Ideal Investments for Overseas Filipino Workers
Like for example, those traditional investments in the Philippines offered by the banks:
- Savings deposit
- Time deposit
- Treasury bills or T-bills
In a time deposit, your money is earning more than the savings deposit which ranges from 2% to 3% interest rate. Unlike the savings deposit, your money in a time deposit has a term (30 days, 60 days up to 5 years). That's why you can't or shouldn't withdraw your money before it reaches its maturity or term. If you withdraw it before the term ends, you will be paying charges to the bank but normally you are not at loss when you withdraw your money.
Treasury bills (T-bills) are also offered by the banks. Your money here is invested to a portfolio for government uses. It's earning a lot higher interest rate than time deposit and savings deposit. You will not also suffer losses here because the government will not experience default. We know the government is the one creating and printing the money.
Aside from these traditional investments usually offered by the banks, OFWs can also choose many financial investments offered by non-bank financial institutions. Some of the non-traditional financial investments in the Philippines are:
- Unit Investment Trust Funds (UITF)
- Mutual Funds
- Variable Universal Life
- Insurance Investments
- Education plan
- for funding children to study in school
- Pension plan
- We know that as an Overseas Filipino Worker (OFW), you have no retirement plan sponsored by your companies because your job is only contractual.
- Protection plan
- If the breadwinner dies, the money will be transferred to the spouse or child for financial support.
- insurance
- stocks
- real estate
- business (entrepreneurship)
Those which are described as short-term investments are:
- savings deposit
- time deposit
- UITF
The latest financial instrument in the Philippines is the "Hedging" instrument. It gives protection to the purchasing power of OFW remittances in spite of the growing value of the peso against dollar. How can we better describe hedging? For example, an OFW has $10,000 and invested this to the hedging fund management institution with a 30 days maturity period. The OFW is securing and protecting this money. If the OFW targets exchange rate of P42.60 - $1.00, and if the dollar goes down in value (due to the appreciation of peso) within that period, the OFW can expect the value of his/her dollars remains the same and can get the peso value based on the target Foreign Exchange rate of P42.60 = $1.00. And if within the term period, dollar value goes up (peso depreciates) and the exchange rate after 30 days is P50.00 = $1.00, the OFW can sell the dollars at the existing market rate of P45.00 - $1.00.
The are several potential investments that an OFW can choose from. But beware! The financial experts said that you shouldn't be very careful in parking your money to any investments.
The Head of Financial Consumer Affairs Group of Bangko Sentral ng Pilipinas, Elvira Ditching-Lorico said that some people are enticed to invest or join to those get-rich-quick schemes that are said to be safe and this is one sign that we should not quickly believe it.
Another financial expert said that if you feel you cannot take the risk of investing your money to a certain financial instrument, then choose the safe ones. If you have the appetite to face the uncertainty or immediate stock price low, then you can go to the high-risk investments. High risk investments have the high expected gains/returns.
For first time investors, it's recommended to start with the low risk investments. Low risk investments have low returns.
Therefore, an ideal investments for OFW depends on his/her risk or appetite of investing. As a general rule, before investing to any financial instruments, be sure to study the financial product carefully as well as the bank or financial institution offering the said financial product.
- https://www.affordablecebu.com/