Asian Americans and Savings, Investing & Financial Planning

By John | Sunday, June 6, 2010 | 2 Comments

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2638883650 c81be722ba Asian Americans and Savings, Investing & Financial Planning Back in April, Prudential Financial published a report titled “Asian Americans on the Road to Retirement (.pdf)”. Perhaps the report was a bit self-serving to get more Asian Americans interested in financial planning – specifically with Prudential Financial. But this got me thinking as to how Asian Americans learn how to earn, save, invest and spend.

Of course, people are mostly shaped by their parents. Certainly, my relationship with money was shaped that way. I think my parents’ generation generally grew up in relatively poor and emerging countries, such as Taiwan in the 50’s and 60’s, so there was not much wealth or much of a social safety net to rely on. I think this resulted in being frugal and saving for the future being ingrained in my parents.

I grew up in a pretty middle class family. My parents’ biggest financial concerns, beyond the monthly mortgage and daily living expenses, was saving for college for my brother and I, as well as for their retirement. My father was especially frugal. We really didn’t go on any big vacations (our biggest was driving from Massachusetts to Orlando and back to visit Disney World & EPCOT center the year that EPCOT opened). I recall every month, my father recording in a notebook, the expenses in various categories – like one would do in Quicken or track on Mint.com.

My Aunt in Pennsylvania was a successful realtor and had several rental properties. Our family co-invested in a duplex and had our Aunt handle all the details. I’m not sure we ever made a huge amount of money, since that market in North-Western Pennsylvania never really appreciated much.

I recall every quarter, we’d get Exxon’s (now ExxonMobile) publication The Lamp. I asked why my father invested in Exxon. He felt that the world always needed oil and that it was a safe investment. Plus, Exxon had a DRIP – Dividend Reinvestment Plan, so investing for the long-term was easy and didn’t require a broker and any commission charges. Working for a college, my father had his retirement savings similar to a 401k in TIAA-CREF. I always had an interest in business and stocks, and even subscribed and read BusinessWeek and Fortune and even read Fidelity Investments’ Peter Lynch’s “One Up on Wall Street.”

In college, I’d save up my summer jobs’ earnings for my expenses for college for the coming year, so I never really had money to save or invest in afterwards. Graduating with over $17,000 in college loans ($25,000 in 2009 dollars), I was lucky to find a job towards the tail end of the early 1990s recession, started paying off my student loans and then started to save and invest.

Only after college did I start investing in an IRA, and later in a 401k. I also started learning more about stock investments early on in 1993 on AOL via The Motley Fool, an early pioneer in online communities about stock investing.

I’ve always managed my own stock investments, retirement and savings, mostly because that is the only way I’ve known how and probably a bit of ego – i.e. I should be smart enough to do my own investing and savings (and hopefully outperform the market!). Amongst my peers, I really don’t know anybody that has enlisted a financial planner or wealth manager. But after reviewing the Prudential Financial report, that got me thinking as to whether or not I should. According to the report, only 18% of Asian Americans, out of a pre-screened sample size of 656 between the ages of 25 and 65 with a household income of $50,000 or more, are currently using a financial professional).

As in any professional services practice, referrals are a key pipeline – such as looking for a doctor, lawyer, accountant or tax advisor. Only in the past few years, have I gotten to know a financial advisor or planner here or there. A while ago Ernie Tan at WTDirect had reached out to 8Asians to educate and inform our readers about different savings and investment options.

I’m sure I’ll take financial planning more seriously if I ever get married and especially if I am raising a family. I wonder if others have felt though that growing up Asian American has affected and influenced your thoughts on saving and planning versus your non-Asian American peers? In general, I think the children of immigrants have always had a certain level of frugality, hard work and savings mentality that pervades across most Americans immigrant experiences, let alone Asian American ones.

(Flickr photo credit: Alan Cleaver)

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jasmine08

Great post, and brings up a good topic. As an Asian American and college student, I really wish that there was a course on personal investing and money management offered in college (and I'm a business major!). I took a basic money management course in high school, which was extremely helpful and taught me the basics about filing taxes, opening a bank account, buying and trading stocks, basic retirement plans, etc. However, I know that there's so much more that young adults - not necessarily Asian Americans - need to know about, and it's scary when I talk to my friends and some don't even have a basic understanding of how a stock market works or haven't the slightest idea what a 401k is.

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mike_le

I was completely self-taught regarding saving and finances. My parents did teach me the general idea of saving for the future, but as I got older, I was really puzzled about saving cash. I'd save and find that over time what I'd saved would buy less and less.

I finally started teaching myself about investing and stocks my senior year of college, after I'd snagged my engineering internship and was about to start pulling in my first real money. I read a few articles online, then picked up "The Intelligent Investor" by Benjamin Graham. His writing is the basis for my saving, which is as basic as it gets: every week, cash dumps into my two Vanguard index funds. The most tweaking I've done is gradually increasing my allocation to international stocks.

It's not fancy, but I don't have to worry about it, and it'll (hopefully) get the job done.

It's really depressing how many folks graduate from college without any sense for saving, retirement, or even basic budgeting. I was lucky to have the upbringing that made me think about it, and the free time to study up on it. A "home economics" course should be basic to any undergrad curriculum - and should probably be covered in every high school in the country.

It would probably go a long way to reining in the "spend, spend" mindset in this country.

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