Mass marketing is dead. Or so that’s what everybody says. Although I wouldn’t call mass markets non-existent (there’s a good reason the big television networks and telcos are still raking it in), there is no doubt there’s been a proliferation of niche markets as never before. For sure, prosperity and technology have given rise to niches. As economies develop, so do people’s income. And with that comes choices. Think “tall white chocolate mocha Frappuccino – no whipped cream, please.” Technology, particularly the Internet, has also facilitated the surge of niches, which author Daniel Pink referred to as “The Long Tail” in a distribution curve, where there’s an infinite number of songs, movies, books, and other products that have found a
tiny but constant market demand.

That is why regular folks, including many Filipinos, are able to sell rare collectibles, obscure items, and all sorts of doodads on sites like eBay and Multiply, because the cost of marketing and distribution is so slow and
somewhere out there is a potential customer interested to buy.
So here’s my point: to succeed in today’s world, you have to find your own profitable niche. Whether it’s your career or business, being all things to everyone doesn’t work anymore. It may be good to be a generalist in terms of broadening your skills but to stand out, you have to find your specialization.

Take this magazine for instance. MoneySense is the only local magazine on personal finance. That’s a niche. My small business, Learning Curve (www.iluvlearning.com), is a producer of conferences and seminars on personal finance and entrepreneurship. We target mainly SME owners and mid-level managers, and so we design our content and price our fees accordingly. Personally, I have found my niche in the information business as a magazine editor and conference/seminar producer focused on three areas: personal
finance, small business, and technology.

So if you want to be a chef, you should be a pastry chef specializing in wedding cakes (like Heny Sison). If you want to be a lawyer, specialize in intellectual property law for the information technology sector (like JJ Disini). If you want to be designer, focus on furniture design (like Kenneth Cobonpue). If you want to sell on eBay, sell Filipino collectibles (like Eireen Diokno-Bernardo). If you want to start a shipping and logistics, focus on offering marketing services (like Vcargo’s Paulo Tibig). If you plan to become a software mogul, become a Microsoft certified partner (like Joey Gurango). If you want to be a motivational speaker, focus on leadership (like Francis Kong). If you want to work in financial services, become a fund manager (like our five money managers featured starting on p. 48). If you have to be a celebrity, specialize in television hosting
(like our cover girl Donita Rose on p. 44).

It doesn’t mean you can’t do anything else. Of course you can get into another niche business or start another niche career, but you always have to think in terms of finding a niche. So how do you find your niche? First, find something you really love and you’re really good at and then drill down on more specific
talents or skills that make you stand out (e.g. if you love writing, you might realize what you really love is copywriting, not writing poetry). Second, find a sector you want to get into that’s growing and then break that down in subsectors (e.g. if you want to get into the real estate sector, you might discover your best bet is in renovating and selling dilapidated apartments, not building houses from scratch).

Riches really are in niches. Read the excerpt from the best-selling book by Singapore-based Thomas Fernandez and Sant Qiu “Niche Dominators: Success Secrets Exposed) to give you more ideas on how to find your niche. Better yet, grab a copy of that book and their previous title “Secrets to Dominate Your
Niche.” Special thanks to Nikko Lim for facilitating everything.

Enjoy this issue!

HEINZ G. BULOS
EDITOR-IN-CHIEF
hbulos@moneysense.com.ph

Preparing for Your Children’s Education
An excerpt from the book “Kaya Mo, Pinoy! 12 Steps to Build Wealth on Any Income”
By Alvin Tabañag

More than 360 private colleges and universities increased their tuition fees by an average of 10% for school year 2008-2009. Kaya gaya ng mga nakaraang taon, sumakit na naman ang ulo ng maraming mga magulang na may anak sa kolehiyo. One of the surest things that will happen in the future is that the cost of education will be a lot higher. Walang ibang pupuntahan ang tuition fees kundi pataas. Ang tanong na lang ay kung gaano kataas.

