Category: News & Features

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News & Features

5 Things I Realized After Making My First Million at 20 Years Old

I’m 22 and I made my first million back when I was only 20 years old. Here are 5 things I learned after that life-changing event:

1. Your school and grades are not everything.


Photo Credit to: Writix

I failed more than a dozen times in college and I thought my life was over, until the day I earned my first few pesos from trading the Stock Market—my first stock was Ayala Land by the way.

Here in the Philippines, we are taught that going to a reputable university and being a good student are the only ways to land a great career and be financially free. While this can be true at times, the current status of most young adults in our country says otherwise.

You know why? Because the number of graduates doesn’t match the number of employees needed by corporations. The reality is you have to compete with other fresh graduates or worse, those that already have work experience. How can someone who doesn’t have any experience compete with someone who are already tenured?

This is also the reason why I LOVE the Stock Market. First of all, it doesn’t care about YOU, your Educational Status, the amount of Money you have, or even your Connections.

Everyone is in equal footing when it comes to STOCKS and those who work hard consistently and put their focus on things that truly matter wins.

2. You won’t succeed if you don’t take calculated risks.

Remember the word “CALCULATED.”

Someone once said, “A ship is safe in the harbor, but that is not what ships are built for.”

If you see the stock market like a casino, it will treat you as a gambler; but if you treat it as a great source of wealth, it will give you what you work and sweat for. I’m not saying that you should start investing your life savings and, in a few days, expect to become a millionaire. It doesn’t work that way. Every one of us has different risk profile and risk appetite: Younger people can be more aggressive than those who are older, a single person can take more risks than a married person… AND GUESS WHAT? THAT’S PERFECTLY FINE!

No matter how early or late you start, if you put your focus on mastering risk and analyzing companies, YOU CAN STILL BE SUCCESSFUL in this field.

I’m not pushing you to invest in stocks and change your life if you are happy and contented to with what you’re currently doing. If you’re happy with the path you’re on, keep going and ever stop! But if you think the stock market might be the path for you, why not give it a try? The stock market is a great avenue for you to build wealth and have more time for the things that truly matter. Start planting seeds today because sometimes before you know it, it’s too late.

Seeds can be destroyed by the storm, scorched by the heat of the sun, or inundated by the flood. YOU MUST PROTECT YOUR SEED because a Fruit Bearing Tree that can feed your family is 100% worth the Risk.

3. Money is a tool, but it alone won’t make you happy.

Money is a tool, but it won’t make you happy—but it can buy you time which you can use to be with the people you love, travel to places you’ve never been, ride a jetski, ride a helicopter, experience skydiving, and live without the anxiety that tends to come every time it’s time to pay the bills. Do you get what I’m saying here?

The truth is, the LACK of money will not make you happy as well. In fact, it will likely make you miserable and unable to enjoy the better things in life.

Money in itself won’t make us happy, but the THINGS we buy, the EXPERIENCES we share, the SECURITY we give our family, and the TIME we spent to fulfill our Purpose and Calling. That is true happiness.

“and above all our dreams and aspirations, we should also remember to use money to love people and not use people just because we love money. “

4. You can, but only if you will.

YOU CAN achieve whatever you want in this world if YOU WILL start putting in the work.
YOU CAN be a better person if YOU WILL take failures as lessons.
YOU CAN master any craft that you want to master if YOU WILL focus on building your skills and talents.
YOU CAN reach greater heights if YOU WILL be willing to give up the good for the best.
YOU CAN make a change in your country if YOU WILL make time to change and improve yourself.
YOU CAN be what you want to be if YOU WILL be willing to write your own destiny.
YOU CAN do the impossible if YOU WILL decide to take on the challenge.
YOU CAN only if YOU WILL.

5. Money is never the end goal.

The true goal is to reach a point when you can say to yourself: You’ve finally made it! You’ve finished the race, fought the good fight, and made an impact on the people around you.

This is also the reason why we started Investagrams. We wanted to share how investing can change your life and the lives of the people under your influence. We wanted to cause a ripple effect strong enough to influence more Filipinos here and abroad.

Thank you for taking the time to read this article. I’m really hoping that this will help and inspire you to find your purpose, reach your dreams, and fulfill your calling.

