Asset Allocation - Don't Put All Eggs in One Basket

Asset Allocation – Portfolio Distribution of Various Investments

Asset allocation is a term on how the portfolio is distributed with the various investments. As such there does not seem to be any simple formula which could define the right asset allocation for a single investor. It is one of the most major decisions which investor could make, according to a certified financial planner and the founder of the Delancey Wealth Management, Ivory Johnson.

A simple expanded portfolio could comprise of many investment classifications like stocks, cash and bond and the allocation to each of these groups should be based on the investment goals, risk tolerance as well as the time horizon needed for the utilisation of the funds.

However the agreement among several financial professions is that asset allocation seems to be one of the most major decisions which investors should make. Selection of individual securities is secondary to the way one allocate the investments in stocks, bonds and cash as well as equivalents which would be the main factors of one’s investment consequences.

Extension of Financial Plan

In brief, asset allocation should be an extension of a financial plan. Three main sections of asset being equities, fixed income and cash and equivalents, tend to have various levels of risk and return. Hence each will behave differently over a period of time. The benefits of using an expanded asset allocation are that the combination of several various investments could have varied patterns of returns according to Johnson. He adds that this would mean that the goal of portfolio variation would be to generate the maximum possible return for a specified level of risk.

For instance, if a portfolio of a small company stocks could cause greater returns than an exp

anded portfolio of stock then it is unlikely to achieve that result without considerable more risk or volatility. The outcome would be that in the process of determining an appropriate asset allocation, the combination of assets to hold in your portfolio would be a very personal one. Asset allocation which would work best at any given point of time would depend mainly on the time horizon as well as the ability to handle the risk factor.

Life-Cycle/Target-Date Funds

Known as life-cycle, or target-date funds, asset allocation mutual funds are an effort in providing investors with a portfolio structures which would address an investor’s age, risk factor as well as investment objectives with an adequate allotment of asset classes.Nevertheless, critics of this approach indicate that coming to a standardized explanation for allocating portfolio assets, can be challenging due to individual investors would need individual solutions.

By including asset groups with one’s investment returns which tend to move up and down under various conditions in the market within a portfolio, investor get the opportunity of protecting themselves from substantial losses. Generally, the returns of the three main asset groups have not moved up and down at the same time and the market condition which tends to cause one asset group to do well often causes another asset group to have an average or poor returns.

The investor here on investing in more than one asset category tends to reduce the risk of losing money and his portfolio’s overall investment returns will not suffer losses. Should one asset group’s investment return tend to fall; the investor would be in a position to counteract the losses in that particular group with a better option in investment returns in another asset group.

8 Reasons why Call Center Agents earn more

I’m studying the IT-BPO industry for almost half a decade now. I am still a part of it. Many people still ignoring how much this industry contributes today into our society. This private sector is too young but making this nation more beautiful and fun.  I heard a couple of people why IT-BPO employees (Call center agents) keeps on earning large amount of money compare to others while just sitting around in front of a computer and talking to someone over the phone. 

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1.    This industry is the biggest driving force of the economy – We are bankable as a country and the workforce is totally designed for it. BPO industry is the largest contributor to our economic growth aside from remittances from our OFW’s. According to Department of Trade and industry, that this is the fastest source of employment and revenue. BPAP, an organization that monitors every IT-BPO company that by 2016 with the support of the government the revenue can reach up to 20-25 billion dollars. Considering that this industry will have 1.3 million full time employees by 2016.  

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2.   Real Estate won’t boom too much - Imagine the country without IT-BPO industry; you won’t see too much rising condo on the city today. Real Estate development is so hot right now because of offshore companies leasing those office buildings. Most of the clients of that real estate companies are from IT-BPO industry as well, who is maneuvering our country to become the new tiger of Asia.  The generous employers of call center agents also help IT-BPO employees start investing to condo units, foreclose properties and increase their assets while young. 

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3.  We are getting a lot of curses over the phone - Where can you find a person who went to college and ended up listening to the rant of another person over the phone multiply it sixty times per day? That’s how a normal scenario of BPO voice agents nowadays.  The Vampires are the shock absorbers of many irate customers of overseas companies. It’s hard for us to just listen and don’t take those curses personally. It is draining sometime but it will take a lot of conscious effort not to retaliate to the other person knowing you are being recorded over the phone.  Where can you find a job aside from BPO industry wherein people are shouting and cursing at you for the next 8 hours and you don’t feel so drained?