Check out the table on the next page and see how much you could be paying for your children’s college education. It shows the future value of P30,000 in tuition assuming different annual rates of increase. Kung ang anak mo ngayon ay 7 years old, papasok yan sa college pagkalipas ng 10 taon at ang babayaran mo na tuition sa isang semester ay mahigit P64,000 kung ang increase ay 8% taun-taon. Kung 12% naman ang increase taun-taon lagpas ng P93,000 ang babayaran mo per semester o P186,000 sa isang taon. If you plan to send your kids to the leading universities, expect to pay twice as much. And we are just talking here of tuition. You will need additional funds for allowances, school supplies, projects and other activities.

Kung ngayong taon ka lang nagkaanak, asahan mo na posibleng umabot ng P1 milyon ang gagastusin mo para mapagtapos ng college ang isang anak. If you have more than one child, then you have a much bigger financial challenge ahead of you. Hindi na uubra yung sasabihin mo lang na “bahala na.” O aasa ka na magiging iskolar ang anak mo. O aasa ka na mananalo sa lotto bago sila mag-college. Paano kung ‘di mangyari ang inaasahan mo? You have to plan now!

Future cost of tuition at various rates of annual increase

As responsible parents it is our obligation to prepare for our children’s education long before they step into college. Saving for it now will ease some of your financial burden in the future. Karamihan sa atin, ang tanging maipapamana sa mga anak, maliban sa pagtuturo ng magandang asal, ay ang magandang edukasyon. Nararapat lang na mapaghandaan mo ito ng mabuti. Here are four ways to fund your children’s college education.

1. Pay as you go
This is what you are going to do if you do not prepare in advance. “Pay as you go” means that you will find the money to pay for tuition only when your child is already in college. Kadalasan, manggagaling sa sweldo mo ang pambayad. The big problem with this approach is that you are not sure if you will be earning enough when your kids get into college. Paano kung kulang ang kinikita mo? Paano kung nawalan ka ng trabaho? The usual solution: uutang ka! At kung walang mauutangan, titigil na lang sa pag-aaral si Junior at malamang maghihirap din siya sa buhay tulad mo. Prepare now so you won’t be forced to follow this unreliable approach of paying for your children’s education. Early preparation will ensure that they will finish college.

2. Educational plans
Educational plans are pre-need plans that allow you to save money in advance so you will have funds in the future to cover your children’s educational needs. In recent years the public has been losing confidence in educational plans because of the failure of pre-need companies like CAP, Pacific Plans, Platinum Plans, and The Professional Group (TPG) to honor their obligations to thousands of planholders. Karamihan sa nagkaproblema na mga plans ay yung pinauso noon ng CAP na “traditional” o “open-ended” plans kung saan babayaran ng kumpanya ang tuition fees kahit magkano pa ito. E, biglang nagtaasan ang tuition. Ayon, kinapos ang pondo at hindi nabayaran ng tama at sa takdang oras ang mga tuition fees.

Despite the stained image, educational plans still remain as one of the most effective ways to save for your children’s education. One reason is it forces you to save. It’s like an insurance policy where you only get back a little amount (anywhere from 0% to 50% of premiums paid) if you give up the plan. Kaya sisiguraduhin mong matapos ang pagbabayad para di masayang ang pera mo.

Another reason why an educational plan is an effective tool for saving is that the pre-need company will do the thinking for you on how to grow your money and you’re assured to receive the promised amount. Wala ka nang iisipin pa.

Today’s fixed plans are much safer than traditional plans because the company will pay the planholder a specific amount after a number of years. Dahil alam ng kumpanya kung magkano talaga ang kanilang magiging obligasyon sa planholder, nakakapagplano sila ng mabuti at nakakasiguro ka na hindi kakapusin ang kanilang pondo. Bukod dito mahigpit din ang mga regulasyon ng gobyerno para mapangalagaan ang kapakanan ng mga planholders.

Premiums for educational plans will depend on the age of the child when you buy the plan, how long you will pay for it and how much benefits you want to receive. Payment period is usually five years, but you can also pay for 10 years. You will enjoy discounts if you pay annually or semi-annually instead of quarterly or monthly. Mas malaki ang discount kung spot cash or one-time payment.

