February, 2014

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How to help OFWs make hard-earned money grow?

By Ellen | VERA Files – Sun, 19 January 2014


IT is a question that has perplexed government policymakers and academics for years: where has the money been going?

Since 2006, Alvin Ang, an economics professor at the University of Santo Tomas, has been conducting research into the Filipino migrant worker diaspora for aid agencies, the World Bank, the International Labor Organization and other institutions.

“All these years we’ve been receiving a lot of money, but how come nothing is happening. In general, lots are happening in the economy. It has pushed everything up. It has encouraged a lot of investors to come in,” says Ang. “But for the ordinary person who has a family — who is working abroad — not much has changed in his life.”

It is an all-too-familiar story line for generations of overseas Filipino workers (OFWs): a member of the family leaves for better pay abroad, hoping to build a better life for those left behind — only to come home years later with little or no savings.

An estimated 10 percent of the Philippines’ nearly 100 million population work abroad and they are often hailed by the country as heroes. Nearly every one has a family member or relative abroad. Over 3,000 leave daily for jobs overseas.

In 2012, OFW remittances totaled over $21 billion — forming 8.5 percent of the Philippines’ economic output — according to the Bangko Sentral ng Pilipinas. That was expected to rise by at least six percent last year.

To get a perspective of how much money Filipinos abroad have been sending home, imagine this: the 102,000-ton, 1,092-foot long Nimitz-class aircraft carrier USS George H.W. Bush cost $6.2 billion when it was completed in 2006. The Philippine government’s defense budget for 2014 is $1.9 billion.

Ang partly blames the failed attempts of Filipino migrant workers to escape poverty on their lack of financial literacy.

“OFWs are entrepreneurs, in a way, because they are willing to take a risk much larger than a businessman would take. They are risking their families,” says Ang, who uses his spare time as president of the Philippine Economics Society to give lectures and enlighten OFWs and their families on the need to make intelligent decisions on money matters.

“A businessman will take a risk if he knows the full valuation around him. But an OFW is willing to take a risk without any information at all,” says Ang.

He tells of a trip that he made last year to Jordan, where he met with Filipinas working as maids for a mere $200 in salaries. “That is just 8,000 pesos and you are leaving your family for that,” relates Ang, shocked.

He added that it may have been better for them to find work as maids here, where they are guaranteed rights and benefits by the Kasambahay Law, which was enacted last year to improve the lot of domestic helpers.

“What do you lose by working abroad? The social cost is so huge. You may no longer have a spouse when you get back, or your child may no longer recognize you,” Ang says.

The government relies on the money they send home to prop up the fragile economy. Countries that host Filipino migrant workers know that. Last year, Taiwan froze the hiring of Filipinos to force Manila to apologize over the May 9 shooting of a Taiwanese fisherman caught poaching by the Philippine Coast Guard. The sanction was lifted after three months.

In early 2010, the Arroyo administration offered so-called “OFW bonds” worth $500 million in an attempt to directly tap into the remittances. Much of the money Filipino migrant workers send home go to education, household expenses and consumer goods.

Commission on Filipinos Overseas Chairperson Imelda Nicolas argues, however, that the economy can get a further boost if Filipino migrant workers plow some of their hard-earned money into investments instead of just buying stuff. The agency has several programs teaching financial literacy, but very few take them up because of various reasons.

“Our culture is that we tend to get frightened when it comes to money matters. That is why very few people put money in banks,” explains CFO program manager Nico Herrera. He emphasizes that there are people who do have money and they want to go into business, but they do not have the business acumen.

“They don’t have anyone to advise them,” says Herrera. “Many think of what they are most familiar with, such as computer repair shops or sari-sari stores. But these can only earn so much. They also don’t look around, so they don’t realize that there is plenty of competition.”

Since the start of the Filipino exodus in the 1970s, the government has focused on protecting the rights and safeguarding the welfare of Filipino migrant workers following horror stories of abuse by employers and crimes by human traffickers. But clearly the numbers show that that is no longer enough.

For Ang, he feels that it is his civic duty to teach financial literacy. He says,“Someone has to go there and talk to them and explain to them these things.”

The Easy, One-Step Guide To Becoming a Successful Long-Term Investor

By Fitz | Ready To Be Rich – Mon, 17 Febuary 2014

Imagine that you have a magical money jar.

It’s magical because each day, money appears inside it.

More specifically, P1,000 worth of coins appear inside the money jar every 24 hours.

Yes, that’s P1,000 passive income every single day.

Wouldn’t it be great to have this kind of money jar at home?

I’m sure it is!

Now pause for a moment and ask yourself what you would do if you had this magical money jar.

money jar The Easy, One Step Guide To Becoming a Successful Long Term Investor

Are you going to buy yourself a new smartphone? New clothes? A new bag? New shoes?

Or perhaps, you’ll use the money to travel? To eat in expensive restaurants?

Maybe, you’ve considered quitting your job, and just live off that P1,000 a day income?

I’m sure you’ve said, “Yes” to one or two of these suggestions and there’s nothing wrong with saying so. After all, it is possible given that you’re getting P30,000 a month for free.

But now imagine this…

Can you wait for 3 years and leave the money there, so you can have P1,095,000 later?

Can you wait for 10 years and not touch the money until you have P3,650,000?

What about not spending a single centavo in it for 20 years, so you can have P7,300,000?

Most of you would say “No”, because it’s hard to imagine waiting that long to reach those numbers, and the temptation to spend the money would grow stronger every day.

So how do you prevent yourself from spending the money inside the magical jar for that long?

The answer is to put a specific goal into the amount.

money jar goal The Easy, One Step Guide To Becoming a Successful Long Term Investor

The reason why most of you said “Yes” in the first part is because I suggested specific things you can do with the money in the short term – buy a new smartphone, travel, etc.

But in the second part, you probably said “No” because I only gave you numbers – the total money you’ll get after years of waiting.

So let me rephrase the latter questions and see if your answers would change…

Can you wait for 3 years and leave the money there, so you can buy a new car?

Can you wait for 10 years and not touch the money until you have enough to send all your children to college?

What about not spending a single centavo in it for 20 years, so you can have additional funds for your retirement?

Saying “Yes” to these questions are easier because you now have concrete goals attached to them.

A lot of people don’t have the patience to stay invested for many years, because every time they look at the value of their investment, all they see is the number…

“Wow, my stock market portfolio has grown 300% already and is now worth P1 million!”

And then they begin to imagine all the things they could buy now if they sell their stock market shares.

But if they had a specific goal, the commitment becomes stronger.

“My stock market portfolio is now worth P1 million. I need P3 million to buy my dream house, so I won’t sell my shares yet. Perhaps, I could add more to it, so it’ll grow faster.”

A person’s mindset changes when they’re investing for a specific goal.

And that’s the secret to becoming a successful long-term investor, the one step you need to take to ensure that you’ll stay invested for many years.

Define your objective and attach it to the investment.