growrich pinoy

8/12/2019 Growrich pinoy

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earning the secret of how to become rich is one thing but how to stay rich is

nother matter.

the wake of the stunning success of his first bestseller, Think Rich, Pinoy!, author and realtate investor Larry Gamboa continues to impart his hard-earned wisdom on how to staymfortably and confidently wealthy for years to come.

eres a lot more work to do if you want your passive incometo become massive income.nd its lots of fun!

rry will tutor you as you enroll in the school of life and learn from the failure and s uccessories of a self-made taipan, a computer genius and Pinoys who are working at thinking rich.

you aim to make the grade in staying rich, youll learn more a bout:

l How to determine your financial report card so you motivate yourself by measuringyour way to financial freedom

l How to amass wealth with Larrys 5/7 program

l The myths Pinoys have about making money and how to debunk them with the rightbeliefs

l The Four Types of Thinkers

l The Six Levels of Pinoy Investors

l How to TLD (Think It, Learn It, Do It) your way to massive passive income (the key tofinancial freedom)

mbined with Think Rich, Pinoy!, Grow Rich, Pinoy!will challenge you to say to yourself and

the world, YAYAMAN AKO.And to act.

From the best-selling author ofThink Rich, Pinoy!

GROW

By Larry Gamboa, PhDPINOY!

ww.shepherdsvoice.com.ph

ISBN 978-971-93671-1-6

GROWRICH,PINOY!

LarryGamboa,P

hD

LarryGamboataught

mehow

moneyw

orks.

BoSanchez


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GROW RICH,

PINOY!

By Larry Gamboa, PhD

Edited by Coylee Gamboa and Rissa Singson


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2GROW RICH, PINOY!

ISBN - 978-971-93671-1-6

Larry Gamboa, PhD

Copyright 2006 byShepherds Voice Publications, Inc.

1st Reprint September 2007

Layout and Cover byKelly S. Jugo

Illustrations by

Jose Benedicto T. Gamboa

Requests for information should be addressed to:SHEPHERDS VOICE PUBLICATIONS, INC.#60 Chicago St., Cubao, Quezon City, Philippines 1109P.O. Box 1331 Quezon City Central Post Ofce1153 Quezon CityTel. No. (02) 411-7874 to 77Fax No. 727-5615e-mail: [email protected]

All rights reserved. No part of this publication maybe reproduced, except for brief quotations, without

the prior permission of the publisher.


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To Bel, my kid sister.

You challenge me to be a better kuya.


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4 Contents

Preface 6

Foreword 9

SECTION I

What Keeps Pinoys from Thinking Rich 12

Chapter 1: Its All in Your Head 35

Chapter 2: Whats Blocking You? 59

Chapter 3: 11 Myths Pinoys Have About

Making Money 75

Chapter 4: The Four Types of Thinkers 107

SECTION II

Some Pinoys Who Are Thinking Rich 126

Chapter 5: Stewardship in Action 128

By Charlie Gamboa

Chapter 6: Building Wealth Requires Hard Work 141

By Ronald Cagape

Chapter 7: Lessons from an Apprentice 153

By Roy Nabong


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Chapter 8: Learning the Ropes 165

By Giovanni Olivares

SECTION III

Guidelines for Growing Rich 177

Chapter 9: Think It 179

Chapter 10: Learn It 197

Chapter 11: Do It 203

Chapter 12: The End Is Only the Beginning 212

Chapter 13: Conclusion: A New Beginning 217


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Preface

When I was four years old, I almost drowned.

And for the longest time, I never learned how to

swim.

I was horried of the water. I never went in. I just

stayed in the perimeter, playing with the sand in the beach.

Consequently, I built the most sophisticated sand castles for

kids my age. (Every catastrophe has a bright side.)

But at the age of 12, it happened.

With my heart palpitating, I walked into a shallowpool, lay face down and, wonder of wonders, I oated. It

was exhilarating. The water was carrying me. It was an

overwhelming feeling Ill never forget.

All of a sudden, I knew how water worked.

In the same way, there was also a time when I didnt

know how money worked.


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Proof? I was drowning every day in nancial lack.I didnt know how to keep it, how to save it, how to

invest it, or how to multiply it. I never read anything about

money, and never thought about it, and never talked about

it.

So I kept asking God to bail me out. Consequently,

Ive experienced quite a number of money miracles in my

life. These were my sophisticated sandcastles. And they

didnt last too. They would be washed away by the waves

of my next nancial problem.

But one day, I learned how money worked.

Strange sounding words became my friends: Cash

ow. Savings. Interests. Bonds. Mutual Funds. Stocks.

Business. And real estate

In the past ve years, Ive grown in nancial

literacy which led to my nancial freedom.

In the process, Ive become a nancial mentor toothers.

Hundreds of thousands have already read my books

and articles and listened to my seminars on money.

But this book isnt about me.

This book is about Larry Gamboa, my mentor in

nances and real estate.

Grow Rich, Pinoy!


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He taught me how money works. He encouragedme, coached me and inspired me to keep on learning. And

my life has never been the same.

If youll allow Larry, hell teach you too.

If youre tired of drowning, and if youre tired of

fancy sandcastles that dont last anyway, this book is for

you.

Open your eyes.

A new world awaits you.

Bo Sanchez

Manila, Philippines

Grow Rich, Pinoy!


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9

Foreword

Unlike Larry Gamboa, who is an entrepreneur, I have

been in corporate management practically all my life, having

reached the highest levels of both public and private sector

institutions. Many of my colleagues are unaware that I have

tried my hand in entrepreneurial ventures by partnering with

some friends and investing in a travel agency, an ethnic food

restaurant, an investor relations rm and a hotel management

company. But my experience in these entrepreneurial

ventures have been disappointing and, to a large extent,

dismal failures. This is the principal reason I have chosen to

remain in corporate management. At the same time, I have been more successful as an

investor in corporate bonds, listed equities, mutual funds,

currency swaps and derivatives. I have personally managed

our (my wifes and mine) modest portfolio and have learned

some valuable lessons. Some of the lessons I have shared with

my daughters, which Larry has mentioned in his book, are:


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1. You have to learn how to make money work for youinstead of you working for money;

2. Identify a good role model who has been successful

in making personal investments, and with his or her help,

nd out what makes the most money for you so that you can

focus on that kind of investment;

3. It is all right to borrow money for an investment

provided you could generate a higher yield on your

investment than the cost of your loan. Investing in real

estate properties, for example, can provide higher rental

income than the loan amortizations you have to pay, thus

enabling you to build up passive income. The more passive

income you make, the greater good you can do for the less

fortunate.

