[Ask TBM] Should I still invest in stocks even when the market is volatile?

Market volatility can be difficult to predict, but opportunity remains for those who invest in stocks, says COL Financial experts, particularly with income generating funds.

Market volatility can be difficult for those who invest in stocks. Yet it’s a harsh reality that investors must face: geopolitical instability such as US President Trump’s tariffs and conflicts in Gaza and Ukraine have a negative effect on the global economy. For Filipino investors, there are many questions: Should I still invest in stocks? What is the effect of a trade war? How can I protect my finances? And are there still opportunities to make significant gains?

To answer these questions and more, COL Financial recently held Power Up Your Portfolio Through Income Generating Funds, a series of four educational videos which the company uploaded to YouTube. In the video series, Karlo Biglang-Awa, COL Fund Source Head of Customer Experience, and financial experts–Marvin Fausto, CMI President and CIO, and Zerge Zandueta, CMI Portfolio Manager–tackle the issues of today’s market outlook and what Filipino investors can do in today’s volatile markets.

What is market volatility?

Market volatility is an investment term that describes when a market goes through periods of unpredictable, at times sharp, price movements. US tariffs and geopolitical upheaval have triggered market volatility in markets across the global economy.

Should I still invest in stocks?

The short answer is, yes, with caveats.

Karlo Biglang-Awa, COL Fund Source Head of Customer Experience, explains, “Currently, we’ve seen a lot of investment headwinds and we have seen the market volatility, inflation risk, and geopolitical risk globally. But then again, despite the following headwinds, we know that there’s a lot of opportunities as well.”

If you continue to invest in stocks, you have the potential of high return. Karlo continues, “But there’s a volatility aspect given the current market condition. And now, why should we not consider dividend-paying funds? So it could be the allocation for our portfolio that can provide steady cash flow and stability.

“If you have a combination of these two investment types, you will have a sustainable and resilient portfolio.”

What are the effects of a trade war?

Zerge Zandueta, CMI Portfolio Manager, explains two immediate results that could come out of a trade war. “Number one,” he says, “is it could be slower growth globally, because countries will be very hesitant to trade with one another because prices are getting higher.”

The second result would be inflation, which has a knock-on effect of higher interest rates, and ultimately, slower growth for companies.

Zandueta says, “Inflation, as it relates to financial markets, is very, very important because it affects interest rates. And the relationship here is causal, meaning one causes the other. If inflation is high, normally interest rates tend to follow. It also goes up.

“When interest rates go up, the stock market tends to actually underperform, especially on the capital gains side, right? Why? Because the cost of money is high, it’s harder to do business for the listed companies.”

What are income-generating funds?

COL Financial advises adding income-generating funds to your investment portfolio. These funds, such as mutual funds, are investment vehicles that prioritize generating current income for investors. For example, on the COL platform, there are different types of income-generating or income-paying funds, such as REITs, Global Income-Paying Funds, Equity Focused, and Bond-Related Income-Paying funds.

Why invest in income generating funds?

Income-generating funds, in essence, promise a future fixed income. Karlo Biglang-Awa explains two benefits to investing in funds such as these.

“First,” he says, “this fund will give us a regular income stream… Second, it gives us diversification. So at the same time, if we consider this type of investment, we are getting the diversified strategy allocation of our fund managers. And aside from the dividends and even the payouts that we will get here, we also have the potential for growth.”

How exactly do these funds pay out?

“They can get a payout on a monthly basis or semi-annual basis,” Karlo Biglang-Awa says. So for investors who want to receive regularly on a monthly basis, once your investment becomes significant, you can take advantage of this type of investment.”

In closing, he reminds investors to re-assess their reasons for investing, particularly if they invest in stocks.

“Maybe to some of us, we are preparing for our retirement. But as early as now, you want a passive income when you reach 60. So that can be a purpose that you can consider. Because the purpose of our investment will help us be motivated despite the volatility that we’re experiencing.”