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.
April 30th, 2008 at 5:17 am
As an OFW, obviously I’m out of the country. I attempted to invest in LTNCD through my brother, who’s in Manila, but Landbank informed him that in order to open the account I need to provide a SPA.
The turnaround to produce the SPA may not make the May 16 end of offer.
Is there other way around (i.e. providing copy of passport, employment certificate, etc).
Please advise. Thanks!
April 30th, 2008 at 4:01 am
how can an OFW participate in this LTNCDs if he is outside the country rigth now?
April 29th, 2008 at 10:47 pm
can you please tell me how P13,699 was arrived at to buy 1 unit of LTNCD? Are there any charges, as per my computation, @ 7% for 5.5 years, we have to shell out only P12,300 for the P20k investment.
So following your computation, I have to invest P171,237.50 to avail of the maximum investment, instead of just P153,750 as per my computation.
April 29th, 2008 at 9:52 pm
hi there, this article is very helpful on my part, since im woking here abroad. I would like to ask if this is available to all landbank branches? thanks!
April 29th, 2008 at 10:59 am
The first rule of investing in government issued zero coupon bopnds is this — Do not trust what government tells you. if they tell you it is good for you they are lying.
Frist thing to check is your own inflation ravaged personal/family basket of goods. Not the representative basket that the government uses for its own purposes to detrmine headline inflation rate that it tells you the country is going through. (malabo yun)
If you invest in a zero coupon bond you do not get interest payments during the tenure of the bond. You are tarpped in the bond that would pay you the effective rate of 7% for the tenure of the bond compounded.
Now if your personal inflation rate will be at the 7-15% level you are actually loosing money and you do not know it yet. Please note that our personal ionflation rate also compounds.
Always think of yourself and not the government because what you don’t know doesn’t hurt you and they would like you to think they are giving you a break.
There is only one animal that is responsible for inflation and that is government. That way you pay taxes even if you think you don’t. The higher prices go the more taxes they collect. It’s is the greatest scam yet invented by corrupt governments.