At this point, I cannot say that my daughters have

learned all the lessons I have taught them about money or its

use. But my three eldest daughters, who have been workingfor a number of years now, have been building up their

savings and investing in relatively safe xed income mutual

funds which provide them with signicantly higher interests

than bank deposits would. They have yet to learn from Larry

the advantages of investing in real estate and building a

portfolio that provides signicant passive income.

Grow Rich, Pinoy!


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While I have known Larry since our grade schooldays in La Salle, it was only recently, after reading his rst

book, Think Rich, Pinoy!,that I realized how passionate he

is about entrepreneurship and sharing his lessons learned to

our kababayans.

I would strongly urge everyone to read his second

book Grow Rich, Pinoy!and learn many practical tips from

a hard-nosed and successful real estate investor.

Jose L. Cuisia, Jr.

President & CEO, Philamlife

Manila, Philippines

Grow Rich, Pinoy!


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SECTION 1

What Keeps Pinoys from Thinking

Rich

I wrote Think Rich, Pinoy!with one purpose in mind:

to show how the principles of Robert KiyosakisRich Dad,

Poor Dadcan be applied to the Pinoy of today.

The response was overwhelming.

Daily I receive e-mails from Pinoys here and abroad

saying how much they have been inspired and encouragedby reading the book.

Pwede palang yumaman.

Okey palang yumaman.

And invariably the question comes up: How do I start?

At rst, I was puzzled. Didnt I already answer that in Think

Rich?Just look up Larrys Seven Steps and go!


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13Grow Rich, Pinoy!

Some readers jump right in. They see the goal and, straightas an arrow, they go for it. Action agad.

But some get stuck. They read. They get inspired. But

they do not act. They are blocked. They have more questions.

And the questions stop them from acting.

This is the purpose of Grow Rich, Pinoy! to push you

beyond your questions and into action.

Before we start, lets see how you fare in your nancial

report card.

Determining Your Financial Report Card

David McCleland of Harvard University calls it N-Ach.

John Burley describes it as the Seven Levels of Investors.

Robert Kiyosaki borrows from Burley and describes his

understanding of the levels of investors. Whatever way you

look at it, whether N-Ach or as levels of investors, all three

address the challenge of moving forward nancially.I borrow from McClelland, Burley and Kiyosaki and

present to you the Pinoy Scale of Investing. I will also

provide you with vignettes of each type of investor. The

goal is to help you visualize what level of Pinoy investor

you are and decide where you want to be.

Lets begin by visualizing.


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Think of investing as a scale with zero in the middle.Left of zero is negative and right of zero is positive.

On the negative side are the Level 0, Level 1 and Level

2 investors. These are the poor Pinoy investors. At zero

is the Level 3 investor. On the positive side are the Level

4, Level 5 and Level 6 investors. These are the successful

Pinoy investors.

Obviously, we all want to fall under the right side of

the scale. But before we can move up from one level to the

next, we rst have to know where we are.To help you discover where you are on the scale, Ive

devised a questionnaire for you to answer.

The Pinoy Investor Level Test

Simply mark each statement as true or false:

positivepositive00negativenegative

33 665522 4400 11

Grow Rich, Pinoy!


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15What Keeps Pinoys from Thinking Rich

__1. After all the bills are paid, I have no money left toinvest.

__2. I spend more money than I earn each month.

__3. I borrow money to invest.

__4. I borrow money to pay the interest on older debts.

__5. My debts are greater than my assets.

__6. I shop with my credit card and spend more than I

can pay off in one month.

__7. I regularly pay only the minimum balance on my

credit card.

__8. I set aside money every month and put it in a

savings account in the bank.

__9. I save money to buy big-ticket items like jewelry, a

stereo or a piano.

__10. I dabble in stocks and buy whatever my broker

recommends.

__11. I take risks in the stock and fnancial marketsbecause I believe the returns always outweigh the

risks.

__12. I believe I can make a quick killing in the stock

market.

__13. I am actively involved in my investment decisions.

__14. I avoid bad debt.


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__15. My passive income far exceeds my expenses.__16. My principles for investments seldom vary.

__17. My money works hard for me.

__18. I am a good steward of the material goods given me.

__19. I am creating a substantial legacy for my loved ones.

__20. My companies provide jobs for thousands of people.

Now, lets take a look at your answers. If you answered

true to any of these numbers, check your level of investor

and your corresponding grade range provided below:

If you checked

these numbers Grade

Nos. 1-2 50-60

Nos. 3-7 61-70

Nos. 8-9 71-74

Nos. 10-12 75Barely passing (pasang awa)

Nos. 13-14 76-85

Nos. 15-17 86-95

Nos. 18-20 95-100

Why a grading system? Well, you know how grade

Grow Rich, Pinoy!


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conscious we Pinoys are. Compare these with your academicgrades and see how you fare. It may jolt you perhaps into

seeing how lowthe correlation between academic grades and

nancial literacy grades are.

The Level 0 Pinoy Investor (50%-60%)

Procopio has zero money to invest. By the end of each

month, he has spent everything he made, or worse, he has

spent more than he has earned.

Sure, Procopio is a minimum wage earner who is

struggling to make ends meet while providing for a

growing family.

But Ponce, a young graduate who just entered the work

force and joined a call center is in the same boat. He makes

good money but nds none left at the end of each month.

But would you believe that Percival, who earns

P100,000 a month is also in the same boat as Procopio andPonce? Why? Because like Procopio and Ponce, Percival

also spends more that he earns each month. Financially,

their grade is 50-60%.

Sad to say, most adult Pinoys over 60% of them

actually fall into the same category as Procopio, Ponce and

Percival. They have money (sometimes lots of it), but have


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nothing to invest at the end of each month. Their nancialscore? 50%.Bagsak.


