Money Doctors Inc.

14/07/2019

AN OUTSTANDING OFW LIFE
I just got off an online meeting with a client of mine who is a domestic helper working in Hong Kong. Its her day off, instead of just loitering around the malls of HK, she spends an hour of it learning how to trade in the stock market.

She has been in HK for quite some time now but in spite of her average salary, she managed to save almost all of it.

Her total expenses is only 17% of her total income. The underlying reason for her low expense ratio is her desire to accumulate enough capital for her to go back home "FOR GOOD". She would sacrifice spending money on personal whims and conveniences in favor of putting more money into her nest egg.

Consequently she eventually built a lending business serving co-workers in HK. The interest income she derives from it is again put back for the capital to continually grow over time.

She was so jubilant today for last week she made 5% from a stock she bought 11 days ago.

The early learning days were tough because of the technical knowledge I have to impart slowly. What made it even more difficult was we were doing it on her small phone.

She finally decided to buy a laptop computer which she can connect to the data connection of her phone. It accelerated her absorption of the lessons with a larger screen.

There is still much to learn but I am so happy for her for I know she has broken barriers and is on her way to a meaningful investing experience.

She is a powerful example that demonstrates that OFWs, wherever they are, or what salary they may be receiving have the opportunity to make it in the financial world.

They are no strangers to sacrifice, shedding buckets of tears from being far from home, back breaking manual labor and oftentimes subjected to employer abuse.

The OFW formula is earn in dollars and spend in pesos, my principle of the tuyo teaches them to stay simple in spending, accumulate all of your money and invest in a diversified portfolio of businesses and financial instruments. In no time, you will be riding a plane back home "FOR GOOD"

MABUHAY ANG MGA OFW

note: You will see that Matryoshka doll in my future posts about money management and investing. The doll symbolises life itself, with its accompanying pain, happiness, success, joy wrapped together into different shades. The figurine of the old fisherman is something I bought in HK a long time ago. I believe the work I do endeavours to teach people how to fish. Knowledge when given away is eternal and is passed on from one generation to another. When people I teach succeed in life, I get the satisfaction in the thought that somehow, I contributed a pebble of knowledge in their life journey.

Have a great Sunday everyone!

11/06/2019

SCAMS!
Of late I have been asked several times to provide commentary on certain organisations that provide a 30% monthly return on donations.

Its really moot since President Duterte ordered its closure. I am sure he conferred with the Securities and Exchange Commission before he made that order. The SEC in turn prior to the presidential order already issued a Cease and Desist Order (CDO) and the subsequently revoked the company's registration. I did a quick research by reading materials, watching videos and asking people who are "investors in this company.

There are several things which are out of place. First and foremost is the word "Donation".

Members donate to this religious organization and in return
receive a monthly "gift" of 30% of the amount of the donation .
The basic definition of a donation is that of a charitable act which is gratuitous, meaning, you dont expect anything in return. Members receive a monthly gift, thus we cannot classify this as a donation anymore. It is plain and simple an investment.

If you examine the next donor in the long line of investors, you discover that his motivation for donating is profit and not charity. So both the donor and the recipient, while they may not verbalize it or commit it to paper are really in an investment scheme.

This "donation" is actually a "security" or an investment where you expect a return on the capital in the form of dividends or interest. Investors likewise expect the return of the capital in the future.

In order to avoid registering as a company that offers securities to the public, they called it a "donation" . The SEC have very strict capitalization rules if you sell securities. They safeguard the public interest by making sure it has enough capital to service all the present and future claims.

In one of the news articles in fact, it was pointed out that the amount of "gifts" versus the bank balances and other liquid assets of the company, can service it only for a period of 3 years. Thus they have to rely on new investors to keep the "investment scheme" going.

Sadly, if the company collapses and closes down, even if the members bring the officers of the company to court, the word "donation" exonerates them from any legal liability to return the money.

A great help in avoiding scams is to educate yourself in how it is built and the methods used by scammers in the past.

Among the books I have read about scams, here's one I highly recommend.

Educate yourselves and avoid being the next victim.

These days fraudsters operate on a massive scale that was previously unimaginable. Thousands of people from all walks of life are relieved of billions of pounds each year. No-one knows the full scale of fraud because embarrassed victims often fail to report it.Despite all the press coverage, peop...

