Asian American financial stereotype

[kimpossible]

So after I do my early morning wake up to put some hot potato pancakes and pork on the table for the guys' breakfast, I sit with my cup of joe whilst perusing my financial institution's mag sent out to investors.

I start on an article on investing mistakes to avoid. Light reading with hot cup of coffee. Then I get the slap in the kisser. The article is a series of financial stereotypes with abstract names like "Suzy Spendalot" but lo and behold, we get "The Parks" who own a business and make the horrific financial decision to put too much into their children's college fund by "bowing to misguided traditions" and thereby burdening their children in the future who must take care of "destitute parents" who didn't invest properly for their own future.

I've already made my first phonecall. Soon as I get a reply, and I'm gonna keep calling till I get one, then it's onto the college fund department people where they ARE going to answer why these Asian American parents should continue to have their child's college fund with them.

Then, it's letter writing time. I'll update responses come out.

[VV o n g B a]

err possibly offtopic, but i don't quite get the economic part of it. i vaguely remember that my parents put money into some state college savings program for me. was this apparently a bad idea b/c they could have earned more elsewhere?

i remember my dad making the comment that he was thankful for it b/c it freed him from the responsibility of separately calculating how much to save each month and leaving that amount alone for the necessary length of time. i guess laziness runs in the family.

[nameless]

lol they're really reaching with that one.

err possibly offtopic, but i don't quite get the economic part of it. i vaguely remember that my parents put money into some state college savings program for me. was this apparently a bad idea b/c they could have earned more elsewhere?

i remember my dad making the comment that he was thankful for it b/c it freed him from the responsibility of separately calculating how much to save each month and leaving that amount alone for the necessary length of time. i guess laziness runs in the family.

They have a problem with "too much" funding. Either they think funding for grad school preemptively is bad, or they think kids should pay (at least partially) for college themselves?

[Sarah7106]

I am paying for my college myself. I think it's fair to make the child pay at least a partial amount, because, I've noticed that kids who pay at least something don't take college for granted as much as kids who pay nothing. My husband is Asian and his mother never had a college fund for him or his brother, but, she does have a ton of money to retire on. Which I am happy about, because, a lot of times in the Phils. the parents end up living with thier kids, since, they don't have any retirement money set aside.

[eos]

my parents never put any college money away for my sister or myself. we relied on loans, and in my sister's case, lots of scholarships and grants.

i pay for some college expenses myself but i don't take it seriously. it's cuz i'm a spoiled brat and i hate school. thank god i'm done next week.

[Sarah7106]

my parents never put any college money away for my sister or myself. we relied on loans, and in my sister's case, lots of scholarships and grants.

i pay for some college expenses myself but i don't take it seriously. it's cuz i'm a spoiled brat and i hate school. thank god i'm done next week.

You may think you don't take it seriously, but, just finishing school is taking it seriously. Most kids I know who's parents paid for there college all the way only lasted a couple of years before they dropped out due to partying to hard and not keeping up with there studies.

[kimpossible]

I am paying for my college myself. I think it's fair to make the child pay at least a partial amount, because, I've noticed that kids who pay at least something don't take college for granted as much as kids who pay nothing. My husband is Asian and his mother never had a college fund for him or his brother, but, she does have a ton of money to retire on. Which I am happy about, because, a lot of times in the Phils. the parents end up living with thier kids, since, they don't have any retirement money set aside.

What works for you personally is fine. I also put myself through school.

It also has absolutely no power to justify the application of a racial stereotype and cultural judgment about traditions being 'misguided'. This is our financial institution that we have entrusted our son's college fund with. Correction, had. We're pulling those funds.

[eos]

trust me, i think i know myself a lot better and i KNOW for sure that i have not taken my education seriously. i have potential, it's there, but i'm just unmotivated, uninspired, and lazy. i could have done a lot better if i had applied myself and saved both myself and my parents a butt load of money.

[Sarah7106]

What works for you personally is fine. I also put myself through school.

