Should You Immediately Grab an 8% Annual Return Investment Offer?

An OFW blog follower sought my opinion earlier today regarding a business proposal being offered to her and her friends by a person who claimed that he is expanding his fishpond business in the Philippines. While I do not have a complete background of the proposal I told her right away that she needs to consider a handful of things before saying yes to the offer.

She mentioned that the business proposal is that they are being promised to receive an 8% annual return or annuity for every P50,000 she and each of her friends will invest in the said fishpond business expansion. However, the P50,000 that each of them will invest shall be returned to them only on the third year of the business.

For most OFW’s, having a “small” business on the sides while they continue earning abroad is a very exciting idea, a dream even for some of them. Because they do not have the luxury and the physical presense of starting one in the Philippines immediately, partnering with relative or a friend or even an unknown person is perceived as the best option.

This is one of the reasons why many OFW’s fall victims to unscrupulous scammers and financially-irresponsible or untrained business partner.

How To Know If The Business Offer is Serious

During our previous webinars/online seminars with entrepreneur and finance blogger Fitz Villafuerte and business mentor/EntrepChamp Paulo Tibig, it has always been mentioned that one indication that that a business is serious one is if it has a clearly-defined business plan.

If someone offered you to become a partner of a starting or expanding business, ask if he or she has a documented business plan. Your initial discussion should focus on this very important aspect of the business.


A simple business plan should include the following details:

1) Mission-Vision-Values statements – You will know the direction of the business if this is explicitly written in the plan.

2) Executive Summary – This should tell you what the business is all about.

3) Business Description – The overview of the company’s industry and the business model should be elaborated here.

4) Organizational Structure – The list of officers, business structure, suppliers, partners, and their roles and responsibilities are illustrated here.

5) The Products and/or Services – These should be defined and how they are sourced, processed, manufactured, and delivered should be described.

6) Sales, Marketing & Distribution Plans – Plans on introducing the business to the market and how to sustain the business are mentioned here.

7) Financials and Strategy – This is one of the most important part of the business plan. Numbers such as the capital requirements, financial analyses, forecasts, the strategy that will be used, and a realistic view of how the business will perform should be presented comprehensively.

How To Know if it’s Legitimate?

If there is an investment opportunity being offered to you, ask yourself the following questions

  • Is the person known to you or in public? Have you checked his/her background and his reputation in that industry?
  • Is the investment opportunity registered and licensed in Philippine government institutions?
  • Have you compared the risks of accepting the offer with the potential rewards if you invested in it?
  • Do I understand the investment or the business?
  • If something went wrong in the business along the way, is there someone whom you can turn for help?

An 8% annual return may be good for the ears but the fact that your initial capital of P50,000 will not be returned until the third year of investment should be a warning sign already.

Paper assets and financial instruments (such as stocks, mutual funds, UITF’s, etc.) could possibly give an investor potential returns of 8% or even more per year without having to shell out P50,000 for the initial investment. However, as in business, an investor should always study about the investment vehicle of choice and plan out everything from the start.

Your noble objective of making your money grow is great. But we need to take extra precautions when entrusting our hard-earned money to someone or to a business that you are not familiar with.

It always pays to be informed.

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Join the OFW UsapangPiso Facebook Group and Forum to learn how to plan your finances the right way and how to grow your money in various financial instruments and investment vehicles such as stocks, mutual funds, UITF’s, bonds, money market, real estate, and others.

P.S. 1. Bro. Bo Sanchez has appointed me as a coach for our young and new investors at the TrulyRichClub social site. It’s a fun, learning family with the purpose of “helping good people become rich”. I’m inviting you to join the TrulyRichClub too and email me at if you have any questions. Click here to join!

P.S. 2. Randell Tiongson goes back to Dubai on March 23-24 for another no non sense personal finance learning series entitled “How To Become Dirham-Wiser and Peso-Wealthier”.  Please get in touch with Cherry Murillo or Normie Pascua. For registration and payments details, go here.

P.S. 3. Angat Pilipinas Coalition for Financial Literacy is conducting a FREE Basic Investing Seminar on March 22, 2013, 9AM-11Am at the AVR or Xavier University (Ateneo de Cagayan) in Cagayan de Oro City entitled “Mag-Invest Ta Bai’!”. It’s a first-come, first-served basis only so better go to the venue as early as possible. You will get to meet a celebrity finance blogger who has been actively supporting our financial literacy advocacy in the Philippines.