Paluwagan Investment Scheme

There is another form of paluwagan. Everyone will contribute monthly with a certain amount (it depends on the group how much the amount is ) then they will allow the member or other person. A referral with guarantee of the  member to make a loan with interest then every end of the year all the member can take their capital with interest. Thats what i experienced before

Thanks, that is what she described, somebody borrowing money, but surely even with a little bit of interest paid I do not see where she gets the figure of x3.

If you have to put money upfront do so with *extreme caution especially into anything that sounds too good to be true eg (x3)...I have even heard of fights/murders resulting to downline members who refuse to pay up their share after making the initial lump sum collection.
So I'd stay far away from any of these get rich quick schemes.
Omho

Is that 10% interest that is paid monthly or yearly?

Sounds like it may be a bit of a pyramid "investment", depending how it is set up.

I have attached some links below, also inputted some information about other lending and investment scheme's in the Philippines.

For me if it sounds to good to be true, it probably is to good to be true.

Be aware that even though your wife's may be a small scale investment/lending scheme that the Philippines government Security and Exchange Commission, is cracking down on non licensed scheme's.



As we are aware there are many 5/6 lenders here in the Philippines.  Who charge monthly interest of 6% for someone with a Government job, and 10% for someone without a government job, people would people there titles of there houses or land up as security and one missed payment means that the forfeit there house or land.



I live close to a city that was once called the Golden city, money everywhere, people were lining up in droves to contribute and draw out there "profits"  from "Kapea" (in think that is the correct spelling) people would drive miles to come and invest as the payouts were enormous.  It worked for about 18 months to 2 years then, the government closed it down, for understandable reason that the money being paid out was based on having needing new contributions by existing member and new members.  As such without new members or re-contributions of existing members the scheme would collapse.  As the there would be no money being paid out.  Once it was closed down, people lost all there invested money (it had to be closed down, other wise it the buble to burst would get bigger and bigger, and the impact on the people and the local community would have being devastating.

In regards to Paluwagan:

https://www.moneymax.ph/personal-financ … gan-system

Sorry a bit long winded, but i hope it helps, if YOU don't understand the investment don't invest with it, sadly the financially literacy of the Filipino's is limited, and they do or have little or no understanding about how investments/lending is structured.  Just look at the number of them who think that it is cheap to assume or borrow from the seller of a property in a subdivision, at crazy high interest rates.

PS  if your wife tells you not to worry ask her to express  0.25 at a fraction and a percentage, see what she say's.  I have spoken to teacher's here he cannot do that calculation.

Yup the "Kapa" investment scam was a good example that left millions high & dry.

Thank you all for the good advice, I am not myself considering joining such a scheme, it is something my girlfriend and her close family are doing. I have actually had a couple of other relationships with Filipino women and my current girlfriend is by far the most money conscience person I have met there. Unlike the other women I dated, she does plan for the future and has a good understanding of the importance of having some money tucked away for a rainy day. She also has a small store she runs with the help of her sister.

My ex in Davao invested 5K in something maybe like that, probably different. The money from a number of people was pooled and somebody was to invest it and make huge profits to be distributed--I forget how much exactly but I think it was 3-5x.

Of course, she never got any money back.

Generally she is financially savvy. She lends money to wives of OFWs at 10%/month (!!), and gets their ATM card and pw for security. So when the OFW's pay is deposited, she collects. Quite illegal, of course. But lucrative.

However, she was having some trouble collecting from a relative who borrowed without the ATM deal.

Yeh and there is where I see one major problem. I never borrow or buy from friends because if it goes wrong then the friendship me suffer.

That is an excellent policy. I never lend money I need to have repaid. So why am I lending all my girlfriends money?

Cherryann01 wrote:

Yeh and there is where I see one major problem. I never borrow or buy from friends because if it goes wrong then the friendship me suffer.

Wisdom bro.😀

It's all fun and games until someone takes the money ball and goes home.  It's a pyramid and from what I hear it starts off great until someone takes off with all of the money and people can't/won't pay when it is their turn.  When was the last time you dealt with 10-20 with money involved and everything went perfectly smooth?

bizwizard wrote:

That is an excellent policy. I never lend money I need to have repaid. So why am I lending all my girlfriends money?

Similar for me, I don't lend money, but I give money. I make it clear that it is a gift. If you can't afford to gift someone money, don't lend it.

Now the only exception is when my wife & I lived in Las Vegas. My wife loaned her Filipina friends money but took jewelry as collateral.

Now my wife has a lot of jewelry.

Cherryann01 wrote:

Can anybody please explain to me how Paluwagan works. My Filipino girlfriend is in a group who set up an account and for the life of me I can not understand it. She says that each member contributes an agreed amount each month and that money will be borrowed by somebody who then has to return it plus 10 percent in interest. She then goes on to say that in one years time your initial investment will be  x3.

Having a quick look on Google, I can see no mention of an interest at all, it simply says that each member will draw the value of the pot in tern so if there were 6 members the first would draw the value of the pot in the first month and the last in the sixth month. Meanwhile each member still pays in the agreed amount per month for the pot to grow.

I simply cannot see where any profit comes from.

The one with the x3 return is a scam. It's too good to be true. I think organizers of this type of scan use the term "paluwagan" for lack of a legit-sounding term for it. "Ponzi" and "pyramid" would be more appropriate terms for it. One of my employees joined, in spite of my and my other employees' warning that it's a scam, and lost 8,000 pesos.

The second one you searched on Google correctly describes what a "paluwagan" is. My employees sometimes set one up.  One way to look at it is this: the one who's first in line gets an interest free loan. The last gets back his / her non-interest-bearing savings. Sometimes, it is set up to help a co-worker who needs a loan right away, but would not want to go through a 5/6 lender.

If your wife has a Pag-IBIG membership, I would suggest doing some research on their savings plans. Deposit is guaranteed in its full amount by the government. Tax free. 5-6% interest which is better than any Philippine bank's time deposit current interest rate.

I haven't heared of "Paluwagan" in that situation, but from what you are saying it's possible it's a pyramid scam or coirrect.  It can be correct if the capital is lend out and paid "5-6" interest level monthly because then the capital invested in start will grow 9x in a year if lend out monthly all the time and paid in end of month.  So even more than 9x if paid back  part daily

. ..
KAPA scam was even registered at SEC as a business allowed to get investors from the public, but SEC warned for them long before the bubble bursted, so it was known it was a scam long time but people went on "investing" anyway!!!   It was a religious organisation behind it so when it got known it was a scam., they claimed the money was contributions to the religious organisation!!! The leaders lived posh by it...

bizwizard wrote:

She lends money to wives of OFWs at 10%/month (!!),

In Flipino messure 10 % per month is cheap       because the most common loan in Phils is "5-6"  ="Bombay"  =Borrow 5, pay 6 normaly in a month and in many cases they pay part every day so they don't even borrow the amount the whole month so the effective interest then is roughly 40 % per month!!!

. .
So the common interests in Phils are crazy high. Perhaps they can be depending of almost no Filipinos can count percent, not even some teachers!  so not odd few common Filipinos can...

@JC Rainbow

My wife's children did this in their businesses. They did the rotation each month for monthly loans. Sometimes they made good decisions and some times not so much, therefore paying back a large fee. Otherwise I think it was 10 or 20% interest.