By Michelle Remo
Philippine Daily Inquirer
MORE HOUSEHOLDS ARE NOW saving the money sent to them by relatives working abroad, a survey by the Bangko Sentral ng Pilipinas showed.
The quarterly survey involved 486 OFW households.
The BSP said that 39.9 percent of households receiving money from overseas Filipino workers said they were saving a a portion of the remittances—a significant rise from the 30.4 percent seen in in the third quarter of last year.
Also, in the second quarter of this year, only 38.3 percent of respondent-households engaged in savings.
BSP officials said the increase in OFW savings was a welcome development, explaining that the rise in bank deposits would provide the needed funds to support investments.
Amando Tetangco Jr., governor of the central bank, also said savings by OFWs would help secure the country’s future.
The survey also showed a year-on-year increase in the number of households that allotted money for investments.
OFW households that engaged in investment activities in the third quarter stood at 7.6 percent of respondents, up from 7.4 percent in the same period last year.
The percentage number of OFW households that invested, however, was lower than the 8.3 percent reported in the second quarter.
Analysts said the global economic turmoil, which led to concerns about job security among OFWs, forced many households to save more.
Rather than invest the money sent in from abroad, people were forced to place their cash securely in banks, fearing the risks brought on by the crisis. This risk aversion could have led to the quarterly drop in the number of OFW households that engaged in investment activities.
The BSP said it would promote financial literacy among OFWs and their households. It had conducted road shows in various countries, educating OFWs about investments and savings. The BSP likewise conducted seminars on the same topics among families of OFWs.
“We want OFWs and their families to become financially sophisticated,” Tetangco earlier said.
In the first half of the year, remittances sent to the Philippines amounted to $8.5 billion, up 2.9 percent from that in the same period a year ago.
The government reported that $16.4 billion in remittances were sent in last year.
Remittances could post a decent single-digit growth for the full year 2009, the BSP said.
Showing posts with label bank deposits. Show all posts
Showing posts with label bank deposits. Show all posts
Friday, October 23, 2009
Tuesday, September 8, 2009
No savings at 30?
INQUIRER.net
Q: I just turned 30 years old and realized I have been working for almost a decade and have little to show for it. I'm ashamed to say that I don't have much savings. Although I work, there doesn't seem to be enough left to set aside. What should I do?
A: Working is one of life's simple joys. With it, we can put to use our talents and learn more about the industry we are in and its impact in the economy. By working, we can meet new friends and contribute to society. Plus we get to earn from working which can help provide for our families' needs.
Because we cannot predict the future and cannot be assured of a job forever, it is important to save money. This will tide us over should we lose our jobs, or get sick, or the time comes when we need to retire from active work.
At 30, you should start saving for your future now, and more so since you weren't able to start earlier. Ideally, saving should have been a habit begun while still a child. This would then become a well-ingrained habit throughout life. But do not worry, it's not yet too late. The important thing is you have realized how important it is to save, and commit to do so beginning today.
You actually raised an interesting question: How can you save when there doesn't seem to be enough left for savings? This is a dilemma most people face. How can you save when all your take-home money is used up by the end of the month (and may even be living on credit until the next pay day)?
The answer is quite simple. Instead of waiting until there is money left after paying your bills and other expenses, do it the other way: Save first before spending a single peso from your take-home pay. This is what financial experts mean when they say “Pay yourself first.” It means treating savings as a bill which you have to prioritize over any other bill or expense. By doing this, you will be able to stash away money for your savings which would otherwise have been spent on something you think you need but actually can live without.
You may think it's easy to say but hard to do. The truth is, saving can be done by anyone. Here are five easy steps on how to build up your savings easily:
1. As soon as you receive your salary, take out a certain percentage, start with 5%, and put this in an envelope you will mark “Savings.” Live on what is left of your salary.
2. Do not touch your savings if funds are running low a few days before your next payday. Instead, adjust your spending so that your funds will be enough until payday.