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4.   We are exchanging our day job over our night job – 6 years of night job, that’s going to take out your health from you. We are so called Batman and Vampires. We have an abnormal sleep patterns because of the time zones that we follow since we are catering people from western world. Our safety and security is being on the line every single night as we go to work. 

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5. We are all professionals – Majority of IT-BPO employees were nurses, teachers, former entrepreneurs, IT’s, PT’s, psychology license, business ad, marketing and communication science graduate. We deserve the same treatment with other industry experts and look at the way we adapt with the change in the management. A quarterly transition with the grading system and performance metrics keep us on our toes. A globally competitive group of people is making a wave to help our nation grow more economically.  

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6. We are making a difference indirectly to other nations - Currently as of this writing the Philippines is the number 1 in  Voice and rank number 2 in Non Voice when it comes to outsourcing destination . No wonder because we are the 3^rd largest nation in geography that can speak fluent English. That very skill can make a long way. Filipinos are adaptable that’s why we can easily mimic the accents of every nation. As of the moment my workplace can cater 20 thousand calls per day and since there are currently 1,100 BPO sites in the county right now and projected 1.3million full time employees by 2016 (Source: BPAP) we can help at least 22 million people a day. 803 billion help every year. We are consistently putting the Philippines as the universal soldiers of customer service.

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7. We are too educated to ignore– The skill sets of the IT-BPO employees like technical, language, effective communication and right attitudes is superb. In addition to it with process specific expertise, knowledgeable groups in innovation, we can beat and eat the competition. Other industries are doing their job but you can’t ignore the fact that BPO agents are super agents because of multiple disciplines we acquired in the past. With the help of coach, trainers and environment of excellence we are all recognizable.

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8.  We are under valued compare to our counterparts from the United States. Are you serious?  As of July 25, 2015, the average salary of a call center agent in the US is 27,000 thousand dollars a year 1,188,000 php  (http://www.indeed.com/salary/q-Call-Center-Agent-l-United-States.html)

According to Payscale. Com,the average Filipino Customer Service Representative only earns 203,569 php or  4626.56 dollars a year. The reason why offshore companies will go to the Philippines is not just to invest but to cut cost. Expenses are too heavy especially when the company is expanding. They can see that this country is a goldmine, they can get a cheap labor but the quality of the customer service is good to great. Again, skills will follow when attitude of the employees are willing to learn. That’s why BPO employees should get more perks and benefits from the offshore companies. The more employees felt that they are appreciated they will stick more to the company.

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David Isaiah Angway is a Financial Evangelist

WHY do I need financial planning

 

As a young professional today, you would like to change the status of your finances but you don’t know how. You have million thoughts on how to let your finances be revived again this year but you think it will be better to start next year. If you don’t have any idea where to start, I challenge you to do the something today or else you won’t improve. I am guaranteeing you that once you follow this program, give yourself an average of  10-15 years and am sure you will be able to reach the wealth that you need. It is not a quick rich scheme so you won’t be a scam. 

Knowing is half of the battle. Do this routinely and you will understand more of your behavior towards your finances. You should plan and don’t think average. Get a piece of paper or download a worksheet that has the following then compile and evaluate it weekly.

Start with why you are doing this?

If you can’t tell me your compelling reason then you can’t sustain everything below. Imagine yourself that you are going to have a diet plan for the next 30 days but during the 2^nd day you don’t have the energy and willingness to follow the most powerful plan, like why you need to deprive yourself with your favorite food. Everything will fall apart, you are wasting your time, effort and energy with the planning stage if that won’t be put into action. Your compelling reason why you need to do that should not be yourself. Remember when you think about yourself as the end goal, you are thinking too small. You don’t want to think average like anybody. Poor people think about themselves all the time. Authentic Rich individuals think about opportunities how to help other people and that’s who you are and how you should be wired. 

When you start with Why, the How and what will follow.

Example of BIG WHY
·         To make sure I can be financially free and pass this legacy to my family.
·         To be an excellent steward when it comes to finances.
·         To support nonprofit organization and help campus missionaries.



