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How to Automate Your Investments

The Perks of Dividend Investing

Auto-investing is a simple and effective way to grow your wealth over time. It is a strategy that involves setting up regular and automatic contributions to an investment account. We all know that continuously investing will let you take advantage of compound interest. However, actually doing so is what often hinders people. Through auto-investing, you can take the friction away!

Auto-Investing in the Investa Platform

If you’re an existing Investa user, you can take full advantage of our auto-invest feature. On the platform, you can find it on the left side of the webpage: 

Step 1

You will have different frequencies to choose from. You can either invest weekly, monthly, or semi-monthly.

Step 2

Afterwards, you’ll have to pick the fund you want to invest in. As always, make sure to do your own research before choosing a fund.

Step 3

Of course, you also have to indicate the amount you want to invest per month.

Step 4

Next, link your bank account:

Once completed, something like this will show up on your auto-invest page:

Take note that you will have to agree to an Auto Debit Arrangement (ADA). A prompt will show-up asking you to fill-up a form which you will have to submit to your bank of choice. Afterwards, you should be good to go! Just make sure the bank account you linked will have the necessary funds available during the intervals you’ve set.

Is this worth the time and effort?

It definitely is! As mentioned, everyone knows the benefits of regularly investing. However, many often forget to do so consistently – so why not use technology to your advantage? By using auto-investing features, all you’d have to worry about is making sure there’s money set aside, and the Investa platform will take care of the rest!

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How Reading the News Helps Investors

If you are an investor, you might be wondering how reading the news can help you improve your portfolio. After all, there are so many sources of information out there, and not all of them are reliable or relevant. How do you filter out the noise? Even moreso, how should it affect your decisions?

Let’s dive into the topic!

The Benefits of Reading the News

Reading the news can help you understand the current state of the market. It lets you identify the sentiment of other investors. This can help you know the opportunities and risks, and adjust your portfolio accordingly. For example, anytime geopolitical tensions arise, assets related to energy and oil usually rally as supply chains are cut off.

Learning about new industries and technologies

Reading the news can help you discover new and emerging sectors and innovations that might have a huge impact on the future. This can help you diversify your portfolio and invest in companies that have a competitive edge or a disruptive potential. For example, if you read that electric vehicles are becoming more popular and affordable, you might want to invest in companies that produce batteries, charging stations, or software for them.

Staying informed about the companies you invest in

Reading the news can help you monitor the performance, strategy, and reputation of the companies you own shares in. This can help you evaluate their strengths and weaknesses, and decide whether to buy, hold, or sell them. For example, if you read that a company you invested in has reported strong earnings, launched a new product, or received a positive review, you might want to increase your stake or hold on to it.

How to Read the News Effectively

Reading the news can be beneficial for your portfolio, but only if you do it right. You always have to remember to choose reliable and reputable sources. Not all news outlets are created equal. Some are more credible, accurate, and unbiased than others. You should look for sources that have a good reputation, a high journalistic standard, and a clear editorial policy. You should also avoid sources that are sensationalist, biased, or misleading. For example, you might want to read news from sources like The Wall Street Journal, Bloomberg, or Reuters.

Read From Multiple Perspectives 

No single source can cover everything or provide the whole truth. You should read news from different sources, viewpoints, and angles to get a more balanced and comprehensive picture of the situation. You should also be aware of your own biases and assumptions, and challenge them with contrary evidence or opinions. For example, you might want to read news from sources that are conservative, liberal, and moderate, and from sources that are local, national, and international.

Read critically and analytically 

Not everything you read in the news is relevant, important, or accurate. You should read news with a critical and analytical eye. Always remember that more often than not, smart money “sells the news.” News headlines will always be lagging – meaning what is reported has already been priced in. What you should pay attention to is what the second and third order effects of the news will be. Once you gain accustomed to patterns that exist in the markets and in the economy, you’ll be able to have a good gauge of how developments affect the movements of prices.

Conclusion

Reading the news can help you improve your portfolio, but only if you do it wisely. You should read news from reliable and reputable sources, from multiple perspectives, and critically and analytically. By doing so, you can keep up with the market trends, learn about new industries and technologies, and stay informed about the companies you invest in. This can help you make better investment decisions and achieve your financial goals.

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Leveraging on Credit

Credit is not something to be afraid of or avoid. In fact, credit can be a powerful tool that can help you achieve your financial goals and improve your quality of life. Here are some ways you can use credit to your advantage:

Build a good credit history and score

Your credit history and score are records of how you manage your debts and repayments. They reflect your creditworthiness, or your ability to pay back what you borrow. Having a good credit history and score can benefit you in many ways.

