Investing is one of the most powerful tools for building wealth and achieving financial freedom—but it’s not something you jump into blindly. Before putting your hard-earned money into any investment, you need to take a step back and assess where you are and what you’re trying to achieve.

Too often, I meet people who ask, “Sir Randell, anong magandang investment ngayon?” My answer is always the same: It depends. There’s no such thing as a one-size-fits-all investment. What works for one person may not be suitable for another. That’s why it’s important to consider these three essential things before you start investing:

1. Know Your Investment Objective

This is the “why” behind your investment. Are you investing to build retirement funds? Buy a house? Fund your child’s education? Or maybe you’re looking to generate passive income?

Your investment objective will guide what kind of investment vehicles are appropriate for you. For example:

• If your goal is capital preservation, you’ll want safer instruments like bonds or time deposits.
• If you’re aiming for capital growth, you may consider equity funds or stocks.
• If you’re building passive income, real estate or dividend-paying stocks may be better options.

Without a clear objective, you’ll end up chasing trends and getting confused—or worse, you may fall for scams. Always invest with purpose, not pressure.

2. Determine Your Time Frame

Your investment horizon—how long you plan to keep your money invested—greatly affects your strategy.

• Short-term goals (1–3 years): These usually require more stable, low-risk investments like money market funds or short-term bonds. You can’t afford to lose capital here.
• Medium-term goals (3–7 years): A balanced approach might be better—maybe a mix of fixed income and equity.
• Long-term goals (7+ years): You can afford to take more risk for the potential of higher returns, which makes equity investments more viable.

Remember: Time is your ally. The longer your time frame, the more room you have to ride out market volatility. One of the biggest mistakes people make is panicking during downturns and pulling out too early. A long-term mindset helps you stay the course.

3. Assess Your Risk Appetite

Risk appetite refers to how much risk you’re willing—and able—to take. This isn’t just about emotions; it also considers your financial situation, income stability, and life stage.

Ask yourself:

• Will I lose sleep if my investment goes down 20%?
• Do I have an emergency fund in place?
• How stable is my cash flow?

If you’re naturally conservative, forcing yourself into high-risk investments just because someone else is doing it will only lead to stress. On the other hand, if you have the capacity and mindset to take on more risk, you can pursue more aggressive strategies—as long as they are aligned with your goals and time frame.

Bonus: Don’t Forget Diversification and Asset Allocation

Whatever your objective, time frame, and risk appetite, never put all your eggs in one basket.

Diversification means spreading your investments across different asset classes (stocks, bonds, real estate, etc.) so that no single investment can sink your entire portfolio.

Asset allocation is about how you divide your money between these asset classes, based on your goals and risk profile. For example:

• A conservative portfolio might be 70% bonds, 20% stocks, 10% cash.
• A moderate portfolio could be 50% stocks, 40% bonds, 10% cash.
• An aggressive portfolio might be 80% stocks and 20% bonds.

Proper diversification and asset allocation are what help you manage risk while still aiming for decent returns. This is not just theory—it’s something I always apply in my own investing and teach others to do.

Reminder…

Before you invest in any product, take the time to reflect on these three questions:

1. Why am I investing? (Objective)
2. When will I need this money? (Time Frame)
3. How much risk can I take? (Risk Appetite)

If you can clearly answer these, you’re in a much better position to build a strong, sustainable investment plan. Don’t rush. Investing is not about finding the next big thing—it’s about being faithful, consistent, and wise with what you have been given.

As the Bible says in Proverbs 21:5 (ESV):

“The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty.”

Plan well, invest wisely, and stay faithful.

As a personal finance advocate, being asked about investments and investing is a daily occurrence to me. I often joke that anything that every question relating money has been asked of me already. Building wealth is a preoccupation by many and investing one’s money is a crucial endeavor to wealth building.

Investing is the act of committing money expecting it to grow in value. However, investing will always entail risks which means there will always be a possibility of loss of money. In investing, one needs to understand and accept the risk-return relationship: high returns entail taking high risks while low risks will result to low returns. In other words, your returns or growth will depend on your willingness to take on higher risks. Risk can be categorized as low, moderate, high or speculative.

Speculative investing has been popular among many nowadays because of the desire to grow their money quickly. Personally, I am not against speculative investing but I want to emphasize the dangers of speculative investing. One of today’s most popular form of speculative investing is cryptocurrency (i.e. Bitcoins) but there are many other speculative investments out there. To simplify, speculative investments are easy to identify by looking at its potential yield or gain. Investments that can give you very high returns like 30% or even 1,000% in a year is definitely a speculative one. In 2011, the value of 1 Bitcoin was only $.0008 and someone paid 10,000 Bitcoins just to purchase 2 pizzas! By December 2017, Bitcoin value was already above $17,000 per coin. The astronomical (and seemingly impossible) growth of Bitcoins continue to fuel the frenzy for speculative investments. True to the nature of speculative investments, Bitcoin value hovered for a long time at $6,000, very far from its peak value just a few months after its high in set that year. Bitcoin is only one of the many cryptocurrencies out there and their success is far from encouraging with half of cryptocurrencies issued in 2017 are now non-existing and most of that are still existing perform poorly. However, Bitcoin and other cryptocurrencies once again soared in 2021 peaking above $60,000 which was a big stir in the investments market. But again, and as expected, Bitcoin went down significantly and stayed at the $16,000 range for a long period of time. But again, in April of this year, Bitcoin soared once more to a high of about $68,000 and stayed for a few days before coming down to about $59,000 as of this writing. Will Bitcoin hold at that value or are we expected another crash soon? We will soon find out.