3. Open a separate savings account in the bank and deposit the funds you have set aside in your “Savings” envelope.
4. Deposit to your savings account every payday to ensure that the money earmarked for your savings will not be spent.
5. Once you have built up your savings a little bit, transfer some of it to a time deposit so it can earn a higher rate of interest. Later on, you can also move some of your funds to a mutual fund or unit investment trust fund so it can possibly earn even more interest. These investments have a risk attached to them, so discuss first with the bank or financial advisor if these are right for you.
One other important thing to do is to make a budget or spending plan. Write your projected income and expenses and see where you can cut down on spending. For instance, look at how you spend for your lunch every day. If you regularly buy food, think of bringing baon lunch to work. The excess funds freed (maybe about P500 a month) may then be added to your savings.
What can you use your savings for? It can be money for your retirement. You might think that at 30, retirement is so far away. However, saving for it now can make your money grow faster for you even if you put in only a small amount of money regularly. It is due to compound interest, which lets your money earn interest on top of money that has already earned interest.
Your savings can also be your emergency fund. This should be equal to three to six months' (even more) worth of expenses, which should be helpful when sudden unforeseen events occur: a job loss, an illness, etcetera.
Savings is doable. Start today and keep at it for a long long time.
*Disclaimer: Readers are solely responsible for their own investment decisions and should thus conduct their own research and due diligence and obtain professional advice. INQUIRER.net will not be liable for any loss or damage caused by a reader's reliance on information obtained from our web site. INQUIRER.net receives no compensation of any kind from companies or industries or funds that are mentioned here.
Q: I just turned 30 years old and realized I have been working for almost a decade and have little to show for it. I'm ashamed to say that I don't have much savings. Although I work, there doesn't seem to be enough left to set aside. What should I do?
A: Working is one of life's simple joys. With it, we can put to use our talents and learn more about the industry we are in and its impact in the economy. By working, we can meet new friends and contribute to society. Plus we get to earn from working which can help provide for our families' needs.
Because we cannot predict the future and cannot be assured of a job forever, it is important to save money. This will tide us over should we lose our jobs, or get sick, or the time comes when we need to retire from active work.
At 30, you should start saving for your future now, and more so since you weren't able to start earlier. Ideally, saving should have been a habit begun while still a child. This would then become a well-ingrained habit throughout life. But do not worry, it's not yet too late. The important thing is you have realized how important it is to save, and commit to do so beginning today.
You actually raised an interesting question: How can you save when there doesn't seem to be enough left for savings? This is a dilemma most people face. How can you save when all your take-home money is used up by the end of the month (and may even be living on credit until the next pay day)?
The answer is quite simple. Instead of waiting until there is money left after paying your bills and other expenses, do it the other way: Save first before spending a single peso from your take-home pay. This is what financial experts mean when they say “Pay yourself first.” It means treating savings as a bill which you have to prioritize over any other bill or expense. By doing this, you will be able to stash away money for your savings which would otherwise have been spent on something you think you need but actually can live without.
You may think it's easy to say but hard to do. The truth is, saving can be done by anyone. Here are five easy steps on how to build up your savings easily:
1. As soon as you receive your salary, take out a certain percentage, start with 5%, and put this in an envelope you will mark “Savings.” Live on what is left of your salary.
2. Do not touch your savings if funds are running low a few days before your next payday. Instead, adjust your spending so that your funds will be enough until payday.
3. Open a separate savings account in the bank and deposit the funds you have set aside in your “Savings” envelope.
4. Deposit to your savings account every payday to ensure that the money earmarked for your savings will not be spent.
5. Once you have built up your savings a little bit, transfer some of it to a time deposit so it can earn a higher rate of interest. Later on, you can also move some of your funds to a mutual fund or unit investment trust fund so it can possibly earn even more interest. These investments have a risk attached to them, so discuss first with the bank or financial advisor if these are right for you.