It also has absolutely no power to justify the application of a racial stereotype and cultural judgment about traditions being 'misguided'. This is our financial institution that we have entrusted our son's college fund with. Correction, had. We're pulling those funds.


True. I'm not in favor of this financial institution for what they did and I agree that its wrong.

[AngryABCGirl]

My parents "bowed" to misguided conditions putting me through college, but I'm glad they did because students who have to work through college have to go through a lot more crap and can potentially lose out on a lot of study time and education time. I've worked part-time for my own benefit and still lost academic time.

If anything though, that's hella fucking racist. I'd probably throw a hissy fit and almost bluff or even consider changing institutions to make my point. Whose publication is this?

[SunWuKong]

but lo and behold, we get "The Parks" who own a business and make the horrific financial decision to put too much into their children's college fund by "bowing to misguided traditions" and thereby burdening their children in the future who must take care of "destitute parents" who didn't invest properly for their own future.

duh. it's not about tradition. it's something that a lot of parents simply want to do out of love for their children. back at school i actually knew more white kids than Asian kids whose parents paid for everything, and mostly because they could actually afford it.

my own college finances came from about 10 different sources because that shit was so expensive. i'm still paying back the loans.

but just to ask, does anybody actually know any parents who became "destitute" when they retired because they put too much money into their kids' college tuition? i'm thinking if they can actually even afford a sizable amount of contribution to college tuitions, then they're probably financially well enough that they're not going "destitute" when they retire.

[SunWuKong]

You may think you don't take it seriously, but, just finishing school is taking it seriously. Most kids I know who's parents paid for there college all the way only lasted a couple of years before they dropped out due to partying to hard and not keeping up with there studies.

most kids i know whose parents paid for college didn't have to spend time working for money while they were at school, and graduated debt free. which is fucking awesome and i wish my parents could have afforded that.

[CBC guy]

Ha my parents paid for all my education expenses and I'm debt-free woot! :biggrin:

[SunWuKong]

Ha my parents paid for all my education expenses and I'm debt-free woot! :biggrin:

so you didn't drink your way through two years of college and then drop out? holy shit it's a miracle!

[nameless]

but just to ask, does anybody actually know any parents who became "destitute" when they retired because they put too much money into their kids' college tuition? i'm thinking if they can actually even afford a sizable amount of contribution to college tuitions, then they're probably financially well enough that they're not going "destitute" when they retire.

I have a feeling that the author isn't familiar with the filial tradition of taking care of one's parents in old age, or inviting them to live with you, and assumes it must be a financial issue (not to say all Asians do that, but you know what I mean). He's just mad that his kids are going to ship him off to a retirement home if he can't pay off his house. :biggrin:

[SunWuKong]

I have a feeling that the author isn't familiar with the filial tradition of taking care of one's parents in old age, or inviting them to live with you, and assumes it must be a financial issue (not to say all Asians do that, but you know what I mean). He's just mad that his kids are going to ship him off to a retirement home if he can't pay off his house. :biggrin:

it's not exactly an issue that should be carelessly dismissed. i know that in HK, the act of financially supporting your retired parents have become a great source of stress for some families, to the point that there were even reported cases of elderly abuse. this is why in 2000, the HK government actually implemented a mandatory retirement fund that works like our 401K.

in a modern society with an industrialised economy and 21st century family structures, sometimes supporting your elderly parents is just not so easy. remember, it was in an agricultural society that Asian families started doing this.

having said that, it's the context that the article places the issue that i don't necessarily agree with - that parents have spent too much money in their kids college tuition, to the point that they become "destitute" when they retire. and also that they're somehow bound to tradition to do this - that basically reduces Asian people and the decisions they make to nothing more than tradition. um... we're not automatons.

[applehead]

So after I do my early morning wake up to put some hot potato pancakes and pork on the table for the guys' breakfast, I sit with my cup of joe whilst perusing my financial institution's mag sent out to investors.

