Goodbye, Hello

I guess this is it. This is goodbye.

Before we end, I guess it’s just proper to talk a bit about how all this began.

Investor Juan did not start on February 2010, as what most of you believe. I actually bought the domain name “investorjuan.com” on July 16, 2008. Before that, I’ve just been writing emo personal stuff, similar to what Hap is doing now; up until I realized what a complete waste of time that was (speaking for myself, dude, hahaha). So I decided to write about something more meaningful, something that’s close to my heart, and something that I’m fairly familiar with: personal finance.

My first post was “5 Ways to Get the Most Out of Your Credit Card,” but I never got around to writing a follow-up. So my momentum stalled, and the site became dormant for the next 20 months.

I finally found the catalyst that I needed when I rediscovered my “writer’s voice” on February of this year. I started fresh with an introductory post, and I reposted the credit card article as my third. And that more or less brings us up to speed, here at the end.

The end of what, you might be wondering? Is this the end of Investor Juan? Hell no, far from it: in seven short months, much remains unsaid about the issues that confront the Filipino investor, and Investor Juan will continue to endeavor to help others face those issues.

This goodbye is more of a personal sort. I’m saying goodbye because I’m leaving the country to do something that I’ve wanted to do since I graduated from the MBA program of the University of the Philippines four years ago: pursue a PhD degree. On February of this year, around the same time I “restarted” Investor Juan, I found out that I had been lucky enough to be one of the recipients of the Hong Kong PhD Fellowship. I have chosen to pursue a PhD program in Finance and Decision Science, and in the next three years, I will be undertaking research in that field.

How is this related to the things we talk about here at Investor Juan? Three ways:

• One, my research will focus on how individual investors make important financial decisions like budgeting and investing, and how economic, social, and psychological factors affect these decisions. My research topic is therefore completely consistent with the main themes of this blog. 
• Two, unlike the Philippines, Hong Kong has more developed financial markets; consequently, investors are faced with a slew of investment alternatives that we have not even heard of in the Philippines. This gives us a lot of material to learn from and can serve as the perfect situational benchmark when we analyze the investment environment in the Philippines.
• Three, investing in yourself, with additional education and training, is one of the best ways to improve your financial standing. Warren Buffet swears by it. Millions of Americans turn to it when faced with under- and unemployment. I'm doing it because it's the next logical thing for me to do, career wise, and because I just miss being a student. :)

So this isn't so much an end, but rather a new beginning for the site. In the coming months, we'll get to look at things from a different perspective, while maintaining that distinct Filipino sensibility.

But I'm saying goodbye, nonetheless. Goodbye, my motherland. This is the longest I'll be away from you. We are currently going through a very rough patch, the world now sees us in a very unflattering light, but I know that this will eventually subside and that it's not something we cannot overcome. Know that as I leave, you will forever be in my heart and I will always be your proud son. And I'm definitely coming back.

Jollibee, BPI team up anew for OFW meal delivery service

IN THE NEWS from PhilSTAR.com

Jollibee has teamed up with Bank of the Philippine Islands (BPI) to allow overseas Filipino workers (OFWs) to send meals to their families and beneficiaries in the Philippines. Dubbed “BPinoy Jollibee Padala”, the fastfood remittance delivery service allows Filipinos living or working in Spain, the United States, Hong Kong and United Kingdom to send Jollibee package meals to family members back home with the help of BPI’s 24 overseas remittance service centers. The program will run from Sept. 1, 2010 to May 31, 2011.

The move forms part of the two companies’ efforts to reach out to Filipinos living abroad and promote closer family ties. “We want to give our OFWs a more meaningful way to remit their money by giving them a chance to personally choose the meal package they want to send to their loved ones and making available our BPI Express Remittance Centers to receive the payment,” said Teresita B. Tan, BPI executive vice-president and head of the Overseas Banking and Channel Services Group.

There are five set meals to choose from, costing around $20 (roughly 1,000 pesos): Chickenjoy and Yum with Cheese, Chickenjoy with Spaghetti, Spaghetti with Yum, and the Burger Steak.

“Jollibee staunchly believes in uniting the family and strengthening relationships wherever they are in the world. We hope to help bring even more Filipino families together over good food and create memories that will surely remember even years from now,” said Ann Santos, national key accounts head of Jollibee.