These Pinoys are the borrowers.

Take Margie.

Margie looks rich. She has nice clothes and a classy

BMW. She lives in a Makati Condo. But in truth, Margie

lives on borrowed money. She is buried in debt. She does

not use debt to buy assets that will give her income. Rather

she uses debt to fund a lifestyle that generates negative

rather than positive cash ow. Her house of cards can

collapse at any time.

Sure, Margie has a nice paying job at Makati that gives

her the credit to fund her lifestyle. Margie does not stop

at borrowing money via credit card. She also loans cash

from her relatives. Her idea of nancial sophistication isto borrow from one pocket to pay a debt in another. She is

forever juggling funds around. She lives her nancial life

in daily stress, hoping and praying everything will turn out

OK.

Margie says You have to have faith. But Margie has

done nothing to build a solid nancial foundation. Its all

Grow Rich, Pinoy!


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faith and no action. And what does the Good Book say?Faith without action is dead.

While she has some assets, in truth, her level of debt is

too high. For the most part, she does not control her cash

ow. She simply lets it ow, mostly out rather than in.

Life inRich Dadsterms is full of doodads(expenses

that do not bring in money). Doodads are accumulated

through Margies favorite past time shopping or

malling paid for by the ever-present credit card.

When the credit card bill comes, which gure does

Margie pay? She pays what the bill points her to (nicely

highlighted by the bank, of course) theminimum

balance.See how helpful banks can be?

As a result, Margie ends up carrying a huge interest

load (something like 36% per annum) on the unpaid

balance. Margie scores 61%-70% in her nancial report

card.


These Pinoys are the savers.

Pia puts aside money regularly. Pia puts the money in

the bank and it earns interest through the money market or

through some special promo of the bank.


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Pias biggest joy is the security she feels from havingmoney in the bank. But she has a sneaking suspicion that her

savings give a negative return. The bank offers a 3% interest

on time deposits and 1% interest on savings. But ination

is higher than 7%, plus she is taxed on the interest earnings.

Still, she refuses to leave the comfort zone of bank-promoted

returns.Basta bangko, nakasandal ako sa pader (So long as

it is a bank, I am secure), she thinks.

Some savers like Pia, dont even bring their money to the

bank. They hide it under the bed, in the mattress, in a coconut

shell, in a bamboo piggy bank, the arinola,wherever.

Their savings are used to buy things in the future. A

piano, a tricycle, a car, some jewelry, or they simply save

for an emergency.In effect, they save to consume or for an

emergency, but not to invest.

Still, Pia the Saver is better than Margie the Borrower.

Pia has something rather than nothing. The problem is thatsomething is not growing and in effect, is growing negatively.

Meaning her savings are actually growing less and less. In

time, unless she acts, her savings get gradually depleted, and

she will be left with nothing. Pias nancial report card score

is 71%-74%.Bagsak pa rin.

Grow Rich, Pinoy!


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The Level 3 Pinoy Investor (75%)These Pinoys are the Big Dogs.

Ramon is an example. Ramon likes to talk big but in truth

he takes a passive approach to investing.

In the board game Cashow 101, Ramon is the Big Dog.

Ramon looks and sounds smart because he barks out nancial

terms such as warrants, margins, puts, calls and options. But

Ramon really doesnt have adequate knowledge about these

techniques.

A key giveaway is he does not have any principles or rules

of investing. Ramon buys high on impulse and sell low in a

panic. Ramon is a sitting duck for aggressive brokers or real

estate agents.

Generally speaking, big dogs like Ramon come across as

intelligent people. But in truth, they are nancially illiterate.

Salita ng salita pero wala namang mapakita(They talk and

talk but have nothing to show for it). They have big hats butno cattle, as they say in Texas or Batangas. Ramon scores

75%. Pasang awa.

There are three categories of Big Dogs. Those who say:

1. I have delegated it to others.

2. It cant be done.

3. Searching for the Holy Grail.


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I Have Delegated It to Others

Noel is an intelligent person who has convinced

himself that he does not understand money and never

will. Noel makes the following type of comments to

show how smart he is.

My stock broker picks all my investments and she is

a pro.

I have a great nancial planner.

I have the best nancial advisor in town. I dont

need to understand everything that is going on. Hes a

great guy.

The government (through my SSS) will take care of

me in my old age.

My friend Pedro is a great insurance agent. He

handles everything for me.

The HRD department at work handles our pension

fund. It will be just ne.Due to his beliefs, Noel has very little idea where his

money is invested in or why. Noel is the type of investor

who likes talking big. Yet he blindly follows the market

like sheep and then squeals (a lot like a pig) before

running to get slaughtered.

Grow Rich, Pinoy!


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It Cant be DoneAida delights in proving to others that getting better

returns than bank rates isnt possible. She whines and

complains about missing out on an investment opportunity

as if some barrier other than her own mind is to blame.

There is also Virginia the Cynic who says, Ay,

magkaka-problema yan. Di ka babayaran ng tenants

(Youre going to have a problem there. The tenants

wont pay you). How can you make money out of that?

Siguradong matatalo ka! (Youll surely lose!) If the

returns on bank foreclosed properties are so good, why

didnt the banks do that themselves?

Once in a while they are right in their dire prediction of

disaster. This gives credence to their belief and so they say,

You see, I told you it would be bad. So you should never

venture out. Its too risky. Even when the opportunity is

already there staring you in the eye, they kill your dreams.Virginia and Aida are the Dreamslayers. Listening to

them, you will become as poor as they are. Youll wallow

in the same misery and scarcity theyre in.

In truth, Virginia and Aida are cowards. Often

vocal, they are quick to try to bring others down to their

level. Because they are afraid and unwilling to gain the


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knowledge they need to invest successfully. They chooseinstead to shoot down and criticize others in an attempt to

make themselves, and their beliefs about investing, right.

Everybody else is wrong.

My friend, spend as little time as possible discussing

money or investments with these people. When they see

you moving forward, their natural tendency is to put you

down and try to convince you of all of the reasons why

it cant be done. These are the people who, we Filipinos

say, have a crab mentality. Rather than pushing you up

to succeed, they delight in pulling you down.

