Money Lessons from the ADMU Eaglewatch

Published: February 4, 2016 | Updated: December 13, 2019 | Posted by: Bea Bongat | Personal Finance


Money Lessons from the ADMU Eaglewatch
Data about economic growth of the Philippines and facts about the Philippine Presidentiables? How is that related to my personal life?

There is more connection than what you may think.

Last February 2, the School of Social Sciences of the Ateneo de Manila University (ADMU), hosted the Eaglewatch 2016 Elections Briefing. With the looming elections, the briefing tackled the performance of the Philippine economy in recent years and predictions for 2016 and how this relates to the decision-making process in choosing the next President.

The briefing consisted of two sessions. The first was led by Dr. Alvin P. Ang, an Eagle Watch Senior Fellow at the Ateneo. During his session, he covered topics encompassing the global supply chain and the importance of the Philippines’ participation, the BPO sector and how it is expected to grow, the tapering off of OFW remittances, and the ASEAN integration among others. For the second session, which was led by Rose Fres Fausto, a PhilStar.com columnist and Founder of the financial literacy blog FQMom.com, guidelines on choosing the next President were presented.

Ultimately, the Eaglewatch briefing was loaded with insightful learnings. The “fears of a real estate bubble is unlikely because growth of the real estate market is unbalanced and segmented,” according to Dr. Ang. When Filipinos look at the real estate market, it’s common for many to only look at mid- and high-end condominium developments, which decreased by 13.10% from August of 2014 to August of 2015. However, the real estate market consists of a variety of other segments, such as socialized housing, mid-income housing, and commercial condominium developments, which grew by 101.23%, 56.58%, and 32.39% respectively over the same period.

Aside from the real estate market, the Philippines is also in the best position to compete in five different sectors – the highest among its Southeast Asian neighbors Indonesia, Singapore, Vietnam, Malaysia, and Thailand. These sectors are (1) food, beverage, and tobacco, (2) mineral-based products, (3) basic metals, (4) computers and office machinery, and (5) semiconductors and electronics.

Aside from looking at the macro-scale and the Philippine economy at large, Dr. Ang and Rose Fausto’s presentations are easily relatable to a number of personal finance lessons. Here are 8 personal finance lessons from the 2016 ADMU Eaglewatch:

Go back to the foundations

Dr. Ang said that “in a volatile, unpredictable global and local environment, the best strategy for investment and planning is to go back to the foundations.” The stock market has gone down by 19% (as of February 3) since its April high of 8,100. The Philippine GDP grew by 5.8% in 2015, lower than its 6.1% growth rate in 2014. Exports continue to decline, especially with the weakening of the Philippine peso. Despite all the above, if you go back to the basics, you can see that the stock market grew by 16% under President Aquino versus its average growth of 0.08% over 20 years, a 5.8% GDP growth rate is higher than the ASEAN average of 4.4% (Q4), and despite exports declining, other sectors, especially the BPO industry (earnings pegged at USD 21.2 billion, up 12% from 2014), continue to grow.

Personal finance tip: When it comes to investing, it’s important to always go back to the foundations and the basics. A large part of you may be panicking at the downward performance of your stocks, but if you go back to the basics and your foundations as an investor, this will help you make informed decisions. If you’re investment strategy is long-term, then you shouldn’t be pulling out your investments at the first sight of red.

Do your research first

It always pays to do your research, whether it’s studying the performance of both the stock and real estate markets or figuring out which sectors continue to display growth and potential (tip: manufacturing). Proper research and analysis allow us to understand information easier and better, and from there, make informed decisions.

In Dr. Ang’s presentation, he showed that 30% of employment comes from the agricultural sector while around 10% comes from manufacturing; however, the manufacturing sector is where the Philippines is best positioned to compete against its other Southeast Asian neighbors. With proper research, we can make the assumption that for the Philippines’ to sustain its growth, attention (read: more employment opportunities) should focus on the manufacturing sector.

Personal finance tip: You want to apply for car insurance in Company A because you have a friend who works there. However, a quick look at MoneyMax.ph’s comparison portal (click button below) will show you that car insurance providers offer different rates and coverage, and with a little bit of research, you can save money. Whether it’s applying for car insurance or choosing an investment, it always pays to do your research.
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Don’t listen to your emotions

In Rose Fausto’s presentation, she stressed the importance of following a guideline or checklist in choosing your president instead of wholly depending on hearsay and emotions. You may prefer this candidate over the other because his or her campaigns are more engaging and gets you right in the ‘feels’; however, in choosing the next leader of the Philippines, one needs to be more technical and analytic. This means looking at their platforms, their past experiences and accomplishments, and their political track record among others.

Personal finance tip: You always hear the experts say this. When it comes to investments, keep your emotions in check. Panicking may lead to you selling your investments abruptly just because you lost 0.123% and you can’t stand the sight of red on your trading dock. In the same way, excitement at seeing Stock A grow by 123% in over a day may cause you to buy shares immediately. Letting your emotions get the best of you is counter-intuitive to your investment strategy. When making investment decisions, listen to your mind instead of your heart.

