Dear Gabriel,

My friends and I are planning to invest in the stock market. It’s our first time doing so, but we are not that knowledgeable and want to learn more. Can you give us advice on the kind of investment or stocks that would be suitable for beginners like us, and what are the dos and don’ts? Thank you very much. Joanne

Dear Joanne,

As both you and your friends are new to stockbroking, I would suggest that all of you spend some time studying and analysing industry trends, company profitability, and economic cycles before plunging in. When I was 17 years old, I spent almost 2.5 years during my senior high year studying the Asean market and the US and UK market before I made my first investment. I looked at a 100 years worth of data on industry trends and economic cycles in order to get a firm grasp of the market condition as history tends to repeat itself in financial markets and I cannot afford to lose whatever little I had then.

Dear Gabriel,

In a country like the Philippines, where political events can easily disrupt one's long range investment plans, what would you recommend? Return of Premium or sovereign bonds, corporate bonds, stocks, gold trading, or plain old time deposits? Would you suggest converting my hard earned US dollars to pesos at this time? Johnny

Dear Johnny,

Indeed the political situation in the Philippines is often unstable. I visited your lovely country in 1992 to lecture for the Asian Development Bank in Makati and travelled extensively through Manila, Laguna and Cebu. Over the past 20 years, even big established companies like San Miguel operating in a supposedly stable industry like food & beverage, can have a lot of changes. 

I would not recommend that you convert your hard-earned US dollars to pesos.  Instead, I would suggest you consider the possibility of changing it to strong commodity-back currencies like the Australian and Canadian Dollar. The other aspects of your portfolio should be diversified into international stocks and REITs to provide you with a stable safe income in a relatively safer currency.

Dear Gabriel, 

I have been looking at day trading as a possible option to enhance my wealth. As such I have taken some courses like “Safety in the Market”, but it hasn’t been paying off. There are also a lot of workshops out there claiming to be the best lesson in investment, but having been to some of the previews, I found that it is just a marketing thing. I really like to know what are the good workshops that would impart the know-how? Please advice, Daniel.

Dear Daniel,

I do agree with you that many of these workshops are more like marketing classes. It is actually impossible to teach "Safety in Markets" when financial markets are inherently unstable in the first place. When I was lecturing at the Singapore Stock Exchange and the Institute of Banking & Finance, I would always stress to my audience that financial markets are usually prone to cyclical crashes and as such, behavioural finance should be studied in greater detail. You can do so by looking up many of the popular publications that focuses on the ups and downs of stock markets.  Newspapers in particular tend to highlight problems and company issues. You could also read up finance books and study the financial market over a period of time.  

Dear Gabriel, 

What do you think of credit cards? Is it better to wait for your year-end bonus and pay in large amounts or to enroll in their pay easy programmes with fixed amount to be paid in four years? How about cash loans offered by banks? Are the figures/multipliers they provide to determine your monthly payment fair or over calculated? Maridel

Dear Maridel,

Credit card outstanding amount should be paid in full by the due date as they incur the highest loan rate amongst all financial products like margin financing, housing loan, personal loans, renovation loans etc. Enrollment in their "easy pay programmes" is actually not as "easy" on your pocket as it sounds. You are still compounding your outstanding principal at a high interest rate although you pay a fixed sum monthly – a greater proportion of this fixed sum goes into paying for the interest element as opposed to reducing your principal.

My personal philosophy is to always spend less than what I earn, therefore, I would not need to take loans as they represent a reduction in my future income.

Dear Gabriel, 

My salary is around $2000 but my credit card debt is around $15,000. Should I take a personal loan to settle my debts? I’ve already have one personal loan, which I’m servicing. I just got married earlier this year. My husband and I are always arguing about money. Cornelia

Dear Cornelia,

Money is the No.1 problem in most marriages. I strongly encourage you to put your finances in good order as quickly as possible.

Your credit card bill is 7.5 times your monthly salary – that is very high by most standards as most credit card issuers only extend a credit limit of 2 times your monthly salary. You are paying very high interest rates to rollover the outstanding amount each month. I would strongly urge u to take another personal loan, which will be at a much lower interest rate, with an acceptable loan repayment period of say 24 to 36 months. Therefore, if you save 30 - 50% of your monthly income going forward, you could possibly pay up the full personal loan of $15,000 in about 2 or 3 years.

Dear Gabriel,

I am a 4th year student in accountancy. Ever since I was introduced to the stock market, it has been my dream to be a stockbroker. I have been trading online for quite sometime now but I’ve been losing money. I’ve looked closely at the technical and fundamental analysis but I still can't get the timing right. Please give me some advice. Also, I aspire to be a financial analyst, fund manager and an investment advisor someday. Where do you think I should apply for a job after I graduate in order to pursue a career in investment? Justin

Hi Justin,

To trade currently with limited knowledge and capital while studying is not a very wise thing to do.  The media covers a notable few who have done well in the financial market, but there are many who lose money, and some do lose quite a fair bit. Those who have failed seldom receive media coverage, but their loss can be a lesson too. Therefore, I encourage you to adopt an investment philosophy towards stocks and shares, as opposed to trading on a daily basis where the volatility of modern markets could easily affect your mood and ability to study and do well in your exams, which should be your priority now.

In the future, you can pursue a career in a stockbroking firm or an investment bank for a career in stockbroking/financial planning/investment banking. Know that knowledge increases over the years with experience. There is no need to rush at the expense of your studies currently.

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