If your spouse or signicant other happens to be one

of these people, please dont argue with him or her. Dont

ght them. Just leave them to think theyre right in their

own mind for the time being. Save your energy.

As for you, go on out there and become a successful

investor.When you are in a position to show them the money,

maybe then they will begin to see things your way. Again

though, if your positive results fuel negativity on their

part, dont waste your time arguing. Focus your energy on

becoming even more successful. Napoleon Hill, author of

Think and Grow Rich,calls this transmutation.

Grow Rich, Pinoy!


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Bottom line, avoid these it-cant-be-done dreamslayersat all costs. Focus instead on the opportunities that abound

that can propel you forward to becoming successful. Be

open, however, to constructive criticism. People who ght

you this way are your best allies. How can you distinguish

dreamslayers from constructive critics?

Searching for the Holy Grail

Enrique is this kind of investor. He is always trying

to make it big. As a result he strikes out in a big way.

When asked how he is doing, he will always state that he

is about even or a little bit up. The truth is, hes lost

money many times and often in huge amounts.

Always searching for the Holy Grail in entirely the

wrong place, these big dogs run around so fast that their

inner abilities and powers of independent thought cannot

catch up. They would do well to learn from Dr. Van K.Tharp who teaches that people make money by nding

themselves, achieving their potential, and getting in tune

with themselves so that they can follow the ow of the

market.

Good investors are not gamblers. In fact, they are risk-

adverse people.


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They know how to minimize risk and increase thepossibility of return. This doesnt mean they dont

make mistakes; but should they lose, they have already

minimized the loss.

The Level 4 Investor (76%-85%)

Helen is the Automatic Investor who has learned a

simple system on how to be rich. Her nancial report card

score is 76% to 85%.

According to Bo Sanchez, these Pinoy Automatic

Investors may well be those who have reached the

Promised Land. Theyre no longer getting manna in the

desert but are reaping the bounty of the Promised Land,

says Bo. They have sown and therefore theyre now able to

reap.

They pray and they willingly put in the work needed

to succeed. Grace does build on nature. Faith coupled withaction equals success.

John Burley, author of The Secrets of the Rich, says,

When people reach this level, their investment success is

assured.

Why? Because they are actively involved in their

investment decisions. To hell with what the broker says.

Grow Rich, Pinoy!


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Helen follows her own judgment and not the brokers. Moreoften than not, Helens calls are better than theirs.

Helen has written a long-term plan that will enable

her to reach her nancial objectives. The plan contains the

following elements: she pays herself rst and she re-invests

her investment returns.

Helen receives Level 4 investment returns of 15% a

year or more; she is disciplined in executing her plan. She is

nancially literate and responsible; and she avoids bad debt

and is not averse to taking advantage of good debt.

Helens investment plan is steady and reliable, like a Swiss

watch. In fact, its boring because its simple, repetitive and

steady. Her sound investment plans avoid the reworks and

the dramatics which are good for the movies but not so good

for the income statement or the balance sheet.

Among investors like Helen are the Pinoys who, month

after month, collect royalties (from their songs, for example),dividend payments (from stocks) or rental income from

properties.

These are the Pinoy investors who have gone past the pull

of gravity (i.e. poverty). While theyre not yet in the fast track,

theyve already broken through the poverty barrier and are on

the way to nancial freedom.


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The Level 5 Pinoy Investor (86%-95%)These Pinoys are the Sophisticated Investors. Theyre no

longer affected by the pull of the poverty gravity and have

reached the fast track. Their nancial report card shows a

score of 86% to 95%.

Susan is an example of a Level 5 investor. Susan

continues to build her wealth by making money work for

her. Her main focus is on increasing her assets and thus

her cash ow. She is very clear on her principles and rules

for investing. She may invest in real estate, businesses

or stocks, or any combination thereof. Susans default

investment vehicle may vary, but her principles or rules

seldom do.

Susan has mastered her inner life. She has character,

discipline, work ethics and play ethics. She has grappled

with her fears and can stare them down. She has a rhythm

and balance in her life. She is no longer driven by theexternal so she doesnt burn out.

How often have we heard the story of the man who wins

the Lotto jackpot.

Biglang yaman! Overnight, he becomes a multi-

millionaire. He becomes a different person, he spends wildly.

Pretty soon, he spends all of it and hes poor again.

Grow Rich, Pinoy!


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Will Manny Pacquiao fall into this category after he haspassed his prime as a boxer? The answer lies in his ability to

grow in character as he grows in wealth.

Jim Rohn says it well, The greatest value in life is not

what we get. The greatest value in life is what we become.

Challenging Pacquiao to a Fight

While Pacquiao is currently able to knock out the best

of the boxers in his division, he needs to be just as strong to

steward (exercise duciary responsibility) the wealth hes

amassing with his wins. Why? Because his internal character

muscles have to be properly developed as well. As he builds

up his boxing skills, he needs to grow in his inner character

to keep pace with his wealth. Otherwise, as Bo Sanchez says,

his psychological wallet stays small. And he will behave in

line with it. Rich now. Poor later (sometimes sooner).

But when youve mastered yourself and you have theinternal under control, you dont get knocked out. No matter

what punches are thrown at you internally, character-wise.

You come out better, wiser, stronger.

Steve Jobs was kicked out of the company he founded:

Apple. Instead of letting it take him down, he used the

experience to come back up stronger, humbler and


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wiser. He developed Pixar and Next and regained controlof Apple. More recently, he launched the iPod, which is

revolutionizing the music industry. Talk about making a

comeback and growing bigger as a human being!

For the Sophisticated Investors, the smooth ow of

their inner life and outer life is evident in their investment

results. Their investments create more money for their

businesses. They experience the velocity of money,

although not yet at the pace of the Level 6 Investor.

As John Burley says, Rich people work hard to have

their money work hard, while poor and middle-class people

work hard for money.

Very few Pinoys reach this level of being truly rich.

But, for those who have, their stories are worth telling and

listening to.

Who do you know that are Level 5 Investors?Often

they are the next-door millionaires who look so ordinaryand drab but who are quietly and steadily building their

assets. Who are these Pinoys? It could be the hardware

vendor at the street corner in Banawe. Or your sukiat the

wet market. Or that childhood friend you thought would

never amount to anything like the story of Jing Olivares in

chapter 8.