I don't know about you, but something about the program, and these statements from the executives of BPI and Jolibee, strikes me as insincere and untrue. I mean, if you're an OFW, is buying your family Chickenjoy and Burger Steak from several hundred miles away really a more "meaningful" way to remit your hard-earned money than sending cash? Is this really the best way to unite your family and strengthen your relationships with your loved ones? The markup for Jollibee and other fast food staples runs north of 100%, which means for every 100 pesos you spend on a value meal, less than 50 pesos goes to the actual product. I'm just thinking, if you're a Hong Kong domestic worker earning around 20,000 pesos, is spending 1,000 pesos (5% of your income) on something that's arguably worth less than 500 pesos the best way to send your love to the Philippines?

I understand where BPI and Jollibee are coming from: maximizing shareholder value is the goal of every for-profit enterprise, and the statements of these company officers are just examples of marketing rhetoric that aims to promote that goal. But when it comes to serving OFWs, where the line between honest and unethical business practices often gets blurred, enterprises have to tread more carefully and be more discerning of their use of words... and marketing propaganda.

9 Things You Have to Know About Legalizing Your Business (Part 3 of 3)

7. How do you get a business permit from your local (city) government?

If you're thinking of setting up shop in Quezon City, then you're in luck. The local government has just introduced the BOSS (Business One Stop Shop) business registration system: whereas the old system and those used by other local governments often involve around 12 steps that take at least 18 days, BOSS has been simplified into 3 steps that can take as short as 24 hours. The new system also involves less paperwork, less visits to a fewer number of offices, and a greatly reduced number of interactions between the applicant and city government employees.

To register your business in Quezon City, prepare the following documents:

• The original copy of your Barangay Clearance
• The relevant national-level registration certificate of your business: the Business Name Registration Certificate from DTI for sole proprietorships or the Certificate of Incorporation from the SEC for partnerships and corporations
• Contract of lease if you are renting the business venue, or title to property and tax declaration if you own the business venue

The 3 "easy" steps are:

1. "Apply" - fill up and submit the registration form together with the requirements listed above
2. "Pay" - pay inspection, zoning, and annual business permit fees
3. "Get Permit" - as early the same day

8. How do you register your business with the BIR?

To get a Tax Identification Number for your business and be able to issue receipts, you'll have to register it with the BIR.

Prepare the following documents for submission:

• Filled-up BIR Application for Registration Form No. 1903
• The relevant national-level registration certificate of your business: the Business Name Registration Certificate from DTI for sole proprietorships, or the Certificate of Incorporation from the SEC for partnerships and corporations
• Business Permit from the Local (City) Government

• Submit all required documents to the Revenue District Office (RDO) having jurisdiction over the registered address of your business
• Pay the Annual Registration Fee (500 pesos) at one of the Authorized Agent Banks of the RDO
• Pay 15 pesos for the Certification Fee and another 15 pesos for the Documentary Stamp Tax
• Get your business' Certificate of Registration (Form 2303)

9. What are the different requirements in maintaining a registered business?

Registering your business and getting your TIN is unfortunately only the first step in legitimizing your business. Regulatory laws require the submission of several other documents and requirements every month, quarter, and year.

• Monthly requirements
• Monthly Value Added Tax (VAT) Declaration (Form No. 2550M)
• Social Security System (SSS) contributions
• PhilHealth contributions
• Pag-Ibig contributions  
• Quarterly requirement
• Quarterly VAT (Form No. 2550Q)
• Annual requirements
• Income Tax Return (Form No. 1702)
• Registration of books to BIR
• Financial statements to SEC
• General information sheet to SEC
• Renewal of Mayor's/Business Permit

So that's it: 9 things that you need to do to make (and keep) your business legit. But remember that it does not end there: a legal business does not necessarily mean a successful business. You still have to get funding for equipment, materials, and operating expenses, make sure you have a good product, and let your market know your product exists. But at least if all of your papers are in order, you can sleep more soundly knowing that no government spook can come after you and that the reputation of your business is intact.


Click here for Part 1. 

Click here for Part 2.

This series is based on the presentation of J. Sedfrey S. Santiago, Esq. of the John Gokongwei School of Management, Ateneo de Manila University on July 28, 2010.

15 Questions That Will Tell You If You Have What It Takes to be Wealthy

Okay, so we all want to be filthy rich: some of us want it for the right reasons, while some have a more sinister end in sight. But do we actually have what it takes to amass real wealth?

This quiz from CNN Money compares some of your traits, from your marital status to your looks, to identified characteristics of known wealthy individuals and tells you the likelihood of you becoming filthy rich.

