Money management for teens

You can bank on them

Philippine Daily Inquirer

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IRENE Aquino groups her studentsat Fort Bonifacio High School.

In looking for a meaningful way to mark its 109 years of doing business here, Citibank Philippines found the teachers and the high school students featured in this issue.

By donating copies of the Inquirer every Monday to 40 secondary schoolteachers in the weeks that the Learning section ran the Inquirer in Education series on money management for teens, Citibank made an investment in the future of thousands of students in Caloocan, Las Piñas, Mandaluyong, Manila, Makati, Muntinlupa, Pasay, Quezon City, Alabang, Silang (in Cavite), Sta. Cruz (Laguna) and Ligao City (Albay).

“We accomplished so much in just six weeks,” said Sergio Zanatti, head of Citibank’s Consumer Markets.

SOM PRINCIPAL Sister Amy reading the newspaper.

“While we set out to educate the young, the teachers have also shared very positive feedback that they learned as they taught—and now know the value of saving for their own financial future,” Zanatti added.

Math and economics teachers were invited to attend a preseries workshop hosted by Bangko Sentral ng Pilipinas to qualify for the free copies of Inquirer (see story “BSP hosts national treasures”).

The material published was adapted from the Citibank-funded Global Financial Education training module “Young People: Your Future, Your Money.”

TEACHER Manolo Barles at SOM Girlstown

Classroom visits yielded immediate return on investment for the IIE financial literacy team. Activities exploring the concepts of saving, spending, borrowing and earning money capitalized on the young learners’ energy, enthusiasm and humor.

“We were impressed at how the teachers found creative ways to teach these critical money lessons, and the level of comprehension shown by the students,” said Zanatti.

One teacher said the students posted higher interest in learning because of the lessons’ practical applications to daily life. As much as they had fun designing their own five-peso bills, the students also realized there was a serious need to learn how to save for the rainy days.

The use of the newspaper spiced up classroom learning, the teachers commented.

SINGING seniors at SOM Boystown

The public schools that participated were Angeles City National High School, Bagong Silang High School, Fort Bonifacio High School, Gen. E. Aguinaldo Integrated School, Isaac Lopez Integrated School, Kalayaan National High School, Las Piñas Science High School, Makati Science High School, Maria Clara High School, Muntinlupa National High School, Pedro Guevarra Memorial National High School, Philippine School for the Deaf, Teodora Alonzo High School and Nolasco High School.

The Sisters of Mary Girlstown and Boystown, Erda Technical andVocational Secondary School and Tuloy sa Don Bosco were the nonprofit private schools that taught the series. Mayon Institute of Science and Technology, St. Mary of the Woods and Blessed Christian School also participated.

ROLE-PLAYING girls at Angeles City National High School

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Scouting for investment options

Philippine Daily Inquirer
TODAY’S volatile markets can make anyone uneasy about their finances.
Most would in fact prefer to weather the storm by holding on to cash or maintaining bank deposits, rather than putting them in bonds, corporate notes and other investment instruments.
With the right strategy, however, one can find opportunities to benefit even in this crisis.
There is no miracle cure for market turbulence, but there are ways to mitigate the risk associated with volatile financial markets, and eventually place one’s self in a position to earn stable if not higher returns in the long run.
Lower returns
Holding on to money may be perceived to be of less risk in the short term, but keeping it idle may eventually translate to lower returns and diminished purchasing power due to inflation.
An option worth considering rather than keeping money in cash is participating in an investment fund, where the money of many investors is pooled into one big fund. Placing money in an investment fund allows investors several benefits.
They get access to experienced fund managers who constantly monitor and balance investment risks with return objectives through diversification and other strategies.
They also get better pricing on the purchase and sale of securities as these are dealt in the professional market, which is not usually available to individual clients with smaller amounts of funds.
“One such investment fund is the money market fund. This is one viable option for people who want to minimize the risk on their capital while meeting their short term liquidity needs,” says Josefina E. Sulit, Metrobank executive vice president and head of trust banking group.
In the investment world, a money market fund is considered the most conservative investment fund because its portfolios are invested primarily in assets such as short term government bonds and bank time deposits that are easily converted to cash and also provide better yields than traditional deposit products.
According to Sulit, Metrobank money market fund portfolios are invested in these assets by as much as 80 percent for MetroDollar Money Market Fund and 100 percent for the peso-denominated Metrofund Starter.
Good alternatives
“When there are financial uncertainties, money market funds are considered a good investment alternative, for as long as one sticks to the recommended investment horizon,” shares Sulit, who has been in the business of trust banking and investments for the past 30 years.
A weekly industry comparison of money market funds’ year-on-year returns showed that MetroDollar Money Market Fund and Metrofund Starter have consistently figured among the top performers of products in the same category and have consistently provided very competitive returns.
For example, as of Dec. 24, 2008, the performance of Metrofund Starter is 4.55 percent year-on-year and MetroDollar Money Market Fund is 4.56 percent.
“Fund management is an area that Metrobank has proven to be an expert on. No matter what the prevailing economic conditions are, the welfare of all our clients and other stakeholders is top priority. This means balancing the interests of our clients and complying with our regulators such as the BSP who strictly monitors our industry,” says Sulit.
Professional managers
Although times are tough all around the world, and it may stay that way this year, investors will have the distinct advantage of having their funds managed by professionals.