Another popular form of investing is the stock market. While not all stocks traded in the stock market are considered speculative, many of them are. Investors trade those stocks because their price volatility or movement. Speculative investments can also be found in real estate, business and many other forms of investment.

One of the most important rule to follow in investing is this “never invest in something you do not understand.” While investing is not rocket science, it does require some studying. Because of poor understanding, many are duped into investment scams. Knowing how particular investments work will make you a good judge to determine what is a legitimately speculative investment from an obvious investment scam. Another factor to consider is your risk tolerance. Can you accept a big possibility of loss of money when you invest? If you can’t, stick to more conservative investments.

Investing requires wisdom and speculative investing requires great wisdom. Even if you have a very high tolerance for risks, it is always prudent to limit your exposure to speculative investments. On a personal note, I invest in speculatives particularly cryptocurrencies but I make sure that I am also properly diversified. No one wants to wake up realizing that half the value of his money is gone, or worse, all of it.

The bible offers wisdom in investing, lots of it but let me share two that I often share to others:

“Wealth gained hastily will dwindle, but whoever gathers little by little will increase it.” Proverbs 13:11, ESV

“But divide your investments among many places, for you do not know what risks might lie ahead.” Ecclesiastes 11:2, NLT

Such profound wisdom from the book that is not only timely but also timeless.

Aside from the ‘how’ and ‘what’ of investing, you must also know your ‘why’. Investing, and most decisions we make with money always show the condition of our heart. Ask yourself why you are investing to begin with, what is the purpose? Always remember that money is only a tool and not the end goal. I believe that we are only managers of what we have and we truly do not own anything — the bible says “The silver is mine, and the gold is mine, declares the LORD of hosts.” Haggai 2:8, ESV. As a manager, every action I take with money makes me accountable to the true owner, hence the need for prudence.

Remember “For where your treasure is, there your heart will be also.” Matthew 6:21, ESV

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I’ve been giving talks and lectures for many, many years. Without a doubt, the question I have been asked the most would be, “what is the best investment?” This is a question that will have an answer depending on the person being asked. If you are to ask a real estate agent, he will say real estate; a stock broker will say blue chip stocks; a banker will offer the latest bank products like a time deposit or a special savings account; a mutual fund representative will say mutual funds; an insurance agent would probably quote a variable life insurance – get the drift? However, my answer has always been consistent. The best investment for me? Well, I can’t really give an answer.

Okay, I must admit that many people give me a dumb-founded look whenever I answer them “I don’t know, it depends”. For someone who claims to be a personal finance guy who has been in the financial services industry for over 3 decades and a trainer in financial planning, I am pretty clueless ain’t I? I simply can’t tell anyone what the best investment is because there’s no such thing. My answer will always be “it depends!”

I have a simple four rule guide that I recommend to people whenever they are perplexed as to where they want to bring their hard-earned money.

1) Investment Objective – What is the investment for in the first place? Where do you plan to use it? Is it for retirement, education, purchase of a house? Or is it just to park your money while you are scouting for other investments?

2) Time Frame – When do you intend to use the money you are investing? Is it short (less than a year), medium (up to 7 years) or long term (more than 7 years)? It is unwise to put money in long term investments when you will need your money in the short term – you might end up realizing capital reduction or you may be levied with steep penalties should you liquidate your investment. It is likewise unwise to invest in short term instruments when the purpose of investment is for the long term like education or retirement – you will not realize a good appreciation of your investments as short term instruments generally give lower yields. In other words, your investment would be drastically reduced by inflation and find yourself with not much funds when you need it the most.

3) Risk Tolerance – Investors are usually conservative, moderate, or aggressive. Determine your risk tolerance first. Is liquidity and capital preservation an absolute must for you? Or are you willing to risk some potential capital loss in favor of potential capital hike? Remember the golden rule in investing – the higher the yield, the higher the risks and vice-versa.

4) Acumen – There are simple products and there are complicated products. If you are investing in the stock market and you are not familiar with some form of fundamentals, you might regret ever putting money there. If you can’t distinguish a structured note from a time deposit, you might want to reconsider your decision. I have a simple advice with regard to this – never ever invest in something you don’t understand.

Before parting with your money, I highly recommend that you go through the four-step rule first.

“But divide your investments among many places, for you do not know what risks might lie ahead.” Ecclesiastes 11:2 (NLT).