1. How optimistic are you?
2. When you grew up, were your parents rich and/or home owners?
3. How healthy are you?
4. How smart are you?
5. What level of education did you complete?
6. Physically, are you tall and/or good looking?
7. How many siblings do you have, and are you the eldest child?
8. Are you married?
9. Do you have kids?
10. Do you exercise, and/or smoke?
11. Would people describe you as nice, persistent, and/or materialistic?
12. Do you believe that a woman's place is in the home?
13. What's your source of livelihood: employment, your own business, or are you retired?
14. How would you like to jump out of a plane?
15. Who would you rather emulate? A man known for throwing extravagant soirées in his art-laden mansions around the world, or man whose idea of a wild party is playing bridge online at the home he bought for $31,500 in 1958.

While some of the questions are obvious enough (If you were already born rich, what's the likelihood that you'll end up being rich? Duh?), some of the others are actually quite interesting. I have listed all 15 questions here, but you have to take the quiz to see the explanation for each item and your final score.

As you can see, I managed to get enough points to have a good chance of becoming rich. I guess I have my jaw-dropping good looks to thank for that. :P

So how do you think you'll do? Tell us all about it in the comments section below.

9 Things You Have to Know About Legalizing Your Business (Part 2 of 3)

5. How do you register your partnership or corporation with the SEC?

Here are the steps in registering your business with the SEC.

• Verify and reserve a proposed name for your business with the Name Verification Unit (at the SEC Annex to the left of the main building) or do it online through i-Register. You can submit up to 3 business names for verification. Proposed names must not be:
• identical or deceptively or confusingly similar to any existing corporation or any other name already protected by law
• patently deceptive
• confusing
• contrary to existing laws
• Draw up the Articles of Incorporation and By-laws in accordance with the Corporation Code of the Philippines. You don't have to draft these documents from scratch: ready forms are available from the SEC’s Company Registration and Monitoring Department (CRMD), also at the SEC Annex.

• If required, get endorsements from other government agencies. For example, in the case of banks, pawnshops and other financial intermediaries with quasi-banking functions, a Bangko Sentral ng Pilipinas (BSP) endorsement is required. In addition, the CRMD obtains clearances from other SEC departments whenever these are deemed appropriate.
• Deposit the required paid-up capital in a bank. The minimum requirement is 5,000 pesos, but there is no minimum or maximum authorized capital stock and you can freely define the par value of one share of your authorized capital. The deposit must be certified by the bank manager.
• Present six sets of the required forms and documents for pre-processing at the CRMD. Only complete application documents are accepted for processing.
• Pay the filing fees to Cashier.
• Claim the Certificate of Incorporation from the Releasing Unit, Records Division upon presentation of the official receipt issued for payment of the filing fee.

6. How do you get a Barangay Clearance for your business?

The next thing you have to do is secure a Barangay Clearance for your business, which is one of the requirement's in getting a business permit.

• Submit a filled-up application form.

• Present the certificate of title of the business premises if it is owned by the business, or the contract of lease if it is rented.
• Pay the clearance fee (around 500 pesos, but it depends on the city/town/municipality)
• The Barangay Clearance may often be issued the following day.

Click here for Part 1.

Click here for Part 3.

This series is based on the presentation of J. Sedfrey S. Santiago, Esq. of the John Gokongwei School of Management, Ateneo de Manila University on July 28, 2010.

Billionaire

The first time Ange showed this to me, my initial reaction was: "Wow, this would be the perfect anthem for Investor Juan." I was thinking, don't we all want to be billionaires so fucking bad?

And Bruno Mars is talking about being a US DOLLAR billionaire, not the cheap-ass peso kind. So let's put things in their proper perspective. 

One billion US dollars will place you up there in Forbes' 10 richest persons in the Philippines, just enough to bump Jollibee's Tony Tan Caktiong out of the 5th spot.

A billion US dollars nowadays is roughly equal to 45 billion pesos. 45 billion pesos. 45 and 9 trailing zeroes. That's the ability to spend 1 million pesos a day for 45,000 days. 1 million pesos per day for 123 years; 1 million pesos in two lifetimes for some of us. Or two million pesos in a lifetime. Can you even imagine what you can do, what you will do, with that kind of money?

Then I encountered this Wall Street Journal report about how Bill Gates and Warren Buffet, two of the richest persons in the world whose combined wealth runs in the neighborhood of 100 billion US dollars (that's 200 lifetimes of 1 million pesos per day, in case you've already forgotten), managed to convince 38 other billionaires to pledge more than half of their fortune to charity. The group includes many familiar names: Oracle's Larry Ellison, New York's Michael Bloomberg, Microsoft co-founder Paul Allen, filmmaker George Lucas, and CNN's Ted Turner, among others.