One last thing…

If you want to take that first step towards financial freedom but don’t know where to start, we’ll be having an event this coming April 28 in SMX Convention Center MOA! The event is called InspirePH. We’ve gathered some of the BEST PEOPLE from different industries such as the STOCK MARKET, STARTUPS & BUSINESS, and even DIGITAL CURRENCY to share not just their story but also their mistakes, their motivations, and how they were able to succeed in their respective fields.

Just like you, a lot of the participants want to make that decision to strive towards being financially free. Take this chance to MEET PEOPLE and NETWORK, who knows? Your new business partner might just be around the halls of SMX!

For only PHP1,999 for Investagrams Members (You can register for free at www.investagrams.com), you can that first step to learn the ins and outs of Trading the Stock Market, Building your own Startup or Business, and even using different Digital Currencies. From having ZERO idea about the topics, you can jumpstart your way to EARN from these vehicles!

The Philippines is a great country to invest in, that’s why most foreigners choose our country for their businesses and investments. But the SAD REALITY is that most of the benefits go to the rich and the foreigners who took the risk of investing. Meanwhile, only less than 1% of Filipinos are invested in the Stock Market.

Don’t you believe in the potential of the Philippines? Don’t you want to be part of this growth?

EIGHT Days left and FEW SEATS remaining for this event.

Be part of the 1%, get your tickets at www.inspire.ph and make it happen!

*All the proceeds for INSPIRE PH will be used for the IMPROVEMENT of our platform. It will also FUEL our MISSION to make more Filipinos here and abroad financially free!

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Featured News & Features

10 Lessons from the Trading Cup’s Top 10 Winners

Last January 20 marked the culminating event of Investagrams’ first major competition—the Investagrams Trading Cup 2017—and the turnout was absolutely incredible! Our hearts are truly overflowing and we are sincerely thankful for all the support from newbies, experienced traders, and even masters of the market.

We created the Investagrams Trading Cup to provide a fun avenue where everyone could showcase and improve their trading skills, but the turnout was more than anything we could have imagined. The competition was intense and we were amazed by the caliber of traders that came out on top.

Out of the almost 2000 traders who joined the competition, those who led the pack were truly inspiring and extremely generous in sharing their wisdom and experiences. Here are just 10 lessons out of the hundreds we learned from the Trading Cup 2017’s top 10 players.

#10

@joelduque: Work smarter, not harder.

Joel duque is the living proof that you don’t have to trade actively to earn significant profits. Through proper filtering, he was able to handpick stocks that had great potential and allowed him to bag the top 10 spot.

 

#9

@tris0314: Always be learning—from others and from yourself.

Tristran Montano shared his most significant trades throughout the competition, and highlighted the importance of learning continuously if you want to achieve success. He learns from various online blogs, websites, and his own history of trades.

 

#8

@MoneyGrowersPH: It’s never too late.

Despite lagging in the competition early on, he kept his composure and his winning attitude. In the end MoneyGrowersPH was able to rise up and prove that he indeed is one of the top traders.

 

#7

@Smalltime: There’s always a way to make it work.

Richard Baco is an OFW based in the Middle East. Despite holding down a full-time job, being in a different country, and even being in a different time zone, he still found a way to get the top 7 spot. He even gave a recorded video presentation since he couldn’t fly home for the culminating event.

#6

@Junster: Quality is more important than quantity.

You don’t have to have tons of trades to be profitable. In life and in trading, quality is almost always more important than quantity. When executing your trades, Joseph gave us these words of wisdom: Losing is inevitable. It’s part of the game. Just remember that you can win small, win big, lose small, but never lose big.

 

#5

@chad3ie: Focus on what’s really important.

Chad is one of the best traders of Citisecurities and a teacher in the Caylum Trading Institute. Aside from sharing some of his best tips, for life and trading, he reminded us of what’s really important—at the end of the day, what (or who) is it that we are trading for?

 

#4

@Scraffycoco: You can achieve your dreams at any age.

Rafael won 6th place in the Investagrams Stock Market Challenge last 2016 and has always dreamt of sharing his passion with a larger audience. Despite his young age, he proved that age is not a measure of mastery, and that with hard work and passion you can compete even at the highest level.

 

#3

@zeefreaks: It’s a jungle out there, but you can conquer it.

The mysterious head of the Zeefreaks Tribe and definitely a deserving leader in terms of skills and passion. During the competition, he proved to everyone that he is indeed one of the best traders in the Philippines. He shared his insights on how he studies and understands his prey before striking at the precise moment to capture the most profits.