Typically, educational plans start releasing benefits when the child reaches the age of 17. You have the option to receive the promised amount as a lump sum or in yearly installments. Some plans have added benefits like a graduation gift, a reward for graduating with honors or life insurance for you and the child. Hindi ito lahat libre; ang iba ay may dagdag sa babayaran mong premium.

The best time to buy an educational plan is the moment your child is born; para mas maliit ang premium. If you wait until the child reaches five years old, you will be paying twice as much for the same benefit. Buy your educational plans only from licensed and stable pre-need or insurance companies with a good track record of paying on time; para hindi sumakit ang ulo mo pagdating ng araw tulad ng libung-libo mga magulang na pinahirapan ng CAP, Pacific Plans, Platinum at TPG. You certainly don’t want to be holding a useless piece of paper when your precious one enters college.

Compare the cost and features of different plans before you decide to buy. Ask the agent what is the “effective rate” or “internal rate of return” of the plan. Kung hindi niya alam, magpalit ka ng agent. This rate reflects how much your money is growing every year. Choose the plan with the best rate. Kung di naman kalakihan ang deperensya sa rates (less than 1%), bilhin mo na yung binebenta ng biyenan mo para matuwa naman sa ‘yo.

3. Save and invest on your own
One of the downsides of educational plans is that the growth of your money is not that high; minsan katumbas lang ng 5% interest taun-taon.And this rate is fixed; it will not change during the life of the plan. If the rate of return is low when you buy the plan, you will be stuck with that rate until the plan matures many years later.

You can probably earn more if you carry out “do-it-yourself” investing, which means you set aside money and grow it yourself. This approach allows you to easily move your money to investments which offer higher earnings. Siguraduhin mo lang na talagang marunong ka kung paano ito gawin. Remember that this time you will do the thinking on how to grow your money. You should be familiar with the different investment products, like mutual funds, UITFs, and stocks, and understand the risks involved when investing in these instruments. Pag nagkukunwari ka lang na marunong, baka malugi ka lang. If you are not sure you can handle it, better give your money to the pre-need companies and let them worry about how to grow it.

4. “1-2-3” combination
This is a combination of any two or all three approaches. To fund your children’s college education you may rely on your salary, an educational plan, and money you’ve invested, all at the same time. Kung kapos ka sa budget mahihirapan ka ring kumuha ng educational plan na sapat sa pangangailangan ng anak mo pagpasok ng college. If this is the case, then buy the plan you can afford now and let your salary take care of the rest in the future.

Even if you think you are a pretty good “do-it-yourself” investor, you might still want to put some of your money in the safety of educational plans; para sakaling magkamali ka ng diskarte, may matitira pa sa ‘yo at hindi malalagay sa ala-nganin ang pag-aaral ng iyong mga anak.

PULL QUOTE

To fund your children’s college education you may rely on your salary, an educational plan, and money you’ve invested, all at the same time.

PROFILE

Alvin T. Tabañag is a personal money management coach and a Registered Financial Planner®. He is a member of the RFP Institute and the Financial Planning Association (USA). He established Pinoy Smart Savers Learning Center to spread a culture of saving among Filipinos through practical financial education. Alvin regularly conducts seminars on money management to a broad range of audience; from low-income wage earners to middle-class workers, professionals and business owners. “Kaya Mo, Pinoy! 12 Steps to Build Wealth on Any Income” is available in all branches of National Bookstore. For deliveries nationwide and bulk orders, visit www.pinoysmartsavers.com or contact (0917) 502-3149.

SMART SPENDER>TIPID TIPS

Back to School, Back to Spending
Learn smart ways to save on school supplies
By Ruth Manimtim-Floresca

Every year, before summer comes to an end, grumblings can be heard from parents about increases in tuition as well as the rising costs of school supplies. Since we are still very much affected by the global economic crisis, it is no longer surprising that more students continue to be transferred to public schools as more families cannot sustain the astronomical payments in private schools anymore.

