Tuesday, September 30, 2008

Financial Literacy

Not too long ago, I wrote an article entitled The Sentiments of a Young Filipino MD and was surprised to find my email inbox flooded the next day with numerous comments from colleagues sharing the same sentiments, affirming the experience and even adding stories of their own, some of which are quite alarming while others are downright hilarious. Not too few even suggested that I had it published in a newspaper. I had my misgivings about publication because not all will view those sentiments with empathy as evidenced by some replies I got from non-MDs. We cannot really expect them to fully understand the predicaments of today’s doctors because not everyone knows where we are coming from and what we are going through. Some will criticize our sentiments as nothing out of the ordinary because even nurses and teachers suffer the same predicament. Like I said not everybody knows where we are coming from. Perhaps in the future, I might write an article entitled, “The Sentiments of a Young Filipino MD – understanding where we are coming from” just to provide some interesting insights about our journey as doctors.

I know that we all have our frustrations and dreams regarding the healthcare system in the Philippines. Some frustrations are even borne out of legislations and bills that may potentially harm doctors by treating the act of prescribing a drug as criminal offense akin to murder or rape. No wonder some doctors opt to just leave the country and dream their dreams abroad. But for now, I felt compelled to take a pro-active stance after having read an email advocating all doctors to leave the country or taking Fridays strike until the government shapes up. That was not my intention when I forwarded my article nor did I advocate charging of high PFs to patients. I was simply describing a reality and creating awareness. But now having done that, I feel that I owe it to my colleagues to create a stand regarding the issue. What am I advocating? It's something very basic but not included in our medical curriculum... financial literacy. Those of you who already took on this road, you can stop reading now and get on to your next email. (That is why I recommend this sequel only for those aged 30 to 40-something because I presume that we are in that age bracket who will benefit greatly from this recommendation). But for those of you who have not heard of the phrase ''Pay Yourself First'' and “Don’t Work for Money, let Money Work for You” and those who have no idea of how to start an emergency and a retirement fund for yourself ... read on.

The path to my pursuit for financial literacy started 3 years ago when I and my husband encountered Robert Kiyosaki's book ''Rich Dad, Poor Dad'' and realized that we were totally financially ignorant. We considered it a great blessing that our enlightenment began just when we started with our practice, because that was when real money came in.

I think a lot of our colleagues can relate to this general tendency regarding money matters --- having been deprived of financial ''independence'' for too long, you sometimes get carried away with the first few PFs you receive. Now, that new gadget, that new techie product, that new car, that changes in wardrobe, that condo unit suddenly became attainable. The number of years in medical training can actually be likened to fasting. When we finally start earning, the fasting is over. It's feasting time! There's just too much catching up to do. When our former high school classmates are already climbing the ladder of success in their respective careers; when they are halfway-through their mortgages, we've only just begun. It can sometimes get heady.

Robert Kiyosaki's book helped me and my husband keep our feet planted on the ground. We hungered for financial literacy. We read his other books and local books which we could relate to, like Colayco's book, ''Pera mo, Palaguin mo.'' These books introduced us to a different world, an unknown world to most young doctors. We became more sensitive to opportunities which were not perceived by others. We learned to pay ourselves first. So that after 2 years, we were able to set up a corporation in partnership with 3 other relatives who had no idea of what we were selling but who believed in us anyway. As we were struggling with the business start up, our hunger for financial literacy became even more insatiable. We were like sponges absorbing new material. While it was anesthetizing to read medically-related material as though the years spent reading these have caused us indigestion, these novel topics just passively diffused into our system, from high concentration to low concentration.

The financial nuggets that we learned, we made applicable to our situation as doctors. The secret formula was pay God first, pay yourself next then the rest is for everything else.

