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Inspiring investing

/ 11:35 PM February 04, 2014

QUESTION: I am an OFW about to return to the Philippines.  I have some money saved up that I want to invest. However, I am told that there are not that many options to invest back in the country. Would you advise me to just keep my money in foreign currencies and invest them outside the Philippines?—posted on PFA’s “ask a friend, ask Efren” service at www.personalfinance.ph

Answer: In the Philippines, there is a plethora of investment options.

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If you are just after fixed regular income, you can go after the traditional time deposits, treasury bills and short-term commercial paper. These investments fall under what is called the money market. Try asking your favorite bank about such money market instruments.

There is also a type of single premium endowment life insurance plan that pays fixed interest over the life of the policy while guaranteeing the return of your premium at the maturity of the plan (while potentially making the proceeds of claims exempt from estate tax should you be called from this life before the plan’s maturity date). Inquire with your life insurance agent if they have such a life insurance plan.

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If you are after fixed interest over the medium- to long-term (longer than a year), you can buy notes and bonds through licensed fixed income brokers, many of which are banks (just ensure that you hold your notes and bonds up to maturity).  Banks would buy and sell such notes and bonds at the Philippine Dealing and Exchange System.

If you are after fixed interest, potential cash dividend income or capital gains (i.e., the appreciation of the price or value of your investment over your acquisition cost), you may still buy notes and bonds via licensed fixed income brokers or stocks through licensed stock brokers.

There are stocks that have historically paid cash dividends. These are the companies where you could potentially earn future periodic cash dividends. On the other hand, there are companies that have either displayed consistent or are forecast to generate unusual earnings growth. The stocks of these companies are the ones where handsome capital gains may be generated.

Now, if you have one of the previously cited investment goals but do not possess the minimum investments that the corresponding instruments require, do not have the investment expertise, and/or lack the time to manage your investments, you can invest indirectly through pooled funds.

Pooled funds are investments registered with the appropriate regulator (i.e. Bangko Sentral ng Pilipinas, Securities and Exchange Commission, Insurance Commission and Philippine Stock Exchange), where the funds of people with the same objectives are gathered in one fund and managed by professionals. Currently, the country has mutual funds, unit investment trust funds, variable unit-linked insurance and exchange traded funds. Soon to come are real estate investment trusts.

There is an assortment of vehicles to choose from in the Philippines. Such investment vehicles may even be denominated in foreign currencies should you wish not to convert your funds to Philippine pesos.

Not only is there a wide variety of investment vehicles to choose from, there is every reason for you to invest in our country like ours. Our economy has never been as buoyant as it is today. If you want to learn more about investing in the Philippines, please visit www.personalfinance.ph.

(Efren Ll. Cruz is a registered financial planner of RFP Philippines. Questions about the article may be sent by SMS to 0917-5050709 or e-mailed to [email protected] To learn more about the RFP program, attend a FREE orientation on Feb. 6, 7 p.m. at the PSE Center. Email [email protected] or text <name><e-mail><RFP> at 0917-3464126 to register.)

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TAGS: Business, column, efren Ll. Cruz, Investment, money market instruments, OFW, Personal finance
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