#1

@bobbyaxelrod: There are always opportunities. You just have to know how to find them.

Edu bagged the most profits in the competition through his skills in finding momentum based trading opportunities. He shared simple but incredibly powerful tips for how he makes the most of the opportunities in the market.

 

#1

@Taylor: Above everything else, commitment is key.

One of the few masters of Elliot Wave here in the country, Javi used the Elliot Wave together with set-up based trading to consistently find great opportunities in the market. Through years of sharpening his trading style and skills, he was able to become a master trader and the champion of the Investagrams Trading Cup 2017.

These guys presented their strategies and trading tips in our Breaking Highs event last Jan 20, and even those of us who are experienced traders still learned a lot from them.

For those who weren’t able to attend, don’t worry! You can still watch the FULL VIDEO of all presentations and discussions. Click here to get access.

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News & Features

BREAKING NEWS: BobbyAxel and Taylor Go Head-to-Head in Championship Round!

First of all, we would like to congratulate each and every one of the participants in the Investagrams Trading Cup 2017! Not only have we opened up a fun avenue for both beginners and experts to improve their skills, we have also made history in our country making this the BIGGEST stock trading competition to date in the Philippines.

We’ve had a very intense competition these past few months, which was led by two great traders in the top spot—BobbyAxel Rod and Taylor. They whizzed past the rest of the pack, with each of them turning their PHP 100,000 virtual portfolios into PHP 364,160.13 and PHP 354,225.97 respectively. Only a tight margin of around 3% separates these two competitors—both superb performances for sure.

We want to share with you however, that there were certain concerns brought up to us during the span of the competition regarding the trading of illiquid stocks. As many of you know, part of our rules are protection measures against typical rinse-and-repeat trading methods that are not applicable in the real market. Because of this, we previously sent out warnings and communications to all players so that we keep the integrity of the competition intact. Our goal here was to emphasize the importance of applying strategies that are realistic and applicable in the PSE.

But we realized during the competition that since our virtual trading platform is not yet as perfect as we would like it to be, there were some opportunities in the competition that were not perfectly in sync with those in real life.  That is not to say that these opportunities were unrealistic altogether, but there were some disputable trades that came up. Admittedly on our part, we also understand that we could have done a better job defining which trades would be considered valid and which ones would not be allowed. This is something we will definitely improve for the next competitions.

In an effort to maintain the fairness and integrity in this situation, we reviewed all of the top players’ trades. During this review, we saw that a certain degree of illiquid trades are really unavoidable due to the sudden and often inevitable inactivity of some stocks—whether due to general liquidity or because of the holiday season last December. In line with the concerns raised, we revisited the standings of the top players assuming all remotely illiquid trades were removed. After doing this, we found that even after taking out all the profits from illiquid situations among top 10, the standings still remain the same with Taylor and BobbyAxel Rod still claiming the top 2 spots, except with their rankings switched.

We have discussed this issue with both BobbyAxel Rod and Taylor in great detail over the past couple of weeks. After taking into account all of the issues that were brought up, and seeing how both of these traders have performed and competed with their best effort, our team has decided that the fairest thing to do is to award them BOTH with the 1st prize of PHP 100,000 and the travel package.

In addition, both contenders have also agreed to help us keep the essence of Investagrams Trading Cup by proceeding to a CHAMPIONSHIP ROUND!

On January 20, both BobbyAxel Rod and Taylor will present their strategies and defend in front of an external panel composed of different professionals from the industry. They will be graded by the panel based on metrics such as Strategy, Risk Management, Execution, Comprehensiveness of Defense, and more. These will compose of 90% of their score.  However, 10% of the scoring will be based on the Audience’s Vote—to also take into consideration the view of our community.

Both of them have shown immense trading skills, both of them are first prize winners, but only one of them will be the CHAMPION and win the Investagrams Trading CUP! An exciting match ahead, see you on January 20!

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News & Features

12 Principles for Success and Happiness—in Life and in Trading

Everyone has those off days. Everyone has failures and doubts. What’s important is that we keep going even when it gets hard—especially when it gets hard. Because that’s when you know you’re getting close.

So if you’re feeling down, ere are a few tried and tested principles that will help motivate and inspire you.

