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The Philippine economy continues to shrink as the country continues its battle against COVID-19. And with the recession lingering into the new year, it wouldn't be a surprise for people to consider options on how they can achieve financial security and stability.

GMA Lifestyle interviews Edwin Suson to shed light on financial and investment decisions during a pandemic.

Edwin is a Registered Financial Planner, a Certified Financial Education Instructor, and an Associate Certified Meta-Coach, who currently teaches personal finance and entrepreneurship at the University of Santo Tomas.

Is it a good time to invest during a pandemic?

The year 2020 challenged us in so many ways and this makes us think how much risk we could further take. But for Edwin, the financial adage “the best time to invest is now” remains true and relevant.

Taking action now takes us a step closer to our financial goals.

He says, “Eto 'yung dream natin, eto 'yung reality na dapat ma-achieve natin. Ano 'yung nasa gitna noon? So what step are we going to take to bridge the gap between our dreams and making it a reality. So these are actions.

“Remember our goals, dapat SMART (specific, measurable, attainable, relevant, time-bound). It has to be time-bound, and when you say time-bound, there's a specific time you have to achieve it. And despite the pandemic, it should not stop you on your course, or activity, or action in achieving your goals.

“When you have a goal crafted now, then now is the best time to start. Not just savings ha, but also investing. Because if you don't start now, it might never happen. And if you stop because of the circumstances, may pandemic, it will extend the time to make it happen or much worse, it will never happen.”

The five pillars of financial independence

But before jumping onto investing, Edwin emphasizes that financial security and stability are anchored on five pillars, as taught by the Network For Teaching Financial Literacy and Entrepreneurship (NTFLE).

1. Emergency fund

A person must first build his or her emergency fund which can cover three to 12 months of his or her household expenses in case something unexpected happens.

“In an event that there is a loss of job, we still pay bills and thus this will provide a source to settle regular and recurring monthly expenses.”

2. Health fund

An obstacle to achieving financial freedom is when a person falls ill and unproductive. Thus, it is also important to have a health fund.

Your health fund is “a fund where you can withdraw [from] in case of any critical or dreaded diseases for maintenance or major medical procedures.”

3. Income protection

The ongoing pandemic revealed that job security is not at all an assurance. To pave your way to a healthy financial standing, you must be able to protect your income.

“You protect any loss of income from one of the families, breadwinner in case of death. This will secure a continuous fund for the family's needs.”

4. Education fund

For families or those with dependents, it is also advised to build a fund for the education of your children. This will later empower and equip them to fulfill their dreams and aspirations.

5. Retirement fund

Being financially free also means reaching a point where you don't need to work to provide for yourself. As early as now, it is critical that you build a fund for retirement.

“It is setting aside an amount of money to secure [your] retirement lifestyle and not to be dependent on [your] children's contribution.”

The right mindset in investing and handling your finances

Having the right mindset affects our actions. Thus, Edwin leaves the following advice when it comes to investing and handling your finances.

1. Don't try to time the market.

Timing the market is not foolproof, and that is why financial coaches and experts like Edwin always emphasize that the best time to start investing is now.

“There's no assurance in that one eh. Do not have that kind of belief na 'Ay mataas ngayon, kikita pa 'yan. Mag-iinvest ako ngayon. Parang 'wag mo i-time or mag-predict ka without the necessary information.”

2. Don't let emotions cloud your judgment

Edwin discourages involving emotions in your financial decisions. This includes harboring envy and ill feelings towards the success of your friends or submitting to peer pressure.

“Alam mo 'yun, na nakita mo yumaman kaibigan mo kasi nag-invest siya, yayaman ka din. Kaso nagsimula siya 10 years ago, marami na siyang pinagdaanan. And always remember ang ipapakita niya 'yung kumita siya pero hindi niya pinapakita nung talo siya.”

He further particularly warns about riding on your peer's investment, saying that investing differs for each person. This may depend on how much money was invested, when the investment was started and the frequency of their investments, and the knowledge acquired and depth of information available that influence the decisions and actions of that person.

3. Take action.

Edwin cannot stress enough that it is crucial to take action and to do it now.

“Ibig sabihin nun, invest now. Whether the market is up or the market is down, take action now because in the long run, you will be the winner. Kasi if you're going to look at the historical performance of stock investments, it may be fluctuating but the trend is going up through the years.”

4. Accept your losses.

It is also important to understand that investing comes with risks, and the best ways to cope with this is by accepting your losses.

“Pag nalugi ka, don't stop. 'Okay, nalugi ako,' and then try to study more. Maybe, do the cost-averaging, maybe diversify, maybe find another investment. Don't put all your eggs in one basket, sabi nga nila. Spread it out.”

5. Invest in knowledge.

Lastly, Edwin highlights that the best investment you can make is to invest in knowledge.

“Always invest in the investment vehicle that you understand and the business that you are familiar with.

“Not everyone is blessed with knowledge on investing, a reason why we need to consult an investment expert. You go to an investment expert that knows it kaya lang, you need to pay. If you don't want to pay, papasok tayo ulit doon, so ang ibig sabihin nun, you have to be educated.”

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Do you want to learn more about investing and finances? Read more via our GMA Lifestyle page.