PART 3

• Wealth creation


  The process of developing your net worth through long-term asset ownership which takes time and positioning
• Wealth


  Having the money to fund your needs at any given time
• Wealth does not necessarily mean having millions and millions of pesos. Being wealthy simply means having the financial resources to support your chosen lifestyle
• Wealth is not restricted only to money and possessions. It manifests as plenitude in various and many forms in our life and in nature
• Wealth can be in the form of

  Love, compassion, goodness, strength, energy, knowledge and wisdom
• Keys to wealth creation

  1. Anticipate your future needs

  2. Plan to have the resources to meet your needs

  3. Understand how you can adjust your needs
• Wealth generation


  • It is a life-long process
  • It is something that is built over time
  • It is planned for, periodically adjusted and executed with a firm hand
  • It needs clarity of thought and vision
  • It needs you to be financially literate, that is, to know and understand is what you want for yourself and how you will match your financial resources to meet your future wants
• Fundamental financial life stages

  • Start-up stage
  • Build-up stage
  • Asset allocation stage
  • Retirement stage
• Start-up stage


  The only source of income is your salary or earnings provided by your active participation in terms of time and talent
• Build-up stage


  You now have some income coming from savings and investments, which contribute about at least 20% of your total income
• Asset allocation stage


  At least a portion (30-60%) of your income is being provided by your savings and investments
• Retirement stage


  The income from your savings and investments is your only source to support your living expenses
• Things that help you create wealth

  • Ambition
  • Interests
  • Resources
  • Education
  • Appetite for Risk
  • Grit
• Modes for acquiring wealth

  • Employment
  • Savings and Time Deposits
  • Stocks
  • Treasury Bills/Bonds and Corporate Bonds
  • Unit Investment Trust Fund/Mutual Funds
  • Business or Entrepreneurship
• Employment


  Stable Income, Less Risk of Financial Loss, Career or Professional Development
• Savings and Time Deposits

  Very small return (0.25-2.5%), but risk-resistant. Deposits of not more than 500,000 pesos are insured
• Stocks


  Investors get a portion of the firm's earnings in the form of cash dividends, but only after interest payments to creditors, taxes, and all other financial obligations have been paid. Investors earn by selling stocks at a price that is higher than the price at which the shares were bought
• Treasury Bills, Treasury Bonds and Corporate Bonds


  Treasury bills or T-bills are short-term (one year or less, 91 days at 4%) debt instruments offered by the government to investors. Treasury securities (including Treasury bonds which are long-term, or up to 25 years at 10%) are considered "risk-free" only in the sense that it is impossible for the government to not be able to pay what it owes. Corporate bonds are riskier than government securities because it is entirely possible for corporate issuers to default on their debt and thus provide higher returns (7-10%) than Treasury securities
• Unit Investment Trust Fund (UITF), or Mutual Fund


  A type of investment where the money of several investors are pooled and invested in an actively managed portfolio of bank deposits, government securities, bonds, stocks, and other marketable instruments. Investors participate by buying "shares" or units of the fund at the current market value
• Wealth creation cycle


  • Wealth creation
  • Wealth preservation
  • Wealth distribution
• Wealth creation


  We are generally young, ambitious and confident in our ability to succeed. Our appetite for risk is bigger, too. Many business owners have mortgaged their homes, tapped lines of credit, and otherwise put it all on the line to take things to the next level
• Wealth preservation


  This time we balance what we have, what we do with it and how we keep it safe. Here, you may leverage properties you hold in an effort to buy more properties that can appreciate in value and generate more cash flow. "Pay" for a higher level of safety. An important aspect of successful wealth preservation is portfolio balance, both in terms of the real estate own and your other investments
• Wealth distribution


  Plan for passing along what we have accumulated in our lifetime. There's also the personal side of the equation, which brings in family dynamics and the relationships with business partners, lenders, shareholders and others, all of whom have their own plans for the assets that flow from our estates. Those receiving portions of our estate will know what they are getting, when they will get it and have a clear understanding of their role and responsibility as it relates to each asset they receive
• Core components of wealth creation

  • Planning for wealth creation
  • Wealth creation strategies
  • Wealth creation tips
• How to start the wealth planning process

  1. Increase the income you already have

  2. Add a second or multiple other sources of income

  3. Invest for income and long-term capital appreciation

  4. Budgeting effectively to live financially free
• Wealth creation strategy


  Become an owner. By becoming an owner, you are able to grow your wealth while the underlying business/investment/entity grows. Yes, you can increase your income over time
• Ways to become an owner

  • Investments (stocks)
  • Real Estate / Hard Assets
  • Start a company
• Wealth creation tips


  • Wealth is a mindset
  • Don't flow with the prevailing financial tide
  • Wealth creation takes time
  • Make the wealth creation process fun
  • Set specific goals
  • Let money work for you
  • Read financial literature
  • Get a millionaire mentor
  • Avoid accumulating debt
  • Diversify
  • Avoid procrastination
  • Ensure your wealth
  • Ignore the Joneses