‘The habit of investing from a young age has been greatly lost’: Credicorp

The change of generations and the new way of thinking of young people and professionals who are currently part of the country’s productive force, are taking the country towards a new economic dynamic in which consumption is the protagonist and Good practices such as savings or investment are being left aside.

This, added to the aging of the population and the fact that families no longer have the same number of children as before; It has been creating an environment that, for analysts, requires that measures be adopted now to avoid regretting imbalances in the economy in the future, where the labor force is expected to decrease and the same amount of wealth will not be generated as before.

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In dialogue with Portafolio, Rafael Castellanos, managing director of management of Assets at Crédit Corp Capital, issued an alert for this change in trends, highlighting that savings are no longer seen with the same importance as before and that this is largely due to the lack of pedagogy that exists from the financial authorities.

“Actually, I think that this discipline of being able to save for the long term has been lost a little bit. Especially because in general inflation and costs have made young people spend more on a daily basis than actually saving; forgetting that there may be needs or circumstances in the future, beyond savings, such as eventualities or accidents, for example,” Castellanos said.

The Credicorp Capital expert added that it is not only saved for retirement or old age, which are two long-term elements, but to generate stability on a day-to-day basis through tools such as investment, since from his experience, neither It is about keeping money under the mattress, but about knowing how to use it to generate new income.

“We must instill a little bit again this feeling or this responsibility of saving from a young age for any circumstance and putting this discipline in each person’s head. That will help you mark different milestones during one’s life,” he added.

To explain the concern expressed a little better, from Credicorp They said that a few years ago, even before the financial crisis, in approximately 2010 or 2011, there was a slightly greater savings culture where people saved between 15% and 20% of their income, for some type of circumstance in the future. .

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“What we have seen in general is that this savings culture has been lost a lot. Obviously the cost of living has increased and people are investing much more in entertainment issues, in experience issues, which is not a bad thing because obviously life must be enjoyed. But in the end this makes it a little difficult to have a reserve for an emergency circumstance,” he explained.

Because of this, they say, people are no longer thinking about meeting milestones like owning a house or buying a car, since they have moved more toward a day-to-day mentality, which in the long run could translate into a transformation of dynamic andconomics in the world; that generates pressure in other aspects such as the pension system.

“We have examples like Peru, where there have been seven withdrawals in the pension system; generating a significant lack of savings in the funds that were supposed to be designed to ensure the future of savers and that will now have to be capitalized again, since the money was taken towards consumption,” said Rafael Castellanos.

Investment and investments.

Courtesy.

In the case of Colombia, he said that there is still a long way to go to know howThe pension reform will be applied, although it was made clear that the regulations issued must think about the future and guarantee that all people seeking a retirement can do so in decent conditions.

“You have to be careful with the numbers to see if in the end you will be able to have an adequate amount to live on once you no longer have that workflow, hopefully in many years. The idea is to prepare ourselves so that when this happens, hopefully in many years, we will have the tools for adequate coverage,” they added.

Change in dynamics

Thinking about new paths to ensure that the dynamics that are being seen in society do not translate into economic instability, Credicorp experts put on the table the figure of compound interest, which arises from calculating The initial amount of an investment or loan with interest accumulated from prior periods.

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“As you are able to save when you are younger, this compound interest, which in the end is how your capital base and profitability interest rates expand, multiplies that capital base, you have much more time to accumulate. So that’s why it’s also important to start earlier,” he said.

Regarding how much should be saved, Rafael Castellanos He said that everything depends on the expenses you have, although he suggests that the ideal is at least 20% of your monthly income and that you simply do not put the money under the mattress; but to think about alternatives to invest. Regarding the best alternative, he expressed that everything depends on the risk profile and interests of each person.

Young people working.

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“Both inclusion and financial education are an important part of what is happening and what is coming in economic matters. As time goes by, everything has become more complex regarding the ways to invest and not everything is about great returns or attractive mechanisms. Everything must be analyzed carefully,” he concluded.

Credicorp Capital closed by stating that the transition and change in trends in savings and investment require the joint efforts of regulatory authorities, analysts and financial entities; since this change will happen whether you want it or not and the more prepared you are, Better returns can be obtained in the future.