Lenders and providers typically offer lower rates to borrowers with higher credit scores, as they are less risky and more likely to repay on time. This can save you a lot of money in the long run. It can also increase your chances of getting approved for the credit products you need. Lenders and providers usually check your credit score as part of their eligibility criteria, along with your income, assets, and other factors.

Use loans for productive purposes

Importantly, you should use loans for productive purposes. Rather than using credit for wants, focus on assets that give you returns. If you have a viable business idea or plan, you can use a loan to finance it and generate income. You can also use a loan to grow your existing business, such as buying new equipment, hiring more staff, or opening new branches. However, you should be careful not to borrow more than you can afford to repay, and make sure you have a realistic and sustainable business model.

Manage your debts wisely

Aside from making sure that debt is used productively, you also have to keep an eye out for it. Managing debt wisely is a skill that can help you achieve your financial goals and avoid unnecessary stress. The first step is to know how much debt you have, and to know how much debt you can take in based on your cash flow. Afterwards, it becomes a matter of staying disciplined and staying below your debt limits.

Lastly

Using credit is not free. You have to pay interest and fees for the privilege of borrowing money. These costs can add up over time and eat into your income and savings. You should always compare the costs and benefits before applying for a loan, and look for the best deals and offers available.

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Getting Value Out of Social Media Feeds

Social media feeds are filled with content that keeps you scrolling. They are often created by algorithms that filter and recommend content based on user preferences, behavior, and network. Or, they also be created by users who deliberately follow, like, or comment on certain topics or sources.

Social media feeds are the cause for why users typically scroll through feeds for hours on end. So, how can you use them to your advantage? 

Motivate Yourself

One of the benefits of creating an alternate account with a feed full of financial advice is that it can motivate you to improve your own situation. By seeing posts from experts, influencers, or peers who share their tips, strategies, or success stories, you can get inspired and encouraged to follow their example. You can also learn from their mistakes, challenges, or failures and avoid them in your own journey.

Educate Yourself

Another benefit of curating your own social media feed is that you can educate yourself with it. By reading articles, watching videos, or listening to podcasts from reputable sources, you can gain valuable knowledge and skills that can help you make better decisions and actions. You can also ask questions, seek feedback, or join discussions with other users who have similar interests or experiences and learn from them.

Hold Yourself Accountable

A third benefit of curating your own social media feed in a way is that you can hold yourself accountable. When you hold yourself accountable for creating your own echo chamber, you gain back control over what content you feed yourself. You can also join online communities, where you can further fuel your learning. You can also receive support, recognition, or constructive criticism from others who can help you stay on track and overcome obstacles.

Conclusion

Social media feed are not inherently good or bad. They are what you make of them. By working towards filling your feed with helpful content, you can make scrolling a more value-adding experience.

It also might be worth looking for other niche social media platforms. Aside from our own Investagrams platform, forums like Reddit’s r/InvestPH can help you find a lot of opinions that are worth looking over!

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The Importance of Cash Flow in One’s Finances

Cash flow is the amount of money that flows in and out of your bank account over a period of time. In essence, it’s your income sans expenses. It can be a measure of how well you manage your money.

Cash flow is important for your finances because it affects your ability to achieve your longer-term goals. Whether you want to buy a house, start a business, retire early, or travel the world, you need to have a good stream of money coming in.

What is a positive cash flow?

A positive cash flow means that you have more money coming in than going out. This allows you to save more, invest more, and grow your wealth over time. A negative cash flow means that you have more money going out than coming in. This can lead to debt, stress, and financial problems.

How can you improve your it? There are two main ways: increasing your income and reducing your expenses.

Increasing Your Income

One of the best ways to improve your cash flow is to increase your income. This can be done by:

  • Seeking a raise or promotion from your current employer
  • Finding a new job that pays better or offers more benefits
  • Starting a side hustle or freelance work that generates extra income
  • Creating a passive income stream that earns money without much effort
  • Investing in assets that provide you with additional income

Increasing your income can help you achieve your goals faster. However, it is not enough to just earn more money. You also need to manage it wisely.

Reducing Your Expenses

Another way to improve your cash flow is to reduce your expenses. This can be done by:

  • Creating a budget and meticulously tracking your spending habits
  • Cutting down on unnecessary or wasteful spending
  • Looking for lower rates or fees for your bills and services
  • Switching to cheaper alternatives or providers
  • Taking advantage of discounts, coupons, or rewards programs
  • Saving energy and water at home or using public transportation
  • Avoiding debt and paying off high-interest loans

Reducing your expenses can help you free up more money for your cash flow and goals. However, it is not enough to just spend less money. You also need to allocate it smartly.