Grow Rich, Pinoy!


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Bellum and Doreen Tan from Singapore, who representRich DadAsia, claim to be Level 5 Investors since they

have more than enough passive income from real estate

holdings in Singapore, Australia and Thailand. They (and

Robert Kiyosaki) belong to the initial investor group in

a gold mine in China, which has since made a successful

IPO. Therefore, their capital has already multiplied many

times over. Now, Bellum and Doreen can use their time

to spread the gospel of nancial literacy by promoting the

game Cashow 101 all over Asia (in Malaysia, Singapore,

Philippines, Indonesia, India, China and Australia.)


These are the Pinoy capitalists the movers and

shakers of the business world locally and internationally.

Their scores in the nancial report card of life? 96 to 100%.

For example, Forbesmagazine (March 2006) listedLucio Tan, Henry Sy, Jaime Zobel de Ayala and John

Gokongwei among the top billionaires of the world. These

Pinoy magnates are motivated by the desire to be capitalists

and to create a legacy even while theyre alive.

John Burley wrote, Bottom line, the capitalist not

only creates large amounts of wealth, they invariably also


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create vast legacies of innovation, efciency, economicprosperity, employment opportunity and philanthropy and

thereby greatly increase the standard of living for hundreds

of millions of people throughout the world every year.

Aside from those that Forbes mentioned, other Pinoys who

fall in this category include Jollibees Tony Tan Caktiong,

Metrobanks George Ty, plastic king William Gatchalian,

and Coring Ramos of National Bookstore. Steadily,

through their businesses and foundations (like the Ayala

Foundation, Metrobank Foundation, Lucio Tan Foundation,

and Gokongwei Brothers Foundations), lives are being

touched.

Abroad, the Rockefellers, the Carnegies, Bill Gates,

Michael Dell, Ted Turner, Rupert Murdoch and Warren

Buffett are in a class of their own. Having made so much

money that they could never spend a fraction of it in their

lifetimes, many of them are giving away fortunes to charity.They believe that by accelerating giving and doling out

large sums, they have a better chance of effecting change.

Last year, Bill and Melinda Gates gave their $3 billion

dividends from Microsoft Corp. to their foundation to be

spent on health, education and information access.

Philanthropist Andrew Carnegie made so much money

Grow Rich, Pinoy!


34/59


in the rst half of his life that he couldnt spend it fastenough in the second half for his foundation to spend,

building the libraries and educational initiatives he supports

all over the US. The velocity of money he generated on the

earning side was so fast that he could barely keep up with

the spending side.

I have so much money coming in, I cant spend it fast

enough.

What a nice problem to have!

The Question

Finally, let me ask you, Do you want to become

the next great Pinoy capitalist? Are you willing to ght

poverty big time? What price are you willing to pay in

terms of time, energy, and sacrice?

That is what a capitalist does. Thats their legacy.

If you want to rise to the challenge, your questionwould be:How do I start?

Begin by becoming a Level 4 investor. When you

get there, you can set your target at becoming a Level 5

investor. From that vantage point, with preparation, hard

work and luck, you become a Level 6 investor the next

Pinoy capitalist.


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34

So how do I become a Level 4 investor, you ask. Therst step is to honestly discern what level youre presently

in. Next, determine what you need to become a Level 4

investor. What do you need to change? What do you need

to develop? What do you need to set aside?

Commit to whatever it takes to get there. Then act.In

real estate. In building businesses. Or in stocks.Find your

default vehicle of choice and move forward from there.

Most of us are in Levels 0, 1, 2 or 3. Time to take stock

and change.

Some are in Level 4 or even Level 5. Kudos to you sirs,

whoever and wherever you are. Being aware is the rst

step. Now plan and work at your plan.

As you move, write to me at thinkrichpinoy@gmail.

com.Together, we can work to raise the nancial literacy

of the Filipino so she can get a better grade in her nancial

report card.Now lets work on those things in your head that keep

you from actually thinking rich, Pinoy.

Grow Rich, Pinoy!


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35

CHAPTER 1

Its All in Your Head

Until he was 13, taipan John Gokongwei enjoyed a

privileged lifestyle as the son of a rich man. He went

to Cebus best school, lived in a big house and got free

entrance to the Vision,1the largest movie house in Cebu

which his father owned.But then his father died and the family became poor

and had to split up. His mother returned to China, taking

his ve siblings because it was cheaper to live there. John

1

Quotes from John Gokongwei in this chapter come from http://www.webphil.com/philip-pineentrepreneur-mrjohngokongwei.htm (accessed November 15, 2006) or seeBiz News

Asia, vol 4 no 30, Aug 14-21, 2006.


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36 Grow Rich, Pinoy!

Gokongwei was placed in the care of his grand uncle,Manuel Gotianuy, who put him through school.

Two years later, World War II came to the Philippines

and the young Gokongwei found himself out in the streets.

His grand uncle could no longer see him through because

they lost everything. But so did everybody.

Mr. Gokongwei, giving the Commencement Address at

Ateneo de Manila University in March 2004, recalled, War was

the great equalizer. In that setting, anyone who was willing

to size up the situation, use his wits and work hard could

make it!

The young Gokongwei had to nd a way to support

himself and his family.

You would hardly think today that John Gokongwei of

the Robinson group found himself in the same x that many

Pinoys are in today. But he did and look where he is now.

The 5/7 Program

Whether consciously or not, Gokongwei followed a

simple framework of action to amass his wealth. I stumbled

into this framework after immersing myself in Kiyosakis

books starting withRich Dad, Poor Dad,studying stories

of Pinoys who made it big like John Gokongwei, and


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37

reecting on my own experience of success and failure. Icall the framework Larrys 5/7 program.

Larrys 5/7 program for making massive income

through real estate foreclosures in the Philippines and

providing housing for our kababayan:

P T L F A(thats the 5)

Larrys Seven Steps(thats the 7)

Both are linked by the letter A.

The letters P T L F A stand for:

Plan

Team

Locate

FinanceAct (Carry out Larrys 7 steps)

So theres the framework. Youve got to have a plan,

youve got to have a team, you must gure out the location

where you want to work, you have to work out your

nances.



