Who is smarter? You or your money? – Robert Kiyosaki, Cash Flow Quadrant
“Na-scam ka na ba? (Were you victimized by a scam?)” I was. And this is a revelation. Only few people know my story. My family doesn’t even know this. They would now.
It was in 2005 when I read a provocative book authored by Robert Kiyosaki, Rich Dad Poor Dad. Many of my friends in the networking industry were talking about it and I didn’t mind it first. I thought it’s just one of the books. Nothing special, nothing phenomenal.
When I finally did, it’s like scales fell from my eyes. (Because I liked it so much, I read it four times already).
I learned further when I read his second book, Cash Flow Quadrant. I learned ideas like ‘your money working hard for you instead of you working hard for it, passive income versus active income, basic understanding of assets and liabilities, multiple streams of income, financial freedom versus security,’ and a lot more.
So I looked for ways to let my money work for me. In 2006, I searched from ads and asked some of my friends about investments. It led me to put money in a company that gives 4 to 5 percent a month! Whew! It’s rare to find a bank that guarantees you 4% a year!
This was different, I told myself. The agent from the company convinced me. And I wanted to make more money quickly.
At the back of my mind, I knew it’s kind of a big burden for a company to guarantee 48 to 60 percent a year! But I proceeded anyway. In fact I found two more companies that did the same, and I put some money there too.
Just in case the thing I was afraid of happens, I was diversified (hmmm even the idea of diversification entered my mind here). I didn’t have any background in business and finance then so don’t blame me.
In 2008, I decided to pull out my investment. But I tell you, in those two years I was uneasy. I was afraid that the checks would bounce, even the last check I had. I was lucky they didn’t.
Then a week later, boom! The thing I was afraid of happened. It was all over the news that the owner of the company flew abroad with the investors’ money, and the victims included big personalities!
You think I was lucky? I’m not finished yet. Remember my other two investments? That I didn’t get away. I lost them both. I got depressed. Who wouldn’t? Had I lost the first one also, I would end up a bum.
But I have to learn my lesson. As one motivational speaker would say, in life when you lose money, treat it as your tuition fee to learn something. I say, sometimes experience is more expensive than school tuition fees. Learn from my experience. It’s good that you won’t pay much.
After that, I went into other business ventures. The books I mentioned (and others books as well) really influenced my line of thinking. I had my fair share of failures and successes. How did I get into the stock market then?
In 2008, if my memory serves me right, I was one of the volunteers of the Kerygma Conference of Bro. Bo Sanchez’s Light of Jesus charismatic community. It was then held in Ultra (now PSC Arena) in Pasig City.
There I saw the tarpaulin of Citiseconline.com (now Colfinancial.com), an online stockbroker. But it took me few more months before I invested. I read a few more books, until I finally did in 2009.
One book led to another, to another, and to another, until I came to know a very successful stock market investor in the name of Warren Buffett. Since then I got hooked with his life and investment philosophies.
I said, ‘oh man this is what I want: passive income, money working hard for me. I can do this! This fits my personality.’ And so I became unstoppable. I knew I would enjoy the ride.
One of my favorite lines from Buffett is “Time is the friend of the wonderful business.” This suggests two things: finding a wonderful business and being patient.
Let me tell you now my story with my biggest winner which is DMC (David M. Consunji Inc.). During the late part of 2009, I started doing analysis about stocks using the metrics used by Buffett, like the return on equity (ROE), profit margin, etc. I was not familiar with DMC then.
In 2010, I notice this company was moving up little by little. I got curious. I checked DMC’s financial statements, and boy it was like a check in all my boxes. But the problem was, I didn’t have fund then. I just failed in a business venture.
And so I made a major decision. I sold my car. I used the money to purchase this stock.
I remembered Robert Kiyosaki’s simple definition of asset and liability. He says that an asset puts money into your pocket (like business or investment); a liability takes money out of your pocket. I realized that my car was a liability.
I wasn’t using it for business purposes, but simply as a toy. You know boys are boys. Cars are extensions of our pride.
But when I made some calculations, I was spending a minimum of P50,000 (AU$1,290) a year on car-related expenses alone, like insurance, gasoline, parking, car wash, you name it (so for those who are planning to buy one, just make sure your pockets are ready). And so I sold it and bought DMC shares at P18 (AU$0.46).
To make the story short, I sold it in 2013 for P60 (AU$1.55), or 233% return. But I tell you it was not an easy ride. It’s not easy to be patient. There were times when I wanted to sell when there was negativity in the market.
I just remember then what Buffett says about a wonderful business. Patience can make miracles. So, I held on because I knew the business was still doing well. As a result, I got a good return.
And so that’s one of the perks of being in the stock market. I know this is my turf. I belong here. I like finding that wonderful business. If I find one, I let my money work hard for me.
If you notice the price of DMC now, it P15 something. It’s because the company had stock dividend.
Disclaimer: Stocks that are mentioned are not recommendations for you to buy or sell them.