The combined wealth of the group is currently around 230 billion US dollars; with Gates and Buffet pledging more that 50% of their wealth, more than 125 billion US dollars could go to charities today. Can you imagine how many lives and how many lives can be changed by that kind of dough?

If you do become a (US dollar) billionaire, what are you going to do with the money? Get your mug on the cover of Forbes magazine smiling next to Oprah and the Queen? Spend 2 million pesos a day for the rest of your life? Or donate half to charity and change the lives of tens of thousands of people?

Me? I'll probably just put everything in Treasuries, earn 5% or 2.25 billion pesos per year (depending on the exchange rate). With the 6,164,383.56 pesos that I'll get each day, I'll probably donate 5,164,383.56 pesos to charity and just live a "simple" life with my 1 million pesos a day, forever.

9 Things You Have to Know About Legalizing Your Business (Part 1 of 3)

1. Why is it important to "legalize" your business?

A lot of entrepreneurs who put up their businesses for the first time often choose to forgo the entire business registration process and instead become part of the underground or "gray" economy. These individuals choose not to register their businesses mainly because of the following reasons:

• They want to avoid paying business fees and taxes
• They find the entire process too complicated and cumbersome
• They simply don't know how to do it 

While all of these reasons are practical and understandable, the benefits of legalizing your business significantly outweigh the costs in the long run; proper registration is actually essential for the sustainable, future growth of your business. For example, as your business grows and gets bigger accounts, you'll find that some of your customers will want a receipt. Business registration also provides you with access to financing sources like bank loans and securities markets that would be unavailable to unregistered business. Finally, legalizing your business greatly enhances its reputation and credibility, which can lead to more opportunities for increased profitability and growth.

2. What are the different ways of organizing a business?

An entrepreneur or a group of entrepreneurs can choose from among three ways of organizing a business: sole proprietorship, partnership, and corporation. A side by side comparison of the three types of business entities is presented below.

A sole proprietorships is best for a small business that is managed by an individual owner. Meanwhile, groups of investors can choose to form a partnership instead; firms that provide professional services like accounting, law, engineering, and architecture are almost always organized as partnerships. Finally, bigger businesses may choose to be organized as corporations.

The primary benefit of organizing your business as a corporation is you as one of the owners enjoy limited liability: this means if the business is unable to fully pay its financial obligations to creditors, these creditors cannot go after your personal property, unlike in sole proprietorships and partnerships. The downside in organizing a corporation is that owners are taxed twice: first, the firm's income is taxed on a corporate level; then, when dividends are paid to the owners of the firm, taxes are again applied on a personal level.

3. What is the general procedure for registering a business?

After choosing the appropriate mode of organization for your business, you now go through the business registration process, which consists of the following general steps:

• Obtain
• Department of Trade and Industry (DTI) registration if you choose to organize your business as a sole proprietorship
• Securities and Exchange Commission (SEC) registration for partnerships or corporations
• Get a barangay clearance
• Secure a mayor’s permit
• Register with the Bureau of Internal Revenue (BIR) to get your business' Tax Identification Number (TIN)

4. How do you register your sole proprietorship business with the DTI?

• Think of a unique name for your business. It has to be significantly different from the names of existing businesses registered with the DTI. You can use DTI's online Business Name Registration Service to check the availability of the business name you have chosen.
• Go to any DTI satellite office (there's one within the Quezon City Hall complex, just ask around for directions), get and fill up the application form, and have your business name checked and approved. You can actually skip this and go straight to the main office to have you business name checked, but in my experience going to the satellite office actually saved me time since the queue for business name approval is shorter.
• Go to the nearest DTI office (for Quezon City residents, the nearest one is at Highway 54 Plaza along EDSA in front of SM Megamall) and submit your approved application form (if you skipped the satellite office, you will have to fill up the application form and business name approval here). You should get your DTI registration certificate after about an hour or so. 
• The DTI registration certificate is valid for five years.

Click here for Part 2.

Click here for Part 3.

This series is based on the presentation of J. Sedfrey S. Santiago, Esq. of the John Gokongwei School of Management, Ateneo de Manila University on July 28, 2010.