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When you have these gured out you act.The time frame can be: daily, weekly, monthly or

yearly.

Make a Plan

The plan is not a complicated big business plan. Its as

simple as starting by buying four small houses (could be

townhouses, apartments or duplexes) and converting them

to one big hotel (or bigger apartment units or multiple

condo units) just like in the game, Monopoly.

Or, in the case of John Gokongwei, he became a market

vendor. Gokongwei describes that time: It was every man

for himself, and I had to nd a way to support myself and

my family. I decided to be a market vendor. Why? Because

it was something that a 15-year-old boy in short pants could

do.

The young Gokongwei had a bicycle which he loadedup with thread, soap and candles. At 5 a.m., he pedaled 30

minutes to the market outside the city, rented a stall, laid

out his goods on a small table and started selling P20 of

goods every day.

He recalled, Sixty-three years ago, it was enough to

support my family. And it left me enough to plow back


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39

into my small but growing business.Today, we know that Gokongweis business spans

nine core businesses: retailing, real estate, publishing,

petrochemicals, textiles, banking, food manufacturing,

airlines and telecoms.

But he started it all with a simple plan by becoming

a market vendor. Its the same thing for the rest of us,

whether its real-life bank foreclosed property or the

games Cashow 101 or Monopoly.

How do you win in Monopoly? You have to get those

houses. And when you have four houses, you can replace

them and buy a big hotel.

In our context (bank foreclosed properties), we

start with small deals, like a duplex, two-three-or-four

condominiums, ve adjacent townhouses or four-or-ve

door apartments. You get a number of those and generate

passive income of P5,000 a month, P10,000 a month,P20,000 a month per property.

Your plan can be: I will acquire two properties a year

for the next 10 years so that I can generate P100,000 in

passive income monthly for the next 10 years.

Suppose you get your rst property and make a

mistake and earn maybe only P100 a month or you have



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negative income. If you dont have a plan, youll quit.Youll say its too much trouble for too little money.

But if you have a plan, you wont quit. Youll say,

Wait a minute. Thats just the rst property. My plan is

two per year for the next 10 years. So lets go on to my

second property.

Losers quit. Winners never do. They just move

on, learning from each

experience. And if they have

a daily journal to record their

experience, learning becomes

tangible.

You learn a lot in your

rst purchase. By the time

you hit your third, fourth, fth

property, youre ying. Youre

slowly becoming an expert.I didnt have a plan. All I knew was that I wanted

passive income, which I learned about from the network

marketing business, Skybiz. I started buying property after

three months of failure. I didnt even know how many

properties I wanted to get. By the end of the rst two years,

I had more than a dozen properties. Yet, I wouldnt be able

You must build

a team of trusted

specialists. Choose

professionals whoare not only experts

in their areas but are

themselves investors in

their own right.


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41

to tell you if I was doing well then because I didnt have aplan.

Youve got to have a plan and it has to be simple. It will

be your yardstick. Plan! And hopefully you check it out

with someone whos a more successful investor than you.

Build a Team

Next, you must have a team. You need a real estate

broker who provides you with properties. You need

a handyman who repairs the properties. You need an

accountant who prepares the nancial statements which

you need and which you present to the banks. You need

a lawyer to handle potential defaults, and an insurance

person to protect you and your properties. You need a

banker from whom you can borrow money and who can

give you an idea of how money works. And you need a

property manager to manage your growing portfolio ofreal estate assets.

You must build a team of trusted specialists people

who understand what you want and can move at your

speed. It doesnt happen overnight. Choose professionals

who are not only experts in their areas but are themselves

investors in their own right.



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As you build your team, you might have to get ridof your old friends, especially if they pull you down and

discourage you. You cant do that, Larry, or You will

never be able to succeed. You can still socialize with

them but they wont be crucial to your team. In effect,

consciously build a team of investor professionals who will

support you with a can-do mind set.

The young Gokongwei set up his own team of people

he could trust and work with. In his own words:

After the war, I had saved up P50,000. That was

when you could buy a chicken for 20 centavos and a car

for P2,000. I was 19 years old. Now, I had enough money

to bring my family home from China. Once they were all

here, they helped me expand our trading business to include

imports.

Gokongwei and his siblings imported whatever war-

torn Philippines needed, including used clothing and textileremnants. After gaining more experience and building

his reputation, he borrowed money from the bank and

went into manufacturing. Blend 45 was their rst branded

hit. With their prots, they launched Jack and Jill food

products. Now their many businesses include Cebu Pacic

Air and Sun Cellular.


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43

Defne Your LocationThird, dene your location. Ask yourself, Where am I

going to locate?

Even before he brought his family back from China,

the young Gokongwei made his rst big decision about

location. As the youngest vendor in the market in Cebu,

he could move faster, stay under the sun more and keep

selling longer than everyone else. So he soon had some

savings.

He shared, When I had enough money and more

condence, I decided to travel to Manila from Cebu to

sell all kinds of goods like rubber tires. Instead of my

bike, I now traveled on abatel a boat so small that on

windless days, we would just oat there. On bad days, the

trip could take two weeks!

Gokongwei recalled, During one trip, our batelsank!

We would have all perished in the sea, had it not been formy inventory of tires. The viajeroswere happy because

my tires saved their lives, and I was happy because the

viajeros,by hanging on to them, saved my tires. On those

long and lonely trips, I had to entertain myself with

books, like Gone with the Wind.

The young Gokongwei recognized that Manila was



45/59


themarketplace then and moved his base to Manila.Doubtless, over the years, he made other crucial decisions

like where to locate his malls, for instance.

When I rst started with bank foreclosed properties,

I was strike anywhere. San Pedro, Marilao, Cubao. Of

course, I could justify that they were all in Metro Manila.

But, ideally, if you

could have your properties

within a certain radius from

your home, it would be so

convenient. You could be

jogging around in that radius

look for properties that are

sitting there, both foreclosed

and for sale. That would be

your diamond in the rough.

When I started out I violated this rule and paid theprice. For example, my property in Marilao required me to

visit every week for four months just to make sure I could

meet prospective buyers and close deals. Aside from travel

time because of the distance, there was the Manila trafc to

contend with.

