Cashflow 101 Game

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Yesterday, I had the chance to chat with my friend on Facebook. Although she and I were not formally introduced, she left the company before I could personally meet her, I am glad that we talk as if we have known each other for a long time. Even until now, we have not met yet. But that is the beauty of social media. It does not only reconnect you with people you've known in the past, but it connects you to new people that are yet to come into your life.

At the end of our conversation, she invited me to join her in playing Cashflow 101 next month. It was perfect timing, because I have been looking for venues where I could try playing that game.

What is Cashflow 101?

According to Wikipedia, Cashflow 101 is an educational tool in board game format designed by Robert Kiyosaki (author of Rich Dad, Poor Dad), which aims to teach the players concepts of investing by having their money work for them in a risk free setting (play money) while simultaneously increasing their financial literacy and stressing the imperative nature of accountability.

The board game is based in a financial and economic simulation environment.

There are two stages to the game. In the first, "the rat race", the player aims to raise his or her character's passive income level to where it exceeds the character's expenses.

The winner is determined in the second stage, "the fast track". To win, a player must get his or her character to buy their "dream" or accumulate an additional $50,000 in monthly cash flow.

In place of “score cards”, there are financial statements. The game requires the players to fill out their own financial statements so that they can see more clearly what is happening with their money. It generally shows how assets generate income and demonstrates that liabilities and 'doodads' are expenses.

 

The Purpose of Playing Cashflow 101

 

According to Robert Kiyosaki, he designed the game with two tracks, the Rat Race and the Fast Track, because to him, this game is the real game of life -- that each of us is on one track or the other.

Playing the game teaches you how to get out of the Rat Race. Its purpose is to open your mind to the possibility of you becoming rich and financially free from the Rat Race, free from the drudgery of spending your life working for money and living below your means.

Kiyosaki suggests playing the Cashflow 101 at least  a dozen times, until you get out of the Rat Race in less than an hour, regardless of your profession, your salary, high or low, and what market conditions or setbacks you encounter in the game.

Fully Booked!

I called up the organizer today and unfortunately for others, registration has been closed. Fortunately for me, my friend was able to sign me up before yesterday before all slots were taken. Now that is what I call perfect timing!


Due to limited slots and all are taken, the organizer of this Cashflow 101 Game will be holding another event in the future. With my own personal experience after playing the game, I will be posting the details as soon as it is available.

 

Reference:

1. http://en.wikipedia.org/wiki/Cashflow_101

Rule of 72

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The 'Rule of 72' is a simplified way to determine how long an investment will take to double, given a fixed annual rate of interest. By dividing 72 by the annual rate of return, investors can get a rough estimate of how many years it will take for the initial investment to duplicate itself.


The higher the interest rate, the shorter time it will take for your money to double. Always consider this when making an investment.



Reference:

1. www.investopedia.com

Diversify Your Investments

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I enjoy going to financial seminars and expos. There is always something new to learn and opportunities for growth.

During the Wealth Summit and Money Expo 2013, I learned that diversifying investments is a MUST. This is for the same reason why we diversify our stock market portfolio -- so that if one company fails, the other companies that are growing could balance things out.

Where Else to Invest?

 

Aside from the stock market, we are encouraged to invest also in real estate and foreign exchange.

Real estate is land plus anything permanently fixed to it, including buildings, sheds and other items attached to the structure. Although, media often refers to the "real estate market" from the prespective of residential living, real estate can be grouped into three broad categories based on its use: residential, commercial and industrial. Examples of real estate include undeveloped land, houses, condominiums, townhomes, office buildings, retail store and factories.

Forex is the market in which currencies are traded. The forex market is the largest, most liquid market in the world with an average traded value that exceeds $1.9 trillion per day and includes all of the currencies in the world.



Reference:

1. www.investopedia.com

Invest Now Or Else

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65 Percent of People Working Now Will End up as Bankrupts at Retirement Age

This is according to one of the speakers at the Money Summit. She says that 65% of the people working now will end up as bankrupts at retirement age because they do not know how to save and invest.

There was even an investment ad saying that only 1% will retire wealthy.

Most people have zero savings. If you do not save your money or invest, you will only keep on working and you may not be able to retire at age 65 because you have nothing. This is okay if you die at 66. But life expectancy is becoming longer. The oldest living person died recently in Japan at age 116. 

