Cabal, Jessa Mae C.

BSBA-FM-3B

Activity 3

1. Differentiate Good Debt with Bad Debt. Cite examples.

Good debt, such as credit card debt, mortgages, and student loans, is low-
interest debt that contributes to a growth in our income or net worth, while payday loans,
personal loans with high interest rates, and credit card debt are examples of bad debt,
an expensive debt that negatively impacts our credit score.

2. What's the difference of Credit Scoring vs. Credit Report? Explain how credit
reports are prepared consolidated in the Philippines.

A credit score is a numerical number consisting of three digits that represents our
ability to repay our debts; in contrast, a credit report provides a comprehensive
description of our borrowing and repayment ability. Lenders evaluate borrowers'
creditworthiness based on data from credit reports and credit scores.
The Credit Information Corporation (CIC), a public credit registry and repository
of credit information in the Philippines, prepares and consolidates credit reports. Lenders
and authorized credit bureaus get credit information that the CIC collects from banks and
other financial institutions.

3. Differentiate Insurable Risk with Speculative Risk. Cite examples.

Insurable risks are the ones that insurance companies can protect us from. They
cover many kinds of losses including natural events, such as fires or floods, or other
accidents, such as an automobile crash, while speculative risks are the ones that can
result in either gain or loss, or nothing at all. The most common examples of speculative
risks are gambling and investing.

4. Which is better Traditional Life Insurance or Variable Unit Linked Insurance?

Explain.

Traditional life insurance and variable unit linked insurance (VUL) are two
different types of life insurance products that offer different benefits and features.
Traditional life insurance provides a guaranteed death benefit and fixed premium
payments. On the other hand, VUL combines life insurance coverage with an investment
component, giving the policyholder a potential higher return on their living benefit while
also having a death benefit. As a risk averse, traditional life insurance is better because
it is suitable for me who want a stable and predictable return, and not comfortable with
investment risk.
 5. Explain how Filipinos can invest in the stock market through COL Financial. Know
the purpose and function of this platform as online stock brokerage firm in the
Philippines.

COL Financial is an online platform that allows Filipinos to invest in the stock
market. It offers investors various resources and guidance to help them make wise stock
investing choices. You can start investing with COL Financial by opening an account,
depositing as low as Php 1,000, choosing your stocks, and placing your orders online.
COL Financial’s role and function as an online stock broker in the Philippines is
to make stock investing easy and convenient for Filipinos. It lets investors buy and sell
stocks whenever and wherever they want, as long as they have internet access. It also
assists investors to enhance their knowledge and skills in stock investing through its
online workshops, research reports, market updates, and portfolio tracker. COL
Financial’s goal is to help Filipinos attain financial independence through stock investing.

6. If given a chance to grow your money, would you prefer to be an investor or

trader? Explain your answer by discussing the nature of these two.

As a risk averse person, I would choose to be an investor if I had the opportunity

to grow my money. Investors hold on to their assets for a long time, usually for years or
decades, and aim to increase their wealth slowly and benefit from interest, dividends,
and capital gains. We do not worry much about short-term market changes and focus
more on the basics of the companies or sectors we invest in. Investors usually look for
steady and reliable returns that are slightly higher than the inflation rate over time.
On the other hand, traders buy and sell their assets in a short time, usually in
days, hours, or minutes, and aim to make money from price changes and market trends.
They pay more attention to technical analysis and market signals and less attention to
the basics of the companies or sectors they trade in. Traders have a higher risk
tolerance and a shorter time frame than investors. Traders usually look for higher and
quicker returns, but also risk higher and more frequent losses.

References:

Akin, J. (2023, April 15). Good Debt vs. Bad Debt: What’s the Difference?
https://www.experian.com/blogs/ask-experian/good-debt-vs-bad-debt-whats-the-
difference/#:~:text=The%20difference%20between%20good%20debt,loans%20that
%20provide%20job%20skills.

COL Financial - Philippines. (n.d.).

https://www.colfinancial.com/ape/Final2/EIP_Plus2/Links/col_eip.html

Folger, J. (2023, July 30). Investing vs. Trading: What's the Difference? Investopedia.
https://www.investopedia.com/ask/answers/12/difference-investing-trading.asp
I’m adulting. Should I get life insurance? (n.d.). Insurance Site.
https://www.manulife.com.ph/about-us/blog/im-adulting-should-i-get-life-
insurance.html#:~:text=Traditional%20life%20insurance%20focuses%20primarily,also
%20having%20a%20death%20benefit.

Olive, P. (n.d.). Credit Report vs Credit Score. Financial Education.

https://finances.extension.wisc.edu/articles/credit-report-vs-score/#:~:text=Many
%20people%20use%20the%20terms,number%20signifying%20your%20credit
%2Dworthiness.

Team, E. (2022, October 5). Elements of Insurable Risk & Insurability (with Examples) -
Embroker. Embroker. https://www.embroker.com/blog/insurable-risk/#:~:text=Litigation
%20is%20the%20most%20common,typical%20examples%20of%20speculative%20risk.

What is an insurable risk in business insurance? | TechInsurance. (n.d.).

https://www.techinsurance.com/insurance-terms/insurable-risk#:~:text=Insurable
%20risks%20are%20risks%20that,you%20suffer%20a%20covered%20loss.

Zoleta, V. (n.d.). How to Check and Improve Your Credit Score in the Philippines. Moneymax.
https://www.moneymax.ph/personal-finance/articles/credit-score-philippines#:~:text=The
%20CIC%20is%20authorized%20to,information%20into%20detailed%20credit
%20reports.