Sometimes I deliberately violate my rule of distance.

The best place to

do a deal is close to

home. If you cant do

deals where you live,

moving wont help. Ifyou can do deals where

you live, no reason you

cant do it anywhere.


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45

For example, I purchased a property in Tagaytay because Idid not mind traveling there every week. I loved the drive and

drinking coffee from the veranda at Breakfast at Antonios

which overlooks Taal Lake. It was my weekly Artists Date

with myself. It was relaxing, a way to love myself and move

the business forward in one motion. Thats my kind of life

balance. Work and play in one smooth uninterrupted motion.

So, you have to gure out your location. You start in your

area, then work around your city, then the Philippines, then

you can go abroad also. The best place to do a deal is close

to home. If you cant do deals where you live, moving wont

help. If you can do deals where you live, no reason you cant

do it anywhere like Australia, for example? My dream is

to take what I learn in Manila and do it in another country and

succeed. Think big, Pinoy.

Figure Out Your FinancesFourth, you have to gure out your nances.

You dont need money of your own to make money but

youve got to know where to get the money. And you need to

know the source of money before you need the nancing.

When I talk to people now, I describe the property and say

that the ROI is 40%. They respond, I want a piece of that



47/59


action. So I ask, How much do you want to invest? Theyanswer, Can I put in P500,000? Another said, Can I put in

P2 million?

The best time to look for

investors is when you dont

need the money. Because people

feel it the desperation of

someone trying to make a deal.

Its human nature to doubt you

and say, Naku,he needs the

money!Delikado!He might run

away with my money.

Thats just the way people are. So I suggest that you locate

the funds before you actually need the money. Your sources can

be friends, relatives, banks, people who are willing to lend to

you.

Gokongwei shared, When we had shown success in thesmaller businesses, we were able to raise money in the capital

markets through IPOs (Initial Public Offerings) and bond

offerings and then get into more complex, capital-intensive

enterprises. We did it slow, but sure.

With all his millions, Gokongwei today does not need

to use his own money to build his businesses. He goes to the

If you expect to

know all the answers

before you begin, youwill end up stuck.

Perfectionism leads

to paralysis. Action

always beats inaction.


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47

capital markets and, in effect, uses other peoples money(OPMs).

Does the P T L F A framework apply to other

people, like Steven Jobs of Apple or Tony Tan Caktiong

of Jollibee? Does it apply to going after bank foreclosed

properties? Take a look at the following matrix and ll in

the blanks for your own business.

John

Gokongwei

Steven

Jobs

Larry

Gamboa

Tony Tan

Caktiong

You

(Fill

in the

blanks)

PLAN Manufacturing Apple

ComputerBusiness

Bank

ForeclosedProperty

Food Retail

Franchising

TEAM His Family Woziack Family, Trace

Trajano & Bo

Sanchez

Family

LOCATE Cebu to

Manila

Silicon

Valley

Metro Manila Nationwide

FINANCE SavedP50,000.00

IPOApple

10% down FranchiseFee

ACT Built 8

More Core

Businesses

Pixar,

Next,

iPod

ESTI

(Larrys

Seven Steps

to Success)

Franchise

Jollibee,

Chow

King, etc.



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Now Get Going!So youve got a plan, a team, the location you want and

nancing. Now its time for action!

Here are ve points to remember: learn the basics,

decide what you want out of your deals, develop your

expertise gradually, work from home, and learn your

lessons well.

Learn the Basics

You have to learn the basics which Ive already covered

in Chapter 7 of Think Rich, Pinoy! Let me summarize them

here for you:

Larrys Seven Steps to Success

1. Own your dream.

2. List down the properties you want to get.

3. Call to inquire.4. Visit the property.

5. Learn nancial (and computer) literacy.

6. Prepare and submit that offer to buy.

7. Sharpen the saw and have fun.


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49

Decide What You Want from Your DealsOnce you have the basics in place, you need to nd

what works best for you. What do you want from your

deals?

Is it cash fow?This means you are not after capital

appreciation which involves buying low and selling high.

What you want is steady monthly income money

owing into your pocket every month for 10 to 15 years.

For example, if you generate P2,000 per month in

passive income from a rent-to-own property, that would

give you P24,000 a year for the next decade or so. Thats

money owing into your pocket even as you sleep.

Is it buy and hold?This is the Philippine model. My

mom, Isabel, provided for our family using this. She got a

piece of land, for example, Ayala Alabang, built a house on

it (with swimming pool, of course). Then she rented it out

(the swimming pool fetched a premium). Then she movedon to another property. She demolished the structure on

a prime piece of property we owned and built a six-story

building on it. Then she rented it out, collecting rental

income from each property.

Again, you have created an asset that gives you passive

income. You are no longer working for money; money is



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working for you. You now have the freedom to do what youwish.

Is it quick cash?You buy low and sell high, a practice

also known as ipping. Some folks never put out cash. They

simply take out an option on a piece of property, advertise

and sell before the option period is up. They simply pocket

the difference between the buying price and the selling price

and move on to the next deal.

For example, Dinna

Revilla found a foreclosed

property that had a cell site

which generated rental income.

She bid for the property and

won. Then she sold the rights

to an interested buyer and she

earned P300,000 from the

deal. The title to the propertynever passed through her name but went straight to the

buyer. Dinna simply ipped the property.

Develop Your Expertise Gradually

Dont expect to be an expert before you begin. Do the

gures for potential target properties until you nd a property

The cost of

education is always

cheaper than the priceof ignorance. Or to put

it bluntly, If you think

education is expensive,

try ignorance.


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51

that makes nancial sense. Make an offer then move on tothe next property until you have a pipeline of offers brewing.

Odds are one will click. And before you know it, youre

making a down payment (usually 10%) and taking control of

a property. You then turn around and x it up then lease it out

on a rent or rent-to-own basis. You have become an investor.

If you expect to know all the answers before you begin,

you will end up stuck. Perfectionism leads to paralysis.

Action always beats inaction.

I receive e-mails asking such detailed questions that I

get the impression the person is caught in analysis paralysis.

