I recently saw an infogram stating that only 8% of Filipinos have some form of an investment like stocks, mutual funds, UITF or insurance. Although there has been some gains in the number of Filipinos who have begun investing, we are still way behind many other nations with regard to investing by its citizens.

The stock market, though volatile, has proven itself as a good way to build wealth for those who are investing in it. Investment instruments like mutual funds and UITF have made investing easier, more accessible and even more convenient to the Filipinos and the number of those invested remains to be dismal.

Why we do not invest

The most obvious reason for the low investing numbers is the low income of many of our citizens; the lack of spare cash makes investing impossible. What about those who are earning better or those who belong to the middle class? Studies shows that there are about 25.2% of the Filipino families belong to the ‘middle’ class and 0.1% belongs to the ‘upper’ class or a total of 25.3% and yet there are only 8% who invest. It seems safe to assume that about 16% of us who can invest don’t. So why are we not too keen of investing then? Most common reasons would be fear, ignorance, difficulty and inertia.

I asked my financial advocate friends on why they think Pinoys do not like to invest and these are what they said:

“Attitude and behavior. Delayed gratification isn’t easy for Filipinos. Most of us live ‘in the now rather than preparing for the future.” – Rex Mendoza, leading investment expert and President of Rampver Financials

 “Not educated enough in various investment tools – such as stocks, bonds, currencies and funds; scared to lose their hard earned salary to investments they’re not aware of.” – Rico Hizon, International News Anchor at BBC

 “Lack of financial literacy and could not figure out their own context.” – Francis J. Kong, leading inspirational guru and award winning-author

 “I think one reason Filipinos fail to invest is simply because of lack of awareness or lack of knowledge on investment options. Some simply haven’t heard of mutual funds or UITFs and other vehicles, while others may be aware of them but do not know much about them – how they work, how to buy them, etc, or even have the misconception that you need a lot of money to be able to invest.” – Riza Mantaring, CEO of Sun Life Financial

“Investing is not intuitive for us; it is not taught at home.” – Marvin Germo, leading stock market advocate

“No clear and defined goal: they have not yet identified which particular amount and goal they should earmark that investment for.” – Rienzie Biolena, finance and investment educator

“Small goals. Without big goals, the motivation to invest is not there.” – Carl Dy, property investing expert

 “Knowledge, access and the right mindset about ‘now vs. later’.” – Marvin Fausto, fund manager and investment expert

“Pinoys do not prioritize investing because they prioritize wants over needs, have too much debt, too many dependents and uncontrolled spending.” – Chinkee Tan, wealth coach and media personality

“People fail to invest in their future because they want to enjoy their money even when it is still small. Most cannot wait for the day when they have grown the little they have so that they can enjoy more.” – Dodong Cacanando, business speaker and best-selling author

 “Media and advertising focuses too much on FMCGs (fast moving consumer goods) and beauty products, unlike places like Singapore and the UK where there is so much awareness and advertising related to investing in financial intermediaries like pension funds, insurance companies and mutual funds.” Andrew Wolff, celebrity host and entrepreneur

In addition, I also posted in Facebook and Twitter this question: “in your opinion, what is the leading reasons why there are very few Filipinos who invest, aside from having no extra funds?”

Here are some of the their answers:

• Afraid to lose money
• Fear of scams
• Instant gratification
• Poor cash flow management
• Too much debt
• Current education system
• Demonization of money
• Dependence to family members
• No knowledge
• Investing is only for the rich
• They only want guaranteed returns
• Not really thinking about the future; poor planning
• Not in our culture
• Wrong priorities
• Not knowing where and how to invest
• Care-free attitude
• Lack of patience
• Family upbringing
• Lack of focus and discipline
• Wrong mindset

There are many reasons why we do not invest, some may even be valid ones. However, there are more reasons why we SHOULD invest. We need to build and prepare for our future and investing is paramount in that very important facet of our lives.

Financial education is important for all of us and should be the first step as we begin to invest so we can build our future today.

I am excited to announce that I have a new book on practical investing and it is titled “Build Your Future Today: a No Nonsense Guide to Investing“.

