Professional Documents
Culture Documents
THE PROBLEM
the different investment strategies in order to earn additional income for their
future. Most wealthy individuals asks for the assistance of people who has
expertise in financial services for a well informed decision in investing for a better
yield.
and choices. There are many complex and varied financial instruments available
to serve as vehicle in planning for the future. This study will provide basic
passive income and for capital appreciation. Investment means putting money to
work to earn more money in other words, it is sacrificing money today for future
return. Investing is one of the most successful ways to make financial provisions
for the future, where most of the conditions are uncertain and unpredictable.
With well planned investment, one find satisfaction, of and financial security in
education and increased literacy level, financial literacy is much slower in villages.
The rural investor needs to be well informed about investment principles, risks
involved and the different instruments yielding high returns (Akhande, 2018).
People easily fall into confusion between savings and investment, while
thinking about the investment as a means of savings, they think that saving is
the same with investment because the value of money increases when you add
money on the money they saved. This becomes as one of the factors to reduce
avenues is very low among rural people compared to urban people. They also
found that print media and websites are two most important sources of
generate income and assets. People invest their money in hope of getting
Kasilingam and Jayapal (2010) pointed out that the choice of individual
Filipino millennials, like the rest of the world, are more exposed to digital
media and are more socially connected than the rest of the world (Facebook,
2015). Meanwhile, they enjoy a wider variety of investment options which were
not earlier available, like mutual funds and online trading in stock market.
industry, which influences the share price and finally the tendency to analyze the
public investing. Income and risk factors play a significant role while selecting a
may not for other products. Study on investment confirms that the impact of
2012).
their salaries and income and also on how they prepare for their future. This
Urdaneta City.
4
young professionals.
a. age;
b. sex;
c. civil status;
e. position;
g. monthly salary;
i. types of investments?
a. savings;
b. investing; and
c. purchasing?
Basing from the problems stated in this research, the assumptions of the
information about the investment first before making investment decision that
young professionals will gain knowledge about investment that eventually will
help them to improve their investment decisions and increase their return
from investments.
because they are the one who will benefited if the young professionals invest
their money.
Researchers. This will help the researchers to learn about how young
professionals invest and will help the researchers to gain more knowledge about
investments.
6
Future Researchers. This research will help and guide the future
in Urdaneta City. The respondents on this study are the young professionals who
terms of age, sex, civil status, highest educational attainment, position on work,
investment decision, and type of investments. The investment practices and the
purchasing
There will be eighty (80) who will serve as the respondents of this study.
Definition of Terms
terms used by the researchers in the study are defined lexically and/or
operationally as follows:
how young professionals allocate and invest their hard earned money.
professionals in investing.
the instrument.
Chapter 2
writers said on the subject matter through the use of books, conferences and
and justification for the research undertaken. The review will be made based on
Foreign Literature
mutual funds, fixed deposit, real state and many other kinds of investment, they
only not desire to invest and earn but they also want their mone to be invested
in most secure and liquid assets. However, the decisions varies for every
9
individual depending on their appetite for taking risk taking this ability to cope
with losses and their goal in investing their hard earned money. The purpose on
investment can be closely related with saving objectives. Each individual investor
selects investment option for certain period matching it with their personal
for investments. The investment behavior avenues questions such as why they
want to invest, how much of their disposable income are they willing to invest,
for how long do they want to invest and most importantly when is the righ timing
analyze the factors influencing the behavior of investors in capital market. Which
decisions.
their survey, majority of the investors are found to be considering two or more
Recent research from UK found out that most consumers have basic
greater rewards; lower risk means they stand to lose less but in turn the rewards
10
would be less). However, understanding was limited. Most did not have a clear
idea of what these risks actually were and many felt that long-term investments
were riskier, mainly because they will not be able to access their money in the
the levels of risk associated with different investment products and fund types.