They have so many questions oating around in their mind

(like the spaghetti thinker in chapter 4) that they never get

to act and move towards achieving their goal. They think

themselves into paralysis.

Work from HomeUnless you already have an existing ofce thats being

successfully funded by another of your businesses, choose

to work from home. You dont need a large investment and

you dont need to pay a huge franchise fee. And every day is

a joy. You can literally tiptoe (or dance, if you prefer) your

way to work.



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Ive tried being an employee and enjoyed it. This waswhen I worked for Proctor & Gamble in Cincinnati while

studying at the University of Michigan. They volunteered

to pay for my shipping expense if I would work for them

at Proctor & Gamble Philippines, so I continued to be an

employee, earning a steady income. I enjoyed the prestige

of working for a multinational giant. The experience

trained and disciplined me to think, write and talk

business the P&G way.

Next, I was hired as a Professor for the Asian Institute

of Management. How prestigious! I could sense the envy

of my family and friends. Galing talaga ni Larry AIM

professor.

Unfortunately, I was miserable. I could not put a nger

on why. I thought it might be the dog-eat-dog atmosphere of

the business school. I preferred cooperation to competition. I

tried to learn the case method but it wouldnt click.Looking back, I now believe I felt miserable as an

AIM professor because while I had the academic

credentials (I had a PhD from the University of Michigan

Business School), I did not have the hands-on experience

of actually starting a business, running it or of being an

investor. I had no successes and no failures to share. And


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53

here I was a professor of business kuno. I felt I was beinga hypocrite. I became conscious of my incompetence.

Starting out on my own, I rented an ofce in Mabini. I

got stuck paying rent during a downturn in the economy.

I had to re everybody and cut my costs. I started to work

from home. You cannot imagine how much I saved in

overhead. And I even got to charge myself rent! In the

United States, if you work from home, there are IRS rules.

Youve got to have a corner specically for the thing.

Youve got to have a job description. And expenses, like

the portion for the rent for that space, are deductible.

Later, as a self-employed joint venture partner of

SyCip Gorres Velayo & Co. (SGV) and Development

Dimensions Asean International (DDAI), I lived the

corporate life, going to the tall skyscraper at Makati to my

ofce at SGV.

For 10 years, I managed the DDAI joint venture, on aneight-to-ve schedule every workday of the week. I was a

co-owner of the company (together with Washington Sycip

and Bill Byham). I looked good, but the bottomline was

that I was in Kiyosakis S quadrant I was self-employed.

At times, when meeting with Bill Byham, I felt very much

like an employee.



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This was proven when I decided to quit as managingdirector of DDAI. Bill Byham required that I sell my

30% equity share in the company. And he told me this in

no uncertain terms. Rather than ght him and make a big

issue, I decided to get out. This, in effect, closed a possible

opportunity from moving to the B quadrant and becoming a

business owner.

Through all of these transitions from employee to self-

employed to budding business owner and now investor,

nothing beats the experience of working from home. I love

getting up early and starting work at 4:00 a.m. or 6:00 a.m.

or whatever time I want to begin. Then I put on my trunks

and go for a swim at the clubhouse whenever it suits me.

Or jump into the car and go boxing at Ringside. Or, I just

drink a glass of iced tea and read one of the books I am

currently immersed in (I enjoy reading two or more books

at the same time). Or I can go back to sleep. Or take theother half of the day off after I feel I have put in few solid

hours of work.

Under these conditions, I wake up raring to go. I cant

wait to engage in my passion. Investing, writing and

sharing. Sure, its work. But to me its also play. And I keep

learning and seeing new angles to the same thing. I journal.


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55

I do my daily checklist. I am on re even as the day is justabout to start.

Its a joy to wake up each day in this my ideal

lifestyle.

Learn Your Lessons Well

In this business, you can choose to enroll in the

University of Prior Learning or the School of Hard

Knocks. Choose your wild.

In the School of Hard Knocks, you make your

mistakes and hopefully learn from them. Theres no need

to reinvent the wheel.

Or, you attend the University of Prior Learning.

There, the only people who are qualied to teach are

those who have gone before you and paved the way for

you. Its not at all academic; its based on experience.

You learn from other peoples experiences and mistakes.Thats cheaper than making the mistakes yourself instead

of reinventing the wheel. The cost of education is always

cheaper than the price of ignorance. Or, to put it bluntly,

If you think education is expensive, try ignorance.

So I am more than happy to pay for a seminar like

the two-day business seminar ofRich Dad which I



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attended in Singapore. Learning from someone likeRobert Kiyosaki who has been there and done it

and failed and succeeded helps me move forward in

my own business while minimizing mistakes (due to

ignorance).

In choosing which seminar to attend, heres a tip. Askyourself, Who am I listening to? Never take nancial

advice from someone who isnt making several times

your income. For example, I get concerned when I see

professors in our so-called top schools like U.P., La Salle

or Ateneo teach investing when they themselves are not

investors. Or teaching business when they have not run

Me withRich Dadauthor Robert Kiyosaki.


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57

a business. They have not been through the School ofHard Knocks and graduated. And they call themselves

professors?

Of course, it would be wonderful if the person is a

successful investor and, at the same time, has the gift of

teaching others to be successful investors too. In short,

they areboth school-smart and street-smart.

Once you nd a suitable role model, then, with his

or her help, nd out what makes the most money for you

and give it your laser-beam focus. Right now, for me,

its cash ow from bank foreclosed real estate. I see

opportunities to take courses on investing in the stock

market (under David Novac) or on sales (under Tom

Hopkins), and have decided on taking one course yearly

that would sharpen my skill as an investor. Meanwhile,

I continue learning by reading, listening to tapes (or

CD-ROMs) like the set The Art of Exceptional Livingby Jim Rohn. These keep me on my toes, giving me an

awareness of what I have yet to learn about investing.

Recently, I had the privilege of becoming the local

mentor of someone enrolled in theRich Dadcoaching

program. I learn as the person learns. It is super

synergistic.



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58

So there you have it: How to get started.But one day it hit me. The problem facing Pinoys is

not so much getting started. It is overcoming blocks that

stop us from getting started.

Just what are those blocks that hinder Pinoysfrom

becoming rich?

Grow Rich, Pinoy!

growrich pinoy

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