Ease some of your financial worries by working out a budget that won’t leave you broke before another school year starts. Here are sound school spending tips you can do not only during the summer but also throughout the year.

1. Do an inventory at home
Before heading out to the malls and school supplies stores, gather all your child’s old school items from last year that he wasn’t able to use or are still useful. Rulers, pencil cases, calculators, backpacks, and other durable stuff need not be replaced every year. If they remained in good shape, your child can reuse them this year.

Check too your desk drawer for corporate giveaways that you may have already forgotten such as pens and pencils that you can add to your child’s supplies.

2. Make a list
Find out what your child really needs. As early as possible, ask the school for the list of official requirements for your child’s grade level. Double check this list and tick off those you already have. Make sure you list down everything your child will need for the school year before you hit the stores.

Plan to buy in bulk (that means a reasonable amount, not panic-buying quantities) for items such as notebooks, a box or two of pencils, a ream of bond paper, etc. Stocking up on extras will prevent you from making time-consuming, not to mention more expensive, trips to the store throughout the whole school year just to buy a pad of paper here or five pieces of art paper there. After all, any leftovers at the end of the year can still be used for next year or for your child’s summer activities.

A quick reminder: Just like in grocery shopping tips, remember to stick to your list and your allotted budget! Don’t be pressured with the “Buy me, buy me!” syndrome. Make school supply shopping a learning opportunity to teach an older kid about budgeting and making compromises (e.g. “If you want this backpack so much, we have to buy a less expensive lunchbox.”).

3. Buy supplies in one go
Save time and gas expenses by choosing the nearest store that offers items at reasonable prices. If you are going to a mall close by, find one or two stores where you can get the best value for your money.

Contrary to what some parents believe, buying from Divisoria is not always a wise move. If you live far from the well-known shopping haven, compute first how much you’ll be spending on gas or fares and how much money you might save from the things you plan to buy. Include travel time in your equation. Then ask yourself, “Is it really worth it?”

4. Learn to canvass prices wisely
Every mall has various stores where you can buy school supplies from. Since you’re already in one location and only need to hop from one store to the other, check out prices between stores especially for big ticket items such as shoes, bags and textbooks. A few pesos’ difference here and there still leaves you with more money in your wallet.

Compare brands. High end notebooks can go as much as P30.00 – P50.00 each as compared to the generic and lesser-known names priced at P10.00 – P15.00 apiece. When you multiply the difference by ten notebooks per child, imagine the savings you can get. Be firm and explain to your child that the sky will not fall if he can’t have the expensive notebooks.

Do some math. Compute per piece costs of items that are also offered in bulk packaging. A pack of three pad papers sold at P32.00 is definitely cheaper than buying individual pieces at P12.00 each.

5. Opt for good quality big-ticket items
In terms of bags and shoes, investing in branded items from reputable companies may be your wisest bet. Without a doubt, it is more cost-effective to buy an expensive but longwearing pair of shoes or a higher-priced backpack that would last your child for the whole year or more than to buy two or more pairs of low-quality and inexpensive shoes or more than one bag during the same time frame.

Ask the bag company you are buying from if they offer warranties or parts replacement. There are some that do like Illustrazio where my husband and I have been buying our kids’ bags for the past three years.

6. Don’t forget to flash those store rewards cards
Use your loyalty card to earn points on school supply purchases. Some stores even give away freebies when you reach a certain minimum purchase price. If you have already accumulated a substantial amount on your card balance, use the rebate to buy some of your child’s needed items.

7. Time your shopping well
Buy school supplies by the middle of summer or earlier. Hasty shopping can sometimes force parents to give up buying suddenly-out-of-stock items or forego the endless lines at the cashier counters, with thoughts of just coming back another day or spending extra time looking for another store.

If you can’t totally avoid buying at the last minute (e.g. a week or several days before school starts), shop early in the day as soon as the malls open. That way, the stores are not yet too crowded and you’ll be able to finish your shopping more quickly before the hordes of after lunch shoppers come in droves later.

