There are two widely heeded tenets in the world of finance that doesn’t seem to sit well with many Filipinos.
First, that investing is a long-term engagement, and second, that investments tend to grow more surely when done on a regular basis – weekly, every payday, every quarter or even bi-annually.
So maybe we’re not too guilty about investing regularly as we are at investing over the long term. After all, many of us subscribe to salary deduction savings schemes, participate in cooperatives, or at the very least, maintain our own “paluwagan” circles.
But why has it been difficult for us to keep our hands off of our investments before they even turn a year old? Perhaps because we see investments as equals and alternatives to savings when they are not.
According to SLAMC (Sun Life Asset Management Company), savings or deposit accounts are primarily meant to provide liquidity in case of emergencies or for the proverbial ‘rainy day’. This is why such accounts don’t turn up huge profits – banks aren’t able to do much with the money knowing we may need it any time.
Ideally, a person should have a savings account sizeable enough to tide him over emergencies. With this covered, he can then begin building his wealth via investments. That is, when an emergency hits, the investor should turn to his savings and not to his investments.
“Investments are meant to be grown. And, growth is most surely achieved with the commitment to hold investments over a long period, with the intention to regularly add to that pot,” explained Ben Thomas Pañares, SLAMC Chief Operating Officer.
Our commitment to invest our money over 3, 5, 10 or even 20 years, will give our investment managers more room to maneuver and grow our investments. In the end, this will mean for us potentially bigger earnings!
Our commitment to stay invested long term will temper our emotions in the face of market volatility. It is common for many of us to panic when the market starts to dip. We redeem most if not all of our investments, often trading them for much less than the price we bought them for.
“We had an investor who bought his mutual funds at Php1.50 per share. When share prices went down to P1.25, he came to us wanting to withdraw his money. We told him that if he doesn’t have any need for the money and he can’t put it in a better earning instrument, that he might as well leave it alone and wait for the market to recover. Now with share prices inching up to P2.00, that investor wouldn’t even entertain the prospect of selling,” Pañares related.
It’s time for a longer time
To get majority of our population into the habit of investing regularly and over a long period of time, SLAMC and its parent company Sun Life Financial-Philippines recently launched a financial advocacy called, “It’s time!”
No less than Paolo Benigno “Bam” Aquino IV endorses the lessons for wealth accumulation, while Pia Arroyo-Magalona speaks for the continuing relevance of life insurance.
In billboards to be found in the metro, in Cebu and in Davao, Bam shares how making a habit of investing a little each time, every time can be one’s simple secret to securing the future.
“Still, we realize that many Filipinos might need a little more push, a little more encouragement before they choose to take a long-term perspective of their investments,” Pañares admitted, “that’s why over a limited period of time, we’re throwing in compelling incentives.”
SLAMC recently launched the Fun with Prosperity Funds promo, under which qualified investors who commit to stay invested over the next 3 years, automatically gets to bring home a prize of their choice.
Fun with Prosperity Funds will run until September 15, 2009. Prizes at stake includes LCD television sets, Apple Macbook Air, Sony Vaio, iRest Massage Chairs, refrigerators, MP3 players, and of course, the crowd drawing, all-season entertainment piece, the Magic Sing.
“SLAMC has bravely taken on the position of Investor Advocate. From now on, we will intensify our efforts to uphold the interest of every investor. For starters, we’re giving out wonderful and exciting prizes to reward them for investing long term,” said Riza Mantaring, Deputy President of Sun Life Financial – Philippines.