Whenever we receive our PFs, 10% is put in an envelope marked 'tithing', 20% for personal savings and the remaining 70% for all other expenses. We have a budgeted amount every month for basic expenses. Once paid any further income is for our wants. We also made sure that we pay all credit card expenses every month because we consider interests incurred from unpaid credit card bill as highway robbery. The interest will surely eat a hole in your pocket and before you know it, the interest will compound and you find yourself in a deep abyss of financial mess. A very effective technique we do is to have another envelope marked 'credit payment' where we keep all monthly credit card receipts. We put the cash payment at the end of the day or week in the same envelope and mark the receipt “OK”. This cash goes to a separate account all meant for credit payment. We consider that money as already ''spent money''. At the end of the month, all receipts are essentially paid off, so when the statement arrives, no matter what the amount I am confident that we have the cash for it in the bank. So why use credit card at all when we actually have the cash to pay for it? --- Simply for the mileage points, for convenience of not having to bring big cash, and for rebates.

Some people would protest about tithing. Actually I am sharing this formula because it works. Why? Because when you give, you are essentially telling the universe that you have more than enough. You know the saying, “For those who have more, more will be given. For those who have less, even what he has will be taken away.” When you become a good steward of money then you are entrusted with more. A plus point for tithing is that when this is given to legitimate institutions like UNICEF or Gawad Kalinga it becomes tax-deductible. This principle of tithing, you will soon realize is affirmed in many financial books… from Kiyosaki to even Bo Sanchez's book ''The 8 Secrets of the Truly Rich''. I can just surmise that perhaps God is looking at how we treat money when He entrusts us with a little amount. If He sees that He can make us good channels for material wealth, then He entrusts us with more. You will learn that the wealthiest people in the world are also the great philanthropists of our times. For more wisdom on this, you can read other books like, “Becoming a Millionaire God’s Way”, “The Millionaire of Nazareth” and “The Seven Secrets of Bible-Made Millionaires”.

Viewed this way, then you know that it is not bad to be wealthy. Bo Sanchez so strongly declared in his Truly Rich Seminar, that money may not be the most important thing in this world but it definitely AFFECTS the most important thing in this world. The abundance or lack of it can affect your life and the lives of those around you. This is actually one of the reasons, among others, why a lot of doctors are leaving the country. So, if you want to truly help, you must have the means to do so because even religious institutions do rely on generous donors in order to fulfill their ministry. This is why Gawad Kalinga is such a big success because the poor people not just heard the Good News; they actually experienced the Good News. It is just a pity that an internal rift is occurring within its leadership because some still tend to separate body and spirit.

Before I get side-tracked, let me get back to where I left off… financial literacy, tithing and paying yourself first. How many among us systematically save as soon as we receive our PFs. When I say, systematically… meaning, setting aside 20% of the PF for savings and investments? I know some friends who do save but do not know where to invest their savings. As soon as the word investment is heard, they immediately think of stocks and business ventures. Did you know that these investments are actually classified under high risks investments and are not supposed to be undertaken until you have secured the other major concerns of your life like life insurance, 3-6 months’ worth of expenses as emergency fund and paper assets that beat inflation? How many among us knows the difference between UITFs offered by the bank and mutual funds offered by investment companies? With these types of investments, you will also be asked where you would like to put your money. Is it in bond, balance or equity funds?

These investment instruments can potentially give you higher yield for your money… higher than time deposit which you can use to build your retirement fund. One important rule in investment is, “Do not invest in something that you do not understand”. There is also such a thing as a risk-reward trade-off. Meaning the higher the potential gain, the higher will be the risk. No risk, no gain. There is no such thing in the financial world as a risk-free investment. You are living in fantasy land. But you can minimize your risk and maximize your gain by knowing what you are getting yourself into. Educate yourself so you can take on calculated risks in your investments. Read books. Attend seminars. I actually took the seminar and exam on mutual fund of an investment company just to understand what it was all about because I heard that it can actually give you as much as 40% yield in a year. That is a whole lot more than the 1% interest rate in a regular savings account and 6% interest rate in a time deposit!