8. Store all school supplies in one central location
Eliminate the “Mom, where is it?” questions throughout the school year by designating a big box, a shelf or drawer for all school supplies. This technique also makes it easy for parents to check every now and then which supplies are getting low and need to be replenished.

While it is harder to budget these days than the previous years, we can still cope with the economic changes by being diligent in monitoring our spending. In the end, what matters is that we were able to address our children’s school needs with the resources we have at the time so they can get the best education they can possibly have.

THE BOTTOM LINE>HOUSING LOANS

The Housing Loan Primer
This is a great time to get a mortgage. You have to look at three things: the institution, the requirements, and the numbers
By Rienzie P Biolena, RFP®

For the majority of Filipinos, the purchase of their homes is probably one of the most significant and biggest investments that they will make. Whether it’s a townhouse, condominium, or house and lot, the decision to buy or build a home where the family or individual shall reside takes up a lot of time, effort, energy, and consequently, money.

Given the considerable amount that purchasing real estate entails, almost all aspiring homeowners borrow money using a mortgage, or what we more commonly call a housing loan. A housing loan gives the advantage of more manageable payments –spreading the amount over a period of years – making them lighter in terms of cash outlay, at the purchaser’s chosen terms. This uplifts the burden of paying the huge amount of cash upfront, especially when buyers do not have the ready money. Moreover, cash freed up can be channeled to other investments that in time can be used to pay off the loan.

But a housing loan is not just for construction or acquisition of property only; it could also be used for refinancing an existing home loan, for home improvement, or for any other purpose.

In securing a housing loan, buyers should thus be aware of the factors to consider so that they can get the best and practical deal in building or buying their dream home.

The Institution. The popular choices for a mortgage are banks and government institutions like PAG-IBIG and SSS. Fees, loan term, and interest rates vary across them. Banks usually give a maximum of 20 to 25 years while PAG-IBIG offers a longer term at 30 years. The minimum amount for a loan can be as low as P400,000 with a maximum loanable amount of 80% of the appraised value of the property.

The Requirements. Though the particulars vary from institution to institution, requirements at the end of the day must establish the borrower’s identity and credit-worthiness in paying off the loan as well as the legality of the property to be loaned for. Requirements must often show the income of the borrower and the title of the property involved.
Some of the typical pre-processing requirements are as follows:
• Borrower should be of legal age but not more than 65 years old upon maturity of the loan
• Identification papers (TIN, Passport, Company ID, Driver’s License)
• Marriage contract (if married)
• Bio-data/Resume
• Deposit statements of accounts (last 6 months)
• For PAG-IBIG, applicant must be a member for at least 24 months as evidenced by the remittance of at least 24 monthly contributions at the time of loan application
• For SSS, applicant should be a member and has paid at least 12 months continuous contributions or at least 24 months total contributions
For Employed Individuals:
• Latest income tax return (ITR)/W-2 form
• Certificate of employment
For Self-Employed Individuals:
• Audited financial statements and ITR for the last 2-3 years (BIR stamped)
• DTI registration
• List of suppliers and customers
• Clinic addresses and schedules (for practicing doctors)
For OFWs:
• Certificate of employment stating length of service and monthly compensation package
• POEA contract
• ITR (if any)
• Pay slips (last 6 months)
• Special Power of Attorney (Bank Form)
* All documents have to be authenticated by the Philippine Embassy/Consul if issued abroad
Collateral Requirements:
• Clear copy of owner’s duplicate of TCT/CCT
• Location map certified by geodetic engineer
• Photocopy of tax declaration/tax receipts/tax clearance
• Endorsement letter/computation sheet/contract to sell from developer stating the contract price (for accredited developer project)
Bank Forms
• Loan application
• Mortgage Redemption Insurance (MRI) application (as applicable)
Upon the submission of complete documents, loan approval usually takes around five days upon which the submission of post-approval requirements are in order. Generally, requirements include:
• Original owner’s copy of TCT/CCT
• Certified true copy of the latest realty tax declaration on land and improvements under the name of the borrower/mortgagor
• Medical examination (as applicable)
• Fire/Lightning/Earthquake insurance coverage (as applicable)
• Four copies of Special Power of Attorney, if applicable
• Opening of deposit account with the bank or the accredited receiving bank, as applicable
Once approved, loan proceeds are usually credited to the borrower’s account, ether on a lump-sum or staggered basis depending upon the completion of the property.
The Numbers. Most important in considering loans are the interest rates offered by the financing institutions. As a general rule, the longer the loan’s term, the higher the interest rate given. For instance, a 1-year loan may have a fixed interest rate of 9.5% while a 16-20-year term loan can have an 11.5% fixed interest rate. Thus, though borrowers have a stretched number of years with which to pay their loan, oftentimes, they end up paying higher due to the higher rates.
Borrowers have the option to fix the interest rates of their loan from as short as one year to as long as 25 years. Or they can reprice or adjust the interest rate of their loans in which they can protect themselves from the sudden change of interest rates in the market. For instance, in a market with rising interest rates, it is better to have a fixed interest rate for the duration of the rise so that the borrower is spared from the additional cost of rising rates. Similarly, a borrower in a falling interest rate environment would want to reprice during this time to avail of the reduced rate cost.
Nowadays, Filipinos lives in a low interest rate environment such that the BSP has in fact encouraged borrowers take advantage of this and avail of loans. As such, borrowers should watch out for the interest rate trend with which they can adjust their loan rates and in the end, save in costs. Moreover, clients with a good relationship with their bank (perhaps they have significant deposits or are good regular borrowers) may actually avail a lower interest rate.
Aside from interest rates, borrowers should also consider the fees and charges of a loan. Most financing institutions charge a non-refundable filing and appraisal fee that ranging from P1,000 to P3,500 to cover the cost of ocular inspection as well as the processing of documents.

