As a Christian navigating the complex world of finance, I often find myself pondering the ethical implications of various investment strategies. One question that frequently arises is whether it’s appropriate for a believer like myself to engage in speculative investments. This is a nuanced issue that requires a careful examination of biblical principles and practical wisdom. Let me share you my personal thoughts about this.

Speculative investments are those that carry a high risk of loss but also offer the potential for substantial returns. Examples include forex and cryptocurrencies. While these investments can be tempting due to their potential for quick and huge gains, they also pose significant risks that can lead to financial ruin.

First and foremost, I am reminded of the teachings in the Bible that emphasize stewardship and the responsible management of resources. In Matthew 25:14-30, Jesus shares the Parable of the Talents, illustrating the importance of wisely managing the resources entrusted to us. This parable encourages us to be diligent and prudent, rather than reckless, with our investments.

Furthermore, Proverbs 21:5 states, “The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty.” This reminds us the value of careful planning and the dangers of hastiness, which are often associated with speculative investments. The allure of quick profits can lead to impulsive decisions that are not in line with the wisdom and diligence advocated in Scripture.

Another crucial consideration is the potential impact of speculative investments on our hearts and minds. 1 Timothy 6:10 warns, “For the love of money is a root of all kinds of evils. It is through this craving that some have wandered away from the faith and pierced themselves with many pangs.” Engaging in high-risk investments can sometimes foster a love of money and a desire for wealth that distracts us from our faith and spiritual growth. I always need to remind myself that I cannot serve both God and money at the same time (Matthew 6:24).

Moreover, the principle of contentment, as expressed in Hebrews 13:5 , “Keep your life free from love of money, and be content with what you have, for he has said, ‘I will never leave you nor forsake you,'” serves as a reminder to be satisfied with God’s provision. Speculative investments can often stem from a desire for more, rather than a trust in God’s sufficiency.

It is also important to consider the potential consequences of financial loss. If an investment fails, it can not only affect us personally but also those who depend on us. Romans 13:8 advises, “Owe no one anything, except to love each other, for the one who loves another has fulfilled the law.” We have a responsibility to avoid financial decisions that could lead to debt or hardship for our families and communities.

However, this does not necessarily mean that all speculative investments are inherently wrong for believers. To be transparent, I have invested in cryptocurrencies myself because I believe there can be a place for calculated risk within a diversified and well-thought-out financial plan. The key is to approach such investments with a heart of wisdom, prayer, and discernment. It’s essential to seek God’s guidance, perhaps consult with financially knowledgeable Christians, and ensure that our motives align with His will.

As a believer, our financial decisions should reflect our faith and our commitment to God’s wisdom. Therefore, any involvement in speculative investments should be approached with caution, prayer, and a deep commitment to honoring God with our resources.

My 2 cents.

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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Join me, Chinkee Tan, Enro Mendoza, RJ Ledesma, Jayvee Badile, Caleb Edpao and Jochell Quiñones at #PisoCon — details and registration HERE

Appears in my No Nonsense Column at the Moneysense Magazine, March-April 2011 issue.

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As I write this column, the official exchange rate is Php 43.45 : US$ 1. A lot of people are really anxious as to the direction of the once mighty global currency standard. If my memory serves me right, I believe the US Dollar peaked at about PhP 55 : US$1 not too long ago. At a certain point period of time, the annual average depreciation of the Philippine Peso against the U.S. Dollar was pegged at about 7 to 8% per year. About 5 years or so, many Filipinos were still converting their money into US Dollars in an attempt to secure the value of their monies and even experience capital growth.

From its peak, the once mighty green bucks have significantly loss a lot of its value as against many currencies, including our once feeble Philippine Peso – by as much as one fourth, or 25%. If you consider inflation, the impact of the appreciation of the Philippine Peso has greatly eroded one’s portfolio had it been primarily invested in US Dollars.

The big question is, what should you do with US Dollars? If you have them, do you sell them? If you don’t have, do you buy? That’s a tough question to answer. Fortunately, there are some great insights posted at my website (www.randelltiongson.com) when I asked the readers of my blog on the options for the US Dollar. Here are some tidbits:

It depends on your objective. If you plan to retire in the US, then you should start accumulating at these “cheap” levels. If you plan on staying here, why bother with FX volatility. I wouldn’t buy it right now as a means of investment or speculation of it appreciating again (I already got out while it was Ps47). – Rich (unknown respondent)

“I find myself buying more of this currency now for travel funds. My thought is we can’t rule out the dollar just yet after all its still an international currency. But is it a wise investment on my part?” – Roy A. (Printing Business)

“If you have lots of it then keep it. No use selling it now since it already lost 10% of its value. Buy more dollars next year. Eventually it will go up once peso starts going down. Just be sure you are diversified. Just my opinion. (P.S. buti konti lang dollars ko! haha)” – Raymond (Hardware Business)

“Dump my USD before the year ends as the seasonal spikes in the Peso occurs. Then, when it starts to weaken, accumulate again.” – Raffy Pekson II (Corporate Executive)

“I think the dollar will never recover if quantitative easing in the U.S. will continue. With this scenario, I’d rather sell my dollars as soon as I get them. And split it into gold and peso. If a double dip recession comes true, the dollar will further lose value. Gold will appreciate and I would have the option to repurchase dollars with pesos to invest in good US blue chips like Google and Apple in anticipation of the eventual recovery from double dip recession.” Hilbert Cardenas (OFW)

“What to do with dollars? Well, I just burn them. They take up too much space.” Rafael Azanza (Management Professor)

There you go. Such varied suggestions but there are so much insight into such advices. There are a couple more comments in the said blog entry (https://www.randelltiongson.com/what-to-do-with-your-us-dollars/) and all are interesting to read.

The conclusion? Well, you really must consider the purpose of your investment first and foremost, your time frame for the investment as well as your risk tolerance. US Dollar, like any other investment, is an asset class. All asset classes have their purpose and particular contribution to any diversified portfolio. Remember, always practice prudence in anything – investing or otherwise.