1. Give yourself time.

Success takes time. Building an empire takes time. “Overnight successes” like PokemonGo or even the biggest breakouts you’ve seen took years before finally breaking through that glass ceiling.

Trying to achieve success as fast and as aggressively as possible is great, but you need to be in it for the long haul. Take time to recharge and take care of yourself. You’ll be happier and more productive for it. Not to mention you’ll be able to outlast any challenges that may come your way.

2. Be humble and take things one step at a time.

Just a little bit of success, a 5% gain for example, can make us feel invincible—like we can do anything and nothing can bring us down. Don’t fall into this trap.

Whatever amount of success you achieve, know that there is always room to improve. Don’t be impulsive, thinking that you’ll always be right. In other words, ‘wag mag-assume. Bad ‘yun.

Remember that success can fade as easily as it comes and know that it can all be taken away at any time. Work hard so you can stay successful.

3. Don’t be afraid to take risks—but don’t be impulsive either.

By now, you’ve probably already heard of the saying, “High risk, high reward.” Yes, you shouldn’t be afraid to take risks, because you won’t gain much by always playing it safe.

But while that is true, it seems that most people nowadays have the opposite problem—they impulsively take too much risk. Notice that we used the word “impulsively”. This is because the main problem is not that people are taking large amounts of risk. The problem is that people are taking large amounts of risk without knowing what they’re getting themselves into.

This is a common story in the stock market. Sabi nila high risk high reward e. Edi kinuha ko ‘yung biggest risk. Too many people bet all their savings on volatile stocks, only to lose all their money. Kahapon lang niya nakilala, in love na raw. What do we say to that? ‘Wag ganun, boss. Bad yun.

4. Don’t waste time.

You can always make more money later, but once time has passed then it’s gone forever. In trading and in life, focus on the most important things first. Grab opportunities while you can. Enjoy moments while you can. Spend time with people while you can. Because in both life and trading, you never know when you’re going to run out of time.

5. Help yourself before you help others.

This is a hard one, especially for us Filipinos who are always taught to be selfless and to put others first. But the fact is that you can’t really help others that much if you don’t help yourself first.

Master your craft. Become the best person you can be. Find what makes you happy. Keep yourself healthy. Live a balanced and fulfilling life. Then help others do the same.

6. Be sincere.

It sounds simple in theory, but it’s actually very hard to execute in real life—especially with so much noise from the media and society in general. It’s a harsh world we live in, and it can be tempting to just focus on your own survival. Sincerity is rare nowadays, but it doesn’t have to stay that way.

Remember that someone else’s gain does not need to be your loss. Be compassionate. Be kind. It can be something as small as saying a few heartfelt words to someone who’s having a hard time.

Be sincere in everything that you do and you will make your mark in people’s lives.

7. Know the rules, then break them.

Rules are important. They give order to our otherwise chaotic world. But not all rules make sense, some are outdated, and some are just plain stupid. A lot of rules are just the result of too many compromises and too many people saying, “Well that’s how other people do it” or “That’s what we’ve always done.”

Don’t be scared to challenge rules or the status quo, especially if you know it is for the better. You can still be respectful even if you speak up. And who knows? You might be the one to change the world someday.

8. Become comfortable with change.

Change is the only thing in life that is permanent. You won’t be able to anticipate everything that will happen, but you can learn to roll with the punches and turn unexpected challenges into even greater rewards. Take the hits that life throws at you. Learn from them, adapt, and improve.

9. Learn to welcome failure.

Even the most successful people in the world have failed—many times and at many things—sometimes even at the things they’ve become famous for today. Oprah Winfrey was fired from her first television job. Jack Ma applied to 30 jobs and was rejected 30 times. Walt Disney was once told by his boss that he had no imagination.

Failures are painful, but they are valuable. They teach us much more than success does, and they forge us into stronger, more resilient people. As odd as it may sound, some failures are very important.

10. Stop hiding behind your age.

Age is just a number. Young or old, don’t let age be the reason for you not following your dreams. Success doesn’t care when your birthday is as long as you work hard and commit. There’s no time like the present, and you don’t want to have regrets when you’ve used up your time in this world. Whatever it is that you’re passionate about. Do it now.

11. Become indifferent to money.

Don’t let money make you sad,  but don’t let it make you happy either. Don’t let it control you. Money is just a tool, learn to become indifferent to it and you’ll be better off.

