Does Money Matter? a Study of Savings and Investment Patterns Among Professional South Asians in Canada

ABSTRACT - This study underscores the inseparability of economics from other socio-cultural contexts in understanding South Asian culture and ways of life (Das 1987; Marriot 1990) as lived by immigrants in Canada. Indians outside of the continent blend elements of Hindu practices with the demands placed on them by living abroad (Mehta and Belk 1991; Joy and Dholakia 1991). As in India today, there is no question that consumerism, and hedonism affect all aspects of social life. While education, extensive overseas travel, and working abroad in high paying professional occupations have had a tremendous impact on lifestyle and socio-cultural practices, Indians, by and large, have still maintained a fundamental understanding of the Hindu way of life. Here the term AHindu@ is used in a general sense to refer to all South Asians, because despite religious differences there is a general recognition of a shared cultural system, that acknowledges the presence of the caste system, the extended family system, the importance of religion, as well as pluralism in life patterns and expectations (Venkatesh 1995:53).

Citation:

Arvind Kumar Jain and Annamma Joy (1996) ,"Does Money Matter? a Study of Savings and Investment Patterns Among Professional South Asians in Canada", in AP - Asia Pacific Advances in Consumer Research Volume 2, eds. Russel Belk and Ronald Groves, Provo, UT : Association for Consumer Research, Pages: 36-37.

Asia Pacific Advances in Consumer Research Volume 2, 1996      Pages 36-37

DOES MONEY MATTER? A STUDY OF SAVINGS AND INVESTMENT PATTERNS AMONG PROFESSIONAL SOUTH ASIANS IN CANADA

Arvind Kumar Jain, Concordia University, Montreal, Canada

Annamma Joy, Hong Kong University of Science and Technology

ABSTRACT -

This study underscores the inseparability of economics from other socio-cultural contexts in understanding South Asian culture and ways of life (Das 1987; Marriot 1990) as lived by immigrants in Canada. Indians outside of the continent blend elements of Hindu practices with the demands placed on them by living abroad (Mehta and Belk 1991; Joy and Dholakia 1991). As in India today, there is no question that consumerism, and hedonism affect all aspects of social life. While education, extensive overseas travel, and working abroad in high paying professional occupations have had a tremendous impact on lifestyle and socio-cultural practices, Indians, by and large, have still maintained a fundamental understanding of the Hindu way of life. Here the term "Hindu" is used in a general sense to refer to all South Asians, because despite religious differences there is a general recognition of a shared cultural system, that acknowledges the presence of the caste system, the extended family system, the importance of religion, as well as pluralism in life patterns and expectations (Venkatesh 1995:53).

Religious traditions particularly in the Indian context have philosophical and practical implications for the daily life of an individual. Religion is not separated from other spheres of society. Indeed as Das (1987), notes, religion and materialism are not antithetical but, on the contrary, are essential to each other. The search for salvation, and the desire to acquire wealth are not contradictory or problematic as in western cultural contexts, but are goals that co-exist, and which individuals seek to attain as they progress through life. It is within this larger cultural matrix that we seek to locate financal practices and investment behavior among professional Indians in Canada.

The study was done with thirty professional Indian families in Montreal over a period of three months. Both husbands and wives were interviewed although in most instances much to our surprise, these educated women had little knowledge of the actual investments the husband had made. While these interviews were completed in a relatively short time, both principal researchers have lived in the city for over fifteen years, and have extensive networks within the Indian community. Also, they have conducted extensive research relating to consumption patterns within this community. Finally, one of the authors teaches finance while the other teaches marketing.

The approach was basically ethnographic in nature and the data were gathered through in-depth interviews. We were assisted by two business students of Indian origin who had a lot of experience in the financial services sector. One of them had prior experience selling financial products to the Indian community, and the other was in the process of establishing herself as a financial consultant. After each interview the research assistants shared the information with the principal researchers. Thus there was continuous interaction and development of ideas as they emerged in situ. Consequently triangulation of researchers was possible.

