How can you invest 10 pesos per day?

Actually, it is only when your savings reach PhP5,000 that you can actually invest your savings in an instrument like Government Securities (Treasury Bills/Bonds) and Mutual Funds.

Government Securities (Treasury Bills/Bonds)
Government securities are certificates of indebtedness issued by the national government with a promised yield that is backed up fully by the state. GS are classified as the safest investment instrument because it is guaranteed by the national government. It is also the most liquid as you can sell it at any time and there are always buyers. The most popular government securities are Treasury Bills (T-Bills) and Treasury Bonds (T-Bonds).

T-bills are certificates of indebtedness that mature within one year or less. T-bills come in the following tenures: 91-day, 182-day, and 364-day.

T-Bonds, on the other hand, are certificates of indebtedness that mature beyond one year. T-Bonds come in the following tenures: 2, 5, 7, 10, 15, 20 and 25 years. There are different kinds of T-Bonds: Retail T-Bonds targeted for the retail market; Dollar denominated T-Bonds; Progress Bonds, among others. During the Erap administration, the government introduced the Small Investors Program (SIP), which reduced the minimum amounts for T-Bills and T-Bonds to as low as PhP 5,000 per investor. This gave rise to what is known as the Small Denominated T-Bills, T-Bonds and T-Notes.

If you want to invest in GS you can go to any of the 47 GS eligible dealers accredited by the Bureau of Treasury. These are mostly banks. The rates offered for these securities, once they are already in the secondary market vary. Banks will always buy back your GS whenever you need to sell them. You must also remember that there is a 20% tax on income on GS.

Once in a while, Retail T-Bonds are issued by the Bangko Sentral ng Pilipinas for a minimum denomination of PhP5,000 but unfortunately these issues were easily sold out. Banks that have T-Bonds usually require a bigger amount of PhP100,000 or even more as a minimum investment. It is only the government issued Treasury bills/bonds that are risk free because the government can always print money even if the actual value. But the returns on T-Bills/T-Bonds are much lower and most of the time, just closer or a little over the inflation rate. Unless, you invest in long-term T-Bonds, which have interest are higher than the inflation rate.

Other than T-Bills/T-Bonds, Mutual Funds and Unit Investment Trust Funds (UITF) accept PhP5,000 as a minimum and you can add PhP1,000 each time you want to add more savings.

Another issue that Brens brought up is the closing down of institutions that accept money for the purpose of growing it. He brought up the case of companies that closed down and could no longer located. It is true that there have been and there will continue to be companies that will close down for one reason or another. Some of them would be because of bad management and others would be due to reasons beyond the control of management. Nobody can really foresee if a company will continue to be viable to grow your money. But there are ways of lowering the risks. And of course, there are scams. Those are what you have to completely avoid. Scams are get-rich quick schemes that have no real products to offer. We can talk more about all these and Mutual Funds and UITFs in future columns

About the Author:
Francisco J. Colayco is an entrepreneur, a venture developer and financial advisor. He is the Chairman of the Colayco Foundation for Education and the Author of Four Publications, Three of which are Bestsellers: “Wealth Within Your Reach” (Awarded 2004 National Book of the Year, Business and Economics by The Manila Critics Circle), “Making Your Money Work” (Nominated 2005 National Book of the Year, Business and Economics by The Manila Critics Circle), “Pera Palaguin Workbook≤ and just off the press, ≥Money For Kids.

He is available for talks, seminars, and workshops. Learn more about his advocacy at www.colaycofoundation.com or email info@colaycofoundation.com. The books are available in the Philippines at National Bookstores, PowerBooks, 0917-8537333, 02-6314446 and www.colaycofoundation.com, in Hong Kong at Shop 367 Worldwide Plaza 19, Des Voeux Road, Hong Kong and in Japan at Global Growth Management Inc. (GGM) 9-1, Suite 201, Hirakawa-cho, 1chome, Chiyoda-ku, Tokyo 102-0093, Japan Tel: +81-3-3264-0441 Fax: +81-3-3264-6960 Cell: +81-90-2423-7065 E-mail: ito@ggm.co.jp. In other areas, please contact info@colaycofoundation.com or the publisher of this article.