• Why I found it hard to start investing (and the need to tackle the challenge)



    I’ve been lurking around various Facebook groups where people have been discussing different investment strategies and tips. Participants to these discussions come from a broad range of divergent persuasions and background, from investment bankers to ordinary people who have taken a shot at investing. With open discussions such as these, which are readily available to anyone who wants to learn how to invest, why are millennials like me still afraid to start investing?

    When we interviewed Atty. Roel Refran, chief operating officer of the Philippine Stock Exchange (PSE), I didn’t even find it shocking that there were just 640,645 accounts registered with the PSE as of 2014. Where were the millennials who had disposable income to start investing in their retirement or other big ticket purchases?

    I was once in the same boat, too. After graduating from college, it took me four years before I realized that I should make my money work for me. It was in September 2015 that I opened a variable unit life insurance (VUL) policy that would need monthly contributions because otherwise, the policy would lapse and I would lose all the money I had previously invested in it.

    But what is really the reason behind the fear of investment products among the millennials?

    Perhaps one of the reasons for the hesitation is the lack of a sense of security for one’s money in the form of a paper asset that only offers a potential for a hefty return, which is present, no matter how little growth it delivers, in seeing one’s money stored safely and securely in a bank. Most of us would rather keep our money in a passbook account with a 0.25 percent gross interest rate per annum than put it in a mutual fund that could potentially earn 3 percent to 5 percent gross interest. This mindset could have stemmed from our culture of keeping money in the house, instead of putting it in a bank account. We like to keep our money within reach in case of emergencies or impulse purchases.

    Another is being emotionally unprepared to take on the challenge of investing, with all the risk involved. Most financial experts would encourage people before investing in the stock market to try a trading simulation mobile application like TradeHero or PSE Edge. This will give the user virtual money that he can use to invest in his preferred stock in simulated trading, which he can monitor, or to keep the money in the stock for a given period of time. It sounds easy to just leave your money in an investment simulation game, but it is not.

    I tried TradeHero for two months and despite using virtual money, I was constantly checking in one-hour intervals on the mobile app to see if my portfolio was growing. If this was the case for simulated stock trading, how much more paranoid would I get if I were actually trading my hard-earned money? I wondered. This experience prompted me to read more about investment products and acquire the discipline to wait for the reward in due time.

    The third reason is the available option to go for short-term wins on top of long-term gains. There are serial travelers who tell their social media readers that they do not care about having savings because traveling is living in the present in full color, and that saving and investing for the future can wait. Not all travelers have the same mindset but for those that think this way, putting their money in an investment that will benefit them in 40 to 50 years down the line is certainly out of the picture.

    These points may seem basic but they could truly hinder or delay one’s decision to start investing. Many government agencies and private companies are doing their best to expand financial inclusion and financial literacy in the country, but if we do not have the mindset of persevering and overcoming the three points I mentioned above, then starting to make our money grow would be a great challenge. Building the discipline to get over them will involve a big curve in the beginning but will allow the smart ones to reap the benefits in the long run.

    Kristel Silang is content manager at MoneyMax.ph, a financial comparison website aiming to help Filipinos save money through diligent comparisons of financial products.


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