The real value lies in the ideas, the freedom, and the good that money can help bring to life. Focus on coming up with great ideas, giving yourself and your family the freedom to not worry, doing good for those around you. Do something worthwhile. Make an impact. Provide people with value and money will follow.

12. If you don’t want to be average stop acting average.

If you are not where you wanna be, then do something about it. It’s easy to just sit there and complain—and that’s why so many people do it! But that’s also why so many people never see the changes they want to see.

If you want something, stop spending so much time on TV shows and Facebook. Stop slacking and start getting to work. It’s going to be hard, but if you really want it bad enough then find a way to make it happen.

 

What about you? What are some of your tried and tested principles for success? Let us know in the comments below!

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News & Features

The Elliott Wave: Something Worth Adding to Your TA Tools?

If you hang out with a lot of traders, then you’ve probably heard about Elliott Waves at least once or twice. And if you’re a beginner in the stock market, then you’ve probably been confused by them at least once or twice too!

In this article, we’ll explain the basics of the Elliott Wave theory, give you a simple overview of how it works, and break down its pros and cons so you can decide if it has a place in your trading strategy.

Background

Price movements in the stock market can seem quite random, especially if you’re a beginner. But a quick intro on technical analysis will show you that the market actually moves in repeating patterns. The Elliott Wave theory is just one method under technical analysis that maps out how these patterns unfold.

Back in the 1930’s, an accountant named Ralph Nelson Elliott noticed that there was a specific pattern of waves that appeared again and again in the stock market. This pattern of waves are what we now call Elliott Waves.

How It Works

The basic Elliott Wave pattern includes two phases—an impulse phase and a corrective phase. The impulse phase has 5 waves and goes with the dominant trend while the corrective phase has 3 waves and goes against the dominant trend.

Here’s a simple illustration to show you what these waves look like when the overall trend is bullish (Fig. 1) and when the trend is bearish (Fig. 2).

Eventually, the shorter cycles of Elliott Waves can also combine to form bigger Elliott Waves spanning longer periods of time. Every completed cycle, no matter what degree, will still develop the same 5-3 wave pattern.

Elliott Waves can form over many different time frames. A cycle can be completed in just a few minutes or over centuries! Although there’s no exact rule on which degrees correspond to which time frame, there are 9 generally accepted levels and labels:

  • Grand supercycle: Forms over hundreds of years
  • Supercycle: Forms over many decades
  • Cycle: Forms over a few years (minimum of 1 year), but possibly also a decade or two
  • Primary: Forms over a few months to a couple of years
  • Intermediate: Forms in a few weeks to a few months
  • Minor: Forms in a week to a few weeks
  • Minute: Forms over a few days
  • Minuette: Forms in a few hours
  • Subminuette: Forms in just minutes

The Elliott Wave theory can easily become complicated, but at the end of the day it’s just a form of pattern recognition. Knowing the pattern allows you to predict price movements and make better trading decisions.

To use the Elliott Wave, you must first identify two things:

  1. If the dominant trend is bullish or bearish
  2. Which wave you’re currently on

To spot Elliott Waves correctly, make sure to follow the 3 basic and unbreakable rules:

  1. Wave 2 should never go beyond the start of wave 1.
  2. Wave 3 cannot be the shortest among waves 1, 3 and 5.
  3. Wave 4 never overlaps with wave 1.

Conclusion

Recognizing the Elliott Wave pattern can involve a lot of subjectivity, so results will vary from trader to trader. In some ways, you might even say that executing it is more of an art than a science.

We can’t tell you if this method will work for you or not, but what we can say is that there are people who have used it and profited from it.

What about you? Are you going to try the Elliott Wave or is there another method that you swear by? Let us know in the comments below!

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News & Features

Making the Stock Market Easier with Investagrams

  • Many people think that the stock market is complex and that trading is hard. Maybe that was true before, but nowadays there are many ways to make stock trading easy and hassle-free. One way is to use the tools, services, and information here on Investagrams!

Here’s how we can help you on your stock market journey:

Learn using our free videos and articles


If you’re a beginner in the stock market, or even if you have no idea about how stocks work, we have learning modules that can help you.

If you’re starting from nothing, you can read the Investagrams guide on How to Start Investing in the Stock Market first. For concepts that are more advanced, like how to read charts and understanding moving averages, you can follow Investa Daily—your trusted source for investing tips and stock market advice.