Question: I have been reading your articles and other posts about finance. While I find most of them very informative, I find them difficult to apply. How do I find the discipline to follow the rules that you, finance advocates, always talk about?-Joshua via Facebook

Answer: Let me start by saying this, “money is behavioral and not mechanical.” It is too challenging for us to follow the money “rules” because we think we can just flip a switch and be on our way like a computer program. The famous author Dave Ramsey said, “Money is 80 percent behavior and only 20 percent skill.” The struggle will always be about our behavior and how consistent we are with such behavior. The money “rules” may be very simple such as “do not spend more than what you earn,” “live below your means,” “invest early” and so on. However, simple is not the same as easy and therein lays our struggles.

Finance advocates can give ideas that seem very sound but can sometimes be impractical. For instance, you will hear us say, “do not drink expensive coffee, do not upgrade your smart phones etc.” They are logical ideas, but hey, where’s the fun in that? I am a father of four kids and I know how important rules are, without them our household will be in constant chaos but my wife and I also learned how to set rules, relax the rules and be flexible—in other words, we are trying to strike a balance. With regard to money matters, it is the same—balance is key.

Having a budget is very important, you will need to track and allocate what you should be spending on. One of the many reasons why people are in a financial mess is that they are unaware they are over-spending. By the time they realize they are, it may be too late. A budget tells you where money should go, not just where it went. Allocating your money is critical to you being able to achieve your financial goals.

However, your budget should not be too stringent that it does not allow ‘fun’ items. Some finance advocates will give you very strict recommended budgets that even many of them can’t follow themselves.

For instance, you might have heard or read experts telling you that you should not spend your 13th month pay on buying gifts and festivities and just save and invest all of them. While it is a good suggestion, it’s actually easier said than done. We are people and we need to have fun, removing it will make us feel money is a hard taskmaster and we will find ourselves rebelling.

How do you strike a balance then? Unfortunately, there are no hard and fast rules on this. You will have to experience trial and errors until you find a balance that works for you. If your budget is too stringent that you feel like you are missing out on many things, adjust your budget. When you look at your bank account and you get stressed because your funds are so small, adjust your budget.

Know your priorities, we should all be responsible about our future. You should not sacrifice long-term gains by enjoying short-term benefits. After several trials and errors, I am sure you will find a balance that will allow you to enjoy the fruits of your labor, without sacrificing a comfortable future. After finding that balance, you will still need to recalibrate it from time to time—that’s what life is all about.

Be part of the country’s most empowering investing conference – #iCon2017 this May 27, 2017 at the SMX Aura. Join me and the country’s leading experts and let us help you build your future! For details, visit www.bit.ly/ICON_2017

One my favorite definitions of investments is this – “The commitment of funds made in expectation of some positive rate of return. If the investment is properly undertaken, the return will be commensurate with the risk the investor assumes.”

Whenever people invest, their primary concern is almost always about return. While it is obvious that we should be concerned with returns as I have never met anyone who invested and expected no return. However, returns are not the only thing you need to be concerned with. Even prior to concerning yourself with returns, what you may want to look at first is the risk. After all, returns are, in a great way, a function of the risks that you take. Many people would want high returns but might overlook the inherent risks those returns will bring. One of Warren Buffet’s famous quotes says “Never test the depth of the river with both feet”, such a wise reminder.

Before committing yourself to any investment, it is important that you know what the risks are. To this date, the principle of risk and return trade off still holds true and time will not change that despite the ostentatious claims of some investment experts – ‘high risks, high returns; low risks, low returns.’

When you begin to chase returns, there is a high possibility to you may begin to be desensitized as to the risks that you take. The lure of big returns have fooled many unwise investors into losing more than their shirts, so to speak.

Go ahead and invest, it really is a wise thing to do… but make sure that as you invest, you fully understand that the risks that you are entering into, an those risks are acceptable to you. Further, ensure that your investment are always consistent with your investment objectives.

Craft a prudent investment strategy and do not chase returns, you made find yourself falling off a cliff.

Learn the proper way to invest at the country’s most empowering investment conference — #iCon2017 this May 27, 2017 at SMX Aura, Taguig City. This conference features me and my friends: Marvin Germo, Rex Mendoza, Rosemarie Rafael, David Leechiu, Carlo Ople and many more. Tickets are going very fast so go and book your seats at www.bit.ly/ICON_2017