27/05/2019

STABILITY FUNDS ARE THE FOUNDATION OF BEING PERMANENTLY WEALTHY

Being wealthy is defined by what makes you happy rather than a specific amount of money. A janitor who accumulates a portfolio of financial assets that produce passive income of Php20,000 a month can consider himself wealthy. In contrast, some people may not be able to maintain their lifestyle with only P20,000. Their level of happiness in terms of financial independence can be much higher than that. Therefore, the term “wealthy” will be different from one person to the next. It's a good idea to start this journey by being clear as to what kind of lifestyle you find suitable for you. Make sure, it is within the realm of what is reasonable and constantly ask yourself the question “am I living within my means?”.

How do you get to this financial nirvana ?

In my long experience in helping people get to that happy place, I discovered a path you can follow. I cannot guarantee it, but if you embrace the principles and recommendations we have on good money management, If you remain faithful to these principles, you will eventually get there.

The foundation of financial wellness are stability funds. Unless this is in place, there is no hope at all of ever becoming financially independent.

DISBURSEMENT FUND - The first objective is to have an amount equal to your monthly expenses in your disbursement account. I suggest, you use your payroll or income account for this. You have a choice of either using a savings account or a checking account for this purpose. At the BEGINNING of the month, you should have the entire planned expense in this disbursement account. Out of habit, people wait for their income before expenses are paid, this is not good. You are subjecting yourself to episodes of financial feast and famine.

This is clearly demonstrated by the 13th month bonus paid to employees in November. Seldom does it ever remain untouched until December 25. This payday to payday mindset is the first thing you need to break. Bring out pen and paper and pre-plan all your expenses for the month. The amounts will vary because you have CHRONIC or repeating expenses such as food, shelter and utilities and you have PERIODIC expenses, an example of which are tuition fees or vacation expenses. At the beginning of the month, the entire amount should be in your disbursement. The rule is, “ you cannot spend, what you did not plan this month!”.

Most will argue with me that they are so hard up, that it is impossible for them to accumulate this amount.

I beg to disagree!

Ask yourself “ Can you save Php1.00 a month? Can you save Php 1 million a month”. The point of the question is, you can really set aside money if you really wanted to! Be it a mere Php 20.00 per payday or more. Methodical saving money is a decision with the objective of stabilising how money flows in and out of your life.

If you are someone who is starting out zero, you have to make a decision to save at least 10% of your current income. If you do that, you will accumulate enough funds for your monthly expenses over a period of 10 months. Thats 10% a month of your income multiplied by 10 months is equal to one month’s expense. If you find 10% to be too tough, you can drop it down to 5% and it will take 20 months to do it. This is first and all important step. Stabilising, your spending patterns.

SMALL EMERGENCY FUND - No matter how hard we try to plan, life happens to us. There will be unforeseen expenses that suddenly pop up. This may be due to illness, a relative or friend approaching you for money, a sudden change in your work situation and many more. You can avoid disrupting your disbursement funds by continuing to set aside money for small emergencies. An amount, equal to one month’s income is what I always suggest. This should be placed in a certificate of deposit (more popularly known as a time deposit) in the bank where you do most if not all of your financial transactions.

Why 1 month’s worth of INCOME? In my conversation with people, they discovered that if someone were to borrow money from them, and they can’t say no, the psychological limit is a maximum of one month’s income. If someone were to ask you for more than a month’s income, your mind revolts at the idea and would want to have more information before you part with your hard earned money. This small emergency fund therefore is set up to avoid disrupting your normal disbursement patterns and at the same time provide liquidity so you can address the unforeseen expenses that pop up once or twice a year.

BUFFER FUNDS equal to 3 to 6 months worth of income should then be your next step after completing what I enumerated above. This is for major emergencies or even opportunities that come into your life. We suggest you place this amount in a MONEY MARKET FUND. I currently recommend investing in the First Metro Asset Money Market Fund. There are no entry and exit fees and you can open an amount as small as Php5,000 and add Php 1,000 or more monthly to build it up to 3 to 6 months of your income. It is highly liquid since it is invested in short term corporate and government bonds as well as time deposit certificates. The earnings are modest and this year, my expectation is a max of 6% for 2019. During normal years, this should provide 1.5% to 2.5% return on the investments you have placed in this fund. The objective of this fund however is not income. This is where you place your buffer funds to address large unforeseen expenses. Even periodic expenses like tuition fees, can also be placed here because of its excellent liquidity.