Think twice as to setting aside part of your money for investment for your future. Exactly how much, you may ask? You can prepare for your retirement with at least Php20,000 PER YEAR! That is only Php56/day. Imagine that! You can prepare for your retirement by missing out a simple snack per day.

Always have your retirement as the end in mind. If you keep procrastinating and delaying on when to invest, you will never start. 

Start investing now.

Understand that a day you keep delaying equals one day that you do not earn. The problem is always when to start. 

Invest now or else.

People Are Desperate To Invest

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Everyone wants to grow their money. Everyone wants to stop working for money and make money work for them instead. Everyone is tired of being in the rat race and are desperate in moving to the fast track.
 
I can say this because every now and then we hear and see people in the news being victims of various investment scams. There are also those who get into business just because they are sick of their day jobs, wants to be their own boss, and thinks that having a business is the answer to their boredom. And of course, there are those who keep their money in banks thinking that it is the wisest thing to do.

Again, the key is to keep learning.

If we take enough time to learn, we can avoid being scammed and invest our hard-earned money in investments that actually work -- investments that the rich have, that the middle-class and poor are not aware of. 

To name a few, you can invest in the stock market, forex or real estate. But before starting, please seek a mentor first. Someone who is an expert on those fields.

Getting into business is also a way to get out of the rat race. Aside from the fact that you cannot start a business right away, there is also a chance of failure. But remember that the rich fail their way to success. The key is to never quit. For those who want to get into business, I recommend reading How To Turn Your Passion Into Profit by my mentors Bo sanchez and Dean Pax Lapid. It contains the head and the heart of starting a business.

And those people who keep their money in banks thinking that it is the best way for their money to grow, think again. Most banks offer 1.25% interest per annum. The highest interest rate for time deposit is 1.85% if you have 5 million pesos and 1 year holding period. Last year's inflation rate was 2.6%. So when you think that you are growing your money in banks because of interest, you are actually losing money due to inflation. 

Banks are for deposits and withdrawals only. If you want to invest in a bank, buy the bank through the stock market. In my case, I am a part-owner of BPI, BDO and Metrobank -- the giants.

Seek for Learning

 

There are a lot of seminars available on investment, books and organizations (read: Truly Rich Club) that guide newbie investors. Attend them. Read them. And find your way towards your own successful investment stories.

Happy investing!

Is A House An Asset Or A Liability?

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Today I made a status post on my personal Facebook account stating this: "Rule of thumb: Never borrow money to buy deteriorating stuff."

Aside from the few likes, it drew attention to a friend who I have known as a financial advisor for almost a decade. (Read: expert/wiser/more knowleadgeable than I am). He asks, "What about a house?"

Since I cannot put a full article on the space provided for comments, here is my point of view regarding his query.

Is Loaning for a House a Wise Thing to do?

I have a workmate who loaned Php1M to buy a house three years ago. (Yes, properties come cheap here in the province.) His monthly amortization is Php16,000 a month for 10 years. So, his original Php1M loan becomes Php1.92M in 10 years. It almost doubles! Aside from the high interest rate, he pays for the maintenance over time (yes, a house deteriorates) and he also pays for property tax every year. 

So, obviously, loaning for a house in this example is not a wise thing to do.

I know many of you will react and say that a house is an asset because it appreciates over time. Yes, the value of a house appreciates, but over a VERY LONG period of time. In the example above, do u think the house that costs Php1M now will be saleable at Php2M at least (means Php2M amount paid plus maintenance cost plus yearly property tax) after 10 years? I doubt it.

To make things simple and more logical, whenever you plan to borrow money to purchase something, think first if it is a good debt or a bad debt. A good debt is when you buy something that puts money in your pocket. A bad debt is when it takes money out of your pocket. Simple right?

When you loan a house that not only takes money out of your pocket due to monthly amortizations, and puts nothing into your pocket, then it is a bad debt. Therefore, it is a liability.

When Does a Housing Loan Become a Good Debt?

 

As my mentor says, a housing loan becomes a good debt when you use it for real estate making it generate cashflow. 

One clear example of this is using other people's money and applying the powerful law of leverage to purchase a foreclosed property. These properties are usually priced 40% lower than their market value. You spend a little (remember you got it at a discounted price) on renovation and then sell it at a higher price as rent-to-own. Your buyer's monthly amortization becomes bigger than yours so this is cashflow for you every month. And since it is on a rent-to-own scheme, he also pays for the maintenance. 

Simplify.

