Fear and investing can be like oil and water. Shake ‘em, turn ‘em over and under, bring ‘em to a boil, and you’ll still have oil and water—apart—in the end.
Most Filipinos are extremely risk-averse. That’s why we like PDIC’s deposit insurance. That’s why we have most of our money in time deposits or special deposit accounts growing at a snail’s pace. That’s why most of our grandparents hid money in bauls.
Some personal finance books and experts say, at some point, we have to learn to accept some risk especially if we want our money to grow in the long-term. But with the scary events of recent months, who’s going to think embracing risk will be a walk in the park?
I read an article by Val Araneta in the latest issue of the Financial Executives of the Philippines (FINEX) magazine which is very informative. It’s not meant as an entertaining piece, but what he says is important: knowing and understanding possible risks is a huge part of managing personal investments.
Take the following test based on his article to see if you know the kinds of risks that you face when you save and invest.
1. Default risk refers to the kind of risk that…
a. means risk by default.
b. means you won’t get paid.
c. is de fault of the borrower.
d. None of the above.
2. Business risk is a type of default risk that…
a. has to do with the business going pfft.
b. can affect both business owners of companies or investors in listed companies.
c. is very important for those who expect to finance their children’s education with stock investments.
d. all of the above.
3. Credit risk is another type of default risk which…
a. can only affect a corporation and not an individual.
b. can affect only individuals and not corporations.
c. can affect both corporations and individuals.
d. can affect only the government.
4. Notes that are not secured are naturally riskier than those that are secured. “Secured” here means…
a. collateralized.
b. placed in a safety deposit box.
c. backed up by legal documents.
d. it is insured.
5. The riskier and the longer the tenor of a debt security, the higher would be the expected return for the holder.
a. True
b. False
6. Sovereign risk has to do with…
a. the country where you invest.
b. the possibility that a country or the companies in that country will not honor its or their debts.
c. can affect holders of government bonds
d. all of the above
7. Cross border risk…
a. has become a major consideration now because of the globalization of investments and the lower costs of transaction of these global investments.
b. should be a lookout of every Filipino who invest in different countries
c. happens when a government imposes a ban on foreign currency flows from its country.
d. All of the above.
8. Filipinos are afraid of price risk because we…
a. like to make sure our investments are guaranteed.
b. don’t have the financial education necessary to track the factors that affect it like economic fundamentals, the fortunes of companies, interest rates, etc.
c. are afraid of fluctuations and want our savings and investments to be always accessible for withdrawals.
d. All of the above.
9. Liquidity risk is a major problem now in the US financial market because…
a. of the greenhouse effect on Wall Street.
b. it has stopped raining in Los Angeles.
c. home buyers in the US who can’t pay their mortgages cannot sell their homes at values that will allow them to pay their debts.
d. A and B.
10. Filipinos are vulnerable to the risk of frauds and scams because…
a. They chase after returns
b. They follow their best friend/relative/PTA member’s ‘expert’ advice and don’t research on their own.
c. Don’t have financial education.
d. All of the above.
11. The worst kind of risk in personal finance is the risk of inaction because…
a. inflation and currency movements can eat into everyone’s savings.
b. jobs and health can disappear without warning.
c. The gap between retirement and life expectancy keeps growing
d. all of the above.
Click this link for the answers.
9-11 -- you're the risk guru of sorts!
5-9 -- you still have to do some legwork but you're ok.
0-4 -- read more before you invest!