After completing these three foundational funds can you now look into investing for a profit. This is what you call your FINANCIAL INDEPENDENCE PORTFOLIO. You start by buying a Fixed Income Fund. In order to mitigate investment risks and at the same time maximise reasonable gains, you can diversify your holdings to include equities, real estate rentals or even business enterprises. Portfolios are to be invested over the long term. You need to lock out the money for at least 10 years to make it worthwhile. You have to rely on the power of compounding interest to grow this fund faster. There will be years where the returns are not that great but it is evened out by years where you make a ton of profits.

For information on how to start building both the stability and financial independence portfolios, do send me a note so that I could provide more guidance as to how to complete it.

05/03/2017

http://www.thesummitexpress.com/2017/03/doctor-to-barrios-gunned-down-in-lanao-del-norte.html

A modern day hero was gunned down in Mindanao. Please share as much as you can. It's the least we can do to honor Dr. Drey Perlas who dedicated his life helping the poor in Mindanao.

ILIGAN CITY, Lanao del Norte - A doctor who volunteered to serve marginalized patients in Sapad, Lanao del Norte was shot dead in the municipality of Kapatagan on Wednesday, March 1. According to reports, an unidentified gunman shot Dr. Dreyfuss Perlas at the back while he was riding his motorcycle…

23/05/2016

Elections always propel the economy before and after the event. We tend to be forgiving to the president during the first year. It's the proverbial honeymoon period.
There are opportunities out there. We need to go out there to participate in the economy.
Here is a segment I did for Bandila in 2013. The message here should resonate with start up entrepreneurs today

https://m.youtube.com/watch?v=e7a2lhmIxdk&time_continue=621&ebc=ANyPxKqIfndDWk2yZY4YavcaghLni_X6OPgWfLiGa4ggQE-jO3c4CVruzGzHTGAK8bD2zG4DE9nZdzOIwel_MGt8GyCg2kn__g

The Philippines continued to generate positive economic forecasts following a surprise strong third-quarter growth. However, majority of Filipinos are failin...

11/08/2015

It is usual for professional athletes earning millions of dollars over their careers to live large, spend as much, or maybe even more than they earn. So it is a wonder to hear news about Ryan Broyles, a frugal professional athlete.

He says he learned from the mistakes of other professional athletes who have gone bankrupt. Determined not to end up in the same fate, he learned more from people who were financially smarter and richer than he was. He and his wife set and keep to a modest annual budget and invest the rest of his earnings, recognizing that his volatile football career will not secure his financial stability.

Hope we all be inspired by him to not be blinded by short bursts of income and, more importantly, set and focus on working our financial goals. Have a great week everyone!

- Didi Paterno-Magpali

Ryan Broyles wanted to make sure his NFL career, however long it lasts, really does set him up for life.

26/04/2015

http://www.untvweb.com/videos/protecting-yourself-from-loan-sharks/

01/04/2015

ENOUGH IS ENOUGH! Are you swimming in debt? I Hope these tips will help you walk through your financial crisis.

So many people come to me with a basket of financial problems in tow. Most of these problems start out as a small loan which they really did not need to get into.

Before you know it, when the amortization and the principal amount becomes due, they run to another lender to pay off the amortization of the first loan. This goes on and on and on until you hit the wall where no one wants to lend money to you anymore.

Sounds familiar! Well that is the common anatomy of debt and before you know it, you are in a downward spiral that you cant seem to get out of.

From 1% a month, the interest evolves into 10 percent a week. Yes you did not read wrong, thats 10% a week in interest alone because when people become so desperate with many people knocking at their door to collect, they will get into anything just to have a bit of peace.

This does not however last very long, pretty soon, you go out to the debt merchant again to re-finance.

The first thing I make remedial clients realize is that the situation they are in was precipitated by their living beyond their means. It is unthinkable for them to send their kids to public school so even if they cannot afford it, they go into debt just to sustain the private schooling of their children. If you are spending more than 70% of your income, you really are living only for the day without regard for what lies ahead in the future.

I make people sit down and enumerate the things they were spending on before this monster problem started. This realization is key to permanently licking the problem. If they dont see this reality, even if they pay off all their loans today if they win in the lottery, pretty soon, they will be back where they started because they really were not managing the house money properly.

Second is you need to STOP paying everybody temporarily. Tell them to give you a 3 month reprieve from paying anything. Sure, you will get rocks thrown at your house but there is a reason for this.

You need to improve your liquidity. You have to make sure, you create a little buffer fund in your bank account so that you get off that "zero balance" syndrome.