I start on an article on investing mistakes to avoid. Light reading with hot cup of coffee. Then I get the slap in the kisser. The article is a series of financial stereotypes with abstract names like "Suzy Spendalot" but lo and behold, we get "The Parks" who own a business and make the horrific financial decision to put too much into their children's college fund by "bowing to misguided traditions" and thereby burdening their children in the future who must take care of "destitute parents" who didn't invest properly for their own future.

I've already made my first phonecall. Soon as I get a reply, and I'm gonna keep calling till I get one, then it's onto the college fund department people where they ARE going to answer why these Asian American parents should continue to have their child's college fund with them.

Then, it's letter writing time. I'll update responses come out.


wait. they didn't go into details on how these children
were so grateful and respectful of their parents and all
that they went through that it didn't matter if they ended
up destitute because they were very much well taken care
of by these fantastic children who are school-loan free?

[AngryABCGirl]

it's not exactly an issue that should be carelessly dismissed. i know that in HK, the act of financially supporting your retired parents have become a great source of stress for some families, to the point that there were even reported cases of elderly abuse. this is why in 2000, the HK government actually implemented a mandatory retirement fund that works like our 401K.


It's actually one of the reasons why I decided to move into the business field at some point because I need to for myself to be financially stable and have a cushion for my family if necessary instead of running off and becoming a public servant or something, which was the plan. Plus they put me through school and I had the time to study and do a lot I couldn't have done if I had to work, so I might as well start off doing something lucrative and helpful to them for now, instead of going off and being a public servant like I wanted to in the past. That's just me.

With that said, a lot of financial advisors are taught to advise people essentially that saving for retirement is more important than saving for your child's college education for reasons you've listed above and also because there will always be student loans and work options for young people, but not one will give you a loan when you're old and out of luck and there are no bailouts for that and you may not be able to work nor will your children be able to support you.

[Dimeron]

Coop education ftw.

Although graduating one year later than everyone else sucks, but it allowed me to graduate debt free.

[nameless]

With that said, a lot of financial advisors are taught to advise people essentially that saving for retirement is more important than saving for your child's college education for reasons you've listed above and also because there will always be student loans and work options for young people, but not one will give you a loan when you're old and out of luck and there are no bailouts for that and you may not be able to work nor will your children be able to support you.

What if you have enough money to save adequately for retirement and still "overfund" your children's education? I mean, is the general advice to disregard your kid's grad school, and instead put it towards an even better retirement? Or is this just advice for low income families who really do risk becoming poor after retirement?

Oh and not to go off on a tangent, but I heard that Chinese (mainland I believe) save relatively more of their disposable income (like 30%) compared to Americans (15%?). I wonder if that is the same for AAs and if it allows us more freedom to invest differently. Or maybe Americans just have a higher standard of living during retirement?

[AngryABCGirl]

What if you have enough money to save adequately for retirement and still "overfund" your children's education? I mean, is the general advice to disregard your kid's grad school, and instead put it towards an even better retirement? Or is this just advice for low income families who really do risk becoming poor after retirement?

Oh and not to go off on a tangent, but I heard that Chinese (mainland I believe) save relatively more of their disposable income (like 30%) compared to Americans (15%?). I wonder if that is the same for AAs and if it allows us more freedom to invest differently. Or maybe Americans just have a higher standard of living during retirement?

It's more general advice for low-income families to lower-middle-class families, or those who basically cannot both save for their child's education and their retirement. If they had to pick either saving for their retirement or child's education, they should pick saving for retirement.

I have no idea about disposable income in China, but I know it's shrinking for a lot of people in China because of inflation, that sample must be of the most wealthy because half of the population still lives on less than $2 a day. For Asian Americans the wealthier part of the pop must have more, but others no.

[kimpossible]

I was pretty pissed when I first started the thread. Info I don't think I included was that the assumption is also that an Asian family investing in college fund is basically incapable of having a balanced portfolio that includes their own retirement. That and the 'solution' offered was to not worry about saving and just go for loans. Yes, who needs to save when you can go into debt. Debt solves everything. Great advice!