 

Simplification should also be applied. Whether its a house or food or clothing, buy or borrow only for what you need. In addition, as my friend said answering his own question, "If it is for security, then do borrow but make sure that the amortization never goes beyond 50% of your salary or income."


What is your view on this? Share it in the comments below.

 

Why Aim To Be Rich?

This is Pesos and Sense's Episode 1 with Bro. Bo Sanchez, a preacher, a powerful speaker, and a bestselling author. He leads a ministry, he has a radio, tv and internet programs, editor-in-chief of magazines, and has 12 businesses.

Most importantly, he is my mentor and he taught me how to invest in the stock market.

In this video, he teaches us that money is not the root of all evil. Money is not all good either. Money is neutral. It all depends on who handles it and for what purpose is it used.

At the Truly Rich Club which is founded by Bo Sanchez, he taught us that the main purpose of wealth is to love others, especially the poor.

Why do you want to be rich? Share your reasons in the comments below.

My Children Can Retire as Multi-Millionaires

This is a photo of my beautiful daughters. Reading the title of this post, you may think it is absurd. I cannot blame you. We do not come from a rich family. My husband and I are average income-earners now. But yes, I'll say it again, my children, now at aged 5 and 1, will retire at age 65 as Billionaires!

How?

Through sowing in time of famine. 

More specifically, through investing in great, solid companies in the Stock Market.

The Untold Story of Jack and Jill

Let me share with you the story of Jack and Jill, as told by my mentor, after Jack fell down the hill and Jill came tumbling after. Jack had brain surgery. He has no health insurance and his medical expenses made his family very poor. This emotional pain became his strong why that created an inner resolve in him. He told himself, "I will never be poor when I grow up!"

At age 15, he started a small business of selling anything and everything to his classmates. He earned Php2,500 a month, which he invested in the stock market. He was faithfully doing this for 5 years.

Jill, on the other hand, was not affected by the accident except for a few scratches. She lived a happy-go-lucky lifestyle, buying the latest stuff and did not save at all. One time, Jack invited her to attend The Feast and this changed her life. She began investing in the stock market at age 27, putting Php2,500 every month, buying the same great, solid companies as Jack did. She faithfully did this until she was 65. 

Jack Pops The Question

A few years after, when they were both 65, while having lunch after going to The Feast, Jack proposed to Jill and she said YES!

Jill then asked Jack how much money did he invest. Jack said that he invested a total of Php150,000 for five years, from age 15 to 20.

To her surprise, Jill said that she invested a total of Php1.17 M for 38 years from age 27 to 65.

They then decided to call their stockbroker to know how much money they actually have. Both were totally shocked.

Here’s what happened…
Jack          Jill
15 30,000   0
16 30,000  0
17 30,000  0
18 30,000  0
19 30,000  0
20 30,000  0
21 0               0
22 0        0
23 0        0
24 0        0
25 0        0
26 0        0
27 0       30,000
28 0       30,000
29 0       30,000
30 0       30,000
31 0       30,000
32 0       30,000
33 0       30,000
34 0       30,000
35 0       30,000
36 0       30,000
38 0       30,000
39 0       30,000
40 0       30,000
41 0       30,000
42 0              30,000
43 0       30,000
44 0       30,000
45 0       30,000
46 0       30,000
47 0       30,000
48 0       30,000
49 0       30,000
50 0       30,000
51 0       30,000
52 0       30,000
53 0       30,000
54 0       30,000
56 0       30,000
57 0       30,000
58 0       30,000
59 0       30,000
60 0       30,000
61 0       30,000
62 0       30,000
63 0       30,000
64 0       30,000
65 0       30,000

Total Amount Investment:

Jill: P1,170,000
Jack: P150,000

Check below the total amount of money earned by the two when they reached 65 years old…

Total Retirement Money if it Grew at 20% A Year

Jill: P220 Million
Jack: P1 Billion

Surprised?
 
Jill is a Multi-Millionaire. 
Jack is a Billionaire.
And this means that my children can retire with a billion.

Remember how financial advisors would come up to you while your baby is still in your womb or your wife's womb and tell you that if you start at Age 0, the premiums you will be paying are smaller and the you have a longer time to grow money for your kids?

The story of Jack and Jill was something like that -- except that you do not start at age 0 and yet you retire a billionaire.

Friend, I encourage you to sow in time of famine, especially for your children. Do not wait for better times before you invest. Do not wait until you have excess money.

