to the actual redemption by the Issuer.
•    If the Preferred Shares were not redeemed by the Issuer, the Dividend Rate shall be adjusted on the Optional Redemption Date to the higher of (a) the Dividend rate, or (b) the 10-year Fixed Rate Treasury Note benchmark yields as displayed on the “MART1″ page (or such successor page) of Bloomberg (or such successor electronic service provider) as of the Optional Redemption Date.