Build a debt repayment plan where only 30% of your income is allocated for the amortization of ALL of your loans.

This will require impassioned conversation with your lenders to stretch the paying period. What they will get in return is a firm commitment from you that everything you promise in terms of payment will become a reality.

Hard to believe, specially from someone whom they already consider as "balasubas sa utang" but there are no two ways about it. You have to lengthen the payment period otherwise you cant pay off anything.

Once you have the debt terrorists sufficiently calmed down you begin the process of paying what you promised.

It does not however end there. The second stage is to increase your current income. The excess money should be set aside in a fund to liquidate your loans.

For example, if the income from this additional work or business you are doing results into a 5K savings monthly, in about four months, you would have a tidy sum of 20K. You then look at your list of creditors to see who you can pay the 20K to clear the loan.

You continue doing this and before you know it, instead of 10 years as you earlier promised, you might be able to clear the deck in five years.

Finally, you need to get the entire family to your side of the fence. Blame throwing will not help. They need to know what the real score is. You will be pleasantly surprised how your children will even volunteer to give up something just to help bring the family out of its financial crisis.

Finally, a little prayer does help in consoling your tattered emotions. These moments of contemplation produces enlightenment that often leads to an inspirational moment where you see a light at the end of this very dark tunnel you are in.

Happy Easter everyone, may you have a solemn and meaningful celebration of Holy Week.

29/03/2015

that SALE is not really a SALE.

Walking by a store with a large 50% off SALE sign, I realized that the psychology behind this ploy is to make you buy more than one piece of the merchandise.

The normal reaction would be since its "MURA". lets buy two.

Then I realized that if I bought two, I actually spent the same amount of money or even more if the sale is only 30% off. So hindi sya MURA, its just fooling around with the emotional spender in you and we willingly or even unknowingly fall into the trap.

Another thing is, since you are inside this wonderful store, might as well buy more stuff. Oh how easy it is to sell stuff to people they do not need. Studies have shown that 95% of us are emotional buyers. Only 5%, would walk away, go home and spend 24 hours thinking about it, before going back to make the purchase.

Hang on to your wallet!
Keep it inside your car if you are just window shopping.
Easier said than done :-) but the benefits to your financial health is astronomical.

04/01/2015

UNLOCKING THE WEALTH CODE

Why is a Pig a Pig? Well the obvious answer is because he acts like a Pig. So true also when it comes to becoming wealthy. We start out poor, we become rich and some if not a lot of us eventually end up poor again! What a great tragedy indeed!

The answer lies in our habits. The poor person grew up in an environment that breeds bad habits. Social drinking in a party is several bottles of beer until we get cross eyed, we buy clothes because of the brand, we seem to run faster and higher when we are on our Nike shoes, party with our friends because of weddings, baptisms, graduations and now even mother's day, valentine's, and so many more ###X-days we can invent. We buy things like deprived human beings thirsting for the good life.

To sustain this "good-time" mentality, the debt merchants come knocking at our door. We are all to eager to sign our names on the dotted line and pawn away our future income.

Does this sound familiar? Yes indeed, studies have shown that 95% of human beings both here and abroad, brown, black, white, yellow, red or whatever skin color you choose are infected by the same buying binge malady because of a deep sense of deprivation.

Contrast that to the habits of the 5% who are wealthy. They also work hard but the difference lie in the way they live their everyday lives.

They decide to live a simple life and nail it to the wall. They do not change that standard even if the income increases exponentially. Saving, Accumulating money therefore is but a natural end result.

While poor people struggle to learn how to save, these wealthy people on the contrary save money as a natural result of the way they live.

The key word therefore is contentment.

Live simply, be content, work very hard and invest your money.

If you were born rich, it however does not mean, you cant be infected by this buying binge malady. I have spoken to some people who are "Nouveu Poor". They used to be rich and speak of the business achievements of their forefathers and yet today, they lost everything the first and second generation managed to build up.

They tell me, its harder to be Nouveu Poor because they are not used to riding the jeep and eating only one viand during meals. What led to it?

Truth to be told, they live like deprived pigs. Drinking to excess, buying branded clothes and being too concerned about how people perceive them to be and abhorring the simple life. It was only a matter of time before the gravy train eventually stopped.

When you become aware of these bad habits, do a monthly checkpoint of your expenses. Are you living like a pig? Its a good reminder to us that Simple Living and controlled spending will keep money troubles away.