The Social Cost of Investing


social-cost-of-investingOne of the most common excuses we hear from people who never get started to invest is “Next time na lang, when I have extra money.”

This was also Pong’s excuse when Ping encouraged him to invest as well. (Read their story again here: How to Use Time to Make Millions)

Let us take a look at why Pong never got to invest early.

ping pong

Pong is such a social person. He never missed lunch-outs with his officemates where they bond at different restaurants. He spent around P200 a day for this.

It may seem small, but that P200 when multiplied by 5 working days is P1000 a week. P1000 multiplied by 4 weeks is P4000 a month which he can already use to save and invest. This is a classic example of a ninja expense we discussed here: Ninja Expenses

Because Pong never made a deliberate decision to invest and adjust his lifestyle, he started investing really late. What happened was whenever his income increased, his spending followed too!

What is the social cost investing?

Even though Pong wanted to start investing like Ping, he cannot say no to the bonding time with his officemates. He also cannot afford not to have the latest Apple gadget in its first week of release.

The feeling of being left out and not having the latest gadgets are some of the examples of what we call the social cost of investing.

When you already know what to do, have all the time and money to invest, this will prevent you from investing regularly.

We Filipinos are very social people like Pong. We love doing things together! Our social calendar never runs out of things to do – Valentine’s, vacations, birthdays, family reunions, and weekly get-togethers. Because of this, we also never run out of things to spend money on.

Can you not join the summer vacation in order to save and invest? Ping did!

If Ping can do it, so can you!

Ever since Ping started investing, he has lived a totally different lifestyle from Pong.

To adjust to investing lifestyle, Ping brought packed lunch to the office instead of eating out.

While Pong was having fun at the beach during summer, Ping stayed at home and continued his financial education by reading books and articles regarding personal finance and investments.

Whenever the latest Apple gadget came out, Ping did not replace his old phone just to be “in” and buy something that depreciates in value.

We all know how this story ended – all of Ping’s sacrifices paid off. Take a look at Ping’s retirement fund.

table pingpong

Ping’s retirement fund is thrice the amount of Pong’s!

We are not saying that spending on “fun” things is bad and we should deprive ourselves just to save and invest. We just like to remind everyone to keep things in moderation, because unless we make a deliberate decision to invest, we will never get started.

Question: What is that one thing that you always had the difficulty to say no to?

Share us your thoughts!

public seminarofw


Comments

    • says

      For the article:
      I could not agree more. Many people have the “enjoy now na” mentality. A few have the “delayed gratification” mentality. Problem is… a portion of those with “delayed gratification” mentality are still “savers” and not really “investors.” They still haven’t realized that inflation will just eat up the returns from their bank accounts (supposedly earmarked for retirement or any other long-term goals).

      For Andrew:
      You can try the FV function in Microsoft Excel to compute for the “Future Value” of your retirement fund.

  1. says

    I agree and think it’s very critical that people learn delayed gratification, and to focus on true value. For example, bonding time is about time and not money.

    But to be fair, it’s still important to be social. We are social creatures after all. The answer is to simply have a fun fund. A portion – small and reasonable – of your expenses reserved for having fun or rewarding yourself. You can source it from your picky piggy bank or some other saving method.

  2. Kimberly Landicho says

    I really believe in the essence of investing early. Apart from the time horizon, the younger you invest, the more money you’ll be able to allot in investments. Practically because most likely, you won’t have a family to feed and children to send to school yet especially on your early 20s. The older you get, the more expenses you’ll shoulder leaving you with lesser capacity to maximize investments. So take advantage of the time and your age, it can make the big difference.=)

  3. Paul D. Laraya says

    Hello!!

