It's Time!

By: Kendrick Chua, CIS, The Wealth Warrior
first published in Business Mirror March 15, 2010 issue. Link

“Save a little each day, every day and see small things grow big,” says Bam Aquino, a social entrepreneur in a Sun Life advertisement. Yet, long before those words were popularized in a television commercial, the Japanese were already living that principle, which they called, Kaizen.

Kaizen came from two words, “Kai” which means to change and “Zen” which means for the better. Both words embody the philosophy of making continuous improvements in all aspects of life.

With a GDP of $5 trillion dollars, Japan is the world’s second largest economy next to the United States. Yet Japan didn’t achieve its status as a global economic leader dramatically; it took them 60 long years to recover and rebuild their country from the ravages of the Second World War. And one of the crucial factors that made Japan’s momentous growth possible was the application of Kaizen, a strong desire to be better and to be the best.

The principle of continuous improvement can likewise be applied in financial planning. So diverse is the field that we can always find something to improve on. In asset allocation for instance, portfolios can be regularly rebalanced for us to maximize gains and opportunities and minimize losses and risks. In debt management we can look for institutions that offer lower interests and more flexible terms. And in financial literacy, we can be wiser and smarter about the environment today than yesterday.

One of my greatest frustrations as a financial planner is that most of the people I have talked to do not want to undergo the process of financial planning. They feel it’s boring, old-fashioned and down-right slow. Guess what? They are right. It is boring, old-fashion and down-right slow! That’s why it is effective.

But for the others who heeded the advice, reaped the rewards. One of my clients, Celine Salazar a single mother of two who works in the training and development department of a business process outsourcing company started 2009 with nothing in savings. But I worked with her through a formal financial plan. She diligently saved P2,000.00 pesos every pay day. Within a year, her savings grew to more than P50,000.00 pesos. Considering all her obligations and the environment she is in, it was a great accomplishment.

Salazar will be the first to agree that it wasn’t an overnight success. It did take her quite awhile to accumulate that amount. But she was steadfast in her commitment and even when she was on maternity leave, she still saved that up. Two thousand may not be much, yes. But when added to the other two thousand pesos she saved before, it becomes significant.

Then there’s another client of mine who invests regularly in mutual funds. Not even the financial crisis that struck the world two years ago stopped him from investing. As a result of this practice, he was able to buy shares at lower prices. The result: huge gains when the market rebounded!

The Kaizen principle can also help us in being keener in spotting opportunities to make our money grow…legitimately.

Mr. Randell Tiongson, one of the most respected financial planners in the Philippines noted this paradox, “For a conservative country like the Philippines, a lot of people are getting scammed.”

True. Several years ago, a financial organization was offering lucrative returns for its investors. Enticed by the potential of growing money exponentially, a lot were lured into it. Despite tell-tale signs of it being a pyramiding scheme, nobody bothered questioning its legitimacy. As long as the investors were paid, everyone was happy.

A crackdown ensued and it was proven that the institution was indeed a scam. When the dust settled, the investors were bewildered. The masterminds were nowhere to be found taking with them millions and millions of pesos along with the dreams of the investors.

Several years after, another organization offered the same thing. Although it was a Ponzi scheme instead, the result was the same: investors lost money.

Financial planning never advocated get-rich quick schemes but rather a consistent saving and investing approach to achieve financial independence.

Kaizen is all about improvements, no matter how small, are still improvements. Vincent Van Gogh once said, “Great things are not done by impulse but by a series of small things brought together.”

The philosophy is applicable to money management as it is to any facet. Even if one is contented with his or her financial status, there is always a way to improve it further, to make it better; to look for a higher yielding investment, to spend a little less, to save a little more and to dream a bigger dream.