Pinoy Business Coach

A friend posed a question to me this morning that went me into "contemplating" mode.  Her question was being a newbie in the investment world, what were her options to start with?

I replied that it depended on her needs.  This is a question that comes once people become aware of the different paths to financial success through investing.  Are you investing for (1) Cashflow, (2) Future savings or (3) Asset protectio?, I asked.  The most basic of all is to invest for Cash flow since it will take care of basic needs like food, shelter and clothing and can be expanded to provide for a comfortable life.  Future savings is for funds that you will not be touching for the next 5-10 years or maybe 20 years for that matter while Asset protection is for "hedging" or saving your fortune in the form of real estate or precious metals.

There are many known ways to invest for cash flow.  The most unsophisticated or basic of all is putting your money in the bank and  hoping that interest will more than make ends meet.  A mere 3% gross per annum in the bank will not get you anywhere that soon.  If for instance you have 50T to invest, this will be a mere 125 pesos a month less taxes.  There is nothing great about saving money in a bank deposit since monkeys can be trained to do this.  But in our country, savings is better than no bank savings.

Another way to invest for cash flow is through Mutual Funds.  There are many mutual fund companies that have great returns which can bewilder the common man.  But this needs further studies and a more sophisticated way of handling things.  A good mutual fund may be able to provide a conservative 6% per annum on your money which is 250 pesos a month less expenses.  Only a handful of people know about these vehicles since the general population is still risk-averse and do not see things broadly in the context of superior gains.  The Stock Market is also a good avenue for cash flow but sadly it is not for short term gain since nobody can time the market and it requires a really good and sharp broker, if you find one then please inform me.

The third option I explained is through investing in a business.  It is done by investing in a good business (either yours or others- doesn't matter).  Then my friend made a follow-up question which went something like so how do you know if you are investing in a good business or not?

There is no easy answer to that question and in my limited homo sapien brain, I can only say that you can invest in a good business by BEING a business person yourself!  A skilled musician would know a good instrument from a bad one.  A skilled Civil Engineer would know which buildings are strong and which ones are not.  If you catch the drift....

The 2nd limited answer which I did not mention to my young friend was the fact that you need to experience being in business, immersed enough in it that you will encounter bad deals yourself which you will be enable you to learn how to sift the wheat from the tares.   This sounds a little rough and blunt but that is the way it is.

Many are scared because 9 out of 10 businesses fail in the first year.  To the contemplating mind I implore to find out WHY 9 out of 10 micro businesses fail and learn from their mistakes.  You will learn that many of these micro-businesses did not keep good records, did not make a basic business plan, spent the revolving capital thinking it was profit and so on and so forth.

The Philippine school system is not really preparing our Youth to become independent free-thinkers and Entrepreneurs.  We have turned into a nation filled with aspirations far from our home-land as employees.  Those who have treaded and are treading the path of Entrepreneurship will continue to shape the future of this country.  The question is, which side of the table will you be in?