A few weeks ago I published the first article in this series on Philippine Retirement … it was quite popular and thankfully many said they wanted more (well a few of you anyway … thanks). Sorry to say but you guys are going to have to be patient, because my speed of production here ranges from dead slow to actually becalmed as I finish up all the things that need doing on my new house project … move in date is now pretty much firmed up for 15 November and I also chase one of the most elusive things I have ever chased in the Philippines. Decent Internet service.
In that article I promised information on at least 5 legitimate ways to invest as little as Php 20,000 towards your retirement here in the Philippines. I’m actually going to “over deliver” on that promise, here’s the first installment.
Author’s Note: I you are scanning and are wondering if you should read farther, I would submit that you should. The “target audience” for this article includes my fellow foreigners who are single and unattached, those with family her in the Philippines, all my many (I want more by the way, share this with your Filipino friends) Filipino readers, bit here in the Philippines and very importantly, overseas and migrant Filipinos workers. None of you are going to “escape” the issues of retirement income, except for those who take a “shortcut” and die early … and there are costs to bear with that alternative as well … do you want to die leaving your family with the burden of your utang?
iMoney Posted at 08/24/2014 9:13 AM | Updated as of 08/26/2014 9:44 AM
(Editor’s note: This article was written by iMoney as part of a content partnership arrangement with ABS-CBNnews.com.)
MANILA, Philippines – Let’s say you’ve been saving P2,000 every month from your paycheck, and now you have P20,000. Or you got that amount as a performance bonus from work. Or a particularly generous relative gave it to you for your birthday.
What would you do with it?
You might be thinking that it’s too little an amount to invest in anything long-term, enough that you’re tempted to just go shopping with it.
But if you look around for wiser options, you can find ways to make that money work for you. Below, we’ve put together a list of investments you can make with P20,000 that are financially better for you than going on a shopping spree.
Unit Trust Investment Fund
You can easily dive into the world of investment with P20,000. For example, Security Bank offers a number of unit investment trust funds (UITF) which require an initial amount of only P10,000. But what’s a UITF?
Unit Trust Investment Funds “pool the funds of investors to create a large fund which, under the watchful eyes of professional fund managers, can productively harness these funds, taking advantage of economies of scale,” according to Banco de Oro. Thus, even individuals can access investments usually just available to big investors. UITFs are also heavily regulated by not only the banks offering the fund, but also by the Bangko Sentral ng Pilipinas, protecting investors.
UITFs are medium- to long-term investments that have historically better earning options over a long horizon than traditional deposit options, so if you can afford to leave your money in a UITF without having to withdraw from it for a long time, it can be a good option for you in the long run.
For example, if you had invested in Security Bank’s Peso Asset Variety Fund on January 1, 2014, these are the kind of returns you could be expecting (disclaimer: values from Security Bank’s UITF calculator. The investment value is only indicative of the value of investment as of a certain date. However, for redemption, please note that the net asset value per unit (NAVpu) will be not be known until the end of a certain business date.)
That’s an ROI of 13.42% over six months, which you can’t get with your regular savings accounts. Again, this is just an example, so please consult with your bank first to determine which fund is right for you.
East West Bank also offers the Infinity Peso Intermediate Term Bond Fund, another UITF which requires an initial deposit of P10,000. It’s a low-risk venture, because the money will be invested primarily in government securities and investment-grade corporate bonds. This is ideal for investors with a long-term investment horizon.
Let me add some “outsider looking in” perspective:
The first thing that comes to mind here, and probably the first comment I am going to receive here is “safety”. Are these funds “safe”. Well I can give a definitive answer here. yes, No or Maybe. If I had only Php 20l in my hands, and no actual savings, I would NOT invest in any of these funds (or any other investment I might recommend here). I am continually amazed by the percentage of readers who write in, asking for ideas and help, who have absolutely NO income and NO personal savings. Read this carefully … if this is you, then stop reading and but that P20k in an insured savings account, or even in a locked box under your bed, and then get busy and start making more. The Philippines is not the place for either a foreigner or a Filipino to have no secure savings. Especially a foreigner. This is not the article for you. You need several months of expenses and especially a reserve to accommodate unexpected medical costs, before you start making investments.
Name brand Philippines banks are quite safe. In fact the banking laws in the Philippines are way, way stricter on the type of investments banks are allowed to make, so the relative safety of these investments is quite high … but they are speculative funds and they are not covered by the Philippine Deposit Insurance Corporation (PDIC).