One other important thing to do is to make a budget or spending plan. Write your projected income and expenses and see where you can cut down on spending. For instance, look at how you spend for your lunch every day. If you regularly buy food, think of bringing baon lunch to work. The excess funds freed (maybe about P500 a month) may then be added to your savings.
What can you use your savings for? It can be money for your retirement. You might think that at 30, retirement is so far away. However, saving for it now can make your money grow faster for you even if you put in only a small amount of money regularly. It is due to compound interest, which lets your money earn interest on top of money that has already earned interest.
Your savings can also be your emergency fund. This should be equal to three to six months' (even more) worth of expenses, which should be helpful when sudden unforeseen events occur: a job loss, an illness, etcetera.
Savings is doable. Start today and keep at it for a long long time.
*Disclaimer: Readers are solely responsible for their own investment decisions and should thus conduct their own research and due diligence and obtain professional advice. INQUIRER.net will not be liable for any loss or damage caused by a reader's reliance on information obtained from our web site. INQUIRER.net receives no compensation of any kind from companies or industries or funds that are mentioned here.
Monday, September 7, 2009
What's the safest way I can invest?
INQUIRER.net
Q: What's the best way to save these days? I am expecting a big amount of money to come from the sale of a lot we've had in the family for a long time. With the global economic crisis affecting our economy, I want to play it safe yet grow my money. – Edwin
A: It's good that you are thinking of protecting your money (your capital) by investing the proceeds from the sale of your lot. Investing your money may make it grow over time.
Understand, though, that with investing comes risks and rewards. If you want your investment to grow and yield higher possible returns on your investment, be prepared to meet setbacks and losses if they happen. Investments that yield higher returns come with higher risks such as heavy losses, as what stock market investors have realized last year at the height of the global financial crisis. Investments that have low risks may more or less safeguard your capital but give you low rewards as well (low interest income or minimal capital gains).
Bank deposits and government securities may offer you relatively safe investment options.
Bank deposits take the form of savings accounts, interest-bearing checking accounts, and time deposits. You deposit your cash in the bank and you get interest back after a month or so. While this may seem to be safe and will preserve your investment, this may not actually be the case as inflation may eat into your investment.
The current rate for savings accounts, for instance, is about 0.75 percent per annum. The inflation rate is way higher than that, which means that the growth to be yielded by your investment in a savings account will be overtaken by the rise in prices of commodities.
Time deposits may give better rates, but still may not be enough to match the cost of inflation. You may need to keep your money on deposit for a longer term to achieve a higher rate of return.
As “The Citibank Guide to Building Personal Wealth” (a book published by Citibank) says, “Inflation is a major risk if you hold large sums of cash permanently, because it reduces the buying power of cash.” Put simply, inflation may erode the value of your investments over time.
We mentioned government securities above. These come in the form of treasury bills, treasury notes, and treasury bonds. Bills have the shorter term (less than a year), and bonds have the longest term. Government securities are generally low risk since the government guarantees to meet its obligations and pay the published interest rate.
But since you mentioned that you want to grow your money, it may be wise to look into other forms of investment as well to achieve your goals:
1. Stocks or equities may give you high possible returns over the long term, but these come with high risk, which you don't seem to want to assume at this time.
2. Bonds may also give you good rates of return, but these also come with some form of risk, although lower than that of stocks.
3. Pooled funds come in the form of mutual funds or unit investment trust funds (UITFs) and depending on their nature may be invested in stocks alone, bonds alone, money market funds (government securities and commercial papers), or a combination of these.
To keep your money safe and make it grow at the same time, we advise that you do what wise investors have been doing all along: Diversify! Keep some funds in bank deposits, some in government securities, and some in pooled funds. Since you may have other financial goals and may have a timetable in needing your funds later on (example, for retirement), we advise that you consult a financial professional who will assess your risk profile and suggest the best possible allocation of your investments.
