Other Than Banks

We know that banks give an interest rate of around 0.25% per annum. So if you have P10,000 in your bank account, you will only earn P20 for the year (P10,000 x .0025 x .80 - 20% withholding tax). Will that be enough? No! That's why we need to find ways on how to grow our money.
There are a lot of ways like having a business, stock market or investing it in pooled funds. However, returns are unguaranteed with these types of investments. That's why, study first before investing to make sure you are prepared for the consequences. While doing that, the following may be recommended especially if you prefer low risk investments:
1) Time Deposit -  is a fixed deposit at a bank, which you will not have access to during the agreed time period in exchange for a higher interest rate compared to a savings account. Identical to an investment account, you will be eligible to a higher premium rate as a return on your investment. Time deposit investment rates generally differ from interest range of 1.00% to 5.00%.
Interest earned on time deposits is subject to a final tax of 20%. These are charged every month when an interest is earned on your account. Aside from taxes, it is also subject to stamp duties if the principal amount exceeds ₱250,000.00, in which you will be charged ₱1 for every ₱200 after it.
You can check http://www.imoney.ph/time-deposit to know which banks offer the best rates.
2) Bonds - bonds are debt instruments wherein an investor lends money to a borrower (government or company). There are two general types of bonds – bonds issued by the government (treasury bonds) and those issued by corporations (corporate bonds). 
Bonds offer higher returns than savings accounts; however, the returns from treasury bonds vary. For example, 4-year bonds offered in 2005 had a yield (until maturity) of 10% while 7-year bonds offered just last year have a yield (until maturity) of only 3%. Still, the interest rates are higher than what you get from savings accounts, which is a good investment if you’re a conservative investor.
Payment on your bonds is made usually on a semi-annual basis. The percentage of the debt paid to you on a yearly basis is known as the coupon rate. If your bond was issued at Php 100,000, and the coupon rate was 10%, then you would be paid Php 10,000 yearly or Php 5,000 semi-annually. Receiving regular payments on your bond with interest is a good way to stock up your net worth.
If you are ready to buy, check the Bureau of the Treasury’s website for the latest offerings or go to your local bank. Bank of Commerce, BDO, and PNB are three banks that offer treasury bonds and other government-issued investments. Take note though that the minimum deposits vary greatly. You can buy BDO retail treasury bonds for as low as Php 5,000, but other banks may require a minimum of Php 100,000. For corporate bonds, you can buy from your local bank as well. CTBC, BDO, and PNB are companies that offer these products. In addition, it also pays to stay up-to-date with news on local bond offerings so you can get first slice of the pie.
3) SSS Flexi-fund - this is offered only to OFWs. There are two kinds of return for your Flexi-fund: a) Guaranteed benefits - interest rate based on a 91 T-bill so sometimes interest will be less than 2%. Still better than banks. b) Annual Incentive benefit - given if you don't make any withdrawal on your fund. Rate varies also.
A member may opt for early withdrawal of his Flexi-fund contributions in lump sum, including net interest earnings, anytime. After your retirement you can apply for your SSS pension . And you can choose to withdraw all your Flexi-Fund on a lump-sum basis or opt to buy annuity or converting everything to pension. Through this, you have greater pension or money saved for your retirement. 
An OFW-member may pay his Flexi-fund contributions anytime, provided that, at the time of payment, he pays/has paid the maximum regular SSS contribution (P1,760). Any amount paid (not lower than P200) in excess of the required maximum contribution for the applicable period shall be automatically credited to the member's individual Flexi-fund account to earn interest. You can deposit as much as you want on your Flexi-Fund as part of your investment.
An OFW-member may continue paying his Flexi-fund contributions even after the termination of his employment abroad, provided that he continues to pay the required maximum monthly contribution. Payment of contributions shall cease upon filing of a final claim under the regular SSS program.
4) Pag-ibig MP2 - this is a voluntary savings program offered by the Philippine-government to every existing Pag-IBIG I (P1) member. MP2 is different from P1 and Pag-IBIG Overseas Program (POP).  It’s term is renewable every 5 years and it provides higher return of investment (ROI) than savings and time deposit accounts in banks.

So these are the few options that I know that give better interests compared to banks. These types of investments are low-risk. Try researching also on COOPERATIVES. Some offer higher interest rates compared to banks but make sure that the coop you'll be joining has a good financial position.

#Happy Investing Kabayan!


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