But the rate of returns reflects the fact that you are getting paid to take a calculated risk. If you put the Php 20k in an insured savings bank, you’ll get about .1% a month. In a whole year, you’ll gross 1.2% (less the mandatory Philippine income tax that the bank will automatically deduct) . In this case _you_ are paying for your safety.
The choice is yours. If you want total safety, do not invest in anything speculative. If you already have sufficient “safe” savings, and then you want to earn something with that spare Php 20k, then take small risks and get paid for doing so. Please keep this in mind when you make your comments. It amazing me how many folks can’t seem to understand the fact that there is no such thing as a high rate of return without taking certain risks.
A great many readers are going to see this and say, “But how do I ever learn about such offers”? “I asked at the bank that the yeller didn’t know any thing about this” … or words to that effect.
Well one suggestion I would make is. you need to make connections. And the simplest way to “make connections” is to “connect”. that is, be somebody and ask and learn.
One easy example which has paid me dividends many times over is the way I deal with my bank and my bank manager. Do you currently have a bank account in the Philippines? Then get one 9and yes indeed you can no matter what visa you are using .. I could write a book on that subject alone …maybe I will, but be pleasant, inquisitives and persistent. And lose the inflated feelings of superiority most of us foreigners carry around with us like a chip on our shoulder when we arrive.
Do you even know your bank manger’s name? have you sat down with them and discussed your financial goals and let them tell you what their own banks offerings are and ways their bank’s products might help you? You might be surprised.
And if you find it’s impossible to hit it off with your current bank manager, change. There are many banks here, like BDO, BPI, PMB or Security bank (whose products are highlighted above). Surely you can find a location and manager which suits you … if you don’t give up. 99% of the things I hear from fellow foreigners about the things they “can’t do” are just out and out wrong … they just didn’t try hard enough.
Note. Some good quality investment plans are NOT available directly to foreigners, because the Philippine Central bank issues products that by law are specifically for citizens of the Philippines. But there are still many, many plans you can search out that are certainly better than keeping your money under the mattress or just blowing that P20K on Red Horse beer and fancy shoes for your latest girlfriend.
Invest in a Business
For as low as P15,000, you can own a siomai business. Shanghai Siomai has dealership packages that start with a one-time P10,000 dealer registration fee and a minimum order of P5,000 worth of siomai ingredients. Consult their website for details.
P20,000 can also get you started in owning your own rice business. Bigasanko.com, a rice distributor, wholesaler, and retailer, requires that amount as an application fee, which can be deducted from the down payment.
Before investing in a business, make sure you’ve done your research and have a plan for profitability.
If you want to build up your management skills, the Advanced Managers’ Course at the UP Institute for Small-Scale Industries can help you.
The 10-day course, which you can take over 10 Saturdays and costs P18,000, focuses on leadership, innovation, technology, environment, people management, strategic management, risk management and customer relations management. Ideally, you should already have attended other management courses or been in a managerial position, though this is not required. Check the schedule to see if you can enroll.
Or maybe you’re looking for a raise and want to improve your negotiation skills before you go to your boss. For P10,800, Ateneo’s Center for Continuing Education offers Negotiation Skills: Deal or Deadlock, which will teach you when to negotiate, how to implement your negotiation plan and counter others’ tactics, and develop the core skills of a good negotiator.
What better way to invest your P20,000 than in yourself? Taking lessons and learning a new craft is a good way for you to grow your skillset and expand your career options, or just make your life better.
So if you want to start your own bakery, for example, or want to level up your skills in making pastries and desserts, take a look at the 5-Day Pastry Boot Camp at Enderun Colleges. This intensive 30-hour class will teach you how to make sponge cakes, choux pastry, chantilly cream, and more bakery staples. When you’re done with the course, you can use your new skills and techniques to start your artisanal bakery, or bring new desserts to family gatherings.
You could also beautify your home or workspace by learning more about interior design. The Interior Styling workshop at the School of Fashion and Art (SoFA) Design Institute, for P10,000, is an 8-week course which helps you develop an understanding and appreciation of color, pattern and furnishing, and how these can improve interior spaces, whether they be residential, commercial, or institutional.
If you aren’t yet familiar with it, I urge you to look closely ate a service/website called Udemy. There’s a huge selection of course you can take, as well as a huge opportunity for anyone … no need to be a degreed teacher just to pass on specialized knowledge you have. A very interesting opportunity I will be talking about more in the future.
Do you have any ideas for what else to do with P20,000? You certainly can make a worthwhile investment in the Philippines with only PhP 20,000. Little by little is how you finally reach your goal of Philippine Retirement.