Bank Time Deposit~ Inquiries and information

[emow]

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what you mean turtle?

Bao... hinay kau... not on the Fast Track...

[tinsi]

dili ba lugi ta sa time deposit because i think when you deposit example 20T, dili man gyud 20T and madeposit pero mga 18T+ nalang because of fees.. then when it's time to withdraw the account, you will be taxed by 20% on the capital gains of the account? dili ba murag turtle ning TD?

As far as I know BANK Time Deposits (TDs) are like your regular Money Market placements so you get your certificate of deposit for the principal (In your example it's the full 20K) and then the interest is computed based on the prevailing rates at the time you opened the account. Your account will increase by the interest less 20% final tax on the interest. Example: P 20K times 3.10%p.a. is P 620 divided by 365 is P 1.6986 less 20% final tax is P 1.3589 daily interest. This is to put it very simply but the bank computes the interest slightly differently but to a layman this is the simplest way to put it.

Mutual funds have NAV's (Net Asset Value) as a barometer of where your invesmtent is going. When you put in your money in a Mutual Fund it is minus their fees. (Fees can either be front ended or back ended , here in the Phils. it's usually front ended or deducted upon opening the account not when you sell). Example P 20K less 1.75% Front end fees leaves P 19,650 for investment in the Mutual Fund. If the funds NAV for that day is let's say P 1.4567 so your P 19,650 gets you 13,489.39 shares of the fund. 6 months later , the NAV goes up by 5% (making the NAV P 1.5295) your investment is now worth P 20,632.49. (P1.5295 X 13,489.39 shares) NAV is already net of all taxes (which is why it is referred to as NET asset value)

Just keep in mind that a mutual fund is a pooling of the funds of several individual investors. The fund in turn is managed by fund managers and invested in various instruments (bonds -both government and corporate, equity - shares of stocks, or a mixture of both ) Your investment in a mutual fund is not insured so it is best to know your risk appetite before you invest.

[emow]

Like I've said, TD is a turtle...=)

[che(k_afss]

@theprofessor:


pila sad minimum deposit ana 20% p.a nga yield?

[che(k_afss]

same account sad na cya kanang naay credit card?

[theprofessor]

Rural banks are engaged in "microfinancing" where they lend/loan it at 3.5% to 5% per month to borrowers. They give the depositors 20% p.a. Net on your 5-year term. The banks differ in their minimum deposit to earn 20% p.a.. Some have minimum of Php 250,000.00 while some have Php 100,000.00 as minimum.

Note that banks have external insurance from PDIC up to 250k per name/account. With this it becomes practically risk-free, that is as long as a depositor keeps within PDIC level.

[tinsi]

There are some loan institutions that provide high return precisely because they are also in the business of loaning these out at higher interests except that the deposits received are called "capital" versus the regular savings or time deposit. Pls. pay attention to the passbook that will be given to you to check the type of deposit made. Capital deposits are not covered by PDIC.

[darth_yoda]

I inquired about Pag-ibig House Bonds directly from Pag-ibig. Their interest rate is only 5% net of tax per annum. A minimum of P10,000 investment.
The interest rate is very low. Any suggestions where to invest?
Are there banks who offer double your money in 3 yrs (or 5 yrs) and also covered by PDIC?

[tinsi]

THere have been several posts here on where to possibly seek high returns for your money. This may be slightly OT but just like to remind everyone to keep in mind that the best way to save is to diversify. This means depending on your age and risk appetite, we should try to invest by spreading our savings over various types of investments. Saving in a bank is one , mutual funds, jewelry, land , stocks , art etc...

Since our topic is on which banks to put our savings in, I am assuming that the amount to be placed is basically the basice emergency fund which represents 6 - 12 months of your living expenses. SInce this is an emergency fund, you would need to put this in a vehicle that is liquid so choose a reputable bank, invest within the PDIC limit and compare the rates. Beyond the emergency fund you may start investing in other forms of investment as listed above.
I think the PAG-IBIG returns of 5% NET seem fairly reasonable given the existing bank rates of 3.5% (for 30 days minimum 1 M ) less 20% final tax pa gyud so in effect yields only 2.8% after tax. But since this is a bond you cant cash in until the maturity of the bond.