Find your ideal stocks using our automated stock screener

Once you’ve learned the basics of stock analysis, you can start to develop your own strategies and trading system. Use InvestaScreener to quickly and easily find stocks that match your criteria. Filter stocks based on the 52 week high, support, resistance, and much more.


InvestaScreener is a powerful and flexible tool that will help you save tons of time and effort when analyzing stocks. With this powerful stock screener, you can do what would normally take hours in just a few clicks.

Practice using our virtual trading platform

If you’re excited to trade but afraid to risk money, don’t worry! You can practice with the Investagrams virtual trading platform. It shows real companies and actual price movements in the Philippine stock market. Why is that important? Because you get to practice under real market conditions,  and you’re prepared to jump straight into trading with real money any time!

Buy, sell, and manage your portfolio just like the real thing to test your strategies before putting real money on the line.

Monitor stocks and charts in real-time

Use Investagrams to get complete and up-to-date information on any stock listed in the Philippine Stock Exchange. Easily access all the numbers you need to make smarter decisions and better trades.

You can also study the price movements of your stocks using our real-time charting tool. Here you will easily be able to monitor the historical movement of price and volume, understand the context of supply and demand, and identify patterns that are forming in the market.

Stay up-to-date on the latest stock-specific news

Instead of spending hours gathering information from tons of different sources, now you can just look at the Investagrams News Feed. See all the business, economic, and stock-specific news organized in just one page. Not only will you save time, but you’ll also find it easier to monitor important news that could affect your stock picks.


You can even follow and interact with other traders on Investagrams’ social platform to see what people think and how the news may affect the stock market.

Save time with our price and disclosure alerts

We’re all busy with our lives, whether it’s because of work, school, or our families — we all know how important our time is. But becoming financially free is important too, right?

With InvestaWatcher, you can receive instant alerts whenever your stocks hit your buy point, target price, and cut loss level. You will instantly get notified when your stocks have disclosures such as the earnings report, company buy backs, acquisitions, and other important announcements.


The best part? You can receive the alerts everywhere — SMS, e-mail, in-app notifications, and even Facebook Messenger! Forget about spending hours monitoring the stock market and let us do the work for you.

Get help on-the-go with the Investagrams Facebook chatbot

Investagrams is fully integrated with the Facebook Messenger through the InvestaChatbot.

Just chat the Investagrams FB page to get instant information on the current stock price, news, financial reports, and more!

Improve your skills by joining events and competitions

Investagrams holds many competitions and on-ground stock trading seminars throughout the year. Follow our Facebook page for announcements, and join us to take your trading to the next level. Plus, we’d love to meet you!

Our mission is to make your stock market journey easier and, of course, more profitable. We’re always developing new features and services to serve you better, so keep checking back to see if we’ve added anything new! If you have a question or a request, just let us know in the comments below!

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News & Features

10 Habits of Happy Investors

Who is a happy and effective investor?

In my opinion, he is someone who can confidently grow his investment portfolio through realistic means and without much stress. This confidence enables him to do what really matters to him as money is not the main objective of what he does. A happy and effective investor epitomizes “true financial freedom” because he knows that he can rely on the returns of his investment portfolio when he retires.

Contrary to popular belief, a happy and effective investor does not need to have a degree in finance or be an analyst (like me) or a stock broker.  He just needs to have certain habits that are easy to adopt.

In this article, I’ll be sharing what I believe are some of the essential habits of happy and effective investors.

HABIT 1: INVEST CONSISTENTLY

A lot of people don’t invest because they think that getting a high paying job is enough to guarantee financial freedom. Ironically though, having a high paying job is not enough to guarantee financial freedom. If it were so, why are numerous highly paid celebrities and athletes bankrupt a few years after retirement?  Moreover, according to a study by LIMRA on “when 25 year olds today reach 60”, a vast majority will be broke (63%), while 5% will still need to work. Only 1% will be wealthy and 4% will be financially independent.

Although getting a job that pays well is important, it is also equally important to invest consistently to become a happy and effective investor.

How much should you set aside? The 50-20-30 rule stipulates that you should consistently set aside 20% of what you earn on financial priorities which include investments.  When you get a bonus, strive to set aside 50%for investments.