Anyhow, thankfully that letter is done. Now I gotta withdraw the funds which I'm sure is a mountain of paperwork.

edited to add: oh yeah, this is in conjunction with stuff they printed about students graduating with record amounts of debt, advertising college funds and providing info on ever-increasing tuition costs.

[eos]

no seriously, who ARE these jerks? loans are no fun, and being in debt at a young age can be really traumatic for people.

[SunWuKong]

the 'solution' offered was to not worry about saving and just go for loans. Yes, who needs to save when you can go into debt. Debt solves everything. Great advice!

i don't agree with their stereotyping, but if you can put the investment somewhere that has a long term rate of growth that's bigger than the interest rate you'd get charged for, and keep in mind that interest with college loans are pretty damn low, then it really is a good idea to borrow instead.

[kimpossible]

You'd be counting on a few things that are at best uncertain. That you can get enough loans to cover whatever school you are accepted to. That you could get all subsidized loans versus unsubsidized. That wherever else you invest to get that great growth rate magically stays at a constant rate of return.

On a more positive financial note, and having shat out my letter and therefore my wrath I'd love for this to take turn towards college finance, college funds aren't that bad. You get some tax sheltering and less risk there. In many things, all depends on how risky you want to get. Assuming ALL those factors remain in your favor for two consecutive decades isn't too likely. Just my take and I think you and I are on opposite sides of the battlefield when it comes to carrying debt. Fair to say?

[jackandjerry]

I was borned in tokyo

[SunWuKong]

You'd be counting on a few things that are at best uncertain. That you can get enough loans to cover whatever school you are accepted to. That you could get all subsidized loans versus unsubsidized. That wherever else you invest to get that great growth rate magically stays at a constant rate of return.

of course. and i'm not saying you shouldn't save for college tuition. let me put it in a different perspective - you shouldn't carry a high interest loan for college tuition if you can help it. i'm also just speaking from personal experience because i still have two loans that i'm almost done paying off. one of them is at 5% and the other is at 4%. of course, i took them out because i didn't have enough money for tuition. but if i did have the money, it would be kind of sad if i couldn't have found funds that have a higher 5-year return rate than that, no? (though not that i would have been thinking about that when i was 18 years old.)

i'm just talking about undergrad though. i don't know about grad school. it seems most people i know who went to grad school carried the entire tuition in loans.

[kimpossible]

With respect to the numbers I'm a stickler for transaction costs and I might be place a higher value on maintaining a certain amount of liquidity - my guess is that our different positions in life. I can't afford a higher risk profile with a dependent. You can be bolder if that's fair to say.

I also want my boy to grow up and go to a top notch school like you did. :) I'd never forgive myself if we had to turn down a school like that because we didn't have enough money to cover costs or couldn't get enough loans.

[SunWuKong]

With respect to the numbers I'm a stickler for transaction costs and I might be place a higher value on maintaining a certain amount of liquidity - my guess is that our different positions in life. I can't afford a higher risk profile with a dependent. You can be bolder if that's fair to say.

oh if i had a kid, i'd definitely start a college fund early, just like you yourself have probably either done already or are in the process of doing. and that way i can pick something less risky but with long term growth.

I also want my boy to grow up and go to a top notch school like you did. :) I'd never forgive myself if we had to turn down a school like that because we didn't have enough money to cover costs or couldn't get enough loans.

bah. if i was good enough i would have gone to MIT instead. :rolleyes:

[Yeahman]

This is actually one of my pet peeves. Many parents, and practically all Asian parents, over-invest in their children's education. I'm sure we can come up with a long list of reasons but it's absolutely good financial advice to tell parents to stop that shit.

For grad school, everyone can get a loan for the full cost of attendance at a max rate of 8.5%. For undergrad, parents with good credit get the same deal. So there, that's what you can do for your children. Co-sign the loan for them.

8.5% isn't great but it's nothing to be scared of. With the tax advantages of 529's, saving for college isn't a bad idea, but by no means, necessary.

