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Financial vs. Emotional Investment

“When people are financially invested, they want a return.
When people are emotionally invested, they want to contribute.”

– Simon Sinek

One of my favorite authors Simon Sinek who wrote the bestseller Start With the Why tweeted this some time in 2014. Very powerful words and worth pondering upon in the way we do our business, carry out our career, and live our life in general.

When you make a financial investment, it’s clear that you are doing so in order to earn a profit from that venture. As I advocate in my books, articles and talks, everyone should invest, as early as possible and to do so consistently. The consultancy firm my husband put up after he took his early retirement is called IFE and it stands for Investing For Everyone! The easiest way we recommend is to do cost averaging (investing a pre-determined amount in your account at pre-determined dates on a regular basis, regardless of the market). This and other kinds of financial investing are straightforward and the goal is to make a profit.

On the other hand, the second kind of investing mentioned in the above tweet is what we call emotional investing. (This time I’m not talking about the emotional kind of stock investor as discussed in previous articles – link.) You are emotionally invested when you deeply care about someone or something to the point that you are vulnerable to being hurt by the person or the cause you’re invested in. The end goal is not monetary and so you are not seeking profit. Since it is usually a cause that satisfies your core values, you want to contribute.

I’ve experienced this myself. I believe in the cause of purposeful parenting and after I gathered all my midlife guts, I came up with my first book Raising Pinoy Boys. One thing led to another and the High FQ part became the common favorite among the readers that gave birth to FQMom.com whose main goal is to help parents raise their children with High FQ in order to arm them with Economic Self-Defense. Along the way, I have encountered a few criticisms especially from those whose mindsets oppose my advocacy to teach children about money early on. Some are a bit hurtful but they are no match to the letters I receive sharing how they have been encouraged to make money talks part of family conversations and goal-setting. One workshop participant once approached me to say, “Rose, you will really reap the rewards of what you’re doing when the children of the parents who followed your advice have grown up to be adults with high FQ!” And so I continue to pour in my time and effort in learning more about raising children with high FQ.

A son’s dream:

Upon closer look at the above Simon Sinek quote, I remember what my son Enrique said months ago when he shared his long-term goal with me. He said, “I want to master how to analyze companies and identify great investment opportunities. In the future, I’d like to put my money in worthwhile and innovative investments that do well for the environment like this philanthropic billionaire Manoj Bhargava who came up with the Free Electric (a stationary bike that produces clean energy), Rainmaker (converts sea water to fresh water), Graphene (cables that can get heat from the earth’s core for energy); and even our own Illac Diaz who came up with Earthbag Homes (inexpensive and quick way to build structures that can withstand harsh weather conditions) and Liter of Light (electricity free lighting for homes). I will ask my friends to join me in investing in similar worthwhile projects but with a basic reminder to them that this is not just a monetary investment, but an investment in our environment and better life for all. That way they will be more flexible and patient with the monetary returns.”

When he explained that to me, I once again felt, “Wow! We must have done something right in raising the boys!”

What’s your driver?

So when we want to ask people to invest in our project, what should we trigger, the financial or the emotional aspect?

Before I answer that question, I wish to narrate another story. Last weekend while we were having Sunday lunch after hearing mass, the same son mentioned that sometimes he wonders whether becoming too rich will hinder his future children from enjoying the simple joys of life like eating in a carinderia and other cheap thrills. His older brother Martin told him, “I think if you really want them to, you can still make it happen. It won’t be that easy especially if you’ve set a high standard of living for them, but it would definitely be easier to make them enjoy cheap thrills as a rich dad than to make them experience the good things in life without the financial capability.”

Again, this mother was awed listening to her sons talk about money in a mature way. Weren’t they just quarrelling about the most trivial things and playing with their Pokemons and Power Rangers a few years ago? And now, here they are talking about life when they become fathers themselves. It was a proud yet sentimental feeling I got especially now when I don’t see them very often anymore.

It’s not binary.

A much closer probe into the Sinek quote makes me conclude that being financially invested and emotionally invested should not be binary. The presence of one should not necessitate the absence of the other. In the dream of my son to invest in projects that are worthwhile to the well-being of mankind, he is not taking out the prospect of making money from the investment. He is just managing the profit objectives of his future investors such that the bottomline will not be the sole driving force. And I think finding a fulfilling career should make use of this same guiding principle. We should not separate the earning part too much from the fulfilling our purpose part. It is when we are emotionally invested in something, that we are able to do beyond what’s practical, beyond what is the typical limit of what others would do. And most of the time, it is at this point where we find sweet success. Hence, it is in finding the intersection of these two important points that we will experience a great life.

The point of intersection is our point of sweet success. Our core values should function as our compass.

The point of intersection is our point of sweet success. Our core values should function as our compass.

 

The same is true when you become very rich. Being abundant should not hinder you from enjoying the inexpensive thrills in life.

The same is true in our giving. Doing good should not overemphasize the sacrifice part just to earn pogi points. My son Martin was once struck and inspired by a conversation he had with a young philanthropist who belongs to an old rich family. The philanthropist said that she does not give until it hurts but until it feels great. And her giving has something to do with what she’s good at and enjoys doing. This way, her giving is more sustainable.

In the end, it should not be Financial vs. Emotional Investing after all. The ideal is we should put our money where our heart is. But of course, once money enters the scene, things get a little bit more complicated. There is confusion about the norms at play. Is it the financial norm or is it the social norm? And that is why we should always be clear on the role that money plays in our life. Our core values should always be our compass.

The best combination is our financial investment is something we are also emotionally invested in.

 

In a future article I will discuss the difference of these two norms (Financial/Market Norm vs. Social/Emotional Norm) in my series on The Psychology of Money.

For the meantime, I wish you happy investing, both in the financial and emotional sense.

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 ANNOUNCEMENTS

  1. Do you want to know your FQ Score? Click link below to take the test. Poster-FQ-TEst-1024x717-minhttp://tinyurl.com/FQTest
  1. I will speak at the Smart Parenting’s Money Strategies for Money Smart Moms on October 22, 2016 at the Chateau 1771 Café. Click link to register Please reserve my slot.
  1. I will speak at the UST Financial Literacy Campaign and Promotion on October 24, 2016 at the Thomas Aquinas Research Complex Auditorium, University of Santo Tomas.
  2. I will speak at the Ateneo Paradigm Entrepreneurship Crash Course on November 11, 2016 at the Oakwood Joy Nostalg Center, Manila, Pasig City.
  3. I will speak at the Kerygma Conference on November 17, 2016 at the MOA Arena. My talk is entitled “AWESOME FAMILY, BY DESIGN (Applying Behavioral Economics in Raising a Great Family).” Click link to register – Please reserve my slot.Poster-Kerygma-1024x700-min
  1. Watch out for the continuation of my FQ talks in cooperation with Security Bank. Dates and venues to be announced.

Rose Fres Fausto is a speaker and author of bestselling books Raising Pinoy Boys and The Retelling of The Richest Man in Babylon (English and Filipino versions). Click this link to read samples – Books of FQ Mom Rose Fres Fausto. She is a Behavioral Economist, Certified Gallup Strengths Coach and the grand prize winner of the first Sinag Financial Literacy Digital Journalism Awards. Follow her on Facebook and You Tube as FQ Mom, and Twitter & Instagram as theFQMom.

ATTRIBUTIONS: Photos from ClipArtBest.com, A2ua, clipartbest.com, FreeImages.com, Wikipedia.com, Pinterest.com, wallpaper.zone put together to deliver the message of the article.



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