So your goal to be an OFW is to buy a House?
If you ask a typical OFW what he would want to buy when he have money, the common answers would be House and Car.
Most people borrow money just to build their dream house. After the dream house, they will buy expensive appliances, big screen TV, sound systems – the list goes on and will be never ending expenses.
Sa liabilities lang napupunta ang pinaghirapan kapalit ng pagwowork ng ilang taon sa ibang bansa. The OFW then is trapped and forced to work overseas, specially if nag loan si OFW to build his house not to mention pa ung pinang bili ng appliances.
Once the OFW returns to Pinas after several years of paying utangs for the house and appliances and if he has no passive income. He may need to work again overseas or worst pag may emergency naibebenta pa nla ung bahay nla.
According to Uncle Robert Kiyosaki on his book Rich dad Poor Dad“Your house is a liability”.
But wait before we go there; can you define what is an asset and liability?
As per Kiyosaki, an asset is something that puts money in your pocket. A liability is something that takes money out of your pocket.
I have read Rich Dad, Poor Dad twice and it changed my financial perspective.
I love the idea of money working for me rather than me working for money.
Kiyosaki said, your house is a liability because it generates expenses.
There’s the mortgage you have to pay every month, property insurance, home repairs costs, maintenance, and property taxes.
It’s taking money out of your pocket, so it’s simply a liability.
Your house may be appreciating in value but that amount is not liquid and getting in your pocket in regular basis.
You won’t be able to access the appreciation value unless you sell the house. Question, are you planning to sell your house in the near future?
If no, then again it’s not an asset. A house can be an asset—if it generates an income regularly or in the near future.
Im not saying that buying a house is not important. We definitely need a shelter. what I’m only trying to say is a house is not an asset and don’t treat it as an investment unless you are planning to sell it or rent it out.
Maybe you are asking, So I am an OFW and have P600,000 budget to buy a house in our my province.
Where then can I put my hard earned money and make it work for me? What if i tell you that there is an investment vehicle that can give you 12% compound interest yearly.
If you invested your P600,000 supposedly for your house and leave it for 6 years, it could be P1,184,294
You read it right, it will be P1,184,294
|P600,000 for 6 years with 12% compound interest = P1,184,294|
You delay gratification and you can now buy a much more better house and probably invest the remaining amount to something else.
So is buying a House still your first goal as an OFW?
You can make money work for you instead of working for money.
You just have to know where to invest. there are a lot of investment vehicles to choose from.
You may check sample computations of compounded interest on my previous article:OFW Stories in Singapore (Part 1): Have you tried spending P200,000 in a day?
If you want to know more on how you can make your money grow and where to invest then subscribe to my blog Super OFW Investor. Feel free to share this article and comment below for any questions.