Resist the temptation to buy things that you want but don’t really need. Just remember that when you choose investments over your wants, your investments will eventually allow you to buy what you want. Every year, my husband and I set aside a certain amount for my children’s investment accounts because we believe giving gifts that keep on giving.

While investing consistently can be difficult like sticking to a diet or an exercise plan, you can do something to help you stay the course. For example, you can schedule an automatic fund transfer out of your payroll account equivalent to 20% of your salary every payday that will go towards the purchase of mutual funds or UITFs. COL Financial already has a function that allows automatic monthly investing of stock­s and mutual funds.

HABIT 2: AVOID TIMING THE MARKET

When the market corrects,investors usually sell their positions with the intention of buying back when the market recovers.  Intuitively, this should be a more profitable strategy as investors avoid big draw downs in the value of their portfolios.

However, studies show that timing the market is a very dangerous habit. According to a study conducted by Davis Advisors (using Bloomberg data), investors who just stayed invested in the S&P 500 from 1994 to 2013 would have generated an annual return of 9.5%. On the other hand, investors who had missed the 10 best days of the market during the same period would have seen their returns diminish to only 5.5% annually,while those who had missed the best 60 days would have generated a loss.

The same holds true for the Philippine stock market. In fact, market timers are hurt even more significantly given the greater volatility of local stocks. While investors who just stayed invested in the PSEi from 1996 to 2016 would have generated an annual return of 9.4%, those who had only missed the 10 best days would have already generated a loss of 0.4%!

HABIT 3: AVOID BEING EMOTIONAL

Investing in the stock market can be a very exhilarating exercise which is why many investors choose to trade actively instead of sticking to an investment plan that simply involves buying funds and some individual stocks on a regular basis. After all, a lucky investor who makes the right bet could more than double his money in a short span of time.  For example, earlier this year, MAC was trading at less than Php3.00/share. Now it’s worth almost three times more at Php8.50/share! Assuming that you were the lucky investor who bought MAC earlier this year, you would be much richer today!  People might also say that you are a genius for spotting MAC at such a good price making you feel proud of your achievement.

Most of the time though, investors are unlucky. According to a study by Dalbar and Lipper, the average stock fund investor returns from 1994 to 2013 is only 5.0%, trailing behind the average stock fund return of 8.4%.  This is because investors typically buy at the top and sell at the low as they are overcome by greed and fear.  This is why Warren Buffett said to “Be fearful when others are greedy and greedy when others are fearful.”

HABIT 4: ACCEPT VOLATILITY

Investing a certain portion of your portfolio in the stock market is important if you want to beat inflation and retire comfortably. However, a lot of people avoid investing in the stock market because of volatility. Unlike bank deposits, returns of stocks are very volatile. Even worse, they can go down in value and there are always many reasons why the market can go down in value (Examples: election of Trump as U.S. president, the declaration of martial law in Mindanao, Fed rate hike).

Although stocks are volatile, they also generate significantly higher returns compared to bank deposits. Moreover, the market goes up more frequently than down. For example, during the last 29 years, the market was up 20 years while it was down only 9 years. Total return during the said period was also substantial at 795%, significantly beating returns of bank deposits!

HABIT 5: BUY WHEN THE MARKET GOES ON SALE

January and July are my favorite times to go shopping since shops have their semi-annual sales. Like me, most people get excited to go shopping when stores go on sale.

However, the opposite is true when the stock market goes on sale. Instead of buying stocks, typical investors avoid the stock market, worrying that there must be something wrong.

In contrast, the happy and effective investor gets excited when the market goes on sale. He understands that buying when the market goes on sale allows him to generate even higher returns as history has shown that markets eventually recover after falling substantially in reaction to negative developments such as the Asian Financial Crisis and the Global Financial Crisis.

HABIT 6: DO YOUR HOMEWORK

People normally rely on tips when choosing which stocks to buy.

However, a happy and effective investor understands that to pick the right stock, he needs to do his homework. He knows that for share prices to remain in an uptrend, profits also have to be rising. This is based on the logic that profitable businesses are worth more. After all, who would want to buy a business that is losing money? He tries to understand what drives companies’ earnings, and determines whether these drivers are currently favorable for the company.

For example, from 2011 to 2013, CEB’s share price was on a downtrend because the price of oil was rising and oil is one of CEB’s major costs. At the same time, the airline industry was suffering from overcapacity as the growing popularity of low cost carriers encouraged new players to come in. This led to price wars that negatively affected CEB’s profitability.

