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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Credit cards offer a range of benefits and conveniences, and when used wisely, they can be a powerful financial tool. For Filipinos looking to maximize the advantages of their credit cards, here are several strategic ways to do so:

1. Choose the Right Credit Card

Select a credit card that aligns with your lifestyle and spending habits. Look for cards that offer rewards on the categories you spend the most on, such as groceries, fuel, dining, or travel. Banks in the Philippines offer various cards with specific perks including cashback, rewards points, and travel miles. Comparing these features will help you choose a card that best suits your needs.

2. Understand the Rewards System

Get familiar with your credit card’s rewards program. Understand how points are earned and keep track of them. Some credit cards offer higher points for specific types of purchases or during promotional periods. Make sure to use your card for these high-reward purchases when possible. Additionally, know when and how to redeem your points for maximum value, whether for flights, shopping vouchers, or cash rebates.

3. Pay Balances in Full and On Time

To truly benefit from a credit card without falling into debt, always pay your balances in full and on time. This avoids interest charges and late payment fees. Maintaining a good payment history also improves your credit score, which can be beneficial for future loans and credit applications.

4. Take Advantage of Promos and Discounts

Credit card companies often tie up with merchants to provide discounts, promos, and special offers. These can range from discounts at restaurants, retail outlets, online shopping deals, or travel packages. Always check the latest offers from your credit card issuer and plan your purchases around these promotions to save money.

5. Use Balance Transfer Features

If you have outstanding balances on other high-interest credit cards, consider using a balance transfer facility to save on interest payments. Many credit cards in the Philippines offer promotional low-interest rates for balance transfers, which can provide you with a period of relief to manage your debts more effectively.

6. Manage Your Credit Limit Wisely

Request for a credit limit that suits your financial capacity and spending habits. While it might be tempting to have a high credit limit, it’s important to have a limit that you can manage responsibly. Conversely, if you often reach your credit limit and are confident in your ability to repay, you might consider asking for a limit increase to improve your credit utilization ratio, which can positively affect your credit score.

7. Monitor Your Account Regularly

Regular monitoring of your credit card account is essential. Check your statements for unauthorized transactions and report any discrepancies immediately. Many banks offer SMS alerts and mobile banking apps that help you keep track of your purchases and payments in real-time.

8. Utilize Consumer Protection

Credit cards often come with consumer protection features that can include fraud protection, extended warranties, and travel insurance. Understanding and using these protections can provide additional value and security for your purchases, especially on high-ticket items or when traveling.

9. Participate in Special Programs

Some cards offer additional benefits such as access to airport lounges, free travel insurance, or exclusive access to events. Participating in these programs can enhance your travel and leisure experiences significantly.

10. Financial Discipline

Lastly, it’s crucial to maintain discipline in using credit cards. They should not be viewed as an extension of your income. Create a budget that includes your credit card spending and stick to it. Avoid using your credit card for cash advances due to high fees and interest rates.

By following these tips, Filipinos can make the most out of their credit cards, turning everyday spending into rewarding experiences while managing finances efficiently and effectively.

Use your credit cards wisely and responsibly!

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Life insurance is a particularly effective risk management tool for Filipinos, given the unique socio-economic challenges and cultural values that characterize the Philippines. Here are several reasons that illustrate why life insurance is especially important for Filipino families:

1. High Family Dependency

In the Philippines, there is a strong cultural emphasis on family and community support. It is common for a single income earner to support multiple family members, including children, spouses, and often extended family such as parents and siblings. Life insurance ensures that in the event of the breadwinner’s untimely death, the financial needs of these dependents are addressed, thereby preventing significant economic hardship.

2. Overseas Filipino Workers (OFWs)

A significant portion of the Filipino workforce consists of Overseas Filipino Workers (OFWs) who leave the country to work abroad in higher-paying jobs to support their families back home. Life insurance is crucial for these workers as it provides financial security for their families in the Philippines in case they face life-threatening situations abroad. Given the risks associated with working in foreign countries, life insurance acts as a safety net that protects the economic well-being of their families.

3. Limited Social Safety Nets

The Philippines, like many developing countries, has limited social welfare programs, and public benefits may not sufficiently cover the needs of all families, especially in times of crisis. Life insurance fills this gap by providing financial support for expenses such as healthcare, education, and daily living costs in the event of the death of the family provider.

4. Preparation for Natural Disasters

The Philippines is prone to natural disasters like typhoons, earthquakes, and volcanic eruptions. These events can have devastating effects on the livelihoods and homes of many Filipinos. Life insurance policies can offer additional riders or provisions that provide financial payouts in such circumstances, helping families to rebuild and recover without the burden of significant financial strain.

5. Support for Children’s Education

Education is highly valued in Filipino culture, and parents often go to great lengths to ensure that their children receive a good education, viewing it as a key to better opportunities. Life insurance can secure the necessary funds for education, ensuring that children can continue their schooling uninterrupted, even if the parents are no longer there to support them financially.

6. Managing Debt and Financial Obligations

Many Filipino families have financial obligations such as mortgages, personal loans, or business debts. Life insurance provides a financial safety net that can be used to settle these debts if the primary earner passes away unexpectedly. This prevents the debt from becoming a burden to the surviving family members and helps maintain their financial independence and stability.

7. Estate Planning and Inheritance Taxes

Life insurance can play a critical role in estate planning by providing the funds needed to pay inheritance taxes and other related expenses, ensuring that the deceased’s assets are passed on to their heirs without financial complications. This is particularly important in the Philippines, where handling estate matters can be both complex and costly.

8. Cultural Importance of Responsibility

Filipino culture places a strong emphasis on the responsibility of taking care of one’s family. Life insurance is viewed not just as a financial tool but as a fulfillment of a moral duty to protect and provide for one’s loved ones even after death. This aligns with the deeply ingrained values of Filipinos concerning family and community care.

In conclusion, life insurance serves as a critical risk management tool for Filipinos, providing financial security and peace of mind amidst the uncertainties of life. It aligns with both the practical needs and cultural values of Filipino families, making it an essential component of financial planning in the Philippines.