It does not have to be big. What is important is that you start, and invest consistently.

Because your greatest ally is time.

Happy investing!



P.S. If you find this post helpful, please click the SHARE buttons below.

P.S2 Do you want to start a fund for your kids? The best time to start is always TODAY. Please fill up our financial planning form and we will email you a proposal. Go to the LET'S DISCUSS YOUR PLAN in the page above.

What Is Financial Freedom

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Financial freedom is a term generally used to describe the state of having sufficient personal wealth to live, without having to work actively for basic necessities.^[1] For financially independent people, their assets generate income that is greater than their expenses.

This blog primarily aims to help its readers in achieving financial freedom through increased financial literacy, and offers financial products that will actually help you cross that bridge to your dreams.

For me, as a wife and mother, financial freedom is being able to take care of my family full time. It is being able to send kids to school through World Vision, doing volunteer work every summer, going to Anawim every first Saturday of the month -- without worrying about expenses.

For me, financial freedom is not being tied at work just because I am dependent on my salary.

As I have read on a Facebook post, "Money can enslave through keeping us in bad jobs, bad relationships, or depriving us of our dreams."

Money does not buy happiness. Money buys freedom.
 
Acquiring sources of passive income yields potential of financial independence.

Passive Sources of Income to Achieve Financial Independence

• Business: Traditional, Franchise, Networking, etc.
• Property: Rental Property, Buy and Sell, etc.
• Paper: Stock Market, Mutual Funds, Bonds, etc. 

Invest in Paper Assets

Not everyone can start a business right away. It takes a learning curve.

Not everyone can buy real estate right away, and have the capital to flip a foreclosed property and turn it into a rental property.

But anyone who earns ordinary income (salary) can start investing in paper assets, and invest in the stock market. It requires only a small amount to start investing.

Do you know how small?

The maids of my mentor, Bo Sanchez, invest in the stock market. He has written about this in his book My Maid Invests in the Stock Market and Why You Should, Too. To get a copy of this eBook for FREE, click HERE.

If maids could do it, then anyone could do it, too.

My prayer is that you achieve financial freedom and be able to spend time with people you love, doing things that you love.



P.S. Do you want to invest in the stock market directly? This is where you learn about the Peso Cost Averaging and choose which stocks to buy, when to buy them, and when to sell. Then sign up at Bo Sanchez' Truly Rich Club. They will teach you the simplest and most effective way of investing in the stock market. To become a member, be financially and spiritually blessed, click HERE.

P.S2 Do you want to invest in the stock market but do not have the time to learn how? Then invest in the stock market indirectly. Let a fund manager do that at a minimal fee. To choose which financial product is perfect for what you want and need, fill up our form HERE.

P.S3 If you find this post helpful, please click the SHARE buttons below.



Reference:
1. Cummuta, John. "The Myths & Realities of Achieving Financial Independence". Nightingale Conant. Retrieved on 14-Sep-2009

The Magic Of Compounded Interest

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Compound interest arises when interest is added to the principal, so that, from that moment on, the interest that has been added also earns interest. This addition of interest to the principal is called compounding. 

As Albert Einstein says, "Compound interest is the eight wonder of the world. He who understands it, earns it. He who doesn't, pays it." 

If you are a credit card user, it is best that you always pay your total amount due in FULL, and not just the minimum. Because as we all know, your remaining balance earns interest which is added to your next month's purchases and then compounds whenever you pay only the minimum.

If you want to make compounded interest work for you, invest. A lot of people do not invest. They spend whatever they have. Worse, they spend it even before they actually earn it. This is because they have this thinking that they have money coming on the next payday, or on the next bonus. But who would want to work his whole lifetime just to pay off debts and remain to have zero investments? I don't.

Let me share this beautiful quote from Aya Laraya, an investment advocate. He says, "When you invest today, you are buying a day that you do not have to work."

Invest today. It is really not about how much you earn. But how much you invest. Make compounded interest earn for you.


Reference:
1. http://en.wikipedia.org/wiki/Compound_interest


P.S. Do you want to invest DIRECTLY in the stock market but do not know where to start? Sign up at Bo Sanchez' Truly Rich Club and learn to invest the simplest and effective way. To join, click HERE.

P.S2 Do you want to invest but do not have the time to learn how? Then invest in the stock market INDIRECTLY. To choose the best investment product for you, fill up our form HERE.