Puregold Considers Public Listing

IN THE NEWS from Business Mirror Online Space

Image from TJ's Daily

Puregold Price Club Inc. is reported to be “seriously” considering an initial public offering (IPO) to finance its planned expansion in Luzon. And by “seriously,” Puregold honchos mean the plan could be implemented "at most within two years."

The retail firm would need a significant amount additional capital as it plans to expand aggressively in Luzon, through both organic means and acquisitions. Last week, Puregold opened its 50th branch in Cubao, Quezon City; it plans to add another 10 to 15 branches this year which could cost the company anywhere from 2 billion to 3 billion pesos.

The first time I read the report, my immediate reaction was, "Ang kapal naman ng mukha. The nerve of these people." I'm not an expert in the retail industry, but I do know that margins are paper-thin and bargaining power is exclusively (and often brutally) wielded by the top players, namely SM, Robinson's, and Rustan's. So why would investors want a piece of a middling player in this highly price-competitive industry?

Typically, investors would expect only companies that have shown sustainable profitability or good potential for growth to go through an IPO. I posit that Puregold has, as of yet, not been able to exhibit either of these two characteristics, so an IPO in the near future would be ill-timed and ultimately unsuccessful. Growth for growth's sake is worthless: those additional 10 to 15 stores would have to generate significantly positive future cash flows to be able to create additional value for shareholders. And with SM, Robinson's, and Rustan's dominating Mega Manila and more experienced players like Walter Mart already deeply entrenched in rural areas, what's the chance of that happening for Puregold?

In fact, this "article" comes across as just some sort of press release from the retailer to test investor sentiment in the midst of an over-performing local stock market. In other words, it just looks like a half-assed, paid attempt to know if investors would be gullible enough to bite into the offer.

But that's just me. What do you guys think?

201,000 Reasons

A GUEST POST by Hap

Image from The English Spot

There are 201,000 reasons I should be scared shitless.

A couple of weeks ago, after arriving home from another domestic trip, I swapped credit cards that I kept in my wallet. I usually carry only two cards, depending on the types of purchase that I would anticipate. I use one card with a higher credit limit and more bonus perks for travel, and another for gas purchases because of the higher rebates it offers. I also always carry around yet another one for emergencies only.

So as I was replacing the cards, I noticed that one of them had a tear right along the magnetic strip. I haven't really noticed it until then, I haven't had to use it for months anyway. But just the same, I wondered if I could have it replaced.

I promptly called up the card company, and they said they'd be sending me my replacement in a week. Great, I thought. There wasn't any hurry, but I looked forward to it just the same.

So it came today, along with a notice that they have decided to up my credit limit. Crap!

*****

Just yesterday, I learned that one of my loans had already been paid off. A week ago, I had the balance of one of my cards transferred to another for a magnificent rate of 0.50% per month interest. A month ago, I've successfully been able to get a stay on my annual dues for yet another card. For the past 4 months, I've been able to keep true to my promise of not using any other card except for the one I use for gas purchases. 6 months ago, I paid off the total balance of still another card and promptly cut it into itty-bitty little pieces. (They still claim I've some dues to pay, though. Good thing I've got emailed evidence to the contrary)

So you can see, I've been such a financially responsible kid for half a year. The trouble is, they're on to me.

*****

Besides today, last week a telemarketer told me I was one of the lucky cardholders that could avail of an outright loan from them at only 1% interest per month. Last month, I got a letter that I only needed to use my credit card 5 times in a month to avail of a free watch. 4 months ago, I got a pre-approved credit card in the mail with a free dinner on my first use.

So far, I've been holding out fairly well. But there's only so much a man like me could take.

Just yesterday, I stopped by an appliance and electronics store while waiting for a meeting. There it was, a shiny new LCD television set with a free home entertainment system at a rock-bottom price. And if I use my credit card, I could have it paid in 12 installments at 0% interest. But wait, there's more... for an additional amount, I could get an mp3 player thrown into the mix as well. Last month or so, as my phone was getting noticeably wonky, I passed by another electronics store and saw a nifty mobile phone also available in 0% installments. And did you know that a leather seatcover set for my car could also be paid for by plastic?

Really now, why is the world conspiring against my financial health?

*****

I put the notice and the card back in its envelope, and hid it underneath my underwear drawer. I also tucked just the one credit card for gas in my wallet. I've come so far down this road that I can't afford the risk of being sidelined and back in the hole, so to speak.

"Just when I thought I was out... they pull me back in!" - Michael Corleone, The Godfather III


For this and his other (mis)adventures, read Hap's blog, "A lot of nothing to say."