DUBAI: Filipino expats in the UAE are earning more than they ever did before, but do they really know what to do with their money?
The Filipino Times talked to the community and found that most OFWs are willing to invest, put up a business and grab an opportunity to have extra income.
But the thing is, they do not
know how, or where to even start looking.
“The problem is accessibility. In recent years, there has been an interest in making investments but a number of Pinoys just don’t know how to do so,” financial adviser Carion Yumut said. “It’s not as if business opportunities are offered in racks that one can just find when he enters a mall.”
Yumut admits that investing does look too complicated, with too many factors that should be considered. But like other money experts, he emphasized that it can be done and that the basics are not really hard to understand.
There’s a range of options available – from crowdfunding, which is gradually becoming popular among OFWs looking to put up businesses in the UAE; property investments, which have attracted hundreds of OFWs due to its profitability; buying franchises; to investing in stocks, bonds, and mutual funds.
Before you dismiss this article for all those horrifying terms, hold on: They are bound to sound easier with this five-point feature.
The Filipino Times talked to experts and came up with a crash course that could help you make an informed decision.
Property investment
ESTIMATED INITIAL CASH-OUT: From Dh15,000 to Dh25,000 (depending on the total contract price of the unit; but keep in mind the monthly payments involved)
“What is the compelling reason why you’re working abroad? Because you want to buy Prada? I don’t think that’s smart,” Yvet V. Andalis, a registered realtor in California, USA for the past 10 years with about 35 years’ experience all together in the real estate business, told a group of about 300 OFWs at a real estate road show in Dubai.
One way to make money through property is by renting it out, where the investment is a mere 20 percent down payment on the total contract price and the rental rate increasing annually at 10 percent.
Still another, Andalis said, is by investing in up to five units for rent with an average total contract price of Ph10.5 million (Dh860,548) for a total 20-percent down payment of Ph2.6 million (Dh213,088) and a monthly income of Ph259,370 (Dh21,614) on the tenth year.
“Top billionaires made it through real estate,” Andalis said.
Renting out is an option that is not bad at all, as Manuel U. Arbues II, AyalaLand regional head for North America and the Middle East, put it.
“Obviously, in terms of capital appreciation, the sooner you buy, meaning in the pre-launch period, the better for you. If you want faster rentals, get a studio. If you want a higher income, go for a two-bedroom, even three-bedroom unit,” Arbues said.
The value appreciation is at anywhere from 10 percent to 20 percent annually, he said, adding that Ayala’s Avida brand, which is for the OFW market and the company’s fast-seller, posts a price increase at an almost quarterly rate.
Vince Lubrin of SM Development Corp.’s (SMDC) international sales could not agree more, citing how SMDC’s Shell Residences at SM Mall of Asia (MOA), which was launched in 2011, now has its value skyrocketing.
“People who invested in 2011 in a one-bedroom unit with a balcony for Php2.2 million (Dh176,000) now are enjoying an appreciation of almost 50 percent; the unit is now worth Php3.4 million (Dh272,000),” Lubrin said.
And with the ongoing development in the MOA complex, the value of the unit in five years is projected to increase by 40 percent and, in 10 years’ time, around 80 percent, Lubrin said.
Ramirez however cautioned that investing in condo units requires financial stability and a steady income. “Some OFWs fail to complete the investment because of uncertainties in their employment abroad. I am not saying that investing in the real estate or condo is not good. In fact it is. But availing a property has to be planned according to the stability of an OFW income,” she said.
Your real estate investment options are also not limited to the Philippines: You can definitely own freehold properties in the UAE. Freehold areas in Dubai include plots in Jebel Ali, the Palm Island projects, The World islands, Dubai Marina, Emirates Hills and Al Barsha, among others.
HOW TO DO IT:
While real estate agents are everywhere and top developers have set up offices in the UAE, it pays to have all the options available in one venue.
If you are looking to buy property either for investment or for other goals, drop by the Philippine Property and Investment Exhibition on September 23-24 at JW Marriott in Deira, to see what are the best and the lowest investment deals available in the market.
Crowdfunding
ESTIMATED CASH-OUT: From Dh368 to Dh18,400 (based on an existing model)
Many feel that they do not have enough money to put up their own businesses, but what they do not know is that they can actually grow whatever money they have in an endeavour that also needs all the help it could get. Anyone could help fund a business project that is open to the public—they call it ‘crowdfunding’.
In a nutshell, crowdfunding is about generating a pool of funds from different people who may not even know each other, and who in return would all share the profit after sales, said Anabel Ramirez, CEO of AMDG management services, a company now assisting fellow OFWs in setting up their own businesses in the UAE.
“Crowdfunding is a way of diversifying your savings. It’s similar to a stock market but with direct access to the company that you are investing in,” Ramirez said. AMDG Management Services is in fact founded by a group of OFWs in Dubai through the same method.
“By having ‘access’ to the company you’re investing in, it means you can speak to the owner or meet the owner when you require to,” she added.
Ramirez said investment can start from Dh368 to Dh18,400, and all you have to do is fill out a registration form. An investigation would follow to ensure that the money was not ill-gotten and that the investing OFW is financially stable.
Companies in Dubai formed by OFWs through crowdfunding include the now-popular Carinderia ni Tandang Sora in Port Saeed near Deira City Center.
Somehow, the potential of a crowd-funded venture is also undeniable especially with a sound business plan. Just imagine the network of instant customers that it is bound to get considering the number of people involved in the project.
On the other hand, while the returns from crowd-funded businesses could be promising, all investors should know every detail of operations and of the terms and conditions. A rule of thumb for any investment is: You should always know your way out and have an exit plan prepared when worse comes to worst.
