There are roughly 1.2 million Filipinos currently investing in the Philippines shares market. It may seem a lot but it actually only constitutes 1% of the Philippine population, which is very low.
We asked our network of friends and family to break down the barriers to investing that Filipinos like them face. We note that the barriers are not always financial or economic, but often are psychological. Lots of Filipinos may actually have disposable income that may be used for investing only if they are able to get over a few of the myths and barriers they may have about investing and the shares market.
Stocks investing is for rich people. “Pang-mayaman lang yan!”
Well to a certain degree this is still true especially when you see that some brokers still require upwards of at least PHP 100,000 before you can invest with them, With the onset of online trading however, more and more platforms are allowing middle class and regular Juans and Marias with a starting entry investment of PHP 1,000. With the internet, so much data and some tools which only brokerage companies only had access to are also now available for individuals.
It’s complicated. “Nose-bleed. Di ko magets”
It is common to hear complaints or comments that all the numbers and charts can be complicated. When you can only see a few letters and a lot of numbers on the Business pages of the newspapers, it indeed can be confusing. We aren’t even talking yet about the candlestick charts that some advanced investors may refer to. A few think they need to have someone to mentor them. Thankfully, there are stockbroker firms that offer free workshops and seminars on investing but most of these are held only in Metro Manila and a few bigger cities in Visayas and Mindanao. There are also lots of resources available online to help beginners learn from a range of sources.
I don’t know how or where to start. “Paano?”
Personal finance and investing are rarely taught, if at all, in Philippine schools. Over half of Filipinos are wage earners relying on regular monthly or bi-monthly income, and the occasional annual bonuses. The next group rely on their family members remitting money from working overseas. Building wealth and getting out of poverty is on top of family goals, which is why education is almost always on everyone’s list of goals for themselves and their families. Financial literacy is generally low and it is uncommon for Filipinos to not know how the shares market works. Those who may be keen to learn more don’t know how or where to start. With some, the only time they ever learn about managing their finance is when they get approached by insurance agents who educate them the value of securing their own and their families' future.
Unfortunately for some, there is a growing interest to build wealth through investments, however some fall prey to get rich schemes. It also does not help that most brokerage companies only have offices in Metro Manila. Some brokerage companies have been working hard to address this problem by offering free seminars and opening branches in Visayas and Mindanao.
I am busy and I have no time. “Wala akong oras”
Like any other investments, whether in education, self-development or business, investing in shares do require some time for learning. A great percentage of Filipinos are employed full-time and may not find themselves having extra time to acquire new skills or learn about investing. This is especially true for major urban areas where a good amount of the day is spent commuting on congested roads. Those that have funds for investing either keep their money as savings or sometimes rely on financial advisors who invest them in insurances with investment components. Interest rates for deposit and savings products in banks are too low and fees for insurances/advisors and managed funds are not transparent and can add up over time. Some advisors may push for investments that may not be appropriate for your goals just to receive a company incentive or bonus.
Investing in stocks is like gambling. “Sugal yang stocks”
Due to their lack of or limited knowledge about shares and hearing terms like gain or losses, it is unsurprising that a few Filipinos would equate stocks and shares with gambling. It is a myth that proliferates until now maybe because both involve taking risks and taking quick reactions to those risks. However investing in stocks is not gambling. Gambling takes money from a loser to give to a winner which is not how stocks work. With stocks you invest money in companies which can be used to improve product quality and service and bring benefits to the overall economy.
Above are just some of the misconceptions why only few invest. There are also institutional and economic reasons. Onboarding process is tedious with having to physically submit and show identification documents. Board lot minimums when buying stocks can be confusing. Employed Filipinos find it hard to transact online when the markets are closed. Market opening hours are also now shortened. The number of companies listed in Philippine Stocks Exchange are limited and are unknown and unfamiliar to many.
How about you? What other misconceptions do you have about stocks investments? Have you started your investing journey?
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