What is "Paluwagan"?
Paluwagan is a Filipino term for a saving or investment method commonly practiced in the Philippines. Paluwagan comes from the root word "luwag" which means loose or allowance.
How does it work?
It starts with a group of people who will pool a fixed amount each week. This amount will be given to 1 member of the group and that will be his income from the paluwagan. On the next week, the group will be giving the same amount in the pool and this amount will be given to the next person on the list. How much you earn from the paluwagan depends in how many yo are in the group and how much you put in it each week. most of the time, the main person in-charge keeps track on who and when someone will be getting his share and will inform that person.
Is this a good investment option?
Some analysts or advisers might tell you that paluwagan isn't a good investment option since it doesn't really have a clear sense of the time value of money and, that because the pool will be given to different persons each week, it would seem that the first money will be benefitting the most.
But to me, I don't like to think of it as an investment because it's NOT! It won't be sufficient for you to finance your goals and if you only have a paluwagan as your investment then you've got to think of other ways to grow your money.
I like to think of it as more of a saving method than an investing one. The money you put on the pool will be keep for safekeeping and in a few weeks time it will be returned to you. If your give 100 pesos of 10 weeks in a paluwagan, you will be getting 1000 pesos on the 11th week. in that case, you don't really earn anything instead your only saved the 1000 pesos from getting used for you current whims and wants.
When should students join a paluwagan?
Paluwagans aren;t necessarily a bad thing, but what students should understand is that before joining anything that involves your finances, make sure that you have gather all the important details such as how much you will be needing to contribute and when or how you will be getting the income. The most important tip that I can give you is only join a paluwagan if you have SPARE MONEY or SPARE ALLOWANCE.
Don't join one just because everybody else is doing it. Join for the experience, yes, but don't venture on something that you can't commit to. Remember that this involves a group of people and they are dependent on your contribution as you are with theirs.
Disclaimer: This post is based on my options only. The images is from google and from a site called
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