Moreover, borrower can also avail of product bundles with their loans such as the mortgage redemption insurance as well as fire insurance, the premium payment of which depends on amount and appraisal of property.

So as in all types of loans, it is best to compare across the various housing loans available in the market. Check out the interest rates available in their Web sites (or call their hotline) as well as the documentary requirements, fees, and charges. You can also drop by the nearest office or branch of the bank and ask for more information.

SMART SPENDER>CONSUMER HELP DESK

Outsmarting Investment Scams
Victimized by Ponzi schemes? Lost money on pre-need plans? Learn how to protect yourself from being a scam victim
By Sherwin Chan, RFP

“I got zero!”

Unlike the toothpaste commercial, there is a woeful sighing that comes with that statement. This lament comes from investment scam victims.

Greed is a powerful incentive for individuals who take unmitigated risks with their money. Based from old news reports, victims of Performance Investment Products Corp. (PIPC) plunked in a consolidated amount of $250 million. On the other hand, unsuspecting “investors” devoted $51 million to Royal Manchester Five Trading Corp.

What drives individuals into bilking other people’s money?

Jordan Belfort, author of “The Wolf of Wall Street” and a convicted investment scam artist himself has this to say, “We did some outrageous behavior, some illegal stuff, but everyone was doing it… a lot of people turned a blind eye to what was going on. We were all making money.”

Crooks are not limited anymore to petty thieves that thrive on dark alleys and shabby corners. They now wear corporate suits and sell you stories about solid investments with good returns.

Need for greed
Sometime in 2007, a person went up to this author and inquired about a possible investment with the Rural Bank of Parañaque. The bank’s officer had been wooing him about a “double your money in 5 years” scheme and his efforts were starting to bear fruit. Naturally, he began asking this author whether he should dive into it or not.

In hindsight, an ounce of pretension was worth a pound of manure.

During our discussion, this person showed me printouts of the bank officer’s PowerPoint presentation. It was a sales presentation with little details about where the money would be invested. More than that, the clincher was this statement made by the bank officer – “If you’re still unsure, just invest up to P250,000 only. Anyway, if the investment goes wrong, you are protected by the PDIC.”