The repeated themes that emerged during the interviews, were as follows: the importance of a temporal view of life, the centrality of the family i.e., the performance of one’s duty towards one children, the protection of the family, duty towards parents, obligations towards extended family through gift-giving, visiting India as a means of maintaining ties, (particularly for the sake of the children), and a general understanding of appropriate behavior given the respondents’ stage of life. The two basic sub-samples we had were based On age, marital status, and the ages of the children. Hence there was an under fifty, and an over-fifty group. However, there was one couple who did not have children, and a professional unmarried woman who were also interviewed.

In investment patterns Indians take a very long view of time. Time is neither scarce nor short. They are in no hurry to make money in the short run. Their primary purpose is to invest money in order to provide for their progeny - not so much in a strictly linear sense, but in the sense of performing one’s duty or "dharma." The same idea is stated even more eloquently by Olivelie (1993) who says that the progression implied in the four stages of life of an Indian, can only be understood against the horizon of the transcendant. This was voiced unequivocally by respondents, and was indeed one of the governing forces in their financial decisions.

Decisions to purchase a house, to make work related contributions to pension plans, or begin registered retirement plans, all point to the significance of the stages of life concept governing financial decisions. The first few interviews clearly reinforced our expectations of the importance of the spiritual dimension which guides their material decisions. From then on each additional interview moved us to plumb all aspects of this overarching concern raised by the respondents.

The under-fifty group of respondents with school going children, focused their responses around the importance of the family, and duties of parents towards children. There was only one couple in this category who located the importance of the family within a larger religious context and actually referred to the Hindu concept of "varnashrama dharma," or the duties that are expected of individuals based on their caste and stage in life. This couple needless to add is a very religious couple who live close to the temple, and who feel that once their children leave home, they would devote their lives to spiritual concerns.

It is not surprising that this group as a whole focused on their young children. The good parent (primary reference is to the father) as many respondents noted, provides for Ms children. This came up often in statements such as we had to buy a house because we wanted the children to run around and play. The apartments were small and did not give them this freedom." Another said, we decided to buy a house in the suburbs with a garden, because the children could play." While overt religious dictums were not particularly adhered to or proclaimed, their sense of doing what is appropriate to their life stage was an overwhelming concern.

The older group however waxed eloquent on philosophical and religious concerns. They conveyed the sense of having done their "duty." The act of "looking back on their lives" allowed them to slip easily into philosophical observations relating to the four stages of life. One respondent for instance, stated, that he had considered buying a bigger house, but since his last son had left home, there was no more reason to acquire more wealth. "That stage of my life is over," he noted. "Now we have more time, to start thinking about more spiritual matters, and we are less tied down to mundane issues relating to maintenance of a house, and other possessions." They, like several others in this subgroup, were looking forward to a happy retirement.

In order to enter into such a worry-free situation, most families had made wise financial decisions. The long term view that they take in investment matters makes them more risk tolerant. The majority invest inequity accounts rather than in fixed income accounts. If we keep the age factor in mind as a guide to sound investment, they have more equity investments than is warranted by their age. They show little or no concern about short term fluctuations and they are not affected by inflation. They also do not pay too much in taxes because of their investment patterns.

Support of parents either living in India or in Canada was an important priority as well. This meant either visiting India on a regular basis (on an average every two years) or getting them to visit them in Canada. Visits to India cost a lot of money not merely because of transportation costs, but also because of the extensive gift giving practices associated with it. Immediate family members are usually given expensive gifts, while the proportional spending on gifts for members of the extended family and friends are lower. Nevertheless every one of the respondents noted that they spent a large chunk of their savings in buying gifts. While they expressed some concern, and made some modifications in their budget to manage this activity better, there was no question in their minds that they were going to continue to do it. Gift-giving was not an area where they were going to compromise, because maintaining family ties, and encouraging their children to develop their roots in India was an important priority for them.

