Last Sunday, I asked my friend who was a businessman if he was still renting an apartment or if he had already bought a home for his family. He asked me if it was really a good idea to buy one, assuming he had the money to pay for the house in cash.
“You see, my Chinese friend pays P85,000 to rent a house in Greenmeadows and says it would be stupid for him to take out his P50 million in the bank to buy a house. He buys a house; his P50 million is gone,” says my friend.
“After all, he tells me, would anybody know that house is not mine?” he adds.
What the Chinese businessman does instead is to live on the earnings of P50 million, making sure that the cash remains intact. Cash is king for this guy.
Does the philosophy sound good to you? If you had P50 million, what would you do with it?
PS. What a nice problem to have, eh?
September 10th, 2008 at 1:26 pm
i dont know how much interest banks are giving nowadays but if the figures given by dann is true, i say i’ll go with dann. banks because i think its the safest venue for putting/placing your money. but then of course choose a well stable bank and not the smaller ones that tend to offer higher interest but lacks stability.
August 28th, 2008 at 10:27 pm
Renting at P85k/mo for a P50M house is a steal. Just do a simple math, at 6%interest rate, the P50M earns P3M/yr or P250k/mo, and you only pay P85k/mo in rent, a savings of P165k/mo. Its a smart move for the renter but not a smart move for the house owner.
August 28th, 2008 at 6:00 pm
I will create 3 basic pots:
1) 10% - cash accounts (CD, TD, etc)
2) 40% - fixed-income investment (bonds, money market, rent ) to support the first pot
3) 50% - growth investment (equities, real estate) to support first and second pots.
August 28th, 2008 at 11:34 am
people, please note that we don’t need to expose ourselves to high risks if we have more than enough moolah.. ofcourse prerogative nyo yun.
I’m just saying, for those of you who are new to personal finance, risk taking should be at par with your cash needs.. if you don’t have enough then you need to risk more to gain wealth..
if you have more than enough money (lets say sobra2x na ang 50mm), you can take it easy sa risk area.
August 28th, 2008 at 11:02 am
i know several of my friends with this setup.. their investment & business income pays for their expenses and savings
I am also a renter.. if i buy a house today, it will be a major portion of my net worth. I don’t think having such a big allocation tied to 1 entity is wise. imo lng.
another plus is, you dont have to pay for maintenance, RE taxes..
i wish someday sa hotel na kmi mag reside para full service galore. ^_^