What is the 'Pinoy style' in financial planning?


Posted at Jun 13 2015 11:18 AM | Updated as of Jun 13 2015 07:18 PM

MANILA – How do Filipinos plan financially for their future?

Chartered financial analyst Gavin Lee said the Filipino principles in financially planning are generally the same compared to other countries, and differ only in the tools or implementation of principles.

“For example, in developed countries, the investment policy statement would include investments in stocks outside their country,” Lee told ANC’s “On The Money.”

Lee said that in the Philippines, when people are investing in the stock market, they invest in local stocks.

They might find it difficult to invest outside the Philippines because it’s difficult to open an account with another broker abroad or the lack of familiarity with the foreign stock market, he added.

He also noted that Filipinos are more conservative when looking at risk, but greedy when looking at returns.

“People don’t seem to like the idea of losing money, which is why many Filipinos don’t invest,” he said.

Part of changing the mindset of Filipinos, Lee suggests, is opening them to the idea that when they invest, they should be prepared to take some losses. You cannot get high returns with no risk.

He said it’s okay to take in losses, but make sure to learn from the experience.

“The reason why a lot of people fall for scams is the idea that, ‘I can get 20 percent return in two weeks,’” he said.

The close family ties and remittances from overseas workers also set the “Pinoy style” apart. OFW remittances take the place of government pensions compared to the US and Europe, where government pension tends to be bigger and people can live off it.

Lee said Filipinos also tend to spend on unnecessary items, citing as an example the “pasalubong” mentality.

Filipinos are used to buying items to bring home to their families and friends when they travel abroad or locally. Most of the time, they make unnecessary purchases and end up with unnecessary expenses.

“Sometimes, there is an amount of spending that is not really necessary,” he said.

Lee said to change the mindset of Filipinos when it comes to personal finance, younger people need to be educated on the proper principles of financial planning, so that as they progress with their lives, they will carry these principles with them.

“We have to change the thinking of the young people, which is more than 50 percent of our population, so they will have a big impact,” said Lee.

He said one of the strengths of Filipinos when it comes to finances is they often find creative ways to earn money.

“Unfortunately, it’s not just about how you earn, it’s about how you save,” Lee stressed.

Lee said that financial planning also boils down to pride, as a lot of Filipinos give in to buying branded items, thinking that they will become a better person if they buy expensive clothes, shoes or gadgets.

“If you can get rid of that mindset and address one important problem, which is spending,” Lee said.

“If you can be proud of who you are without any of these fancy gadgets, that’s going to help you stop spending,” he added.

The financial expert suggests that instead of buying expensive items that you don’t need, invest in yourself.

“Educate yourself and make yourself a better person and improve your self-confidence,” he said.