The risk test
1 TrackBack
TrackBack URL: http://blogs.inquirer.net/cgi/mt/mt-tb.cgi/1485
Cooking caribbean fare.... Cooking caribbean fare. Unleavened bread in indian and caribbean cooking....----- PING: TITLE: Cooking ribs in a smoker. URL: http://cookfit.blogs.fitnessportal.co.uk/2009/11/20/cooking-ribs-in-a-smoker/ DATE: 12/22/2009 01:04:27 AM IP: 127.0.0.1 Cooking ribs in a smoker.... Cooking ribs in a smoker....----- PING: TITLE: Cooking sets for kids. URL: http://cookfit.blogs.fitnessportal.co.uk/2009/11/20/cooking-with-kids/ DATE: 12/21/2009 04:13:25 AM IP: 127.0.0.1 Cooking games for kids to play online.... Cooking chemistry kids. Kids cooking equipment. Great ideas for cooking with kids. Easy cooking with kids. Kids give directions for cooking turkey humor. Kids cooking class. Kids monthly cooking....----- PING: TITLE: Cooking whole pig. URL: http://f43pills.dogsblogusa.com/2009/11/18/cooking-a-pig/ DATE: 12/20/2009 11:22:31 PM IP: 127.0.0.1 Recipe for cooking pig neckbones.... Recipe for cooking pig neckbones. Cooking whole pig....----- PING: TITLE: Cooking steaks in the oven. URL: http://f43pills.dogsblogusa.com/2009/11/18/cooking-steaks-in-the-oven/ DATE: 12/18/2009 06:27:45 PM IP: 127.0.0.1 Cooking steaks in the oven.... Cooking steaks in the oven....----- PING: TITLE: Easy home cooking magazine. URL: http://f43pills.dogsblogusa.com/2009/11/18/easy-home-cooking-magazine/ DATE: 12/17/2009 06:01:23 PM IP: 127.0.0.1 Easy home cooking magazine.... Easy home cooking magazine....----- PING: TITLE: Cooking glossary com. URL: http://cookguru.blogguru.net/2009/11/23/cooking-glossary/ DATE: 12/16/2009 05:42:35 PM IP: 127.0.0.1 Cooking glossary com.... Asian cooking glossary....----- PING: TITLE: Cooking contest for 2007. URL: http://cookevent.blogs.event-management-uk.co.uk/2009/11/20/2007-cooking-contest/ DATE: 12/16/2009 02:52:02 AM IP: 127.0.0.1 Cooking contest for 2007.... 2007 cooking contest. Cooking contest for 2007....----- PING: TITLE: Cooking rice in a crockpot. URL: http://cookkeep.blogs.keeptaperrelief.com/2009/11/20/cooking-rice/ DATE: 12/09/2009 11:39:59 AM IP: 127.0.0.1 Cooking wild rice.... Rice stick cooking instructions. Rice stick cooking. Pressure cooking brown rice. Cooking rice in the crockpot. Microwave rice cooking chart. Rice epicurean cooking classes. Cooking rice....----- PING: TITLE: Cooking with tagine. URL: http://cookment.blogs.mentoring-uk.org.uk/2009/11/20/tagine-cooking/ DATE: 12/09/2009 09:42:34 AM IP: 127.0.0.1 Cooking with tagine.... Cooking with tagine. Cooking tagine....----- PING: TITLE: Summer 2007 cooking classes in portland. URL: http://f43pills.dogsblogusa.com/2009/11/18/summer-2007-cooking-classes-in-portland/ DATE: 12/08/2009 10:59:57 PM IP: 127.0.0.1 Summer 2007 cooking classes in portland.... Summer 2007 cooking classes in portland....----- PING: TITLE: http://test.com URL: http://test.com DATE: 12/05/2009 09:26:12 AM IP: 127.0.0.1 test... odqVUt2 | test ...----- PING: TITLE: Stores for cooking products. URL: http://f43pills.dogsblogusa.com/2009/11/18/cooking-products/ DATE: 11/25/2009 12:43:20 AM IP: 74.86.238.186 Danger men cooking products.... Galvanized products used for cooking. Cooking meth with home products. Danger men cooking products....----- PING: TITLE: Meth cooking. URL: http://f43pills.dogsblogusa.com/2009/11/18/cooking-meth/ DATE: 11/23/2009 01:13:10 AM IP: 67.159.44.63 Penalty in ne state law cooking meth.... Penalty in ne state law cooking meth....----- PING: TITLE: Chocolate candy recipes no cooking. URL: http://f43pills.dogsblogusa.com/2009/11/18/chocolate-candy-recipes-no-cooking/ DATE: 11/22/2009 04:31:26 AM IP: 66.102.237.46 Chocolate candy recipes no cooking.... Chocolate candy recipes no cooking....