A unique sales pitch if you came into the meeting unprepared. But if you’ve heard the trite phrase “Start with the end in mind” then you would understand that this investment was doomed from the start.

Knowledge is power
A little knowledge of basic investment principles like the rule of 72 would help most of us. This principle simply states that you divide the interest rate by 72 to know the length of time it takes to double your money. For our Rural Bank of Parañaque example, that interest rate is somewhere between 13% to 15% p.a.

With this in mind, start thinking of what sort of investments the bank will make to guarantee you an interest rate like that. Remember 2007? Telltale signs of the faltering global economy were already there. If the economy is doing badly, how can one bank have the ability to still generate investments that kind of return?

Nowadays, it really pays to be well informed about what is happening around us. News travels fast but oftentimes our ignorance still persists. A convenient solution to that is to use the Internet to do a background check.

Searching through the Internet for resource, this author came across a post last June 2007 in an online forum called Pinoy Money Talk regarding irregularities with Banco Parañaque. At that time, the Legacy Financial Group wasn’t hogging the headlines yet. However, the fact that a financial institution’s reputation is stained with controversy should make would be investors think twice.

Then again, an organization like the Legacy Group would have been difficult to assess at the beginning. With so many branches and so many depositors, people had the perception that there was nothing wrong. But now that the truth has come out, it appears that they actually offered products like the “double your money in five years” and even “double your money in three years” deposit mentioned above as well as a slew of other “too good to be true” schemes.

Handling scams
In most cases, your easy solution is to compare what the established and well-known banks and financial institutions are offering. Chances are that if they aren’t offering similar products, there is something fishy going on. You should be extra careful with your dealings with investment solicitors.

So what do you do when you are confronted with a possible scam? Our Securities and Exchange Commission (SEC) proposes a set of questions you must ask to protect you and your money.

1. Name of the person and the company making the offer
2. Address of both the person and the company
3. Phone number, particularly the landline
4. SEC registration

Bear in mind though that having an SEC company registration does not grant it the authority to sell investment instruments, such as securities, bonds, commercial papers, or similar financial instruments. Only investment houses and financing companies with QB (quasi-banking) license and with SEC registered securities may offer to sell the same to more than 19 investors. And only SEC registered persons (brokers/dealers/sales people) may offer or sell SEC registered securities to the public.

A case in point is Royal Manchester Five Trading Corp. If you didn’t know already, you can check on the veracity of a corporation’s registration license over at the SEC Web site (www.sec.gov.ph). That site carries a preamble that tells you that a name listed there as a registered corporation does not mean they are authorized to sell investment products. Try looking up Royal Manchester Five in its search facility. It is there, but as we all know by now, they were not authorized to sell investment instruments.

If you find irregularities after carefully mulling all of the items, then it’s time to call the SEC–CED (Compliance Monitoring and Enforcement Department) at 724-7650 or 727-2267.

Investing tips
The moribund investing climate we are in today certainly discourages retail investors. The stock market, unit investment trust funds, and mutual funds have lost on average 50% from their highs in 2007. It also doesn’t help that big US banks buckled under the pressure of the subprime meltdown.

Investor confidence needs to be restored before paper asset prices begin to recover. However, lately we’ve seen that most stock market indices have started regaining lost ground due to policies set forth by governments worldwide. If this is the start of a long awaited recovery remains to be seen.

Just always remember that a high rate of return simply means a higher degree of risk. Given that logic, an exorbitant rate of return means that there is also an unbelievable level of risk. Also remember that oft-quoted line, “Don’t invest what you can’t afford to lose.”

If you find it hard to trust banks and investment houses then why not trust in yourself? Your money and talents could be the powerful ingredients for a successful path to entrepreneurship. After all, if you can’t trust other people to do the investing for you, do it yourself.

Sherwin Chan is a Registered Financial Planner. He maintains a weekly personal finance blog at guerillainvesting.blogspot.com. For comments or questions, you may email guerillainvesting@yahoo.com.