[SunWuKong]

This is actually one of my pet peeves. Many parents, and practically all Asian parents, over-invest in their children's education. I'm sure we can come up with a long list of reasons but it's absolutely good financial advice to tell parents to stop that shit.

i'm personally still wondering though, does anybody know any Asian parents that have actually over invested in their children's education, i mean so much so that now they are poor because of it? i haven't come across this yet. actually with a few exceptions, i personally don't know any Asian parents that could afford to pay full tuition for their kids. but granted, i'm not talking about community college or the subsidised tuition of the UC system.

[AngryABCGirl]

i'm personally still wondering though, does anybody know any Asian parents that have actually over invested in their children's education, i mean so much so that now they are poor because of it? i haven't come across this yet. actually with a few exceptions, i personally don't know any Asian parents that could afford to pay full tuition for their kids. but granted, i'm not talking about community college or the subsidised tuition of the UC system.

Same here. It's either they can pay or they just can't, and the kid must apply for loans. I don't think my parents could have footed the bill if I didn't go to the UC because their financial situation was rocky when I first entered college. I dunno how you can find the money to "overfund" an education either unless you have it.

[Yeahman]

By "over-invest" I don't mean that they're poor, only that they spend more on their children's education than they should. I can think of two ways they over-invest.

1. Education isn't the be all and end all as most Asian parents seem to think. In many situations, education can be economic waste. It may be better to give your kid a little seed money for a small business. I always come back to the example of my friend in her 8th year towards her Associate's degree.

2. Student loans aren't bad! The old Korean man at the corner deli was telling me how he thinks mortgages are evil schemes. He's saving up to buy a house with 100% cash! That's over-funding a home. We that that's crazy but so many people think the same way when it comes to tuition.

[SunWuKong]

1. Education isn't the be all and end all as most Asian parents seem to think. In many situations, education can be economic waste. It may be better to give your kid a little seed money for a small business. I always come back to the example of my friend in her 8th year towards her Associate's degree.

if they have seed money for a small business, doesn't that also mean they have money to contribute to tuition? are you describing a situation where parents should give a kid money if he's trying to start a business, but refuse money if he's trying to come up with tuition?

2. Student loans aren't bad! The old Korean man at the corner deli was telling me how he thinks mortgages are evil schemes. He's saving up to buy a house with 100% cash! That's over-funding a home. We that that's crazy but so many people think the same way when it comes to tuition.

are there Asian parents that tell their kids they can't go to university until they've saved up tuition money in cash? i would think that if by the time the kid graduates high school and they don't have the cash, they would have no choice but to go with loans.

saving money to buy a home with cash is ridiculous just on the fact that you'll end up losing more money to pay rent than to pay interest on a 30-year fixed.

[Yeahman]

if they have seed money for a small business, doesn't that also mean they have money to contribute to tuition? are you describing a situation where parents should give a kid money if he's trying to start a business, but refuse money if he's trying to come up with tuition?
I'm describing a situation where seed money for a small business could be a better investment than money for tuition.

are there Asian parents that tell their kids they can't go to university until they've saved up tuition money in cash? i would think that if by the time the kid graduates high school and they don't have the cash, they would have no choice but to go with loans.
There are Asian parents who forgo home repairs, business expansion, or retirement savings because they want to avoid taking out loans for college.

[SunWuKong]

I'm describing a situation where seed money for a small business could be a better investment than money for tuition.

so... basically give the kid money if he's trying to start a small business, but refuse if he's trying to get an education...?

[buttermilkwise]

You may think you don't take it seriously, but, just finishing school is taking it seriously. Most kids I know who's parents paid for there college all the way only lasted a couple of years before they dropped out due to partying to hard and not keeping up with there studies.

Definitely not true. When you're fighting tooth and nail to graduate, and you have the additional burden of having to work and pay at the same time it can easily be a much bigger disaster.

[Yeahman]

so... basically give the kid money if he's trying to start a small business, but refuse if he's trying to get an education...?
In certain situations, yes. As with all investments you consider the expected return.