The quest for financial literacy also opened my eyes to what is actually happening in our country and that is when I actually started to hope once more for our country. When you start to hear facts from businessmen and leaders, when they start talking about economic growth despite their lack of faith in the current leadership, and when objective trends & numbers point out to a strong Philippines despite subjective media criticisms and chaotic politics, then you begin to see and truly see that something is happening here which will eventually be difficult to ignore. We question the strength of peso against the dollars and attribute it not to a strengthening domestic economy but to massive dollar influx from OFWs. Is it too difficult to admit that despite our misgivings, our economy is already starting to turn around? Whenever I tell my colleagues that in the year 2007, the peso is the highest performing currency in the whole of Asia, they look at me in disbelief. But that is true and it is all over the news!
The first sector who felt the impact is the business and financial sector and the last will be the poor & marginalized. Therefore the real progress will only be felt some few years from now... perhaps even during the term of the next president and therefore these misgivings will not be dispelled until a few more years. I began to see because I allowed myself to be exposed to the business & financial world. And I began to hope for our country. Slowly my desire to leave the country dissipated. Suddenly I wanted to be a part of this growth and even contribute to its growth. Suddenly I saw how the US economy is growing weaker and how our own economy is getting stronger. How many among you are in a panic about what to do with your dollars simply because it has now devaluated? That is an investment we made and we took on the currency risk. That risk has materialized. Now, we are being advised to keep our dollar investments to only 10% of our whole assets so as not to lose more. It is being suggested that if the US economy goes into recession and we continue to enjoy our economic growth… a $1=P20 is not too impossible to happen in the near future… that is…. if things will continue to move in the same direction.

We are actually in the more exciting times of our country’s growth. We should open our eyes to new avenues offered before us. With financial literacy, you will begin to see wide arrays of investment opportunities. I learned that if I don't have the guts to start a business, I can actually invest in the business that I believe in through the stock market... That if I buy a share of one company, say Jollibee, I can actually claim to be part-owner of it. Don’t get into this though, unless you have also educated yourself about it! If you cannot stomach the volatility of the stock market, then there is the option of investing in mutual funds where you can still indirectly invest in stocks and have the convenience of a fund manager working for you full time and for a less capital requirement. My investment company accepts investments as low as P 10,000 and a top up investment of P5,000. There are many investments companies out there! You can make your own research at http://www.icap.com.ph/ and see for yourself the many avenues for investments. Put your money in the companies who have been in the industry for quite a while. Do not be easily convinced by sales talk of sales agents. Many will claim to be the best performing in the market. Look for consistency and stability because in mutual funds, you are talking about long term investments not some short term supernatural growths. Some may give reports of high yield, but look into where they invest your money. If the company puts your money in some speculative and risky investments in order to obtain high yields, there is also a bigger chance that they are exposing your money to greater risk of losing in the market. As I said, the risk-reward trade off will always be operational in any form of investment. So you want to make sure your profile as an investor matches that of the company because again, if you are looking into investment for your retirement, you want your investment company to still be there standing and performing 20 years from now. Through these investments you can earn way above the rate of inflation and start saving for your retirement now so you won't have to worry about the lack of pension program for doctors.

But of course having read the book of Kiyosaki, my husband and I have already taken the road less traveled by doctors. We are slowly learning the ropes of being entrepreneurs. An important rule again is knowledge regarding the business. Don't start opening a restaurant if you have no idea how it works because statistics would point a success ratio of 1:100. You might as well have invested in stocks. You can increase your chance for success in business through franchising, or lower your capitalization through networking. A word about network marketing, though, since a lot of bogus companies has abused the word. Here is how to detect a pyramiding scam from that of a legitimate networking business. Most pyramiding scams will make you earn from recruiting people from down lines ALONE! It usually requires high start up investment. You will immediately earn your check from your first few recruits alone. Next, look into the products. Are the prices for the products commensurate to its quality? Most scams would have products that are of questionable quality that cannot justify how expensive it is being sold for. Search the internet if the products are listed among the top 5 in its industry globally. Most of the legitimate network businesses have been there for more than 5 or 10 years and they usually produce their own products utilizing their own research and manufacturing facilities to maintain superior quality. Networking business, if done professionally with a legitimate company will make you fast track the achievement of your goal towards passive income and financial freedom.
But once you earn that added income you should know how to reinvest. I have encountered many colleagues who look for avenues to earn money but I only know a few who look for avenues where to park their hard-earned money to maximize gain. It seems that the only place we know where to park our money is in banks. Young doctors, you need to educate yourself financially. Read books, find a mentor, and expand your horizon. You can start by grabbing Bo Sanchez’s 8 Secrets of the Truly Rich, Robert Kiyosaki’s Rich Dad, Poor Dad or Colayco’s Pera Mo, Palaguin Mo.