Your lifestyle depends on your output

The amount of work you put in will affect your output. On a larger scale, the more productive an economy is, the higher the potential for growth. Both Dr. Ang and Mrs. Fausto stressed the importance of solving the country’s traffic woes because traffic indeed affects the economic output of the country. In a report by the Japan International Cooperation Agency (JICA), the findings showed that the Philippines can lose up to Php 6 billion every day because of the worsening state of traffic. Do you dream of having enough money to build your dream home or travel the world? Then, you better get to work.

Personal finance tip: If you want that dream home by the beach or the year-long global excursion, you need to start saving and growing your funds. Merely hoping and wishing for the best won’t take you a step forward. Do you ever wonder why some of your friends or colleagues can afford to drink premium coffee every day? It’s probably because they’re working harder, and thus, earning more. If you want to reach a certain standard of living, then you need to start taking the steps to get there, be it negotiating for a pay increase or growing your income streams.

Look at the small details

As mentioned above, a real estate bubble is unlikely because the market is segmented. There are 12 real estate segments according to the Housing and Land Use Regulatory Board (HLURB), commercial subdivisions and mid-income housing are just two. If you look at the real estate market with a general point of view, the -15.35% growth (total of the 12 segments) may be a cause of concern, but if you look at the small details, you can see that some segments performed significantly better than others.

Personal finance tip: Ever wonder why at the start of the month, you feel like you have more than enough but then you’re up to your last Php 100 a week before payday? Maybe, that’s because you aren’t keeping track of your expenses. Look at the small details and categorize your expenses (e.g. rent, electricity, food, clothes, transportation). This way, you can see where your money goes to and you can adjust your budget to fit your spending habits.

Look at the bigger picture

Aside from look at the details, you also need to look at the bigger picture. You’ve heard experts say and publications print the message that the Philippines is a “stable and sound economy”, but why does the Philippine Stock Exchange index (PSEi) continue to go down? This is because the Philippines is not an isolated island and is reliant on other economies. All economies are interrelated. Looking at the bigger picture, you can see that exports have been decreasing because of the slowdown in China; however, on the bright side, the Philippines is more resilient than other economies because China isn’t the major export country (4th) of the Philippines.

Personal finance tip: You’re in your twenties and are single, earning an income, and loving it. Retirement, what? You still have more than thirty years before you hang up your coat and live the life of the retiree. Not to mention, before you even retire, you still have marriage, children, and career highs and lows to experience. That is the big picture.

As much as living life day by day can be an exciting way live life, it’s always better to be prepared. Look at the big picture, the long-term – your finances included. Are you saving enough to cover your expenses for the next twelve months in case of a job loss? Are paying down your debts, so you don’t have to pay them for the next thirty years? It’s time find balance – enjoy today but prepare for tomorrow.

Practice and live with integrity, intelligence, and energy

Rose Fausto quoted Warren Buffett in saying, “In hiring people, look for three qualities – integrity, intelligence, and energy. If they don’t have the first, the other two will kill you.” Past and aspiring Presidents love to say, ‘kayo and boss namin’ – that the Filipino people is the President’s boss. So in choosing the next leader, he or she must have the three above-mentioned qualities, and without integrity, the other two are futile. When it comes to the financial aspect of your life, you still need those three qualities.

Personal finance tip: Integrity will help you in keeping true to your beliefs. I’ll buy this stock because I support the company’s products and believe in its vision. Intelligence will help in making informed decisions. I crunched the numbers and it’s better to pay my debts faster than slower, so I can avoid additional fees on interest. And last, but not the least, energy will give us the push to learn, dream and act. I’ll start reading one finance book a month, so I can start investing and grow my money by the end of the year.

Start with ‘you’

“An organization is only as good as its people” – it’s a ubiquitous quote that speaks the truth. If we want to sustain the growth of the Philippine economy or choose the President that will move the country forward, we all need to start with ourselves. A company won’t function effectively if its employees are inefficient and lazy. On a much larger scale, the Philippine economy won’t continue to grow if its people don’t seek for ways to participate and contribute to said growth. In our personal lives, if we want change, we need to start with ourselves.

Personal finance tip: No amount of wishing and dreaming will help you get to your goal if you don’t take the necessary steps. Start with ‘you’ – easy to say, hard to follow – so start taking baby steps. No one can become a millionaire overnight (tip: try not to count on the lottery). Even today’s billionaires started somewhere before they got to their current state. Whether it’s saving 10% of your salary or reading a book on business, personal finance, or self-development, starting small allows you to build the habit, which will take you further than where you were yesterday.

Most Filipinos think that facts about macroeconomics or Presidentiables do not affect their daily lives since these are topics affect the Philippines in a larger scale. But if you look closely, this can have a direct effect to how one will handle his money. It is just a matter of applying your learnings and using these data so you can get ahead in the financial aspect of your life.