Lifestyle

Your Christmas Bonus Can Make You Rich All Year

A financial analyst tells you how to stretch your finances beyond the holiday season.
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You wait 11 to 12 months for this moment, this glorious moment when the numbers in you bank account suddenly double; when, for a few days, you feel a little bit like Richie Rich. Now why don't you extend that feeling to last for weeks, months, or years, even. It might be tempting to blow all that cash right away on the new iPhone or a fancy vacation, but remember how you painstakingly waited for this moment. You can have a small celebratory dinner, but not just because you got your Christmas bonus; also because you can take that money and make it multiply. 

Here are six investment recommendations to stretch your finances and make it last for more than what's left of the year. Remember, growing money takes patience so you need to invest in time, too. We're not including mutual funds because, well, you might already have one.  

Invest in Yourself 
For the more entrepreneurial who want to get serious about stock investing, put your money on some educational material before risking it all on stocks you know nothing about.

Get started with these classics: 

Warren Buffett: The Making of an American Capitalist by Roger Lowenstein
Beating the Street by Peter Lynch
How to Make Money in Stocks by William J’ O’Neil
Trade Like a Stock Market Wizard by Mark Minervini
Tomorrow’s Gold Asia’s Age of Discovery by Marc Faber

For more serious instruction, enrol in a class from Caylum Trading Institute, an affiliate of the COL Financial Group, the largest online stock brokerage in the Philippines. The selling point: all the mentors are professional traders with seven to 20 years of experience trading global markets.

Aside from mastery of the tools of the trade, another crucial ingredient that separates the 1% who make millions (or billions) versus the rest who are suckered out of their capital is emotional stability and level-headedness. Believe me, it’s so easy to let your emotions tell you when to buy or sell. The first way to mitigate this is to practice until you can make decisions automatically. It's like an athlete practicing the movements until shooting a free throw becomes second nature.

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Second, invest in your physical health. There are a lot of studies that show that on a physiological basis physical health is intimately connected to mental and emotional health. Exercise stimulates the production of brain cells, removes stress, makes you more energized and focused at the task at hand. Ever wonder why hedge funds in Wall Street hire elite athletes?


Should You Buy That Shiny New Gadget?
Apple's latest iPhone X will probably figure in a lot of Christmas wish lists. Instead of shelling out cash or getting blinded by postpaid bundles, cross your fingers and wait for Santa’s good graces. By now, you should be mature enough to realize that shiny new gadgets are not an investment. In case you don't, an investment is something that should grow your money and not something that's going to be worthless in two years. Apple made this “ultra-premium” $1,000 smartphone as a desperate move to grow profits. 

Believe it or not, global smartphone shipments (in terms of value) have been plateauing since 2016. The category is maturing and competition intensifying much like what happened in the PC era of a decade ago.

This means that the only way for big boys like Apple and Samsung to eke out growth is to create an extra-expensive category to separate themselves from the horde of smartphone manufacturers vying for a piece of the pie. I would usually recommend buying stock instead of buying the product, but these aforementioned dynamics aren’t good for Apple since they have a market value of $881 billion and sales of $229 billion (of which 55% come from smartphone sales). Investing in Apple now would likely result in limited return for a lot of downside risk.

The other gadget that everyone currently wants is the Nintendo Switch. Nintendo has sold over 10 million units of its Switch console since its March 2017 release and is aiming for 14 million units in its first year. In contrast, the Wii U (released in 2012) sold only 13.5 million units in four years and was the company’s worst selling console ever.

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What’s so special about the Switch? For starters, it’s a home console that competes with the likes of the Microsoft Xbox One and the Sony PlayStation 4, but with the added feature of being able to play on the go. This means that you can play rich HD games like Super Mario Odyssey, The Legend of Zelda: Breath of the Wild, and even Skyrim anytime, anywhere and with anyone.

Nintendo is already shaping up to have an even more explosive 2018. Now that doubts of the success of this new console have been dispelled, third party developers are lining up to support the Switch and grab a piece of the action. This should in turn drive more sales of the hardware. 

So yes, you can have a shiny new gadget. If you're going to get one, buy the Switch so you can see for yourself how this console can propel Nintendo’s stock back in the top of the gaming world. Having fun? Buy some Nintendo stock for yourself, too.

Beat the tax hike and buy a car?
Let’s face it, even if DU30’s “Build, build, build” program does get off the ground it will probably still take (at least) a decade before we ditch our cars for public transport. Yes, the increase in vehicle excise taxes will be implemented by next year, but this should only delay the purchases of urbanites in the absence of viable alternatives.

Buy a car if you truly need it, but be smart about it. Instead, you can use your knowledge on vehicle trends can put some gains in your stock portfolio. For example, Toyota Motors Philippines is the undisputed leader in the Philippines with a 44% share of the market. The local franchise is owned by tycoon George Ty’s GT Capital Holdings Inc. which also has stakes in Metrobank, Federal Land, Axa Philippines, Metro Pacific Holdings, among others. So, you can buy GT Capital stock, or, if you want a pure play go directly to the parent company Toyota Motor Corp which is listed in Japan. The company has bright prospects from being a market leader in several fast-growing Emerging Markets like China, India and Indonesia. They are also investing heavily in research and development of hybrid electric vehicles which are forecast to slowly replace old school combustion vehicles in the next 10 to 20 years.

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Buy, Don't Rent
This is quite the no-brainer. That Christmas bonus may give you enough to get a place of your own, but weigh in the options for the long term.

If you buy: You get to live in it (the “convenience yield” in finance jargon) and get an asset that has historically proven to appreciate over time. To maximize the gains, make sure you buy from a reputable developer and focus on getting the location right (even if you have to a pay premium price).

If you rent: You get to live in it, but the rent money will disappear forever. From an investment perspective there’s no difference between renting and burning money.


Is It Time To Get Into Cryptocurrency?
This list won’t be complete without the trending “investment” of this age. There are enough articles about cryptocurrencies online, so I won't go into that. What people need is some practical advice. 

The Bitcoin craze is what we call "speculative mania," dominated by millennials whose investment theory is summed up thus: "it went up a lot." If you could use history as a guide for other speculative mania, tthen you should probably know that it doesn't usually end with happily ever after.

Understand that the concept of Bitcoin and the blockchain technology behind it is definitely revolutionary—but so was the internet in 2000, and it ended in the Dot Com bust where the value of companies like Amazon, Apple, and Microsoft fell 90% and a horde of other internet companies went bankrupt.  

Practical advice 1: if you have the risk tolerance, buy it but make sure to only allocate money that you are willing to lose. 

Practical advice 2: The blockchain itself is potentially more valuable than Bitcoin, so I suggest following companies that are investors in this space such as SBI Holdings Inc. of Japan and Google Inc. in the U.S.

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To access the stock of companies mentioned in this article,you will need to open an account with a broker that has access to international equities like Interactive Brokers of the U.S.

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About The Author
Jason Mariposa, CFA
Mark Jason Mariposa is a holder of the right to use the Chartered Financial Analyst designation from CFA Institute (US) and works as an investment analyst at Citisecurities Inc., a sister company of COL Financial Group, the country’s largest online stock brokerage. He is also an instructor at Caylum Trading Institute also a sister company of COL Financial Group.
View Other Articles From Jason
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