You may also invest your money in tangible assets such as real estate property. However, market values fluctuate over time, so be prepared for any eventuality. Investing in a business also comes with a high risk as not all businesses realize income. Jewelry and art are also forms of investment, but bear in mind that it may take a while for their value to increase. Converting them to cash may also take a longer time should you find the need to do so.
Whatever investments you go into, study all aspects thoroughly. Look into the pros and cons before deciding. We wish you the best.
*Disclaimer: Readers are solely responsible for their own investment decisions and should thus conduct their own research and due diligence and obtain professional advice. INQUIRER.net will not be liable for
any loss or damage caused by a reader's reliance on information obtained from our web site. INQUIRER.net
Q: What's the best way to save these days? I am expecting a big amount of money to come from the sale of a lot we've had in the family for a long time. With the global economic crisis affecting our economy, I want to play it safe yet grow my money. – Edwin
A: It's good that you are thinking of protecting your money (your capital) by investing the proceeds from the sale of your lot. Investing your money may make it grow over time.
Understand, though, that with investing comes risks and rewards. If you want your investment to grow and yield higher possible returns on your investment, be prepared to meet setbacks and losses if they happen. Investments that yield higher returns come with higher risks such as heavy losses, as what stock market investors have realized last year at the height of the global financial crisis. Investments that have low risks may more or less safeguard your capital but give you low rewards as well (low interest income or minimal capital gains).
Bank deposits and government securities may offer you relatively safe investment options.
Bank deposits take the form of savings accounts, interest-bearing checking accounts, and time deposits. You deposit your cash in the bank and you get interest back after a month or so. While this may seem to be safe and will preserve your investment, this may not actually be the case as inflation may eat into your investment.
The current rate for savings accounts, for instance, is about 0.75 percent per annum. The inflation rate is way higher than that, which means that the growth to be yielded by your investment in a savings account will be overtaken by the rise in prices of commodities.
Time deposits may give better rates, but still may not be enough to match the cost of inflation. You may need to keep your money on deposit for a longer term to achieve a higher rate of return.
As “The Citibank Guide to Building Personal Wealth” (a book published by Citibank) says, “Inflation is a major risk if you hold large sums of cash permanently, because it reduces the buying power of cash.” Put simply, inflation may erode the value of your investments over time.
We mentioned government securities above. These come in the form of treasury bills, treasury notes, and treasury bonds. Bills have the shorter term (less than a year), and bonds have the longest term. Government securities are generally low risk since the government guarantees to meet its obligations and pay the published interest rate.
But since you mentioned that you want to grow your money, it may be wise to look into other forms of investment as well to achieve your goals:
1. Stocks or equities may give you high possible returns over the long term, but these come with high risk, which you don't seem to want to assume at this time.
2. Bonds may also give you good rates of return, but these also come with some form of risk, although lower than that of stocks.
3. Pooled funds come in the form of mutual funds or unit investment trust funds (UITFs) and depending on their nature may be invested in stocks alone, bonds alone, money market funds (government securities and commercial papers), or a combination of these.
To keep your money safe and make it grow at the same time, we advise that you do what wise investors have been doing all along: Diversify! Keep some funds in bank deposits, some in government securities, and some in pooled funds. Since you may have other financial goals and may have a timetable in needing your funds later on (example, for retirement), we advise that you consult a financial professional who will assess your risk profile and suggest the best possible allocation of your investments.
You may also invest your money in tangible assets such as real estate property. However, market values fluctuate over time, so be prepared for any eventuality. Investing in a business also comes with a high risk as not all businesses realize income. Jewelry and art are also forms of investment, but bear in mind that it may take a while for their value to increase. Converting them to cash may also take a longer time should you find the need to do so.
Whatever investments you go into, study all aspects thoroughly. Look into the pros and cons before deciding. We wish you the best.
*Disclaimer: Readers are solely responsible for their own investment decisions and should thus conduct their own research and due diligence and obtain professional advice. INQUIRER.net will not be liable for
any loss or damage caused by a reader's reliance on information obtained from our web site. INQUIRER.net
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