Allocating Your Money

The final step to improve your cash flow is to allocate your money according to your priorities and goals. This can be done by:

  • Setting up an emergency fund that covers at least 3-6 months of living expenses
  • Paying yourself first by saving or investing a portion of your income every month
  • Using the debt snowball or avalanche method to pay off your debt faster
  • Diversifying your portfolio and investing in different asset classes
  • Reviewing and adjusting your budget and goals regularly

Allocating your money can help you optimize your cash flow and grow your net worth over time. 

Having the Right Mindset and a Long-Term Vision

The final factor that affects your cash flow is your mindset. Your mindset is how you think and feel about money and yourself. It influences your behavior, decisions, and actions. You have to focus on opportunities that come your way and find solutions rather than complaining about problems and challenges.

You also have to remember that no matter the amount of money you’re handling, you have to stick to your plan. 

Conclusion

Cash flow is the key to financial success. By properly managing your money, you can improve your finances and achieve your longer-term goals. Always remember that:

Money attracts money.

As you continue to build up your wealth, more doors eventually open up for you to further improve your finances.

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5 Lessons from Market Wizards

Market Wizards is a classic book by Jack D. Schwager that features interviews with some of the most successful traders of all time. The book reveals the secrets, strategies, and mindsets of these legendary traders, who have achieved extraordinary results in various financial markets. In this article, we will summarize five key lessons that we can learn from Market Wizards and apply to our own trading.

Lesson 1: Focus on risk management

One of the most common themes in Market Wizards is the importance of risk management. Almost every trader interviewed by Schwager emphasizes the need to protect their capital and limit their losses. As Paul Tudor Jones, a famous hedge fund manager, says: 

“Don’t focus on making money; focus on protecting what you have”

To be successful, you have to use various methods to manage their risk, such as setting stop-loss orders, diversifying their portfolio, and sizing their positions according to their confidence level. By focusing on risk management, they are able to survive in the long run and take advantage of profitable opportunities.

Lesson 2: Follow the trend

Another common theme in Market Wizards is the power of following the trend. Many of the traders interviewed by Schwager are trend-followers, who try to identify and ride the dominant direction of the market. As Bruce Kovner, a billionaire trader, says: 

“I always believe that prices move first and fundamentals come second”

The traders in Market Wizards use various tools to identify and follow the trend, such as moving averages, chart patterns, and indicators. By following the trend, they are able to capture large moves and avoid fighting against the market.

Lesson 3: Be flexible and adaptable

A third lesson from Market Wizards is the importance of being flexible and adaptable. The traders interviewed by Schwager demonstrate a high degree of adaptability, as they are able to change their views and strategies according to changing market conditions. As Michael Marcus, a legendary commodities trader, says:

“Every trader has strengths and weaknesses. Some are good holders of winners, but may hold their losers a little too long. Others may cut their winners a little short, but are quick to take their losses. As long as you stick to your own style, you get the good and bad in your own approach” 

Some of the market wizards are not dogmatic or rigid in their trading, but rather open-minded and willing to learn from their mistakes.

Lesson 4: Master your emotions

A fourth lesson from Market Wizards is the significance of mastering your emotions. The traders interviewed by Schwager reveal how emotions such as fear, greed, and ego can affect their trading performance. As Ed Seykota, a pioneer of computerized trading, says: 

“The elements of good trading are: (1) cutting losses, (2) cutting losses, and (3) cutting losses. If you can follow these three rules, you may have a chance”

Great traders use various techniques to master their emotions, such as meditation, journaling, and self-awareness. By mastering their emotions, they are able to trade with discipline and objectivity.

Lesson 5: Find your own edge

A fifth lesson from Market Wizards is the necessity of finding your own edge. The traders interviewed by Schwager have different trading styles and approaches, but they all have something in common: they have found an edge that works for them. As Richard Dennis, a famous trend-follower and founder of the Turtle Trading System, says: 

“I always say that you could publish my trading rules in the newspaper and no one would follow them. The key is consistency and discipline”

Most professionals have often developed their own trading systems and methods that suit their personality, goals, and risk tolerance. By finding their own edge, they are able to trade with confidence and conviction.