Knowledge about investments runs deep in the community although it is gender based. We were very surprised that wives, often well educated, paid little attention to financial matters. It was only in one or two situations that investment planning was actively engaged in by the wife. All others were aware of what was being done by their husbands, but chose to leave it to them. What they chose to focus on instead was the creation and maintenance of a annual budget for the household. In this sense they were more short-term oriented, but since budgeting leads to savings, it contributes to the long term planning process that the husbands actively pursue. But both spouses however share in the view of taking care of the family, and performing their duty.

The men who were interviewed are meticulous, and study everything that is available in newspapers, brochures, articles and business related publications on investments. Many of them attend investment seminars, and update themselves on a regular basis. They believe in continually educating themselves and feel a need to research everything. This allows them to be more results-oriented rather than relationship oriented. i.e., towards financial planners or salespeople.

The exception to this rule occurs when they are new to the process of investing. At this stage they value the assistance provided by financial panners. But as soon as they have had some experience, they manage their money on their own. At best, they would like to receive invitations to investors’-seminars on specific issues relating to financial matters such as for instance, how certain socio-political events can affect the products they buy.

It also seems that Indian professionals do not like to be tied down to particular investments. They would like the freedom to opt out if they wanted to and when they wanted to. In order to keep this option open, they do not like to pay deferred charges either (it costs nothing if investments are held for at least six years. There is a penalty only for early withdrawal). Instead they try to negotiate a cheaper front end sales charge which allows them the flexibility to withdraw their money as they wish. Tying into this wish for freedom, is a desire expressed by many respondents to shop around for financial products and services. Further, they do not necessarily like to work with banks and investor groups because these institutions tend to treat their customers as a captive audience.

However, despite the high risk tolerance that Indian professionals show, they still tend to invest mostly in registered retirement plans, rather than play in the stock market. Their views on this matter seem particularly interesting. As one professional observed, and this was echoed by a number of others, "I am only loaning my money and getting interest on it currently. Whereas if I am buying stocks in a company, I become an owner and not just a lender. I will receive a share of the equity." While they consider the stock market a very legitimate institution in society, and while some of them have purchased stocks either here or in India, the bulk of their investment is located in mutual funds. The sentiment that most respondents expressed is one of uncertainty about making money in this fashion. They cautiously observed that they were not working hard enough for the money, but engaging in speculative activities. The terms they used are "easy money" or "illicit money." Thus, money made on the stock market is not seen as money earned through hard work.

The idea that money made in the stock market is "easy money" should not be misread as their belief that one does not have to work hard in speculative matters. What they prefer not to engage in are activities where the chances of losing or making a lot of money are high. They make the distinction between calculated risk and speculative risk. Given their educational backgrounds, and level of sophistication, there is no question that this is a preference that comes from their understanding of work values, and a conservative attitude towards making quick and easy money. As far as they are concerned it is not a moral issue.

REFERENCES

Das V (1987)"The Sacred and the Profane in Hinduism," in V. Das (ed), Structure and Cognition: Aspects of Hindu Caste and Ritual, pp, 114-131, Delhi: Oxford University Press.

Geertz, C. (1973), The Interpretation of Cultures, New York: Basic Books.

Joy A., & Dholakia R. R.(1991), "Remembrances of Things Past :The Meaning of Home and Possessions of Indian Professionals in-Canada," Journal of Social Behavior and Personality, Vol. 6. no. 6. pp 385-402.

Mehta R. & Belk R. (1991), "Artifacts, identity and transition: Favorite possessions of Indians and Indian Immigrants to the United States," Journal of Consumer Research, Vol. 17.p, 398-411.

Venkatesh, A (1995), "Ethnoconsumerism: A New Paradigm," in Marketing in a Multicultural World, (eds)., G. Bamossy and J. Costa, p.26-65, Thousand Oaks: Sage Publishers.

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