SMEs for inclusive growth

By: Cielito F. Habito
Philippine Daily Inquirer

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No one else among our Southeast Asian neighbors saw poverty worsen in the last 10 years the way we did in the Philippines, in the face of record economic growth at that. Ours is a classic case of growth that has failed to be “inclusive,” now the favored term to describe economic growth with widest participation and benefits, best ensured through equal opportunities. Our situation stems in turn from a highly concentrated economic structure, with a very narrow segment of the economy accounting for an inordinately large share of total output and incomes in the economy (measured by gross domestic product or GDP). We have an economy where total output and income is dominated by a small number of very large enterprises.

Consider these data: 90 percent of our firms are “micro” enterprises (defined as having less than 10 workers), and another 9.6 percent are “small or medium” enterprises (10-199 workers), or what are officially known as SMEs. The remaining 0.4 percent that are large enterprises (200 workers and up) actually account for more than two-thirds (68 percent) of our total economic output, while less than a third is spread thinly across the other 99.6 percent!

There is much evidence from economic research that a robust SME sector could bring higher income growth, greater employment of domestic resources, more gainful integration with global and regional trade and investment, and greater equity in access, distribution and development.  The value of a strong SME sector in fostering broad-based, thus inclusive, growth is widely recognized and often extolled by policymakers and industry observers. Still, the government persistently finds difficulty providing the right amount and the appropriate nature of support to the SME sector to adequately address their age-old lack of access to financing, technology, raw materials and markets. Hence, the mortality rate for SMEs tends to be high, with very few able to survive beyond three to five years, often much less.

Through the years, I have argued that the need is for a more comprehensive and integrated approach to SME promotion and development. Fostering a conducive and nurturing environment to enable SMEs to flourish is not a job for the Department of Trade and Industry alone. Most if not all instrumentalities and levels of government could have an important role to play in building a vibrant and resilient SME sector, spanning provision of credit, infrastructure, technology support, and market linkages. The work requires an aggressive, orchestrated and sustained effort wherein the President provides the proper impetus and guidance for all government entities to play out their respective roles as a team, and make a tangible contribution.

There are four important points to consider in building a dynamic and resilient SME sector:

First, distinction must be made between microenterprises and SMEs. We tend to have a misplaced tendency to lump them together, and yet the circumstances of the former, which are mostly in the informal economy, lead to needs quite different from those of more formal enterprises falling under the SME category. There is now a propensity to adopt the combined term “MSMEs” to refer to micro, small and medium enterprises all together, thereby falling further into this trap.  But institutional support for the two must arguably be kept distinct and separate, and is probably best handled separately by distinct government agencies as well.

Second, there is need to cluster SMEs together to facilitate consolidation and necessary quality control of their outputs, in order to meet volume demands from institutional buyers and export markets. Successful clustering needs an effective broker to facilitate the process of bringing individual SMEs together. This can be done either by organizing them formally into a cooperative or corporation, or by simply consolidating outputs of independent small producers systematically, to attain sustained desired volumes. Successful examples of clustered SMEs typically came about because a third party (e.g., a “nucleus” producer, a motivated NGO, or an effective government entity) invested effort in initiating and sustaining the clustering arrangement.  This was the case with the Northern Mindanao Vegetable Growers Association (Normin Veggies), and the Sultan Kudarat Muscovado Farmers and Millers Corp., both of which were initiated with impetus coming from an NGO and a foreign donor-funded project, respectively.

Third, technology support is critical for SME development, as smaller firms will by nature not have the internal resources for effective research and development. As SME development can be considered a desirable public good, the case can be made for public provision of R&D services focused on SMEs (calling the Department of Science and Technology). Developing environment-friendly SME production technologies is particularly important, given common observations that in many cases, SMEs rather than large enterprises are the ones more responsible for environmentally damaging production methods (as in the case of small-scale mining).

Finally, it is worth stressing that focus on SMEs should not imply a bias against large enterprise; indeed, a key element of the SME strategy should be to foster closer synergy between large-scale enterprises and SMEs, as is common among Japanese firms. By deliberately relying on SME contractors as suppliers of product components as in the Japanese auto industry, large enterprises could actually help sustain, rather than supplant, smaller enterprises, and vice versa.