Conclusion

Market Wizards is a timeless book that offers invaluable insights into the world of trading. By learning from the experiences and wisdom of these legendary traders, we can improve our own trading skills and performance.

In trading and in life, the best way to learn will always be to study how the best do it.

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An Introduction to Shorting

Shorting, also known as short selling, is a trading strategy that involves selling a borrowed asset in the hope of buying it back later at a lower price. Shorting can be used to profit from falling prices, hedge against downside risks, or speculate on market movements. However, shorting also carries significant risks and challenges that traders should be aware of before entering a short position. In this article, we will explain the basics of shorting, its pros and cons, and some common shorting strategies.

How Does Shorting Work?

Shorting is the opposite of buying or going long on an asset. When you buy an asset, you expect its price to rise and sell it later for a profit. When you short an asset, you expect its price to fall and buy it back later for a profit. To short a stock, you need to borrow shares from a lender, usually a broker-dealer, and pay a fee or interest for the loan. You then sell the borrowed shares at the current market price and receive the proceeds. At some point, you have to buy back the asset and return it to the lender. If the price of the asset has dropped, you can buy it back for less than what you sold it for and keep the difference as your profit. If the price of the asset has risen, you have to buy it back for more than what you sold it for and incur a loss.

What Are the Benefits?

Shorting can offer several benefits to traders and investors, such as:

  • Profit from falling prices: Shorting allows you to make money when the market is bearish or when a specific asset is overvalued or in decline. For example, if you believe that a company’s earnings will disappoint or that its stock is in a bubble, you can short its shares and profit from its downfall.
  • Hedge against downside risks: Shorting can also be used to protect your portfolio from potential losses or reduce your exposure to a certain sector or asset class. For example, if you own a long position in a stock that is correlated with the overall market, you can short an index fund or ETF that tracks the market and offset some of your downside risk.

Shorting also involves significant risks and challenges that traders should be aware of before entering a short position, such as:

  • Unlimited downside: Unlike buying an asset, where your maximum loss is limited to your initial investment, shorting an asset exposes you to unlimited losses if the price of the asset keeps rising. There is no limit to how high an asset’s price can go, so your potential loss is theoretically infinite.
  • Short squeeze: A short squeeze occurs when a large number of short sellers are forced to cover their positions due to rising prices or margin calls. This creates a positive feedback loop that drives the price even higher and squeezes more short sellers out of their positions. A short squeeze can be triggered by positive news, strong earnings, analyst upgrades, or other factors that boost the demand for an asset.
  • Stock loan fees: When you borrow an asset from a lender, you have to pay a fee or interest for the loan. The fee depends on the availability and demand for the asset, as well as the broker’s terms and conditions. The fee can vary over time and eat into your profits or add to your losses.
  • Margin requirements: To open a short position, you need to have a margin account with your broker and meet certain margin requirements. Margin is the amount of money that you have to deposit with your broker as collateral for your short position. The margin requirement depends on the broker’s policies and the volatility of the asset. If your account value falls below the margin requirement, you will receive a margin call from your broker and have to deposit more money or close your position.

Implementing shorting strategies

There are many ways to implement shorting strategies depending on your goals, risk tolerance, and market conditions. Some common shorting strategies are:

  • Selling a bounce in a downtrend: This strategy involves selling an asset after it has bounced from a lower low in a downtrend and waiting for it to resume its downward movement. This strategy requires identifying the trend direction, support and resistance levels, and reversal signals.
  • Entering within a trading range and waiting for a breakdown: This strategy involves selling an asset that is trading within a range-bound market and waiting for it to break below the lower boundary of the range. This strategy requires identifying the range limits, volume patterns, and breakdown signals.
  • Selling into an active decline: This strategy involves selling an asset that is already in a sharp decline and riding the momentum to the downside. This strategy requires identifying the catalysts, trendlines, and exit points.

What to expect from the introduction of shorting to the PSE

Shorting brings two big benefits for the Philippine market. First is that it’s possible for the market to experience an inflow of liquidity. Given that shorting requires a a lot of activity within stocks, it’s possible to see volume increase among shortable stocks.

Second is that traders can now profit from breakdowns. The benefits here are obvious and don’t need to be explained. However, something traders have to realize is that shorting isn’t as easy as it seems. Yes, the PH market may have been slumbering, but there’s a big difference between stocks having no significant movements within a range versus stocks crashing. You also have to consider that risk-reward ratios are different when you’re shorting.

As always, being systematic is the most crucial part towards profiting from the markets. The introduction of shorting is just another tool that we can use to do so!

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