Most consumers in a recent study believed (wrongly) that there was no capital at
2008). The Baseline Survey of Financial Capability indicates that some risk-averse
consumers may take out investment products unaware with the presence of
fairly consistently that women are more risk averse than men in their attitudes
2009).
wealth and marital status, and found a gender difference exists independently of
Consumer Finances found that the proportions of wealth held in risky asset
11
classes grew more steeply for men with increasing wealth (Jianakopolos, 2010).
found that the lower levels of stocks in women’s pension plans held true
within couples).
Some studies indicate that marital status and wealth play bigger roles than
status: other things being equal, single women and married men were less likely
than single men to choose "mostly stocks" (a riskier portfolio) and married
women were more likely than single women to choose this. The tendency for
women to invest in less risky asset classes than men appeared to be attributable
of gender differences in risk preferences, lower income was the main contributor
2014). The explanations for gender differences observed in research have been
gender roles that impact on these inequalities (Bajtelsmit and Bernasek, 2015).
outcomes (wealth, income and employment) and these outcomes are caused by
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their financial affairs. People no longer just look only on the short term financial
concerns such as money savings and borrowings but also in long term prospects
wise and economic decisions for them and the society as a whole. Financial
focused on five domains. These domains are knowledge and financial concept,
Local Literature
taking control of money earned from work and making sure it is adequate to
sustain for standard of living. For others, financial management is more than
meeting present needs but more importantly, securing the need in times of
difficulty and life after employment, thus allotting a proportion of earning for
saving. A survey conducted in the Philippines, it was revealed that Filipinos value
the importance of saving for the future but only 1 out of 10 Filipinos is
Managing finances is not only about savings, checking accounts and time
Financial education is not the priority of the government that is why most people
are still financially illiterate, meaning people lack knowledge regarding budgeting
and saving.
14
Efren Cruz, the head of the personal finance Advisers of the Philippines
said that the most efficient way to trace resources of income as to how fast they
are spent and where were they used is by keeping a record of every single
Foreign Studies
account the corporate social responsibility of the companies they invest in (Cox
et al., 2012), and indeed, advance the Corporate Social Responsibility (CSR)
that society has expectations for corporate processes that extend beyond
20th century, has been the norm for main stream financial actors such as pension
funds, insurance funds, mutual funds and investment banking and it essentially
Demographic trends that signal that Millennial investors are likely to drive
demand for sustainable investing well into the future. According to a study
products for individual investors cannot ignore these trends (Stanley, 2015).
There are also other people who developed the habit of making money
stocks, government bonds and real state. Depending on their risk profile, these
people put money in investments instruments that can potentially improve their
Some people are successful in managing finances and some end up short
of money to meet their needs. As a result, they resort to borrowing cash from
other people or securing loans from financial groups or institutions. The most
common types of financial institutions are banks, micro financing, credit unions,
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and savings and loans association. These organizations offer wide range of
Much of the literature on investment choice behavior comes from the field
of behavioral economics. The evidence base for this literature comes largely from
savings plans. Most of the evidence is drawn from survey data, and includes
Tapia and Yermo (2007) carried out a review for the Organization for Economic
investors should hold diversified portfolios that include the most efficient
combinations of assets to optimize risk and return, and which reflect investor
arrive at an investment decision with firm preferences. The most frequently cited
work, carried out in the US, found that pension plan participants appeared to
have relatively weak preferences for the portfolio they had selected themselves
(Thaler, 2001). In this experimental study, participants were given the choice
allocation in their 401(k) plan and the distribution implied by the average
allocation among all participants in the same plan. Most participants preferred
the average distribution that based on their own allocation. The authors
participants had portfolios that were, almost by definition, more extreme than
the average. Such results seem to call into question individuals’ ability to choose
an optimal asset allocation (i.e. the most favorable allocation that would best
meet their financial needs). As Tapia and Yermo (2007) note, this may be
offered.
and (Yermo, 2007) identify some countries (Chile et al., 2007.) that offer pension
five, where the funds are differentiated mainly by the proportion invested in
unlimited investment choices to plan participants. The most recent statistics for
Sweden, for example, show that in 2007 there were 86 fund management
companies with a total of 785 funds registered with the premium pension system
2007). Administrative data from one large pension plan provider indicate that the
note that plan sponsors (i.e. employers) add fund options at a faster rate than
participants use them. Nearly half of plans (47 per cent) offered between 11 and
20 options, but 56 per cent of participants used only one, two or three options
(Vanguard, 2008).