    Ngayong panahong ito nararanasan ko ang “social cost of investing”. Sa panahong hindi pa ako mulat sa tinatawang na financial literacy ang mentality ko ay “masyadong bata pa ako para mag ipon”. I mean it literally! Kung nagpatuloy yun tiyak walang patutunguhan buhay ko. Ngayon, at mid 20’s pag-iipon at pag iinvest ang trip ko. Oo, mahirap ang feeling na “left out” ka katulad nalang kung saan anu-ano nalang gadgets meron mga kaibigan mo tulad ng mga mamahaling smartphones at Tablet PC’s na ‘yan isama pa natin ang DSLR. Araw-araw ko din nakikita mga kaibigan ko sa Facebook palaging gumigimik may kasama pang picture ng mamahalin at masasarap na pagkain samantalang ako maka-isa o dalawang beses lang kung kumain sa labas kada buwan, swerte na nga dalawang beses. Ayoko din namang pilitin ang sariling kong gumasta kasi ganun din ang ginawa ng iba (keeping up with the jonesess diba) Bahala na pag palaging delayed ang gratification ang ibinibigay sa sarili ko basta nakokontento naman ako. I have a phone, its a trusty 2-year old Samsung Chat. Sinong ayaw ng smartphone? Syempre gusto ko din magkaroon nito but I dont feel any necessity having one. Tablet? May netbook naman ako, makakapag-type pa ako EFFICIENTLY. SLR? Aanhin ba ang magandang pixel kung FB lang naman ang patutunguhan ng pictures mo?lol

    Sa mga nakakaranas ng “social cost” sa pag iinvest/save o living frugal. Tiisin lang natin, enjoy naman tayo ng hindi nag wawaldas ng pera. At palagi nating isipin ang rewards sa kalaunan. Pasensya na sa Tagalog ko, non-tagalog speaker ako.

    Thanks!

    • says

      Congrats! I am also in my mid-20’s and I do also feel the “social cost of investing”. May we be rewarded ten or twenty years from now. Investing is a conscious action and change of lifestyle so that we can have the lifestyle we want in the future. It will be better to exclaim “I am living this ‘maginhawang buhay’ now because of my actions twenty years ago” than to say “Sayang. I should have started earlier.”

  4. grace says

    how do i compute for FV? which formula did you use to come up with the above retirement fund of Ping and Pong?

  5. Mhacky says

    Hi guys! To be honest i feel the same way with you. Im already mid 20’s na and OFW here in Kuwait. Last year I just started investing sa Fami and UITF ng BDO. Thankful ako kasi andian sister ko monitor my investmemta and pinilit ko siyang maginvest nadin the same time. Before super updated whats latest na gadget palibhasa single gusto lage in but now things change since I understand the important of Financial Literacy. ANG HIRAP MAGABROAD NOH. ayoko naman abutin ng Golden Age d2 sa abroad. kaya I study and read about Mutual Funds and stock.. Thankful ako kasi meron Organization helping others to know the importance of Financial Literacy. Keep it guys. To. help others para my Financial Freedom ang bawat Pinoy.. happy investing.

  6. gusto ko.. says

    ask ko lang po sana kung bibili ka po ng stocks eh sa “bid price” mo ba ibabase ung presyo and sa “ask price din po ba kung ibebenta mo na?pki answer po nalilito po kasi ako jan eh..tnx

  7. BlackDog says

    Good day! Im one of the thousands of OFW working away from home. Im 30 yrsld. no and im still not “stable” .I have a wife and a kid still kahit nasa abroad ako kulang parin ang kita ko dahil sa pagkaka lubog sa utang bago pa man ako umalis. Gusto ko po sana magkaroon ng idea or any form of material on how can i solve my financial problem.I have a large amount of debt to pay and my our combined earnings is not enough kasi sa utang napupunta. I have been reading about this topics (more of browsing) and I know Im on the right track di ko lang alam san mag sisimula since wala ako ganung funds. I want to make my wife happy and make her sleep soundly every night dahil sa utang di na siya nakaka tulog ng maayos. I am new int stock investing but i have a feeling i can do this with my huge motivation and the will to learn it.

    Thanks!

  8. solomon flores says

    hello, I really want to invest but I don’t know how. most financial literacy seminars have fees. are there free seminars available? thank you.

Trackbacks

  1. […] Once you achieved your savings and you are debt free, then it’s time for you to INVEST. You invest to make your money grow. There are different kinds of investments, aside from SDA in […]

  2. […] was also Pong’s excuse as to why he started investing really late. (Read Pong’s story again here: the Social Cost of Investing). As we always teach everyone, the earlier you start investing, the more time your money can grow. […]

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