However, towards the second half of 2014, oil prices started to fall. The industry also consolidated as airlines that were losing money either closed shop or were bought out by the bigger players. The said factors led to the rebound of CEB’s profitability and its share price.

Aside from knowing where profits are headed, the happy and effective investor makes sure that he is paying a reasonable price for the stock he is buying. This is measured by the price relative to the amount of earnings that the company is expected to generate or the P/E ratio. The lower the P/E ratio, the better, as this would improve a stock’s return potential.

A happy and effective investor avoids buying penny stocks based on tips. He understands the dangers of buying penny stocks, which could lead to his investment becoming worthless.

For example, in 2012, CAL was one of the most popular IPOs as its share price rallied by 219% in 9 days! However, at the peak, CAL was trading at 73.7X P/E which was very expensive considering that the PSEi was trading well below the said level. Moreover, instead of going up, CAL’s profits went down. As a result, share prices fell significantly.

HABIT 7: BE COST CONSCIOUS

The happy and effective investor understands that active trading, while exciting, is very costly. Did you know that the cost of buying and selling a stock (including taxes and commissions) is around 1.1%?

When buying funds, the happy and effective investor also studies fees that are charged by asset management companies. These include front load and back load fees, penalties for early redemption, management fees (0.25% to 2.15%) and other costs (up to 2.25%). Unfortunately, higher fees do not necessarily translate to better performance.

While costs of 1% to 2% may seem small, the slight reduction in portfolio returns spells a big difference when compounded annually over a long period of time. For example, a Php100,000 portfolio that generates a compounded annual return of 10% would be worth Php259,000 in 10 years. This is 8.7% more than a portfolio that generates a compounded annual return of 9.0% (because of a 1% cost annually) and 16.8% more than a portfolio that generates a compounded annual return of 8.0% (because of a 2% cost annually)! The difference increases even more over time as can be observed in the table below.

 

HABIT 8: DIVERSIFY

When I was a teenager, I remember envying classmates who had Sony Walkman. During my teenage years, having a Sony Walkman meant that you were “cool”.

When I had my first baby, I wanted to make sure that all the pictures I took of my baby were perfect. This was why I always bought Kodak film since I didn’t want to leave anything to chance.

However, cassette tapes and film cameras are now obsolete. And if you had only bought shares of Sony and Kodak because of the popularity of the Walkman and film cameras twenty years ago, the performance of your portfolio would be very disappointing.

The happy and effective investor understands that diversification is important to manage risks. Aside from protecting his portfolio from significant volatility resulting from unforeseen incidents (such as obsolescence of products), diversification also helps him manage the cash flow of his investments, so that he will not be forced to sell investments at a bad time.

Below are some basic types of diversification.

 

HABIT 9: THINK LONG TERM

The happy and effective investor is a long-term investor. He understands that by investing long term, he is maximizing the power of compounding to grow the value of his portfolio.

Did you know that by age 65, someone who invested Php5,000 a month starting at the age of 26 will have significantly more than someone who invested Php10,000 a month starting at the age of 46? This is despite the fact that both have set aside the same amount of Php2.4 Mil as investments.

The happy and effective investor also knows that when investing in the stock market, the risk of losses diminishes in the long run. Based on the study of the S&P 500’s performance from 1802-1997, it was impossible for an investor to register a loss assuming that he had a investment time horizon of at least 20 years. The same holds true for the Philippine stock market based on the study of the PSEi’s performance from 1987-2016.

HABIT 10: REVIEW YOUR PORTFOLIO

A happy and effective investor diligently reviews his portfolio on an annual basis. He determines whether he can increase the amount of money that he sets aside as investments. For example, did he get a pay increase or a big bonus that will allow him to invest more?

He also checks whether his portfolio allocation between different asset classes (such as stocks or bonds) is still appropriate given his current situation. For example, will he have a major expenditure soon that will require him to reduce his equity exposure?

He also tries to see whether he still likes to keep the individual stocks in his portfolio and whether his allocation to the different issues is still balanced or acceptable. Have fundamentals changed? Or is the stock now too expensive, making it a good time to lock in gains?

In summary, here are the 10 habits of happy and effective investors. I hope that you can adopt these habits so that you can become a happy and effective investor.

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