In a captivating presentation during the recently concluded Philippine Property and Investment Exhibition (PPIE), renowned author Lyndon Magsino, known as the PISO Master, imparted valuable knowledge and insights on wealth creation and strategic investing. With his engaging talk, Magsino captivated the audience, empowering them to take control of their financial futures.
Assessing Financial Status the PISO Master Way
Magsino kicked off his talk by emphasizing the power individuals possess in shaping their financial destinies. “The power to use debt as a weapon to become wealthy or to be poor lies in your hands,” he stated, encouraging attendees to take charge of their financial well-being.
One of the key lessons Magsino shared was the importance of assessing one’s financial status through the PISO Master method. He urged attendees to conduct a thorough check and balance of their personal balance sheets, understanding the value of their net worth by subtracting liabilities from their overall assets.
Becoming ‘EMvestors’: The Power of Active and Passive Income
Addressing overseas Filipino workers (OFWs) specifically, Magsino introduced the concept of “EMvestors” – a term coined to represent the fusion of being an Employee and an Investor. He emphasized the potential for OFWs to leverage both active incomes from their salaries and the creation of passive income streams.
Delving into the World of Real Estate Investing
Magsino proceeded to discuss the merits of investing in real estate, highlighting its enduring value and potential for long-term financial growth. He outlined crucial reasons why real estate investment should be considered:
C – Cashflows: Properties offer the opportunity for continual earnings through rental income.
R – Real Asset: Unlike paper assets, real estate is tangible and holds intrinsic value.
U – Usable as a Home or Office: Real estate can serve as a personal residence or a place of business.
C – Collateral: Properties can be used as collateral for future financial endeavors.
I – Inheritance: Real estate assets can be passed on to the next generation.
A – Appreciating in Value: Over time, real estate tends to appreciate, yielding higher returns and capital gains.
L – Life-long Asset: Real estate investments provide a long-term asset with the potential for enduring value.
The Importance of Due Diligence in Investing
Magsino stressed the significance of due diligence before making any investment decisions. He described diligence, or “Kilatis” in Tagalog, as an in-depth review or investigation of a business, investment, or person. Drawing a parallel to job applications, he highlighted the extensive scrutiny individuals go through before being hired, emphasizing the need for similar caution when investing one’s hard-earned money.
In connection with the investment, he provided a set of questions that one needs to ask themselves before investing:
1. Demand on products — Is there an adequate demand or need for the products/services of the company? Demand is usually reflected in sales volume.
2. Inherent Risks — Do you understand the elements and level of risks in this business?
3. Legalities — Is the company legitimate and registered with the licensing authority (e.g. SEC, City Hall Business Permit)?
4. Information on Financials — How will you make money? What is the “source” of your ROI? If the source of your ROI is coming from the “downlines” or dependent on the number of recruits, think 10X before investing. Ask yourself, what is your intention or goal in investing? Do you want a long-term yet steady profit, preserve your principal investment or do you want a quick-rich approach?
5. Governance Team — Who are the people behind and running the company (i.e. Board and Management team)? Are they trustworthy and people with integrity, or were they involved in previous corporate scandals, fraud, or anomalies?
6. Economic landscape & Strategy — Does the company have an effective strategy to play in a highly competitive market, to expand and grow the business in VUCA World?
Note: VUCA is a Volatile, Uncertain, Complex, and Ambiguous business world.
7. Nature of business — What is the nature of the business? Do you know the fundamentals of this kind of business? Warren Buffett is not investing in Technology because he does not understand the nature of the business, no matter how lucrative it is.
8. Compliance with regulations — Does the company comply with specific regulations applicable in that industry or business? Non-compliance can result in penalty, financial loss, or revocation of business license.
9. Equity Valuation & Shareholding — What is the basis the equity valuation? Is it properly valued or is it overvalued? Who are the other shareholders? Who are the top 10 or major shareholders? What is the ratio of your investment against the total market capitalization or equity? If the equity is inflated, then your investment will have a lower ratio out of the total equity than it should be. You also need to know your share % in the total equity because it will determine your proportionate share in the profit/loss and the weight of your voice (vote power).
Ensuring Safety and Growth
Elaborating on the concept of due diligence, Magsino emphasized its importance in evaluating financial assets, sectors, and trends. He emphasized that investment due diligence entails analyzing past performance to predict future outcomes, selecting suitable investment instruments, and evaluating risk, yield potential, and price movements.
With his enlightening talk at the 9th edition of the Philippine Property and Investment Exhibition (PPIE), Lyndon Magsino, the PISO Master, left the audience inspired and equipped with valuable insights to make informed financial decisions. His guidance on wealth creation and strategic investing serves as a guiding light for individuals seeking to secure their financial futures and thrive in the dynamic world of investment.
Watch the recap of Magsino’s presentation below: