Why Invest?

Market upswings and good investment climate are not the only reasons to invest.

Ricky So

Market Pulse

THE LONG VIEW. Don't invest because of the market. Invest because you want to secure your future.

According to the World Bank, Philippines is poised to become one of the top 50 economies of the world by 2040.  Currently, it ranks at the upper 80-ish.  This has been the pronouncement of the world body many years ago citing the demographic advantage as one major factor that can sustain our economic progress that started more than a decade ago.  The average age of the country is about 24 years old.  Thereby, projecting the potential workforce and resources of our country in the years or even decades to come.  Perhaps, this has helped our country to be in the radar screens of foreign investors.  Certainly, it has already excited local businesses.  For one, SM plans to build five malls each year from a previous target of two.

But what is the significance of this piece of information for the local investors? Quite significant. More so, if the investment horizon is long-term and one understands the dynamics of the local economy. The World Bank cannot be wrong to make this positive projection of the local economy. Because for the economy to progress, it should have more businesses set up.  Hence, for the Philippines, manpower resources will be not be a major concern. Two, the Philippine economy is largely driven by personal consumption. So, a productive populace could fuel a consumerist economy like ours. This will place the economy in a virtuous cycle of productivity, growth, and prosperity.

Given such scenario, the need to invest (in the Philippines) is quite compelling.  The opportunities will be abound whether through the capital markets or setting up an enterprise.  The potential is vast.

However, local investors should not be blinded alone by this factual information and invest for the sole reason of taking advantage and making money.  A well informed investor should likewise take into account the ‘bigger’ reason/s why one is investing– i.e. to achieve financial goals.  For what will the gains provide an investor if he/she misses the achievement of a goal?

'While the impetus to save and invest is great. The temptation to spend earned income is much greater in our local setting. This is the reason, Philippines is known for its big malls as a matter of world record.'

One big goal anyone should have is a retirement fund or lifestyle. The goal is to have an adequate fund and desired lifestyle going thru retirement and old age. But this goal is not a popular one especially for the millennials of today. They are simply focused on making money and spending it at the same time, missing the big picture, in the process.  While the impetus to save and invest is great. The temptation to spend earned income is much greater in our local setting. This is the reason, Philippines is known for its big malls as a matter of world record. As of this writing, there are more malls set up than investment funds. More money goes to cosmetics, clothes, gadgets than to financial products.

Retirement planning is very important in an economy. It will provide a string of benefits for the country.  A population with high consciousness about retirement tend to be more progressive than one that is not. A country with high savings and investing rate would mean more capital for business and, therefore, more jobs as well.  It will create demand for investment products to accommodate the influx of capital, thus benefiting the financial sector. And with the bustling capital markets and financial sector, the government is likely to take in more revenues from taxes levied on the transactions, which can be used to create more social services for people. It’s a cycle where everyone wins.

Such an ideal sight. An envious case is that of South Korea, a nation of about 51 million people or about half of our number with a lot of mutual funds set up.  Currently there are 11,828 funds available. Whereas in the Philippines, we only have 60 mutual funds and about 150 UITFs offered in the market. Clearly, South Korea is much way ahead in this regard. Statistically, young Koreans have a high level of consciousness in preparing for their retirement. Citing a study by Credit Lyonnais many years ago, about 30% to 40% of young South Koreans, 30 years old and below, have a retirement fund set up.  At that time, their funds number about 6,000. 

Could we possibly learn from them? Why not? Such is a beautiful scenario—that upon old age, the Filipino investor is independent and financially capable of taking care of his/her self without the need of government welfare and familial dependence. In fact, one can be more capable in assisting others who may be in need of financial assistance and could mentor the young on their financial journey as well.

About the Author

RICKY SO is an independent financial adviser with more than 30 years’ experience in the financial services industry. He is currently the Chief Knowledge Officer for Investment Planning and Director of Wealth Management Center for Communications and Research, Inc. He has co-authored the book “Dare to Journey: The Path to Meaningful Wealth. He was a faculty for the RFP Philippines and has lectured Portfolio Management for Asian Institute of Management– EXCELL’s Strategic Investment Management Program. At present, he lectures for various learning organizations and conducts certification courses on Certified Investment Planner, Philippines (CIPP®)



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