High Debt Levels Overshadow Filipino Investors’ Strong Savings Record

The latest Manulife Investor Sentiment Index (MISI) survey reveals that despite strong day to day financial discipline, Filipino investors have relatively high levels of personal debt (excluding mortgages) which could jeopardize their long term financial security. In addition, while Filipinos are prudent savers, more than 80% regret some investment decisions, suggesting they are unable to effectively invest their savings for the long term.

Manulife’s survey is designed to track investor attitudes towards financial planning across eight markets in the region, in order to better understand investors’ needs and identify areas for increased financial literacy. Encouragingly, the survey found that Filipino investors are among the best in Asia in terms of their savings and expense tracking behaviors. Almost all investors surveyed (99%) track their expenses regularly and manage to save part of their income each month – both of which are key indicators of good financial discipline.

The survey also found that Filipinos are effective savers, with 46% of investors that have set a target saving amount starting to save early, before the age of 30. This may explain why an overwhelming majority of investors (91%) claim they will have sufficient savings to meet their financial needs in 5 years time. In addition, of those who have set a target saving amount, an overwhelming 74% expect to meet their goal in 1-4 years, which could indicate that Filipino investors are setting short term targets.

However, despite this strong record in financial management, the survey revealed relatively high levels of personal debt. Four in ten (41%) Filipino investors carry debt – the second highest proportion in the region after Malaysia. While most (41%) have relatively small amounts of debt ranging from PHP 5,000-24,999, 7% have debts of PHP 500,000 or more. A third of respondents cited daily living expenses as the main factor contributing to their debt, which could indicate that investors’ ability to save regularly may rely on the use of credit to pay for day to day living expenses.

In addition, while the survey suggests that Filipino investors have good financial management, 80% of investors wish they had done better investment planning. In particular, a third of investors wish they had done more research on their investments, while a quarter regretted holding too much cash instead of investing and another quarter regretted not speaking to a financial planner.

This could indicate that despite good financial discipline and regular savings habits, investors are failing to effectively invest their savings to generate returns. This is supported by the fact that

Filipino investors park 26% their savings in deposits or in investments with no specific purpose, indicating an opportunity to set a clear long term plan to make the best use of their savings.

“While it’s positive that Filipinos demonstrate good financial discipline, effective financial management is about much more than just tracking your expenses and saving regularly. Investors also need to ensure they are managing their day-to-day spending to avoid falling into debt, and that they have clear plans to get the most out of their savings in the long run,” said Ryan Charland, Manulife Philippines President and CEO. “It’s always important to listen to family when making important financial decisions, but investors should consider seeking advice from experts who will be able to advise on how best to maximize return on investment. There are a wide range of investment solutions to choose from and it’s important to find the right product to suit your needs” he added.