BSP Special Deposit Accounts (SDA)

30. April 2012 · Write a comment · Categories: Investment · Tags: , ,

There is no right or wrong way to invest hard earned money.  It’s a matter of your risk appetite and how much you would like to earn.  For conservative investors who would like to invest on a safe investment vehicle, I would like to suggest the Special Deposit Accounts or SDA launched by the Bangko Sentral nang Pilipinas (BSP) in 1998. 

What are SDAs?

Special deposit accounts are good alternative to regular savings account and time deposits.  They are managed by the trust department of the bank and considered as safe investments.  These accounts are not insured with PDIC but are more or less guaranteed by the BSP.   SDAs are short term investments, usually 7-days, 14-days or 30-days and cannot be pre-terminated.  Your investment is subject to 20% witholding tax and trust fee.  Trust fees varies depending on the bank and investment amount.  Interest rates may vary monthly depending on the rate issued by BSP.

How to Invest in SDAs?

Depending on how much you want to invest, approach the trust department of any of these banks (BDO, BPI , Security Bank, HSBC, China Bank, Union Bank) and inquire about SDA placement.  The minimum investment amount varies for each bank.  The lowest required investment amount is with BPI (Php 50,000).  You will need to have a settlement account with the bank to tie-in with your SDA.

Opening a special deposit account is similar to opening a savings account.  You will need two valid ID with photo, two 1×1 pictures and photocopy of your valid IDs.  You have the option to automatically re-roll the principal, principal + interest or principal + interest + additional investment amount. More »

What Should You Do With Your Kid’s Monetary Gifts?

23. April 2012 · Write a comment · Categories: Saving · Tags: , , , , ,

My sister and brother-in-law welcomed my niece, Nikita Lyric “Leely” to the world last April 7.  As part of a big Fil-Chinese family, monetary gifts in red envelopes are one of the presents given to the newborn.  Since the child is not aware of the importance of these presents, as a parent, what should you do with them?  I would like to suggest some ways on what can be done with these gifts:

1.  Save them on Certificate of Deposits (CD):  Placing the monetary gifts on certificate of deposits with automatic rollover would be a good idea in order to preserve the principal as well as earn some interest on it.   By the time you will give this certificate to your child, you can teach him/her the importance of money and have this as seed money for his or her own bank account.

2.  Give a portion to the church as tithes:  Since this is a blessing from God, we could give back what God has given us.  Note it down like a ledger to teach your child in the future the basics of accounting and the importance of giving.

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How To Build An Emergency Fund?

16. April 2012 · Write a comment · Categories: Personal Finance · Tags:

An emergency fund or “rainy day” fund is one of the most important things that a person should do or start doing to help their finances.  This fund is separate from your savings, retirement or investment fund.  The fund should only be used to pay for unexpected expenses and must be easily accessible.  There is no rule on how much you have to save for your emergency fund but experts are saying to save at least 3 to 6 months of living expenses.  If the figure is too daunting for you, start with a goal of one month living expenses.

 

Here are some basic steps to build an emergency fund:

1.  Track Your Expenses:  Start tracking your expenses down to the last cent.  Jot it down on a small notebook, your mobile phone notes or excel and separate them in different categories for each month.  Track at least 3 months worth of expenses and average it to get your one month living expense.  Your expenses should at least include the following:

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