We worry about brain-drain. I think financial literacy can be one of the potential solutions for this gnawing issue. Attend seminars, join a legitimate business network which educates members, not just make salesmen out of them, enroll in programs of your interest. I am just citing some avenues that we doctors can use to educate ourselves. There are many such avenues out there. Invest in it. Invest in yourself through new knowledge. I actually took a course on Financial Planning (so I can give more sound financial advice to my colleagues and surprisingly… found my passion in it!) I know of some friends who are getting their MBAs in Ateneo. Right now, my husband and I are taking a mini-MBA course in AIM. If you are not contented with what you have, diversify! Look for your passion! You can be a doctor and more….

The end point and vision is to have a passive income that is greater than our active income so we won't care whether our patient can or will pay us because we can afford to treat medicine as our vocation rather than our profession. We can then maximize our service without causing disservice to our dependents and our family. Then perhaps, you will cease regretting that you did not join showbusiness because you can ACTUALLY be a millionaire in the Philippines without charging your patients too much or leaving the country to work abroad.
Posted in a Yahoo email October 7, 2007

The Sentiments of a Young Filipino MD

I have wondered so many times why a lot of successful doctors are leaving the country. Although I am still young in this profession and have not had that great desire to leave this country -- not just yet -- I feel worried that foregoing the opportunity to migrate abroad might turn out to be a decision that I will later regret. I'd often think, What did these older doctors experience later in their practices which made them decide to abandon it altogether?

Just tonight, I caught a glimpse of the answer to my question. I thought it was just a search for a greener pasture, a desire to give a better future for their children, or disgust for the present political climate in our country, but I think it is more than that. It is something more basic, something closer to the core of our being.

Just tonight, as I was busy making plans for the coming Conferment Ceremony and surfed the web for packages for video and photo coverages, I remembered the stupendous amount that the movie stars charge for their services. I heard that for one young actor, half day of picture shoots would amount to P80,000. Then I remembered those times when we did operations for patients for the same duration and I don't get half as much for professional fees. And I am dealing with LIVES here! Precious lives! Then I remembered how my husband would try to package professional fees so that it becomes very affordable for patients. And sometimes, he even feels cheated when he sees that the cellphones of the relatives of the patient cost three times the professional fee that he is charging! Now, looking at the packages of these videos and photos which costs three to four times our professional fees, I begin to wonder. Are we shortchanging ourselves as doctors?

I remembered that conversation I had with a businessman who said, "You, doctors are in a very noble profession, that is why it is sometimes disheartening when other doctors charge so much for their professional fees."

For some reason, something inside me rebelled about that idea. Something inside me was angered. Here I am in front of a man who charges quite a hefty sum for recreational activities and feels that it is justified since these people have the money to spend for such hobbies and yet points an accusing finger to us, doctors, when we charge the same amount for taking care of their health, of their lives. Did it not ever occur to him that just like him, we have our families to feed? Just like him, we have children to send to school? Just like him, we have rents and amortizations to pay? Just like him, we need financial security which we can hope to depend on when we can no longer work? But unlike him, we have to spend more than 20 years in school, being dependent on our parents, not being able to earn a decent income until we are in our late 30s or even 40s, spend gruelling hours trying to figure out the human body and even have to push marriage and building a family at a much later point in our lives. We have sacrificed so much for this noble profession because deep in us, there is that desire to serve others. Yet, should this sacrifice be bled out of us?