HOW TO DO IT:
According to www.entrepreneur.com, a business start-up portal, crowdfunding is usually done through an online platform that allows the fundraiser to set up a public campaign for accepting donations regarding a certain project. People can donate a specified amount through the fundraising campaign’s website.
Miranda said AMDG is currently tweaking its website to have the platform operational by next month.
Franchising
ESTIMATED CASH-OUT: From Dh30,000 to Dh3 million (depending on the brand)
Establishing a business has always been a risky move—and when you have your life savings on the line, you would do whatever it takes to reduce risks to a minimum. This is why some people prefer to go the franchising route: Creating a branch, an outlet or a stand of an established brand.
If one has millions to invest, he/she may consider franchising a well-known brand for about Dh1.5million to Dh3.5million, according to reports. But for others who do not have that much money, food cart franchises could also be considered.
Marketing executive Tereza Cruz, for example, has bought a dim sum food cart franchise at Dh30,000 and then put it up in an MRT station back home.
“I believe that was a good business decision. Today, the business is earning around Php30,000 a day,” she said.
Armando “Butz” O. Bartolome, founder of the pioneering GMB Franchise Developers Inc., said that among the advantages of buying a franchise is that an OFW investor need not start from scratch, having instead a proven system of operation. Even equipment and marketing collaterals are often included in packages.
Moreover, reputable franchisors conduct market research before selling a new outlet, so the risks are somewhat minimized.
But with all the advantages, proceeding with caution is widely advised.
Not all franchises are successful. Location is a key factor in any enterprise, and proper management is also necessary.
“As in any business, franchising can be a sink-or-swim affair—the road has potential pitfalls and potential benefits as well. You must find the ‘fit’ for your franchise business to succeed,” said Paulo M. Tibig, former president of the Association of Filipino Franchisers (AFFI), who has also been in Dubai and Abu Dhabi as resource person in franchising seminars.
HOW TO DO IT:
• Ask a potential franchiser what the return on the investment will be, how will the business reach this number, and most importantly, how much it would cost to start the business.
• Come up with a roster of franchise concepts. “By comparing and eventually paring down the number of concepts, you will be able to have a better idea of what concept to go for,” Tibig said.
• Check and verify, where he said that “once you have zeroed in on a franchise you want, do your homework and talk to its other franchisees.”
• Determine what kind of support can be expected from the franchiser, in the form of marketing, logistics, and operations among others. “Make sure that you are provided with an operations manual, which will serve as your bible in running the business,” Tibig said.
• Cover your bases, where he said the franchise agreement must be reviewed with a lawyer to iron out kicks or ask for clarifications. “Since this is a binding contract, it is very important that you know what rights and privileges you will have,” he said.
Just launch that business idea
If you have a business idea that you feel passionately about, it often doesn’t matter how much money you have. Start anyway.
Every success starts with a decision to try, added with hard work and perseverance.
“Dapat malakas ‘yung loob mo kasi kapag mahina ‘yung loob mo, wala nang mangyayari doon sa negosyong papasukin mo,” said an entrepreneur, who, with his wife, has become a millionaire because of their ice candy business. Read their story below.
Stocks and mutual funds
MINIMUM CASH-OUT: Dh500
We always hear some people rave about “stocks” and “mutual funds”—and more often than not, we wish we know them as much as other people do. Talking “stocks” and “shares” sounds smart, right?
First thing to remember about them is that: Do not be intimidated. It is fairly easy to grasp what it is all about.
“A stock is a chunk of a company. It is basically the funding they use to make their product or conduct some service. The more money this company makes, the more valuable that chunk of the company becomes,” expert Madison Lee explains. “In essence, when you buy a stock, share or equity, you are buying into the company as one of the many owners.”
According to Rex Mendoza, CEO of the mutual funds and fiscal services firm, Rampver Financials, the best time to buy stocks is when there is a crisis, when the prices are down, because it will not stay down over the years.
Validating this is the 2016 pre-presidential election period in the Philippines, which saw the stock market going down and then recovering when the electoral exercise was over.
Mendoza said OFW investors should, during a crisis, “understand what is happening; analyze before reacting; be mindful of their perspective; and, stay the course.”
Officials said key elements to look for when investing in stocks are a company’s proven performance, market size, market leadership, perceived staying power, great potential, capital gains possibility, and innovation.
Randell Tiongson also said investing in publicly traded stocks “requires a certain kind of aggression in terms of one’s risk appetite, and some research.”
Monitoring the stock market could be very tedious and one would need to be hands on, so you would know when and how to move your money. Should buy or should you sell today?
If you don’t have much time for such considerations, consider investing in mutual funds instead. It’s basically the same thing; it’s just that with the latter, you would have a fund manager whose job would be to grow the money you have invested without you having to monitor it constantly.
Tiongson said putting money in mutual funds “appears to be the simplest of options when it comes to investment vehicles. It takes most of the work out of your hands and place it in the very capable ones.”
Mendoza said OFWs with no experience in investing and may be scared to embark on stocks may opt to start with mutual funds. “After they learn the ropes a bit more, they can graduate to direct stock investing. Those who think they can go directly to stocks can do as they please,” he said.
HOW TO DO IT:
Getting started requires opening an account with a broker of which the following are among those accredited by the Philippine Stock Exchange:
• AB Capital Securities, Inc. (www.abcapitalsecurities.com.ph)
• Abacus Securities Corp. (www.abacusonline.com.ph)
• BPI Securities Corp. (www.bpitrade.com)
• RCBC Securities Inc. (www.rcbcsec.com)
When it comes to mutual funds, the top companies to consider are:
• Sun Life Financial
•Philam Asset Management, Inc
•First Metro Save and Learn Fixed Income Fund,Inc.