Iyengar and Lepper (2000) found that, while people generally value
choice, they can easily be overwhelmed by it. They suggest that choice overload
where the costs associated with making the ‘wrong choice’ or even the belief that
there are truly ‘wrong’ choices are much more worrying to an individual (cited in
Singh et al., 2005). Rather than promote consumer choice and active decision
making, increased fund choice has been shown to depress the probability of
administrative data from 401(k) plans indicates that, other things being equal,
every ten funds added was associated with a 1.5 to 2 per cent drop in
most participants suggested that between three and five investment funds would
be a manageable number to choose from. They also felt strongly that funds
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research carried out in the US) indicates that individuals use what are called
investment decisions generally (not specifically pensions) found that level of risk,
charges and fund size were mainly only considered by respondents who were
people’s attitude to risk) suggests that consumers more often focus on avoiding
Several studies have shown that framing effects and investment menu
result in suboptimal investment choices that are unlikely to meet the individual’s
the proportion of equity funds offered by a pension plan and the proportion of
401(k) administrative data shows that this holds true for other asset classes as
the portfolio allocation of participants by altering the mix of equity and bond
funds that are offered, even if the overall investment fund offering remains the
same.
The same conclusion has been reached in the UK, based on evidence from
experimental studies. One study concluded that people choosing from a range of
investment options tended to select the middle option whether the overall range
is low or high in value (Goodman, undated). Another study found that various
measures of risk aversion (in the form of questions about the amount of risk that
respondents were prepared to take, how concerned they were about their
financial future and whether or not they would take a gamble to increase their
earned income) did not account for the amount of risk taken by respondents in
each experimental condition (Vlaev et al., 2007). According to the authors, these
Kempson, 2008).
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The quality of financial advice that consumers receive has, however, been
and adviser definitions of ‘low risk’ (Conquest Research Limited, 2004) and the
among 50 firms offering financial advice found that just over a quarter of firms
established customers’ attitudes to risk ambiguously, and a few did not establish
highlighted that in some cases advice was not appropriate for the customers’
needs in some way, or the adviser had not made sufficient enquiries to assess
about a third of cases it was assessed that there was clearly or probably not a
reasonable basis for the advice. The main problems involved advice to switch to
Commission, 2006).
tenure. Several theories have been suggested to explain the positive income and
They face lower (or negative) tax rates and derive little (or no) tax benefit from
more likely. Job tenure is also strongly linked to 401(k) plan participation. One
reason may be that longer-tenured employees may find plan participation more
attractive due to the vesting of benefits over time, another may be growing
of investment which is a key factor for economic up-raise. Households are liable
More savings draw out more investment. Among various income groups,
turn affects the development of a country through investment. It was found that
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efficiency of people and they can better invest their money. Highly educated
people can better understand inflation and are able to protect themselves from
it. Well educated families save for benefitting their children while less educated
participation in retirement plans. Compared to firms that did not offer financial
education, participation rates are 12 percentage points higher for companies that
rates are 20 percentage points are higher for employees who chose to attend.
percentage points. Effects may be greatest for people who saved little before
returns than the cost of borrowing. There are several mediums where people can
(Ahmad, 2004).