When we sent our application to our respective medical schools some years ago, it was not unusual to be asked, “Why are you taking up medicine?” It may sound like a cliché, one that will make our classmates snicker when we answered, "I wanted to become a doctor to serve others." Yet, we know deep in us, at the core of our being that it is a reason which we can never deny. Of course there are other much baser needs that crop up with this fundamental reason. Along the way, the much baser reasons become predominant and then we become practical beings. We realize that unlike those who join the religious congregation in order to serve others, we do not have a community who will support us. We have to support ourselves and our families. It is then, that the pressure of the material world sets in, because we are but mere mortals who also have to satisfy our basic needs for food, clothing and shelter, and on top of that, education, financial security and retirement funds. We, then realize that we have allowed ourselves to be burdened with so much pressure in our lives, with stress which is inherent in our profession because we deal with lives, that even as we go home, we still think of our patients or what's wrong with them. How come our interventions are not working. Have we made the wrong diagnosis? And, of course, if we could not figure out the problem then the patients and their relatives will again burden us with their expectations, which sometimes prove too much since, as I said, we are just mere mortals and not God. If something goes wrong, the hungry media and some unscrupulous lawyers are just too eager to point a finger to the "erring" doctor. But when we do get to succeed in our mission of providing healing to their ailing bodies, and we charge them with our professional fees, we could not charge too much because it would be unethical. Since we did something noble, we should not be paid too much lest the nobleness fades. But for those who feel that they are justified in asking for the amount that they charge, thinking that what can be more precious in a person's life but life itself, they receive the brunt of their patient's disgust. The patient gets shocked and feels resentment towards his doctor. All of a sudden, glares of accusation are thrown at him, obviously bearing the message, “How dare you, doctor, enrich yourself out of other people's sufferings!” Then he is confronted with market-price bargaining resembling that found in Divisoria, which makes him feel degraded and unappreciated.

That leads me back to my nostalgic thoughts of the professional fees of some movie stars who just needed to host an affair for one hour and gets paid P150,000. Not so for the cardiologist who took care of the patient for a week, the surgeon who operated for more than one hour, or for the anesthesiologist who paralyzed and ventilated the patient so that the surgery can be performed on the patient -- which of course, is just "putting the patient to sleep". How difficult and complicated can that be? No, we cannot charge as much as those movie stars. If only we could, a lot of us would be millionaires by now. Don’t get me wrong, though. I have nothing against movie stars. I am just saying that they are lucky that society is more tolerant of them charging huge professional fees.

Now, I no longer wonder why doctors leave the country. There is just too much pressure placed on their shoulders, that at one point in their busy, successful career, they just wanted to be out. To breathe some fresh air. To slow down. To be out of the rat race.To have that lifestyle with the promise of more quality in their lives.

Besides, there is no pension plan for doctors here. You can still find doctors way beyond their retirement years walking along the corridors of the hospitals, with silver hairs, or worst, faltering gaits. For some, it is a matter of survival. You stop working, you stop earning. You stop earning, you stop living the lifestyle that you got used to. For others, retirement is simply not an option. They have been in the profession for too long. To be uprooted from this environment is like uprooting a plant and letting it die. I have seen how some deteriorated and wilted like a plant just after retirement. They had their entire lives revolving around their noble profession that they find themselves useless without it. Others are forced into retirement by some disabling disease like stroke, myocardial infarction, or Alzheimer's. Then depression sets in. Perhaps this is the scenario that some doctors wanted to avoid in their future lives, that is why they are taking control of it while they still can.

For me, there is no judgment here, because I think I now caught a glimpse of what's going on in these doctor's heads. And perhaps even in my own head? My apologies to those whose heads do not contain these thoughts.

Nagsesenti lang po, kasi nagsisisi akong di ako nag-artista!

(Translation: I am merely venting because I regret not pursuing a career in the movie industry!)