1.       Budget   

This is the starting point of financial planning. You will fail with investing when you don’t know where your money goes. That means you will be running out of gas in the middle of a freeway if you don’t check your gas tank first. But I got good news for you. There is hope. Knowing how much you got so you can maximize what you have is the goal of continuous budgeting. Doing your budget for the first time might overwhelm you because there are so many things you need to include in a minimum amount. Remember that taking actions to your plan will solve the current and future financial issues that you will have. When you’re lazy to do your budget you won’t be able to finish the construction of your dream house. Managing your funds is a skill needs to polish.

2.     Emergency fund

Whenever I got my salary I put that directly into my emergency funds. The rule is simple if your needs expense per month is 10,000 then multiple it by 6. This is a very simple principle. Save for the storms of life (illness, accident, change tires or when you lose your job). Learn to prioritize this.  Do this early as possible so you can move to the next level which saving for your wants. Caution: don’t ever use credit card as emergency funds and you will dig your own graveyard (bankruptcy). 

3.       Saving goals

You need to at least give yourself  3 compelling reasons why you are saving funds or else you won’t stand a chance when laziness  struck you every time you got your salary.  Your goal is to learn during the journey, this is not about the end destination. When you focus in excellence, sacrifice and faith things will start change. Behavior will follow. Chances are you will hit your goal in a repetitive manner. Savings are for your extra needs and wants. Put 20% in the bank when you immediately get your income make sure that you already got emergency funds first. 

4.       Debt plan
Please don’t ever go to investment without paying your debt first which earns a higher interest rate. Your debt plan should include how much you need to pay for every single cent and when you will be debt free. The plan is you need to stick to it no matter what happened.  When you put it in paper you can see the big picture.  The reason why you don’t want to be debt free is very simple; you think everyone is in debt so you think you are in the zone.  Live like no one else so you can live like no one elsesays Dave Ramsey. Debt snowball is a really good strategy, you pay the debts that you can eradicate first and as you get the momentum it will be very hard for you to break it.

5.       Estate plan
You are accumulating a lot of assets now and your investment is off the chart. Estate planning is not only for the rich kids, it is for everyone that you love. Your legacy to your family is important even when you depart; no one will plan for your family so take responsibility for yourself. Be selfless and take time to check your current assets over liabilities. Remember that you don’t want to add up to the inconvenience of your family members once you evaporate from this world.   

6.       Insurance coverage

You are priceless but you need to identify how much you bring on a table. If you were able to identify that you are worth  7 million then get that coverage as long as the computation is correct. There is computation from the insurance industry like multiply your yearly gross income to 10. The computation might not be as accurate as the standard computation of today’s industry but it gave you a ballpark figure. What’s important is to get an insurance that is equivalent to you. You badly need this or else when something unexpectedly happen to you insurance company will help you and won’t let your family suffers.  If you got kids and wife but you are refusing to have insurance, you are putting too much risk financially and emotional aspects in their lives.  No one would like to see those things to happen. Be responsible.

7.       Investment

Everyone wants to get into this but many are being scammed because of poor diligence. Be careful all the time. First, list those things why you are investing,  second, you need to identify whether you got time, money and knowledge to identify the investments that you want then your risk tolerance should be define. Investing is a word that’s not just about higher ROI.  Are you an aggressive type or a conservative one? Regardless of your answer there’s no right or wrong. The purpose will give you the drive, without it you won’t last. Third, List the things that you are investing you want to achieve like education for your kids, retirement or build your dream house. Know the amount that you will be satisfied and consider to be happy.

8. Read Books, Attend seminars, join a Face book group and find a coach.

Never underestimate the value of networking and community. You should declare war against poverty, procrastination and poor mentality. Reading books will give you thought provoking ideas. Attending financial seminars like IMG conventions in Makati, Truly Rich Club, and Money summit every year can increase your network and expand your horizons. Joining Face book group will give you an all access pass with like minded people; you are welcome in contributing your thoughts. You can easily follow mentors who are expert in the financial industry that will make you more accountable with the results you are getting. All in all fresh and updated insights will give you new perspective to make you successful with no boundaries. You should revolutionize your thinking so acting upon it won’t be a struggle.

Your unique plan is totally not identical with anyone so don’t copy someone’s financial plan or strategy. How you manage your finances while you are working is a glimpse of your future financial plan during retirement. You can change your tomorrow today. With the help of our God who holds the future and your willingness to make sacrifice you are surely going to win long term.


Pictures courtesy of hubspot, the dollar business, learnvest, shutter stock, carmen marquez, imoney, img, go banking rates

David Isaiah Angway is a Financial Evangelist