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‘Don’t chase returns’ — financial consultant

Recessions are cyclical, but so are recoveries. “Your future is not about waiting for the economy to get better,” said Marvin P. Germo, financial consultant, stock market trader, and president of Stock Smarts Learning Publishing Inc., which publishes books on finance. “It’s about you being faithful with what you have right now and being better at investing so you can determine your future.” 

At a recent webinar organized by insurance company Manulife Philippines, Mr. Germo advised investing in financial instruments that give growth or long-term capital appreciation, cash flow or predictability of income, and hedge or additional protection in case things don’t go as planned. “The younger you are, the more you should focus on investments that are growth-oriented,”  he added. “The older you are, the more you should focus on investments that give predictability.” 

Based on a 2020 Manulife Asia Care study, 87% of Filipinos are considering purchasing an insurance product this year, with 90% saying that retirement planning has become more important since the coronavirus disease 2019 (COVID-19) pandemic began—this is above the region-wide average of 73%.

This year is a recovery year, but there are risks to consider, according to Zed J. Matubis, vice-president and head of wealth sales of Manulife Asset Management. “While the rolling out of the vaccines provides optimism for the re-opening of economies, resulting in higher gross domestic product (GDP) growth and corporate earnings, we still have to be cautious of the increasing COVID-19 cases, which will have a great impact,” he said. “It would be best for investors to have a long-term investment horizon and diversify their portfolios.”

Investing is about hitting a goal, and investment earnings are a byproduct of how a goal is structured, Mr. Germo said. The sooner individuals prepare for the next recession, the better prepared they are to structure their investments well. “Don’t chase returns. Returns are a byproduct of how you plan. You invest to meet a need so that when the market drops, you don’t get rattled, because you have a plan.” 

Variable universal life (VUL), a type of life insurance policy with a built-in savings component that allows for the investment of the cash value, was mentioned by Mr. Germo as a way to get one’s feet wet and own a piece of the country’s largest companies. It’s an instrument that offers a hedge of protection as well as an investment component, he said.

“A VUL allows me to go all in [on riskier investments] because I protected all the bases already,” he added. 

Another important piece of advice by the financial consultant was to only invest in one’s excess money. “Never put in money you need today,” Mr. Germo said. “It has to be an amount that—even if the value drops to zero—you can still sleep soundly at night.” — Patricia B. Mirasol

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