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financial education can greatly increase both and the average percentage of
personal finance classes for high school students positively impacts financial
knowledge and savings behavior for teens (Boyce et al., 2003), and ultimately
raises the rates at which individuals save as adults (Bernheim et al., 2001).
which has the most influence and the most extensive behavior of the consumers
so that marketers need to understand the influenced of culture, sub culture and
social class of consumers; social measurement, which needs can affect consumer
Previous researchers have reported that many workers tend to invest their
retirement assets too conservatively, and in particular that women are less likely
than men to invest in risky assets such as stocks. In the presence of an equity
explain why people buy or sell stocks. These factors will focus upon how
practitioners.
purchases of small amounts of securities for his or her own account (Nofsinger
and Richard, 2002). No matter how much an investor is well informed, has done
research, studied deeply about the stock before investing, he also behaves
irrationally with the fear of loss in the near future. This different behavior in the
and provides evidence that investors financial decisions are also affected by
internal and external factors It is generally believed that market decisions are
The study of PubMed they categorized by age into young adults (ages 18-
35 years), middle-aged adults (ages 36-55 years), and older adults (aged older
Local Studies
to earn, therefore, they know how to control their earnings. One of the threats in
From the study conducted by the Bangko Sentral ng Pilipinas, it was found
out that overseas Filipino households spent the majority of their money on basic
needs, for education and payment of debts (Dumlao, 2008). Based on their study
retirement is one of the major expenses of every working individual that needs to
be considered.
According to report of the PSE from the Stock Market Investor Profile,
data of which came from a survey of 18 online brokerage firms in the country
that less than 1 million Filipinos are investing in stocks – 640,565 to be exact.
The good news is that from 2013 to 2014, the number of Filipinos trading and
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investing in stocks have grown, rising by 9.4% from 585,652 to 640,665 in 2014.
The bad news, though is that numbers still represents a very small percentage of
activity for the elite few; not even reaching 1% of the country’s population.
reflects continuing employment security for the younger workforce, and thereby,
boost their household savings (Neilsen Consumer Index Report, 2015). The
national savings rate continue to go down for the past five years, mainly
contributed by the declining disposable incomes for people with ages 25-35, i.e.
the millennial group age (Asian Development Bank, 2013). Much of the savings
(Euromonitor, 2015).
One of the notable traits of the Filipino culture is its extended family
structure is its close ties among the members of the household that one member
share responsibility even if they no longer live with their family. Most millennials
still prefer to live in their parents houses. This kind of accommodation has helped
them avoid certain fixed costs like rent and utilities, while funneling these
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are becoming more confident due to their employment security and increasing
The researchers believed that the reviewed literature and studies stated
by different authors and experts are similar to the present study. The researchers
were motivated to use the perception provided by the different authors that will
be a great help for the present study. The above-stated literature highlighted,
the essence of improving investment practices. They also served as the guiding
Further, the studies cited have similarities and differences to the present
study regarding the respondents, locales, subject areas, objectives and the
methods used in gathering data. With the supported studies cited, the
researchers gained knowledge and ideas as to what conduct and process should
The literature of Duplito (2008) and Dumlao (2008) says that some
Filipino thinks that savings is all about taking control of money earned from work
or their income and making sure that it is enough to sustain for their daily needs
but for others, savings is more than meeting present needs but more essentially,
securing the future and what is needed in difficult times. Despite the appreciation
of the Filipinos of the value of the saving for the future, only 1 out of 10 Filipinos
are intently saving for future. And though the number of people engaging in the
savings and investing increased, it still represents a very small number compared
relationship with the present study, the foundation is that though the financial
literacy among Filipinos with regards to savings, most of Filipinos do not engage
in investing due to some reasons, one of which is their income or the money they
earned from work is not enough to finance their daily needs and nothing is left
Efren Cruz is related with the present study and the basis of this is that people
nowadays managed their finance not only through savings but also through
investing and budgeting. They discussed that Filipinos saved money by limiting or
controlling their spending and purchasing habit and the excess to the money
On the studies of Gallery (2010) and Sheriff (2000), they noted that
studies connected to the present study wherein the foundation is that collecting
instrument should they buy. Their decision also depends on their risk profile,
whether these people put money in investment instruments that will enhance
The literature of Institute of Solid State (2008) and Byrnes et al. (2009),
included in this research have a significant relationship with the future study and
on risk-reward relationship. Though most of consumers know that the higher the
risk, the higher the return, the understanding is still limited because there are
some individuals who are risk averse in terms of investing. They further
discussed that women are more risk averse than men in their attitudes and
pointed out that some of the investors, especially the individuals who are new on
the nature of investment, they look for two or more information before allocating
their funds. And most of them, their decision comes from their family and
friends. Their literature has a significant relationship with the present study
where before entering on the investment world, people need to find a financial
analyst or portfolio manager who will help them to know what’s best for them for
On the other hand, Sunden (2009), Embry (2012), Watson et al. (2014)
and Bajtelsmit et al. (2015), said that the gender, marital status and wealth play
significant relationship with the present study where the foundation is that in
terms of gender, females are more risk averse than males. While in terms of
marital status, single men are more likely to engage in risky portfolio than
married men while married women are more likely than single women to choose
this kind of portfolio. And with regards to their wealth, individuals with lower
income have a lower fund to put on their investment than individuals who have a
higher income.
