State-owned Landbank of the Philippines’s sweet deal for OFWs launched yesterday is described in this article.
An annual interest of 7.0% and a maturity of 5.5 years is not bad for anyone’s portfolio. Experts always tout diversification and to do that properly, the risky part should not overshadow the secure and boring part. How to cut the cake exactly depends on personal risk appetites, of course.
It is a fact of life that stocks are sexy and deposits and bonds are boring. ☺ Most of the times, boring is good.
I have an OFW’s sister. You think I qualify?
Numbers to remember:
P2 billion – volume of securities being offered, technically called long-term negotiable certificates of deposit (LTNCDs). (there’s your tongue-twister for the day)
5.5 years – maturity of the securities. No pre-termination is allowed, but the securities can be used as collateral for loans or sold to another investor
May 16 – end of the offering period.
7.0% - annual yield of Landbank’s LTNCDs (practice rolling your tongue!)
5.5% - current annual yield of traditional time deposits of the same maturity
P13,699 – what an OFW needs to get P20,000 in 5.5 years
P250,000 – maximum investment per OFW
20% tax – will not be imposed on the offering
Read the article here.
May 6th, 2008 at 8:06 am
[...] find many examples of those concerns from MoneySmart readers in my previous posts on the LTNCDs here and [...]
May 1st, 2008 at 10:42 pm
if you just want to park your extra cash virtually risk free, then this offer is okay. the erap bond which is had 13.625% coupon rate was redeemed even erap was in jail. as long as inflation is below the yeild you still make money easily. unless inflation goes skyrocketing, then it would be better use the money to buy basic commodities for use or sell as price goes up.
May 1st, 2008 at 5:32 pm
I’m presently in Riyadh. Where can I avail this LTNCD here?
May 1st, 2008 at 5:39 am
I like this product.
If you don’t buy now, what are you going to do with your money (in the bank)? This is a better alternative for bank products (except for those double your money in 7 years or 5 years?)
April 30th, 2008 at 10:48 pm
Assuming this is compounded annually, your P13699 invested for 5.5 yrs at 7% will yield P19874.66. To come up with P20000 at the end of 5.5 yrs at 7% interest, you need to invest P13785.4. The formula is : Total = Principal × ( 1 + Rate )raise to #years … sorry i could not get the right character for inverted v, so i use “raise to”. I don’t know what formula you use lance….