INVESTING

❖ DISCUSS PERSONAL
INVESTMENTS AND
FINANCE

OBJECTIVES
❖ INTRODUCE ❖ DIFFERENTIATTE TYPES
THE CONCEPT OF INVESTMENT/
OF INVESTORS AND TO
INVESTMENTS LEARN TO EFFECTIVELY
MANAGE PORTFOLIO
TODAY 20 YEARS AGO

10% 10%

INFLATION
INVESTING
The act of committing
money or capital to an
endeavor with the
expectation of
obtaining a profit.
Different
Different Types of Traditional
Traditional
Investments

MANAGED REAL
STOCK BONDS FUNDS ESTATE
Common stock is a
security that represents
small pieces of
ownership that is trades
in a stock market.
Stock market
Stocks is a place
are small
where
piecesbuyers and
of ownership
sellers congregate
that are to
being traded.
trade goods.
TWO TYPES
TWO TYPES OF
OF
MARKET
MARKET
PRIMARY MARKET
 where business needing additional
money go to sell their shares to
investing public fro the 1st time
 Initial Public Offering (IPO)
TWO TYPES
TWO TYPES OF
OF
MARKET
MARKET
SECONDARY MARKET
 Actually the first thing that comes
to the public mind when they see
or hear the word “stock market”
 STOCKHOLDER or
SHAREHOLDER
Is someone who invest in the
stock of a business and is
considered a part owner.
“Cash Dividends”
“Cash appreciation”
 Cash
Cash
Dividend
Appreciation
Payment
When the current When the business
market price of pays out a portion
investment in stock is of its earnings to
higher than its its stockholders.
purchase price.
Third Richest person in the world

Made most of his fortune

solely by investing in the stock
market.
USD 105,000 – 25million in
just 13 Years

Warren Buffett
The Philippines stocks market as measured by the
Philippine Stock Exchange Index (PSEi) posted:

Return of 11.71%
Dec. 2006 – Dec. 2014
Inflation average = 4.23%

Return of -20.76%
Dec. 2006 – Dec. 2008
Changing and Volatile
 GUIDLINES IN SOUND
STOCK MARKET INVESTING
1. Think of stocks as pieces of businesses and
not chips in the casino
2. Invest only the amount of money that you can
afford to lose w/o affecting your daily life.
3. Identify and invest in superior businesses.
 GUIDLINES IN SOUND
STOCK MARKET INVESTING

4. Do not touch what you do not uinderstand

5. Value and price are different.
6. Buy those superior businesses only when they
are cheap or during crisis.
 GUIDLINES IN SOUND
STOCK MARKET INVESTING
7. Let the magic of compounding work by
investing for long term.
8. Buy some more stock if the price goes down.
9. Do not put your eggs in one basket.
 GUIDLINES IN SOUND
STOCK MARKET INVESTING

10. Sell your stock once it has gained 50% or

after three years.
11. Do not invest in IPO’s without reviewing it.
 A loan to a company or
government
Safety of principal and
BONDS cash flow
Investing
Receiving
 Debt security –
You will get your debt is
prioritize first over equity.
money back
BONDS
Terminologies
1. Bond Issuer - Borrower

2. Investor - Lender

3. Coupon/Coupon Rate -
Interest Rate
Terminologies
4.Term/Tenor - the time it takes for all
payments to be made by the issuer
and received by the lender.

5. Face Value/Principal/ Par Value is

the borrowed amount.

6.Bills is a debt security that matures

in a year or less.
Terminologies
7.Bonds is a debt security that
matures after a year or more.

8. Treasury is a term that signifies

that the debt security is issued by
the government.
Terminologies

9. Yield is the return that you

would expect if you hold the bond
for a year and is expressed in
percentage.
 SELLING
AT A
PREMIUM

BOND PRICE FACE VALUE

 SELLING
AT A
DISCOUNT

BOND PRICE FACE VALUE

2 TYPES OF BOND

Government Corporate
Bonds Bonds
2 TYPES OF BOND

Considered as risk free

Government investments as the
Bonds/ government can pay off
Treasury the debt
Bond
2 TYPES OF BOND

Issued by a business.
Corporate
Bonds
 Government Bonds/ Treasury Bond
The Philippine Government issues three types of
debt securities:

1. The short term Treasury Bill --91, 182 and 364 days
2.Fixed Rate Treasury Note (FXTN) --5,7,10,15,20 and 25
years
3. Retail Treasury Bond (RTB) ---3,5,7,10,15 and 20 years
4. Foreign Currency - denominated bond called ROP bond
is guaranteed by the Philippine Government.
GUIDLINES IN SOUND BOND
MARKET INVESTING

1. Identify and invest in stable governments.

2. Identify and invest in superior businesses.
3. Pay attention to the issuer's credit rating.
4.Hold the bond for the whole duration of the
term
Are companies or trust
funds that pool money from
various investors and
through fund manager.
MANAGED
FUNDS
Mutual Fund Unit Investment
Trust Fund (UITF)
 -classified as a
corporation
Mutual Fund
-regulated by the SEC
-required to invest a
minimum if 5% of the
fund’s net assets
(liquid or semi-liquid)
-the investor is
considered as a
STOCKHOLDER
 -a trust fund that is
sold mostly to banks
Unit Investment
-subject to stringent
Trust Fund (UITF)
regulations by the
Bangko Sentral ng
Pilipinas (BSP)
-the investor is
buying units of fund -
-- not considered as
a stockholder
Both Mutual and UITF’s are classified as follows:

1.Equity fund
2. Bond fund ( also known as
fixed-income fund / income fund)
3. Balanced fund
4. Money Market fund
EQUITY FUND
Invests primarily in stock.

BOND FUND
Invests primarily in bond.
BALANCED FUND
Invests in a combination of bonds
and stocks.

MONEY MARKET FUND

Invests primarily in short-term
securities.
 GUIDLINES IN SOUND
MANAGED FUND INVESTING
1. Look at the long-term track record of the fund.

2. Read the Fund Prospectus (for mutual funds) and the

Declaration of Trust ( for UITFs) to see if it is aligned with
your own investment objective.

Prospectus - a document that contains information on the

objectives and policies of the fund, strategies of the fund
manager and investment risks.
 GUIDLINES IN SOUND
MANAGED FUND INVESTING

Declaration of Trust - the Plan which contains the

same information regarding the UITF

3. Let the magic of compounding work for you by

investing for the long-term.
Different
Different Types of
of Investors
Investors
Stock and Bond Investor

A stock investor will tend to be

more aggressive investor than
the money market, fixed-income
investor.
Real Estate Investor

Real estate investors tend to

hold on to real estate assets
reflecting their desire to lock
money in real properties to
hedge against significant
inflation.
Business Entrepreneur
The investor-entrepreneur usually starts
up a business for the following reasons:
1. To express his creativity and talent
2. To make use of his person skills and
knowledge
3. To achieve financial independence
4. To tap unlimited opportunities and
reach unlimited financial benefits.
Franchising
Refers to the method of
practicing and using
another’s perfected
business concept.
R1:Aduana, Nick L. Business Finance in the
Philippine Settings. C&E Publishing. 2017
R2:Yumang, K.L., Chan Pao T.Y.L., Benito, P. P.
Exploring Small Business and Personal Finance.
The Phoenix Publishing House, Inc. 2016