The researchers adapt the theory of Ann Henderson, “The Bucket Theory
security, family’s insurance needs, quality of life and investments. Filling the first
bucket until the last bucket represents the responsible financial management.
achieve it unless you are working on it responsibly. The bucket theory of financial
management helps the individual to have an assurance for the future. It helps
the individual to use their money properly and control their expenses that the
According to the theory of (Ando et al., 2010), “The Life Cycle Hypothesis
of Saving” is the spending and saving habit of people over the course of a
lifetime. Every individual needs to work to earn money to use it in the future. The
money that they saved is expected to have benefit in the future time. This theory
relates to the present study regarding securing the future through saving.
Conceptual Framework
The schematic paradigm that presented on the next two page illustrates
the conceptual framework of the research. The research aims to enhance the
purchasing.
age, sex, civil status, highest educational attainment, position, and the monthly
salary and types of investment, and there investment practices utilize by the
The legal basis of this study is the Investment Management and Personal
to meet of personal needs and to implement financial purposes, the main of that
investment in various assets which have value growth trend temporal in respect
needs satisfy. When planning a secure financial future, financial purposes and
For most people in life are stages when income exceeds the needs of and periods
when income is insufficient to ensure the basic needs. Population savings is one
of the major domestic financial resources and credit sources, which stimulate
economic growth.
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a. age;
b. sex; Gathering Educational
c. civil status; information, program can be
d. highest analysis, propose to increase
educational identification of the knowledge and
attainment; Practices of Young awareness of
e. position; Professionals investing of young
f. monthly salary; professionals.
and
g. type of
investment
Investment
Practices of
Young
Professionals
a. savings;
b. investing; and
c. purchasing
35
Figure 1. The Research Paradigm showing the Input, Process and Output of the
research.
Chapter 3
RESEARCH METHODOLOGY
the making of this study. This includes the research design, subjects of the study
Research Design
of young professionals will be considered for the survey. It includes the profile of
The respondents of the study are the young professionals who work in
different banks at Urdaneta City. There are eighty (80) young professionals as
by three (3) experts, sheets for the content validity of data gathering that will be
used.
information of the profile of the respondents. Part 2 is concerned with the data
on the investment practices of young professionals into three (3) major factors:
validators, and some will be taken from the unpublished theses that is connected
to the study.
Collection of Data
37
to the banking institutions to ask permission regarding the conduct of the study,
researchers will approach the respondents politely and will explain clearly the
administer and retrieve the questionnaires from the company’s branch managers,
Appropriate statistical tools will be used to come up with the valid and
are the young professionals in terms of age, sex, civil status, highest educational
𝑭
𝑷= (𝟏𝟎𝟎)
𝑵
Where:
P= Percentage equivalent
F= Number of respondents
38
counts, and the weighted average mean formula will utilize. The formula is
shown on below:
∑ 𝑾𝑴
𝑨𝑾𝑴 =
𝒄
Where:
The descriptive equivalent (DE) of each category and area will be base on
To answer the problem number three which is the educational program that can