Yes, you read the headline correctly. Gildo started investing his money in BPI in July 2011 and grew it by 46% in only 18 months!
This is the first of a series of four short articles, about The Adventures of Gildo, The Driver Who Invests in the Stock Market.
Who is Gildo?***
To be honest with you guys, I do not personally know Gildo. I first heard about Gildo last year when our Truly Rich Club stock market mentor told his story at the Truly Rich Club 2014 Wealth Summit. Gildo is his family’s driver. And Gildo’s story is fascinating. I love telling it to my friends and to my audience when I conduct financial seminars.
The Adventures of Gildo
You have all probably read ( or at least heard of ) Bo Sanchez’ best selling book, “My Maid Invests in the Stock Market ( And why you should too ).” The maid ( I think she was not named in the book ) became famous, because if a maid can successfully invest and grow money in the stock market, then every body can, right?
Well, our stock market mentor thought that if Bo Sanchez’ maid invests in the stock market, why not his family driver? So he suggested stock market investing to Gildo, their family driver. Our mentor told Gildo that if he invests P2,000 per month in the stock market, he will match it with P2,000 per month.
Slow Start
So Gildo placed his first investment in July 2011. He invested his money plus matching share from our mentor, and bought 200 shares of stock of BPI ( Bank of the Philippine Islands ) at P59.20 for P11,840 ( plus nominal fees).
A few months later, our mentor found out that Gildo didn’t make additional investments, so he talked to him. I think the conversation went something like this:
Our mentor: “Why aren’t you making additional investments?”
Gildo: “I am only a driver. I do not understand the stock market. I am afraid to lose money in the stock market.”
Our mentor: “Do you understand that I will match your investment? So your money immediately doubles already when you invest!”
Gildo: “Oo nga, ano?”
Introducing Money Cost Averaging
So Gildo started buying more BPI shares every month starting Oct 2011. He found that BPI shares have actually gone down to P53.50 from his original purchase price of P59.20! So he bought his next 70 shares at P53.50 at a 10% sale price, for P3,745.
Gildo used a simple money cost averaging strategy. He just kept on buying a profitable issue ( BPI ) regularly regardless of the actual price.
Gildo bought his next 70 shares at P53.50 at a 10% sale price, for P3,745. He used a simple money cost averaging strategy and . just kept on buying a profitable issue ( BPI ) regularly regardless of the actual price until he accumulated 1,230 shares for P81,234.
By Jan 2, 2013, he had accumulated 1,230 shares for P81,234. This means an average price of P66.04.
The next day, he sold all his 1,230 BPI shares at P96.40 for a total sale prices of P118,572! His profit for buying BPI and eventually selling all the shares was P118,572 – P81,234 = P37,338, or an amazing simple profit of 46% on original investments of P81,234. (If you do the actual math, his effective compounded annual growth rate is more like 57%)
Aren’t we supposed to just keep on buying?
In money cost averaging, aren’t we supposed to just keep on buying and keep the stocks we purchase?
Well, the idea is to keep the money invested, so it is perfectly alright to sell, but keep the money invested in the stock market and move the investment to a different issue.
Gildo sold all his BPI shares for P118,234, then bought 450 shares of MERALCO at P268.20 for P120,690, using the proceeds of the BPI sale!
Gildo bought 1,230 shares of BPI for P81,234, sold then for P118,234 for a 46% profit in 18 months. He then bought 450 shares of MERALCO at P268.20 for P120,690!
Why did Gildo shift his stock market investment to MERALCO? Abangan ang susunod na kabanata and just wait for the next issue.
Related Post:
Written by Bobet Prudente
***Disclaimer: I just heard the story, so this story as I tell it, might not be entirely accurate. As with most stories being told and re-told, some details get a little mixed up, and more colorful for better story-telling.
BUT I took pictures of the screens of the powerpoint presentation, so let me assure you that the financial and instructional details are correct.
The Truly Rich Club teaches its members Direct Stock Market Investing, Made Easy!
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– Edward K. Lee
Chairman and Founder, COL Financial