Sorry, been very busy for most of January because ….
I got married!
Yahoo! That’s another investment I will write about probably next month (if I don’t get busy).
For now, let me share our investment options and strategies for 2016. Now if you’re a newbie, kindly read our Beginner’s Guide syllabus first to have an idea of the more usual investment vehicles we advocate.
For 2016, I’m seeking to diversify and build on other sources of passive income as more or less, I have already established a habit of investing on these “usual vehicles” the past years. Plus the higher financial demands of a married life.
Definitely stocks, UITF and variable unit-linked life insurance will remain among my core investment holdings since I am already investing in these regularly and since they comprise a significant majority of my current net worth (CNW). Businesses will have to remain profitable too.
The stock market is generally down as of this writing due to various reasons, back to 6200-6400 levels so returns from above-mentioned investments are not encouraging (rather frankly, almost wiped out) but nonetheless, we are sticking with our regular subscription plans for UITF (actually added a third bank provider) and the monthly VUL premiums (which by now, 95% is going to investments already). If Juan is long-term and been buying regularly during the market climb, then now’s an even better time to buy! It’s a matter of Objective-Horizon-Appetite (OHA).
As for my stock holdings via online brokers, I am remaining on the sidelines for now and preparing some fresh funds to buy more stocks once the market bottom and reversal are confirmed.
For now, here’s my rough guide to my 2016 investment plans:
The beloved charitable Ilocana* and I were blessed enough to purchase a small farm late last year in her provincial hometown, around 2 hectares (inclusive of irrigation canal) for PHP800K. That’s PHP40/sqm (exclusive of taxes, transfer fees etc) compared to PHP500/ sqm in San Jose, Batangas. There are still relatively cheap farmlands in some provinces, especially in non-region 4 and Visayas / Mindanao areas. So if you have access to that (like your wife, relatives etc), then do consider purchasing one before the conglomerates dominate.
We plan to continue on making the whole farm productive via seasonal rice planting, as well as planting fruit-bearing trees on the boundaries. I realized that farming can be a good source of passive income, plus it’s seasonal (like bonuses) so might as well capitalize on it. Though it is really a tough industry to base your main source of income from, like many of our farmer fellowmen who solely depend on farming.
Speaking of which, there are also some land owners who are a bit tight on cash flow for certain months and who will willingly pawn their land to you for a certain sum of money. Then you can make use of their farm (and its produce) while the pawned amount is outstanding (usually we see pawn duration good for 3 planting-harvest cycles).
In either buying a farm or financing pawned farms, just make sure everything is properly documented (or titled) and that you are not taking advantage of our dear farmers, especially those in dire need. Let us keep our moral standards in our investments.
Previously dabbled on a small piggery business and cattle-raising. We ended the piggery after one round (due to very small returns) while the cattle is still very much alive and Cowie has grown much after almost 2 years now. I aim to go back and put more focus on these by creating a better (cost-efficient) system with relatives in the province, and spreading the risk by talking to multiple relatives for possibly 2 to 3 cows. If you have relatives in the province then this can easily be worked out.
Barring unforeseen glitches from BIR hunters, the online business remains a profitable source of income. If you want to know how an online business usually works, just create an FB page and create accounts in Xend or Fastrack for the delivery of your item. Buyer buys and pays (usually via bank deposit, inclusive of delivery fee), and you deliver as promised. Others also do meet-up. Simple.
Nonetheless, I’ll put more focus on farmlands and livestock than this one because ideally, I want this business to be registered and legitimized eventually. Nonetheless, there are cost and time constraints in registering the business, plus fees and regulatory requirements that need to be complied with annually (books, financial statements, permits etc) which are not present in farmlands and livestock.
I agree that businesses must be properly registered, taxed etc and this remains among my goals, but all I’m saying is that it is faster and requires less legwork (in my opinion) to enter into new farmland and livestock businesses, compared to opening new retail / foodcart / service (Uber or taxi) businesses.
Pag-Ibig MP2 / PERA
Will push through with Pag-Ibig MP2 this year (I’m just stabilizing my monthly finances and budget since I got married recently).
I’m also considering PERA (Personal Equity and Retirement Account), sort of PH version of 401(k) once the policies and procedures about it have been cleared and established.
High Yield Deposits
I feel that this portion of my CNW is very small (since I always prefer stocks and UITF) but I must continue my hunt for high yield deposits. Previously mentioned AFPSLAI and PSSLAI so those who have access to it should maximise it. I’m also considering certain cooperatives who offer high interests on deposits. Just being wary of the stability and safety of my deposits.
Retail Treasury Bonds (RTBs)/ Bills
In simple terms, these are like high yield deposits but parked with the government. Been browsing on retail treasury bonds (for short term and long term placements), but so far the lowest minimum investment amount I’ve seen is PHP100K. In short, not retail investor friendly. But I’m keeping this in my 2016 options.
Preferred Shares / Corporate Bonds
The former is almost similar to common stocks, but has a higher return in terms of dividends. while the latter is similar to treasury bonds, but issued by companies and not the government. Will be on the lookout for these issuances which have rates ranging to 4% to 8% the past years. The lowest minimum investment amount I’ve seen is PHP50K so probably more doable than RTBs.
How about yours? Please share them here and let me learn.
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*Francis Kong calls his wife Ilocana in his blogs, and since he’s my idol, please allow me to do the same (sort of) in this site moving forward. I hope Francis doesn’t mind too.