One of my favorite subjects when I majored in AB Psychology was Sikolohiyang Pilipino (Filipino Psychology). This subject deals with the social dynamics why Filipinos are what they are. For example, it is so Filipino to have this attitude of 1. Having a sense of gratitude (“utang na loob”); 2. Our warm hospitality (I believe foreigners are impressed with our warm hospitality and that we can still manage to smile and even laugh in spite of the calamities that hit our country every so often.); 3. Bayanihan concept (closely resembles the teamwork concept but this bayanihan concept is cultural and deeper). Proof of this was the recent monsoon rains that beset our country. As there are positive sides to our culture, we Filipinos are not perfect and so, the other side of the coin is that there are a few “not-so-good” cultural traits that can be directly attributed to our pre-disposition to investing.
Going back, why are Filipinos prone to just save and not inclined to invest? For one, it is easier to just put money in banks and then when the need arises, they will just go over the counter or to any ATM to withdraw money. Maybe they thought investment is a complicated thing and that it is not liquid like insurance products. Another habit is that maybe in general, Filipinos associate investments with rich people and therefore entails huge capital before one could invest so instead of investing, they tend to put it off until they have acquired the required amount of money needed to invest. As a consequence, the little amount that they could save, they end up spending it. This is one example of the “manana” habit (procrastination) which they say, we Filipinos, have inherited from Spain when she ruled our country for more than 300 years.
Ironically, even if the rich have money, it is not easy to squeeze money from them to put into long term investments like mutual funds. Not all rich people do. And I can glean this from my own experience. Some of my clients who invested in real estate, do not necessarily invest in mutual funds, when they well can afford to, in spite of my “kakulitan” (nagging). And vice versa, some of my mutual fund clients do not invest in real estate. The latter is easier to accept and understand since mutual fund investors do not necessarily translate to real estate buyers given that you only require a small amount of money to invest but what baffles me sometimes are those clients who can afford to invest millions in real estate, new cars, the latest technology gadgets, but would rather not invest in mutual funds. Is it because they see investing as a form of gambling and that they do not want to risk their hard-earned money in gambling disguised as investing? The truth is, all investments have an inherent risk. Even buying real estate, cars are risky. When you buy real estate, all your money is divested into real assets and therefore are not liquid. So when you need the money esp. for emergency cases, you cannot dispose of your property quickly to get the needed amount. It takes time to sell. Another thing, when you buy a new car, it starts to depreciate a month after and over time, you cannot sell it at its original cost. It’s also a liability because you do not earn from it. Instead, it incurs additional expenses on your part by spending for its regular maintenance, not to mention, gas. What’s weird is that these same clients who can afford all these will tell me that “wala pa silang ipon” (they don’t have savings yet). Imagine that.
I tip my hats off to those Financial practitioners whose noble advocacy is to spread financial literacy to our “kababayan” (countrymen), OFWs (overseas Filipino workers) included, in the hope of spurring them to invest the right way and more importantly, to handle their finances in a more responsible and prudent way, so that it will keep them from making bad financial decisions.
Is changing the DepEd’s curriculum the cure to changing one’s culture when it comes to investing? How do we transform a generation? They say a generation covers a span of anywhere between 25 to 50 years or even a hundred years. My take is that 50 years is a good number to make up one’s generation. Having said that, it takes more than a college education to change the Filipinos’ attitude on investing. There are some financial seminars that will really inspire you right away that you are oozing with excitement and the next thing you know, you end up doing nothing. By ending up like this, you still hold on to status quo. Why is that? Is this what you call “ningas kugon”? This is another Filipino trait wherein one starts with something but does not finish the race and ends up quitting in the middle of the race.
So is this a cultural thing? Pwede. It may seem so. Let me point out a Bible verse that says, “Train a child in the way he should go and when he is old, he will not depart from it .”(Proverbs 22:6). I believe that this is one of the best antidote to this cultural practice where one will just save and not invest it. A similar scenario was shown in parable of the talents in the Bible (Matthew 25:14-30), where the Master entrusted his wealth to 3 of his servants. To one he entrusted 5 bags of gold; to another, 2 bags of gold and to the other, 1 bag of gold. Those who handled the 5 bags and 2 bags were able to double it when the master came back while the other one just kept the 1 bag of gold for fear of his master’s cruelty.
The reality is Investing also requires due diligence. Just like real estate. Nothing can beat the fundamental rules of Financial Planning when you know 1. Your investment objectives; 2. Risk appetites; 3. Financial position. Choose investments that match these criteria. And you can learn all these by attending financial education seminars.
Which brings me to my point: The right kind of education and discipline is the key before you can approach the practice of due diligence. And the best place to start it is at home. To the children, Parents, you need to inculcate the habit of saving and investing for long-term to your children. To the adults, just do it. It’s never too late anyway. Time is of the essence when it comes to investing. Filipinos need a paradigm shift to counter against the cultural roadblock. And when you have achieved this paradigm shift, the norm for the next generation is to prepare for long-term investments.
Direct your children onto the right path, and when they are older, they will not leave it. – Proverbs 22:6 (NLT)