----- PING: TITLE: Italian cooking schools. URL: http://f43pills.dogsblogusa.com/2009/11/18/italian-cooking-schools/ DATE: 11/21/2009 05:52:46 PM IP: 74.86.238.186 Italian cooking schools.... Italian cooking schools....----- PING: TITLE: Culinary cooking schools. URL: http://f43pills.dogsblogusa.com/2009/11/18/culinary-cooking-schools/ DATE: 11/20/2009 08:05:46 PM IP: 74.86.238.186 Culinary cooking schools.... Culinary cooking schools....----- PING: TITLE: Group cooking lessons calgary. URL: http://f43pills.dogsblogusa.com/2009/11/18/group-cooking-lessons-calgary/ DATE: 11/20/2009 01:08:50 PM IP: 208.85.242.212 Group cooking lessons calgary.... Group cooking lessons calgary....----- PING: TITLE: Food cooking and free recipes from chefs com. URL: http://f43pills.dogsblogusa.com/2009/11/18/free-cooking-recipes/ DATE: 11/19/2009 11:05:51 PM IP: 97.74.144.5 Free dutch oven cooking recipes.... Free recipes food nutrition and cooking resource. Slow roast cooking free recipes. Healthy cooking recipes and free. Free dutch oven cooking recipes....----- PING: TITLE: Pressure cooking refried beans. URL: http://f43pills.dogsblogusa.com/2009/11/18/pressure-cooking-refried-beans/ DATE: 11/19/2009 08:36:17 PM IP: 207.182.156.242 Pressure cooking refried beans.... Pressure cooking refried beans....----- PING: TITLE: Cooking spinach. URL: http://b17pills.hockeydisciples.com/2009/11/18/cooking-spinach/ DATE: 11/19/2009 07:29:01 AM IP: 76.73.1.50 Spinach cooking methods.... Cooking spinach. Spinach cooking methods....----- PING: TITLE: Cooking temperatures for deep fryers. URL: http://756pills.iblog.my/2009/11/17/cooking-temperatures/ DATE: 11/18/2009 10:59:12 AM IP: 74.86.238.186 Griddle cooking temperatures.... Cooking temperatures for deep fryers. Crock pot cooking temperatures. Beef roast cooking temperatures....----- PING: TITLE: Cooking for david. URL: http://756pills.iblog.my/2009/11/17/cooking-for-david/ DATE: 11/18/2009 02:47:37 AM IP: 82.100.220.47 Cooking for david.... Cooking for david....----- PING: TITLE: Money Smarts » The best of MoneySmarts and saying goodbye URL: http://blogs.inquirer.net/moneysmarts/2009/04/29/the-best-of-moneysmarts-and-saying-goodbye/ DATE: 04/29/2009 10:23:18 AM IP: 198.66.163.92 [...] is your money personality The risk test Migrate vs stay The cost of having a baby On my Christmas wish-list: a new house Money and math [...]----- -------- Read More
Hi Ms. Duplito,
I've discovered this blog recently and since then I've been hooked. I don't know a lot about investing and stuff but by reading posts, topics discussed and comments from readers from this blog but I learn a lot. I even shared the link to this blog to a friend because I think education on personal finance is very important. Please continue to discuss topics on UITF, money market and other forms of investments (time deposit etc..). I'm still at a "start up" phase at 31 and would want to save fast for my future. Thank you and more power.
hi mayeni, thank you for your kind words. You might want to take advantage of the category listing to help you look for topics you're interested in. UITFs, money maarket and other forms of investments are a common interest here. I will try to write more about them. Have a great weekend!
I got 10! I got #5 wrong
I got 1 mistake - number 7.
Thanks very much Ms. Duplito :o) Looking forward to reading more posts :o) Enjoy the rest of the week!
Ah yes!
Thank you very much Salve for all the wonderful articles you posted
=========
I wonder why this article does not have much responses? are pinoys risk-averse? to the point of not entertaining this post :P
I got 9 out of 11! I got 2 and 7 wrong! Thanks for this test Salve.
@nina, zadkiel and millionaire acts, puro pala kayo risk guru eh :-). great going!
Alohi. Mi zer novazo. http://jestormani.net