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Showing posts from February, 2017

Term of the Day: Inflation

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Inflation is the rate at which general level of prices of goods and services is rising and, consequently, the purchasing power of currency is falling. For example, if the inflation rate is 2%, then a pack of gum that costs $1 in a given year will cost $1.02 the next year.

Inflation is generally measured in terms of a consumer price index (CPI), which tracks the prices of a basket of core goods and services over time.

In the Philippines, as of January 2017, inflation is 2.7% matching DOF's internal forecast which is within the target range of 2% - 4%. Source: http://www.dof.gov.ph/index.php/dof-expects-inflation-rate-within-government-target/

Because of inflation, people invest. Assuming the 2% inflation, a savings account that was worth $1,000 would be worth $903.92 after 5 years and $817.07 in 10 years assuming that you earn no interest rate on the deposit. (Interest rates in the banks usually ranges from 0.25% to 1% which is lower compared to the inflation rate of 2%). That&#…

Estate Tax Amnesty Law

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Last February 13, the Congress approved House Bill 4814 known as "Estate Tax Amnesty Law". This is an act granting amnesty in the payment of estate tax for taxable year 2016 and prior years, with or without assessments, that have remained unpaid as of December 31, 2016. Key provisions of the act are: Grants amnesty within two years (2) from the issuance of the implementing rules and regulations (IRR) at a rate of six percent (6%) of the decedent's net estate. Provides immunities and privileges to amnesty beneficiaries including immunity from the payment of estate tax and from civil, criminal, or administrative penalties. Exempts from coverage of the amnesty persons or cases that involve the jurisdiction of the Presidential Commission on Good Governance, pending cases involving unexplained or unlawfully acquired wealth under Anti-Graft and Corrupt Practices Act, pending cases filed in violation of the AMLA, pending cases involving criminal offenses under the NIRC code as…

Unrealized vs Realized Gain/Loss

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Isa sa mga paraan kung paano kumita sa stock market ay ang pag-taas ng presyo. Ang formula para malaman natin ang ating kita hindi lang sa stock market kundi pati sa business ay:
Gain/(Loss) = Total Sales - Total Cost including expenses
Halimbawa:
Nag-open ng account si Juan para sa stock market nung January 2016. Ang capital nya ay P5,000. Every month balak nya itong dagdagan ng P5,000. Sabi nya sa sarili nya na sa isang stock sya muna mag-fofocus since baguhan pa lang sya. Naisip nya ang ALI (Ayala Land Incorporated).
Transaction dates : January 5 - bought 100 shares @ P33.95  Feb 3 - bought 200 shares @ P31.25 Mar 4 - bought 100 shares @ P34 April 7 - Di ka nakadagdag si Juan dahil holy week. Madami gastusin. May 5 - bought 100 shares @ P33.75 June 7 - sold 100 shares @ P38.95 (walang padala kasi enrollement ng kapatid) Aug 5 - bought 200 shares @ P40 Aug 31 - Current market price ay P38.50 November 29 - Current market ay P32.9 Mas mabilis macompute ang gain/loss kung gagawa kayo…

Books Of Accounts

There are three types of accounts required by BIR:
Manual Books of Accounts
These are the books you can buy in office supplies stores. The books should be updated manually (handwritten). Below are the common books used: General Journal - debit and credit principle. It's like a diary where you will record your transactions in chronological order according to the date. General Ledger - this is the summary of all your accounts. This is used to prepare your financial statements.  Cash Receipts Journal - where you will record cash sales or any collection of your receivables. Put the official receipt number as your reference.  Sales Journal - where you will record your sales on credit. Reference number is your sales invoice. Cash Disbursements Journal - where you will record all your cash payments or expenses made. Purchase Journal - where you will record your purchases made on credit. *To know how to use, kindly check my blog about bookkeeping.
The number of books to be used will depend…

2017 Starting the Year Right

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I know it's already February but "it's never too late." I've been very busy the past months - December & January. December - year-end closing, stock check, auditors while in January - time with family. Before making my projections and setting our goals for 2017, I reviewed first our 2016 portfolio to know whether we are achieving our financial goals or not. Well, our portfolio was down due to our stock investments. Since I was and am a newbie to trading, I was not able to hit the targets but I learned a lot and I am going to apply it this 2017 to know whether such strategy will suit me or not. First thing to remember just in case you decide to become a trader, make sure you are not emotional especially when the market is not going your way. Don't panic. Listen, observe, read, understand then decide what to do with the stock. After reviewing our portfolio, I checked our medium to long-term goals to know what's next. Since we planned on going home for…

Decision Making

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The most important factor in starting your financial freedom journey would be your decision and how committed will you be on that decision.

Below are some of my favorite quotes that will let you understand what a decision is and its impact on one’s life.

Buddha quotes:

“No one saves us but ourselves. No one can and no one may. We ourselves must walk the path.”

“Never let anyone tell you how to live your life, it’s called your life for a reason. You make the decisions.”

“The mind is everything. What you think you become.”
Bible verses:
“Trust in the Lord with all of your heart and do not lean on your own understanding. In all your ways acknowledge Him, and He will make your paths straight.” - Proverbs 3:5-6

“The fruit of the righteous is a tree of life, and he who is wise wins souls.” – Proverbs 11:30

Be still before the Lord and wait patiently for Him; do not fret when people succeed in their ways, when they carry out their wicked schemes.” – Psalm 37:7

“If any of you lacks wisdom, you should …

How To Register With The BIR

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Now that you have your DTI/SEC Registration and Mayor's Permit, you can now apply with the BIR. Since most small and medium businesses register as sole proprietorships, this blog will focus on them.
Note: For those with TIN, make sure that the RDO where you are registering your business is the same where your TIN was registered. You can call the BIR contact center 981-8888 or trunkline 981-7000 and verify with them. If you are working and establishing a business in a different RDO, verify with BIR if there's a need to transfer. However, most cases are they will require you to transfer it to where your business is located as you have to file quarterly and annual income tax returns (1701Q/1701). Accomplish 3 copies of the following BIR forms and attached the requirements:Form 1901 - Application for Registration of Self-Employed & Mixed Income Individuals, Estates, Trusts. Photocopy the following attachments (bring the original just in case they ask for it):Any document showi…

Life Insurance: What You Need to Know?

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Life insurance is a great financial planning tool. It mainly provides you with the opportunity of protecting your family from personal risk exposures especially after death. It is also used for wealth preservation and estate tax planning. However, it should never be thought of as savings vehicle.
Your need for life insurance depends on your personal circumstances like income, savings etc. You have to ask yourself: Do I need life insurance? If you are single with no dependents, it may not be worth the expense; however, it will still depend on your goals.How much do I need? When deciding how much coverage is necessary, you have to layout the details of what you have versus your goals.What type of policy makes sense for me? Whether term, whole life or VUL. (To be discussed in another blog) Some other considerations that you should know about life insurance before buying it are:
Beneficiaries Assignment of beneficiary designations may be primary or contingent. Primary beneficiary is the pe…

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